Carbon policies too complex

3rd July 2014


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IEMA

Government policies to green commercial buildings need to be better understood, monitored and enforced if their benefits are to be fully realised, a new report has concluded.

Carbon penalties and incentives, which reviews the effectiveness of carbon reduction and energy efficiency policies in the commercial property sector, was produced by Deloitte for the Green Construction Board and Green Property Alliance. Overall, the study identified “significant limitations” in the existing framework of policy instruments, with particular concerns around inadequate enforcement, market incompatibility, and poor integration of penalties and/or incentives to drive compliance.

Policies designed to have a broad impact on underlying energy costs at the point of use – such as the climate change levy – are largely ineffective, the report argues, mainly due to their lack of visibility and the inelasticity of energy demand in the sector. Process-driven policies that do not impose an obligation for action – such as air-conditioning assessments under the EU Directive on the energy performance of buildings – are also comparatively ineffective. Conversely, building codes, positive financial incentives and choice-editing instruments (prohibiting the use of particular types of product) are generally more effective.

The report concludes that policies focused on setting standards are most cost effective and easily understood. Given that industry finds the current policy framework complex, it recommends “bundling” together policies in mutually reinforcing packages of standards, penalties and incentives.

More broadly, the report calls for better environmental performance data to help owners and occupiers choose premises, together with more education for real estate professionals so they can properly consider environmental concerns alongside traditional legal and valuation issues.

“Industry is clear in its preference for good regulation and policy direction to create a level playing field for investment and innovation – which makes the government’s insistence on reducing red tape, changing policy, and watering down regulation all the more frustrating,” said Paul King, chief executive at the UK Green Building Council.


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