Sanctions on Russia - the best argument for renewable energy!

When the idea of a gas pipeline from Russia to Europe came up in the 1980s US president Ronald Reagan was strongly against it. At the time I couldn't see why, but the reason has become blindingly obvious in the last few weeks. Europe now gets up to a third of its natural gas from Russia and cannot afford to do anything that would cause Russia to turn it off. Of course loss of exports would hurt the Russian economy, but turning out the lights in Europe would have a devastating effect in only a few days. That's why Angela Merkel's response to Russia's involvement in Ukraine has been so low-key. David Cameron, on the other hand, has made much more fuss. He can afford to: the UK gets its gas elsewhere - from the British North Sea, from the Norwegian North Sea and from the Middle East. For the moment! Resources in the North Sea are running out, while Russian reserves are enormous. 

Britain, as much as the rest of Europe, needs to look at energy security, at energy that we can control within our own borders. That's why fracking is so attractive. It's exploiting British gas and oil. As commented elsewhere, fracking is no silver bullet. It's likely to be costly, there's no guarantee that the reserves can actually be recovered, there are pollution risks, there's strong public opposition and it produces fossil fuels which emit co2 when used. 

We need to explore all the options. Nuclear - under our control, but apart from all the arguments about pollution and waste disposal the plain fact is that it's no short-term solution. It will take a decade to bring a new nuclear station into production. Renewables. There's nowhere near enough capacity at present and it will take years of research and development to increase it significantly. Time to start now. Many people will complain that it can never be as cheap as coal, oil or gas. Probably true, but the age of cheap energy is over. Which would you rather have, expensive energy or none at all? 

The third step to securing our energy supplies is to minimise waste. Are you sitting in an office enjoying the sunshine with all the lights on as well? How many public buildings have the lights on 24/7? Lighting is only part of it. In a few weeks we'll have the heating on again. How hot is your home? What mpg do you get from your car? We need a government lead to encourage energy savings, otherwise we’re never going to do enough. Unfortunately the Green Deal didn't work so we need something else. Pushing energy prices up would do it, but it would make any government that did that unelectable. We need more public education, more investment in renewables, and a subsidised Green Deal ( the one that didn't work failed largely because it was too expensive, too inflexible and in many cases unlikely to yield the promised savings). Governments need to take action, because if they don't they'll be thrown out when the lights go out - and that will be the least of our troubles!

And when our energy supplies are truly secure we’ll never be held to ransom by foreign powers.

Sustainable Real Estate

At a recent meeting of GACSO - the Global Association of Corporate Sustainability Officers - Lynn Cook, Real Estate Associate at DWF, explained how legislation is driving sustainability in the property sector. The key legislation is the Energy Act 2011. This comes into effect in 2018 and provides that any property with less than an E rating may not be let. 25% of offices are currently below this efficiency rating (and 45% are currently below D).

The legislation applies to existing leases, not just renewals or new leases. Landlords will find pressure from mortgage lenders and in turn will put pressure on rents in order to recover the costs of improvements. There may be some help from the Green Deal, launched in January. This is a scheme based on the “pay as you save” principle. Loans are advanced for the cost of approved energy-saving work and repayments are recovered via the electricity bill. The Golden Rule is that energy savings should be greater than or equal to the repayments. So far uptake of the scheme has been slow. The problem for the commercial sector is that the landlord’s and the tenant’s interests are not necessarily aligned. The landlord makes the improvements but the tenant is often the bill-payer.

The government is still supporting renewable energy. The feed-in tariff (FIT) for solar energy is still a good deal, even after the government’s backtracking on the rate of subsidy, which sent a number of solar installers to the wall. The Renewable Heat Incentive, covering biomass, heat pumps and solar thermal, has been much more carefully thought through and will now make these systems cost-effective in many more situations.

Now is the time for landlords to survey their current stock and determine what needs to be done to bring it up to E or above. Or maybe just to dispose of it. Introducing so-called “green leases” putting more of the obligation for energy efficiency on the tenant, is another way of reducing the landlord’s burden.

For the future, it is difficult to tell whether efficient buildings will have an enhanced capital value - or whether leaky buildings will plummet in value as 2018 approaches. Maybe there will be a mad refurbishment panic at the end of 2017. The government is not expected to move from the 2018 deadline. After the FIT disaster it is much more organised.