“The UK government is not doing enough to encourage companies to be more sustainable, the business lobby group CBI has told the Victoria Derbyshire programme. What can be learned from the world's most sustainable industrial building in the Netherlands?”
Source: Michael Cowan 12/8/19 

Last June, the outgoing Prime Minister set out challenges for the UK to lead the World as a net zero carbon economy. With this critical pledge, the opportunity for a Sustainable Britain by 2050 took a step closer to reality. Next year’s COP26 Climate Summit, to be hosted for the first time in UK, will put the World’s spotlight on UK Innovation However, it is the regulatory environment that stands in the way of presenting this as a mainstream rather than niche activity. Investment is not lacking from the private sector but, the dysfunctional relationship between business, Utility operators and Government intervention, adds up to a less than benign environment to host real competition for the world’s most sustainable buildings.

UKBCSD - reflecting the UK position

Our UK based, international members’ experience of buildings in the Netherlands and the UK affords us a practical insight into the issues raised in Michael Cowan’s item for the Victoria Derbyshire Show, presented on 12th August. The commercial investors, developers, property managers and occupiers of logistics and offices have buildings in the UK very similar to this one. They incorporate most of the same sustainable design and operating credentials. However, there are significant points of difference which relate to the respective role and support offered by Government and the energy industry in making this a mainstream activity in the UK.

The first issue to consider - the Netherlands is supporting large scale photo-voltaic (PV) installations on roofs of industrial buildings. They can make this work for a number of reasons:

• They are able to access Feed in Tariffs (FiT), which are Government incentives for renewable energy generation
• They can export power to the grid at retail prices
• There is no additional cost for self-consumption. All PV energy generated from a site is sent to the grid. Occupiers purchase energy they require for use in the building, without additional costs at the meter.

By contrast, UK PV providers receive no FiT incentives. Energy export to the grid is valued at around 3p/kWH which is significantly less than the retail rate charged by DSOs of 13p/KWH. These punitive self-consumption rates, when taken together with the challenge of matching PV generation (which happens in the day) with warehouse energy demand (which peaks in the night) undermines the business case for PV in the UK.
UK developers and occupiers regard this as frustrating. It is an avoidable artificial difference rather than a physical one.

The second issue is the respective approaches to disincentivising use of fossil fuels in our buildings. The UK needs to step up.
In the Netherlands they are moving to all electric heating, as gas can only ever be derived from fossil fuels. In the UK however, an all electric building would appear less sustainable in any energy calculation because the carbon factor for electricity (kgCo2/KWH) is far higher than gas. This will be corrected at some point to reflect growing proportion of renewables in the UK grid, but we still lag far behind the Netherlands in this area.

The third issue, raised by the CBI as a disincentive to developers however, is not one we share. We do not believe there is clear evidence in the industrial sector to support the CBI claim that "If a company lays out the capital for green energy products like solar wind, the value of the property will increase…………” Although there have been numerous reports on this matter over the years (Savills et al), property valuation is still based on the very practical considerations of location, product specification being “institutional grade”, covenant strength and unexpired lease length. Green energy products such as solar and wind are seen as “nice to have’s” which do not attract a valuation premium and almost certainly, as our members can demonstrate, create no uplift in rent.

Suggesting that the Rhenus logistics facility is 'the most sustainable building in the world' is potentially overstated. Given the supportive policy environment in the Netherlands that is nurturing and mainstreaming renewable energy generation and consumption, it is clearly transforming the business case for occupying sustainable buildings. Additionally, with the interrelationship between energy and building code legislation being very closely aligned to serve the same ends, it is giving greater incentive and support to push developers in the Netherlands to do more than they are able to here in the UK.

Our members’ principal focus is on Energy generation for self-consumption – nirvana is communities producing their own energy. However, key to addressing this is adoption and pushing our Government to legislate for power companies to take renewable energy to the grid offers significant progress (and commitment) in providing the solutions the UK needs. The narrow policy focus on penalising consumption, needs to be counterbalanced by incentivising more on site Production.

Becoming a World Leader as envisioned by Mrs May in her final policy announcement last June, must engage our Government as lead director in creating the sort of benign environment afforded to investors in the Netherlands. State intervention in the market is overdue but our members will offer little resistance if all the energy companies are part of the solution in managing significant shifts in reducing carbon consumption. We agree, that won’t be easy, as it will necessitate more contractual and regulatory changes. However, UKBCSD is happy and willing to work with Government and the DSOs and energy utility companies to make progress on this and make certain, our national commitment to fully decarbonise the economy.