The CRC Energy Efficiency Scheme as a driver for air-conditioning inspections
Even if landlords can do little to influence the energy-consuming behaviour of tenants to share CRC responsibility they can still act to reduce the energy used by air-conditioning systems — as Hywel Davies explains.
Before Christmas the Government consulted on changes to the regulations introducing the Carbon Reduction Commitment (CRC), postponing the first purchase of allowances for emissions for a year. However, it contained some worrying ideas about the landlord/tenant relationship, and it is potentially another lost opportunity for air conditioning inspections.
The main purpose of the CRC consultation was to delay the first purchase of allowances, money which Chancellor of the Exchequer George Osborne will now use to ‘support the public finances’, pending a fuller review of the scheme. Tucked away in the depths of the consultation is a statement: ‘Government reiterates that landlords have the greatest ability to influence a building’s energy consumption.’ This statement is causing deep concern in the property industry — and at CIBSE. Not only is it technically flawed, but it contradicts current legislation.
Landlord/tenant relationships are complex and can be difficult. There are many forms of tenancy, and landlords take various positions on green or environmental terms in leases. Similarly, tenants are very diverse, with a wide range of views on energy performance and environmental responsibility. So the relative influence of landlords and tenants over energy use in rented buildings is also very varied.
Energy consumption in rented buildings is either ‘shared’ or ‘exclusive’. Shared consumption is energy obtained by the landlord for common areas of the building (e.g. atrium lighting) and may also include electricity for tenant consumption under shared, unmetered arrangements (e.g. central plant). This counts toward the landlord’s CRC responsibility.
There are two types of exclusive consumption.
• Separately metered energy bought by the tenant directly from energy companies and used under the tenant’s control, often for special uses such as data centres. This will currently count toward the tenant for CRC.
• Energy bought by the landlord and provided to the tenant on an exclusive metered basis. Although the tenant controls the actual level of use of this energy, including its intensity of use, hours of operation and occupancy, this energy use will nevertheless still count towards the landlord for CRC.
Where energy for exclusive tenant use is provided by the landlord, not only is it largely within the control of the tenant how much energy is used, but the landlord’s influence over that energy use is legally constrained by the 1954 Landlord & Tenant Act, which says ‘tenants can exclude all others from their premises, including the landlord, save for reasonable access for maintenance and other specific purposes’. In addition, as tenants usually pay for all energy use in the building apart from landlord’s own use, they benefit from energy-efficiency improvements made to a building. But unless specified in the lease, it is unlikely that the landlord will be able to recover the cost of the investment!
This is hardly ‘landlords [having] the greatest ability to influence a building’s energy consumption’. Rather, it is far more a case of the law actually stopping landlords influencing recalcitrant tenants!
If landlords cannot pass their CRC costs to the tenant, then tenants have no incentive to help landlords reduce CRC liabilities. So it is misleading to say that landlords have most influence over energy use in buildings, as it ignores the complexity of energy use, control and procurement. It is also contrary to the basic ‘polluter pays’ principle.
There is one area where landlords could, and legally should, do much more to reduce energy use in buildings — air-conditioning systems.
There are tens of thousands of air-conditioning systems used in England and Wales. The great majority are of more than 12 kW rated output. As discussed many times in this magazine, they should all have been inspected by 4 January 2011 or within five years if installed after 1 January 2008. Yet too many landlords just aren’t bothering with inspections. Inevitably many systems are using more energy than they need, without delivering effective cooling to the end users. This is an area where the existing energy performance of buildings regulations could support the CRC, encouraging measurement of system performance to inform better management. And both the Landlord & Tenant Act and Energy Performance of Buildings Regulations specifically create a right of access by landlords for the purpose.
The success of CRC in rented non- domestic buildings depends critically upon incentivising energy-efficient behaviour within the constraints of leases and the 1954 Act by influencing landlord and tenant to use less energy. That is why CIBSE, the British Property Federation and the UK Green Building Council are working together to identify ways to get the CRC and the EPB Regulations, which cover air-conditioning inspections and Display Energy Certificates working together to achieve this.
Government is still open to ideas about CRC. Now is the chance to speak up, and steer it away from blaming it all on the landlord.
Hywel Davies is technical director with the Chartered Institution of Building Services Engineers.