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Sustainability as a business benefit in the commercial property sector

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SaveMoneyCutCarbon’s recent participation in an illuminating Mayfair Capital seminar reinforced ideas on how sustainability is a business benefit in the commercial property sector.

The London seminar focused on UK real estate as an alternative and attractive asset for charity and pension trustees, with expert contributions from Lloyds Bank, Mercer, Alliance Trust Investments, the Crown Estate and GVA.

We contributed to the socially responsible investment debate on the day with a direct exposition of the business case for energy efficiency – five ‘no brainers’ for the commercial sector property.

Our MD, Mark Sait, and I were impressed by the level of questioning during the event and in the informal gatherings afterwards. What struck us was the clear grasp of the environmental need for sustainable investment and property management together with the growing understanding that this would have a highly positive effect on the financial side.

Utility costs will only continue to rise – they have doubled in the past decade and are forecast to double again over next 10 years.

Add to this inexorable rise the stark fact that the commercial property sector is wrestling with data a £29 billion green refurbishment bill and there are the makings of challenging, if exhilarating times ahead.

The Energy Act 2011 shifts the terrain for commercial property owners and Estates Gazette advises that around 200,000 commercial properties will need expensive refurbishment to avoid being un-rentable when the deadline for minimum energy standards is reached on April 1 2018.

There is a £29 billion energy efficiency bill looming for these properties and the clock is ticking. In four short years, it will be illegal to let a commercial property that has an Energy Performance Certificate (EPC) rating under an ‘E’.

This indicates that 16% of non-domestic building stock in England and Wales falls below the EPC benchmark. The Scottish government has announced a requirement for landlords to carry out improvements recommended by an EPC if and when they sell or re-lease a property.

The impact for the sector is not only going to be felt in four years’ time. Even now, the energy efficiency regulations are starting to be used as a bargaining chip in commercial property negotiations.

Whatever the final guidelines from government, which we await with some impatience, the pressure on energy efficiency in the commercial sector is a financial plus point as there is a growing movement for a premium to be attached to greener offices, warehouses, retails outlets and so on. The market is moving rapidly towards having sustainability as a key element in the demand list.

Companies want to be seen to be green, not least because this reduces the potential for negative press and public opinion moving away from a brand. There is also the undeniable and growing burden of rising energy bills and the requirement for the most efficient ways to controls lighting, heating and water costs.

Commercial properties that enable reduction in electricity costs through LED lamps, deploy intelligent, efficient controls on heating and ventilation, manage water consumption effectively and go beyond basic compliance will be better set to face any economic and environmental challenges.

Five ‘no brainers’ for sustainability

The SaveMoneyCutCarbon five ‘no brainers’ for environmental and commercial sustainability are:

– Saving Water
– LED Lighting
– Lighting controls
– Heating controls – HVAC/boiler efficiency/intelligent pumps
– Effective measurement and monitoring

We assess that the business case for energy efficiency in the commercial property sector is now beyond all reasonable doubt and one of our key goals in our work is to go far beyond the ‘nice-to-have’ environmental tactics that do just enough for regulatory compliance in this and other sectors.

The opportunity for the commercial sector is to:

– Generate higher yields while ensuring Energy Act compliance
– Reduce total cost of ownership
– Reduce maintenance costs by a factor of five with knock-on improvements in maintenance work and health and safety
– Ensure more market-attractiveness

Let’s unpack those five key elements needed for an effective, sustainable and rapid-payback strategy to cut consumption of increasingly expensive utilities.

Use less water

Very clear impetus here if properties are metered. But you also have to remember that costs of heating and pumping this precious, and increasingly expensive, resource are significantly reduced through better use management. We advise simple, highly effective steps: install eco-showers and shower heads, fit eco-taps or use quality tap aerators.

Retrofit LED lighting

Why LED and not other energy efficient products? The simple answer is that LED is the best technology, most environmentally friendly and most efficient by some way. Fitting an LED should give you up to 50,000 hours of life, using only 10% of the energy that a traditional light would consume. It’s also almost ‘fit-and-forget’, which also reduces maintenance costs.

Deploy intelligent lighting controls

Lighting can account for up to 40% of annual electricity usage in commercial buildings. Intelligent controls save energy without sacrificing style or convenience. For single buildings, or large commercial campuses, dimmers, occupancy/vacancy sensors, light control systems, and shading solutions reduce lighting energy use, optimise system performance, and enhance the visual environment.

Manage effectively all heating and air conditioning

Every property can benefit from fully surveyed and properly installed solutions that reduce energy use dramatically – from smart room sensors to intelligent heat pumps.

