carbon penalties & incentives project report launch · carbon penalties & incentives...

Carbon Penalties & Incentives Project Report

Launch

A presentation of the findings of a review of policy effectiveness for carbon reduction and

energy efficiency in the commercial buildings sector

Sir Robert Finch Chairman, Property Industry Alliance

Bill Hughes Managing Director, Legal & General Property (Chairman,

Green Property Alliance)

Louise Ellison Head of Sustainability, Hammerson (Chair, Green Construction

Board Valuation and Demand Working Group)

Miles Keeping Partner, Deloitte (Carbon Penalties and Incentives Project

Team)

Jon Lovell Global Practice Leader - Real Estate Sustainability, Deloitte

(Carbon Penalties and Incentives Project Team)

Nina Reid Director: Responsible Property Investment, M&G Real Estate

Sylvie Sasaki Plan A Project Manager, Marks and Spencer

Deloitte UK screen 4:3 (19.05 cm x 25.40 cm)

© 2014 Deloitte LLP. All rights reserved.

The GCB/GPA Carbon

Penalties & Incentives Project

Launch Presentation

18 June 2014

Jon Lovell [@lovell_jon] #GCBGPACPI

A review of policy effectiveness for carbon reduction and energy efficiency in the commercial property sector


© 2014 Deloitte LLP. All rights reserved. 3

“Government should conduct a

comprehensive assessment of non-

residential low-carbon policies to ensure

they work effectively.” Committee on Climate Change, 2013

Carbon Penalties & Incentives

Context



Guiding Principles

Carried out independently and impartially based on objectively assessed

evidence from published sources.

Builds upon and complements what has been and is being done elsewhere, including

GCB studies.

Neutral of all political parties and individual commercial interests.

Does not make detailed recommendations on the design or implementation of

individual policy instruments, but seeks to:

make observations on the types of policies which have been successful in

encouraging emissions reductions in commercial property;

make positive recommendations for improvements to existing policies based on

empirical observation; and

make observations as to particular factors which are hampering the success of

policies.

Informed by structured dialogue with a range of stakeholders

4 Carbon Penalties & Incentives



Briefly, methods

Scoping:

• Long-list of instruments prepared - those affecting/concerning the design,

implementation and operation of commercial buildings in England & Wales

• Short-listed in agreement with study Steering Group

Literature Review:

• Instruments’ consultation documents and responses from industry

• Regulatory Impact Assessments

• Academic, professional/industry publications

Questionnaire:

• Online, 330 useable individual responses

• Respondents involved at all stages of the property lifecycle responded, with

broad geographical & organisational size spreads

Workshop:

• 25 participants from stakeholder groups and identified experts from

government and industry

• Examined nature and complexity of instruments




Headlines

Disconnected pre-conditions of policy effectiveness

• Strong consensus on the principles of good policy-making and execution

• Notable gap between stated importance and perceived adequacy of existing

approaches

Considerable scope for improving effectiveness of the policy framework

• Perceptions of complexity and burdensome administration

• Certain policy types held to be more effective than others

• Notable trend of declining effectiveness through policy implementation

amongst certain policy types

• Opportunities for simplification, policy bundling and better targeting

• Overcome heavy bias on operational carbon

Transparency and collaboration deficits on policy implementation

• Harness strong connection between policy familiarity and perceived benefit

• Clearer sign-posting and trajectories

• Better bottom-up data collection and analytics

• Greater independent scrutiny and stronger collaboration between

government and industry on policy monitoring




Pre-conditions of policy effectiveness

8

1. Confidence in policy direction

2. Comprehensive consultations within prescribed timescales

3. Adequate framework for return on investment

4. Policies that make use of markets

5. Incentives that address the risks of efficiency improvements

6. Policies that address all building areas and can be bundled

7. Effective co-ordination between policies

8. Alignment of energy efficiency with wider policy

9. Complementary Government-led demand creation policies

10. Comprehensive, enforceable review mechanisms

11. Institutions that have resources to oversee implementation


Clear sign-posting

Encouraging

markets

Policy connectivity

Enforcement



Gap between importance and adequacy

9

Current Status Importance

5 4 3 2 1 E D C B A


Strong Weak Low High



Policy mapping across the property lifecycle *Correct at the time of writing – March 2014




Some key market perceptions

On the question of whether or not the current

framework is sufficiently effective to help

meet carbon reduction targets,

considerations arise from:

Complexity of framework and of

individual instruments

Industry perception of administrative

burden

Potential for greater market familiarity,

which is likely to lead to greater

perceptions of benefit




Effectiveness of policy design




Effectiveness of policy implementation




Wide spectrum of perceived effectiveness




Policies having the greatest beneficial effect

Building regulations, codes, standards are considered to be the most cost

efficient and effective way of changing market participants’ behaviour… it is

important to ensure these are dynamic, ambitious, have a clear developmental

trajectory and are supported by a broad policy package

Choice-editing by prohibiting the use of particular products, e.g.

of a specific technology (e.g. HCFCs);

products which fail to meet performance criteria (e.g. Eco Products Directive);

reducing the liquidity of assets which do not meet pre-determined standards, as

per MEPS.

Policy bundles are effective: set a minimum standard; devise a label; provide over-

performance financial incentives

Broad impact policies (e.g. CCL) tend to be less effective.

Similarly, those which require a processes or the gathering of information without any

compulsion to act on the findings (e.g. Air-Con Assessments) are not found to be

particularly effective,




Determining the carbon impact of policies

19

Cumulative RIA impact estimates of policy instruments to 2020




Headlines


• Strong consensus on the principles of good policy-making and execution

• Notable gap between stated importance and perceived adequacy of existing

approaches


• Perceptions of complexity and burdensome administration

• Certain policy types held to be more effective than others

• Notable trend of declining effectiveness through policy implementation

amongst certain policy types

• Opportunities for simplification, policy bundling and better targeting

• Overcome heavy bias on operational carbon


• Harness strong connection between policy familiarity and perceived benefit

• Clearer sign-posting and trajectories

• Better bottom-up data collection and analytics

• Greater independent scrutiny and stronger collaboration between

government and industry on policy monitoring




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Carbon Penalties & Incentives Project Report

Launch

PANEL DISCUSSION

Sir Robert Finch Chairman, Property Industry Alliance

Bill Hughes Managing Director, Legal & General Property (Chairman,

Green Property Alliance)

Louise Ellison Head of Sustainability, Hammerson (Chair, Green Construction

Board Valuation and Demand Working Group)

Miles Keeping Partner, Deloitte (Carbon Penalties and Incentives Project

Team)

Nina Reid Director: Responsible Property Investment, M&G Real Estate

Sylvie Sasaki Plan A Project Manager, Marks and Spencer

carbon penalties & incentives project report launch · carbon penalties & incentives...

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