How sustainable was 2010?

It has been a turbulent year, politically and economically. A change of government and continuing fiscal woes have ensured that uncertainty remains the presiding worry for many. The Emergency Budget brought devastating cuts, and many green funds were not spared. Against this difficult backdrop, then, how has the green agenda fared for the property market at large?

The biggest act of green legislation passed this year was the Energy Act 2010. This paved the way for businesses to meet legally binding targets to cut carbon dioxide emissions.

The ever-looming energy crisis gave us all the jitters, exacerbated by the tragic oil spill in the Gulf of Mexico. Regular power cuts and soaring fuel poverty threaten, and a reliable, homegrown energy source desperately needs to be secured. Some provision was made in the Energy Act: Ofgem, for example, will enjoy greater powers to prevent the exploitation of electricity trading, and secure energy supplies. Furthermore, the coalition promised a floor in the carbon price, which should help stability and encourage investment.

Clean coal
The Energy Act stimulates carbon capture and storage (CCS), which will enable us to capture carbon dioxide produced by coal and store it underground. Momentum is gathering for this technology (not quickly enough to make it worthwhile, some would say). The term ‘carbon capture and storage’ has even made it into the Oxford English Dictionary. Chris Huhne, Energy and Climate Change Secretary, held the first CCS conference in July, attended by senior stakeholders, and in August, energy minister Charles Hendry announced plans to licence the storage of CO2 under the seabed.

In the meantime, there are two competitions underway to find contenders for four demonstration projects in the UK. The first competition sees finalists E.ON (Kingsnorth) and Scottish Power (Longannet) – battle it out. Details of the second competition – presumably to find the other three contenders – should by now have been published.

In my view, CCS is not sustainable – it is expensive, environmentally risky and possibly as contentious as nuclear power. Money would be better spent developing alternatives – namely renewable energy and combined heat and power generation. Writing in the Telegraph in July, Chris Huhne himself stated that we need to wean ourselves off fossil fuels – but deploying CCS is not going to help that. It only buys us around 100 years of ‘safe’ CO2 storage – what then?

Renewable energy
Renewable energy presents feasible solutions and is by no means being ignored by government or industry. Offshore wind power is set to become huge; the government states that the UK needs to produce 15 percent of its energy from renewable sources by 2020 – with wind forming one-third of that – to meet climate change targets. Wind power also presents serious business opportunities: according to the Department of Energy & Climate Change (DECC), investment in UK offshore wind could be worth £75bn and support up to 70,000 jobs by 2020.

In January, the Crown Estate granted the new ‘Round 3’ rights to develop wind farms in coastal areas around Britain, and the Labour government pledged £100bn to fund it. Round 3 will give rise to the next generation of wind farms, which promise an extra 32GW capacity (compared with the 8GW capacity of previous Rounds) – this alone is enough to power nearly all the homes in the UK. Much of this new offshore wind power will be produced in the North Sea, with a joint agreement now in place between the UK and Norway.

Britain enjoys some of the best conditions in Europe to produce wind energy, but industry figures show that it lags behind its neighbours. To succeed, offshore wind needs vast capital expenditure, and a commitment from government to keep the Renewables Obligation (pre-election, the Tories were criticised for plans to phase it out).

Nuclear
Chris Huhne has declared there will be no government subsidies for new nuclear power stations. But the Liberal Democrats (Huhne’s party) are a lone voice in opposing nuclear power – a division that has and will delay critical decision-making. In my humble opinion, nuclear power is dubious, although it will likely go ahead, owing to its promise of stable and plentiful energy.

CRC
The CRC Energy Efficiency Scheme launched in April and came into force in September. In August, with just 50 days to go before registration closed, the DECC published a press release stating that 1,229 of the organisations required to register had done so. That number should have been higher, considering the scheme affects thousands of businesses. I could barely suppress a chuckle when Greg Barker, energy and climate change minister, stated: “I understand the original complexity of the scheme may have deterred some organisations and I want to hear suggestions as to how we can make the scheme simpler in the future.”

Red tape aside, the scheme is a step in the right direction, with huge potential to benefit both business and the environment. The London Fire Brigade is one shining example of a CRC participant. The Brigade has already established energy efficiency projects, with savings of more than £260,000 in 2009/10 alone, with carbon emissions from its buildings down by 18 percent since 1990.

Feed-in tariffs
In April, the DECC launched Feed-in Tariffs (FITs). Although initial take-up was largely domestic, this is still an exciting opportunity for businesses too, with growing interest from commercial organisations. The objective of this ‘clean energy cash-back’ scheme is to increase small-scale, low-carbon electricity generation. It should lead to a better understanding of energy use and renewable energy technologies, and is a great example of the ‘think global, act local’ mantra. It will diversify the energy mix, reduce dependence on fossil fuels, strengthen localised energy security, and increase business and employment opportunities in developing and deploying renewable energy technologies across the country.

It has come under criticism though: the number of installations registering for the scheme in August was double that of July. Why? The tariff is too generous, and too easy to fiddle, prompting a ‘gold rush’. This, say the critics, will ramp up energy costs. Trewin Restorick, Chief Executive of advisory body Global Action Plan, presented a good debate on his blog. He argued that the tariff is socially and geographically unjust, penalising those without the suitable climate, positioning or the means to microgenerate power.
Supporters of FITs counter that the scheme is helping create jobs and increase the country’s renewable energy capacity. That is admirable, but I would agree with Restorick: the government should prioritise sites with the most environmental and social benefit. Rather than individual homes, the tariff should be targeted at social housing providers, industrial areas, farm buildings, roadsides and community centres.

On the sidelines
There is not enough space here to cover everything, but here are a few other key actions taken over 2010. There are minor changes due to BREEAM, with the 2011 version launching soon. Part L should by now have been be updated, as the Environmental Impact Assessment is to be replaced, thereby cutting red tape for green development. For housing, there was the new Green Deal, which may yet be applied to non-domestic buildings. Additionally, the government announced a zero-carbon homes policy, and the Code for Sustainable Homes is due to be updated in line with Part L.

And so the low-carbon agenda drives on relentlessly, despite many schemes suffering savage funding cuts. Regulation tightened and incentives increased for the built environment. But possibly this year in particular, the issue of energy security has dominated – and for good reason.

Make no mistake – the case for sustainable energy is as much about political and economic stability as it is for environmental protection. Overall, 2010 has seen much talk and some action. Let’s hope 2011 sees more talk and even more action.