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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
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© 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
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“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
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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
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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
5 Carbon Penalties & Incentives
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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
6 Carbon Penalties & Incentives
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Disconnected pre-conditions of policy effectiveness
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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
Carbon Penalties & Incentives
Clear sign-posting
Encouraging
markets
Policy connectivity
Enforcement
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Gap between importance and adequacy
9
Current Status Importance
5 4 3 2 1 E D C B A
Carbon Penalties & Incentives
Strong Weak Low High
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Considerable scope for improving effectiveness of the policy framework
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Policy mapping across the property lifecycle *Correct at the time of writing – March 2014
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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
12 Carbon Penalties & Incentives
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© 2014 Deloitte LLP. All rights reserved.
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
13 Carbon Penalties & Incentives
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Effectiveness of policy design
14 Carbon Penalties & Incentives
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Effectiveness of policy implementation
15 Carbon Penalties & Incentives
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Wide spectrum of perceived effectiveness
16 Carbon Penalties & Incentives
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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,
17 Carbon Penalties & Incentives
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Transparency and collaboration deficits on policy implementation
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Determining the carbon impact of policies
19
Cumulative RIA impact estimates of policy instruments to 2020
Carbon Penalties & Incentives
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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
20 Carbon Penalties & Incentives
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© 2014 Deloitte LLP. All rights reserved.
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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