Monitor/measure consumption

That might appear to be stating the blindingly obvious but in our experience the deployment of agile, effective and responsive monitoring systems is often neglected. Without this data, the potential for maximum efficiency and rapid response to changing conditions is limited.

Our work with leading hospitality groups indicates the potential for exceptional commercial benefits in the commercial property sector.

In properties where the owner has operational involvement, the agile deployment of the five no-brainers should deliver radically reduced utility consumption that does not rely on changing user behaviour, with assured increase in gross profit and yield.

Even if commercial sector property owners have no involvement, the opportunity is available to demonstrate good landlord status through structured easy access to cost-cutting, products and solutions.

If a property is empty and ready to let then utility-efficiency measures reduce total cost of ownership while improving letting prospects and yield. If the property is being refurbished, then owners will benefit from expert efficiency management, best practice and better use of refit funds.

Responsible, farsighted companies in the commercial rental sector can grasp a unique opportunity to launch sustainable, financially effective green strategies that cut costs and carbon footprint – great for the balance sheet and the planet.

Charlie Farr is chairman of energy efficiency specialists SaveMoneyCutCarbon.

Photo: Mark Lee via Flickr

Further reading:

Education is the Seed for effective energy transformation

7,000 businesses compelled to report energy use and potential energy saving strategies

Power shortage warnings show need for effective national energy reduction

Pressure on energy bills rises as national renewable power policy gets a makeover

The real green deal: bringing energy, water and waste under control

Economy

Will Self-Driving Cars Be Better for the Environment?

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self-driving cars for green environment
Shutterstock Licensed Photo - By Zapp2Photo | https://www.shutterstock.com/g/zapp2photo

Technologists, engineers, lawmakers, and the general public have been excitedly debating about the merits of self-driving cars for the past several years, as companies like Waymo and Uber race to get the first fully autonomous vehicles on the market. Largely, the concerns have been about safety and ethics; is a self-driving car really capable of eliminating the human errors responsible for the majority of vehicular accidents? And if so, who’s responsible for programming life-or-death decisions, and who’s held liable in the event of an accident?

But while these questions continue being debated, protecting people on an individual level, it’s worth posing a different question: how will self-driving cars impact the environment?

The Big Picture

The Department of Energy attempted to answer this question in clear terms, using scientific research and existing data sets to project the short-term and long-term environmental impact that self-driving vehicles could have. Its findings? The emergence of self-driving vehicles could essentially go either way; it could reduce energy consumption in transportation by as much as 90 percent, or increase it by more than 200 percent.

That’s a margin of error so wide it might as well be a total guess, but there are too many unknown variables to form a solid conclusion. There are many ways autonomous vehicles could influence our energy consumption and environmental impact, and they could go well or poorly, depending on how they’re adopted.

Driver Reduction?

One of the big selling points of autonomous vehicles is their capacity to reduce the total number of vehicles—and human drivers—on the road. If you’re able to carpool to work in a self-driving vehicle, or rely on autonomous public transportation, you’ll spend far less time, money, and energy on your own car. The convenience and efficiency of autonomous vehicles would therefore reduce the total miles driven, and significantly reduce carbon emissions.

There’s a flip side to this argument, however. If autonomous vehicles are far more convenient and less expensive than previous means of travel, it could be an incentive for people to travel more frequently, or drive to more destinations they’d otherwise avoid. In this case, the total miles driven could actually increase with the rise of self-driving cars.

As an added consideration, the increase or decrease in drivers on the road could result in more or fewer vehicle collisions, respectively—especially in the early days of autonomous vehicle adoption, when so many human drivers are still on the road. Car accident injury cases, therefore, would become far more complicated, and the roads could be temporarily less safe.

Deadheading

Deadheading is a term used in trucking and ridesharing to refer to miles driven with an empty load. Assume for a moment that there’s a fleet of self-driving vehicles available to pick people up and carry them to their destinations. It’s a convenient service, but by necessity, these vehicles will spend at least some of their time driving without passengers, whether it’s spent waiting to pick someone up or en route to their location. The increase in miles from deadheading could nullify the potential benefits of people driving fewer total miles, or add to the damage done by their increased mileage.

Make and Model of Car

Much will also depend on the types of cars equipped to be self-driving. For example, Waymo recently launched a wave of self-driving hybrid minivans, capable of getting far better mileage than a gas-only vehicle. If the majority of self-driving cars are electric or hybrids, the environmental impact will be much lower than if they’re converted from existing vehicles. Good emissions ratings are also important here.

On the other hand, the increased demand for autonomous vehicles could put more pressure on factory production, and make older cars obsolete. In that case, the gas mileage savings could be counteracted by the increased environmental impact of factory production.

The Bottom Line

Right now, there are too many unanswered questions to make a confident determination whether self-driving vehicles will help or harm the environment. Will we start driving more, or less? How will they handle dead time? What kind of models are going to be on the road?

Engineers and the general public are in complete control of how this develops in the near future. Hopefully, we’ll be able to see all the safety benefits of having autonomous vehicles on the road, but without any of the extra environmental impact to deal with.

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Economy

New Zealand to Switch to Fully Renewable Energy by 2035

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renewable energy policy
Shutterstock Licensed Photo - By Eviart / https://www.shutterstock.com/g/adrian825

New Zealand’s prime minister-elect Jacinda Ardern is already taking steps towards reducing the country’s carbon footprint. She signed a coalition deal with NZ First in October, aiming to generate 100% of the country’s energy from renewable sources by 2035.

New Zealand is already one of the greenest countries in the world, sourcing over 80% of its energy for its 4.7 million people from renewable resources like hydroelectric, geothermal and wind. The majority of its electricity comes from hydro-power, which generated 60% of the country’s energy in 2016. Last winter, renewable generation peaked at 93%.

Now, Ardern is taking on the challenge of eliminating New Zealand’s remaining use of fossil fuels. One of the biggest obstacles will be filling in the gap left by hydropower sources during dry conditions. When lake levels drop, the country relies on gas and coal to provide energy. Eliminating fossil fuels will require finding an alternative source to avoid spikes in energy costs during droughts.

Business NZ’s executive director John Carnegie told Bloomberg he believes Ardern needs to balance her goals with affordability, stating, “It’s completely appropriate to have a focus on reducing carbon emissions, but there needs to be an open and transparent public conversation about the policies and how they are delivered.”

The coalition deal outlined a few steps towards achieving this, including investing more in solar, which currently only provides 0.1% of the country’s energy. Ardern’s plans also include switching the electricity grid to renewable energy, investing more funds into rail transport, and switching all government vehicles to green fuel within a decade.

Zero net emissions by 2050

Beyond powering the country’s electricity grid with 100% green energy, Ardern also wants to reach zero net emissions by 2050. This ambitious goal is very much in line with her focus on climate change throughout the course of her campaign. Environmental issues were one of her top priorities from the start, which increased her appeal with young voters and helped her become one of the youngest world leaders at only 37.

Reaching zero net emissions would require overcoming challenging issues like eliminating fossil fuels in vehicles. Ardern hasn’t outlined a plan for reaching this goal, but has suggested creating an independent commission to aid in the transition to a lower carbon economy.

She also set a goal of doubling the number of trees the country plants per year to 100 million, a goal she says is “absolutely achievable” using land that is marginal for farming animals.

Greenpeace New Zealand climate and energy campaigner Amanda Larsson believes that phasing out fossil fuels should be a priority for the new prime minister. She says that in order to reach zero net emissions, Ardern “must prioritize closing down coal, putting a moratorium on new fossil fuel plants, building more wind infrastructure, and opening the playing field for household and community solar.”

A worldwide shift to renewable energy

Addressing climate change is becoming more of a priority around the world and many governments are assessing how they can reduce their reliance on fossil fuels and switch to environmentally-friendly energy sources. Sustainable energy is becoming an increasingly profitable industry, giving companies more of an incentive to invest.

Ardern isn’t alone in her climate concerns, as other prominent world leaders like Justin Trudeau and Emmanuel Macron have made renewable energy a focus of their campaigns. She isn’t the first to set ambitious goals, either. Sweden and Norway share New Zealand’s goal of net zero emissions by 2045 and 2030, respectively.

Scotland already sources more than half of its electricity from renewable sources and aims to fully transition by 2020, while France announced plans in September to stop fossil fuel production by 2040. This would make it the first country to do so, and the first to end the sale of gasoline and diesel vehicles.

Many parts of the world still rely heavily on coal, but if these countries are successful in phasing out fossil fuels and transitioning to renewable resources, it could serve as a turning point. As other world leaders see that switching to sustainable energy is possible – and profitable – it could be the start of a worldwide shift towards environmentally-friendly energy.

Sources: https://www.bloomberg.com/news/articles/2017-11-06/green-dream-risks-energy-security-as-kiwis-aim-for-zero-carbon

https://www.reuters.com/article/us-france-hydrocarbons/france-plans-to-end-oil-and-gas-production-by-2040-idUSKCN1BH1AQ

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