Category Scope (current and projected) Source
Average industrial gas prices including CCL were 34.1 per cent higher in current terms in Q2 2011 compared
to Q2 2010, whilst prices excluding CCL were 35.4 per cent higher.
Average industrial electricity prices including CCL were 2.7 per cent higher in current terms in Q2 2011 ces/prices.aspx
Quarterly Energy Prices
compared to Q2 2010, and prices excluding CCL were 2.8 per cent higher.
(DECC, Sept. 2011)
Average coal prices were 11.9 per cent higher in current terms including CCL and 12.7 per cent higher trends/2872-pn11-077.pdf
excluding CCL in Q2 2011 compared to Q2 2010. Heavy fuel oil prices were 22.1 per cent higher in current
terms than a year ago.
In 2010 Scotland had around one fifth more renewable generating capacity than England. Renewable
generation in England was 45 per cent higher than in Scotland because biofuels based capacity (the most
prevalent sources in England) are used more intensively than hydro and wind (which predominate in
Scotland). During 2010 rainfall was 63 per cent lower than in 2009, making it the driest year since 2003, and
average wind speeds were at their lowest level this century.
In Wales generation from wind was over 4 times the generation from natural flow hydro, and Wales
generates more electricity from wind than any English region. In 2010 wind generation in Scotland was
nearly one-third more than in England, and almost five times as much as in Wales.
In England the region with the largest renewable capacity is the South East, where 55 per cent of capacity is
from wind. When combined, the South East, North West and East regions account for nearly three-fifths of
England’s renewable generating capacity. London and the West Midlands have the lowest capacities.
In England the regions with the largest generation from wind (including offshore wind with landfall
in that region) were the East, North West, East Midlands and the South East; together they comprised
85 per cent of the total. Almost two-thirds of landfill gas generation came from the East of England,
South East and North West.
Yorkshire and the Humber is the largest generator from “other biofuels” because of the co-firing of
biomass in coal fired power stations.
Through research into the cost predictions by made by the International Energy Agency, and the US Energy
Information Administration, predictions have been plotted of the potential spread of oil, coal and gas prices
on the graphs below.
The highest volatility is expected for oil which has a lower boundary of a reduction of 5% over the next 20
years, and a higher estimate of an increase to almost 40% above current prices. The oil price will be
International Energy Agency
Energy Prices influenced by economic conditions and availability of supply.
(Deloitte research, 2011)
US Energy Information Administration
Coal is expected to show the lowest volatility, with prices projected to be mainly between +/- 5% over the
next 20 years. This is due to the widespread availability of coal as an energy feedstock.
Gas prices are expected to rise significantly over the next 20 years, with the variance in predictions being
fairly low. Prices are projected to be almost 70% higher than currently by 2030. The availability of supply,
potential constraints due to political activity, and increased demand could all contribute to higher prices.
Oil Coal Gas
DECC's projected rising energy (electricity and gas) projections from 2011 - 2050 are shown on the graph
(DECC Scenarios, 2010) The Electricity Market reform (EMR) could have a further impact on utility expenditures - with HMT
announcing Carbon Floor Price to reach £70/t by 2030 (more than 300% increase from today's level). Refer
to Policy table for details of EMR and Carbon Floor Price.
UK-GBC literature review suggests that there are cost savings accessible to those that employ sustainable
strategies. Sustainable buildings are designed to be more resource efficient. Reduced use of resources
should have a positive impact on a company’s cost base over time. In the case of energy, the introduction of
EPCs and DECs should help to provide further evidence to demonstrate the link between energy
performance and value, in the longer term. Making the Case for a Code for Sustainable Buildings: Value &
Cost savings UK-GBC research
Business Case (UK-GBC, 2009)
There remains, however, a lack of firm consensus on the exact ratio between capital cost outlays and
potential cost savings and often the full range of benefits from a sustainable solution are not fully explored
or explained. This is not surprising given the breadth of sustainability issues and the huge variety of
structures in our built environment.
The New Homes Bonus commenced in April 2011, and will match fund the additional council tax raised for
new homes and empty properties brought back into use, with an additional amount for affordable homes,
for the following six years.
CLG has set aside almost £1bn over the Comprehensive Spending Review period for the scheme, including
nearly £200m in 2011-12 in year 1 and £250m for each of the following three years. Funding beyond those http://www.communities.gov.uk/housing/housingsupply/newhomes
New Homes Bonus
levels will come from formula grant. This ensures that the economic benefits of growth are returned to the bonus/
The New Homes Bonus will be paid through section 31 of the Local Government Act 2003 as an
unringfenced grant. Local authorities and their communities will have the freedom to spend New Homes
Bonus revenues according to local wishes and priorities.
Business Rates are fixed known costs factored into operational costs.
Non-domestic rates are a means by which businesses and other occupiers of non-domestic property
indirectly contribute towards the costs of the services provided by local authorities.
Rates are normally payable by the occupiers of business premises. These will usually be either the owner if
he/she is the occupier of the property or the leaseholder.
Apart from those properties which are exempt from rates, each non-domestic property has a rateable value. nIntroductionEnglish_110406.pdf
The rateable value broadly represents the annual rent the property could have been let for on the open
Wider market on a particular date, on full repairing and insuring terms. For the current rating lists, this date was
industry set as 1 April 2008.
incentives Local authorities are responsible for calculating actual rates bills and for collecting rates and will use the
rateable value in working out how much you have to pay.
Sustainable buildings are more valuable and thus attract a higher business rate.
“The Valuation Office undertakes revaluations based on rental values prevailing at the statutory valuation
date, and if higher rents are payable for sustainable buildings, due to expected lower running costs, then the
VOA cannot help but automatically put a premium on such buildings, which in turn will lead to higher rates
Two green exemptions:
• The Valuation for Rating (Plant and Machinery) (England) (Amendment) Regulations 2001, which provides
permanent exemption for qualifying Combined Heat & Power Plant (CHP) from 1 April 2001.
• The Valuation for Rating (Plant and Machinery) (England) (Amendment) Regulations 2008 grants http://andrew-
exemption to microgeneration plant and machinery generating heat or power under certain limits and cooper.com/pdfs/Business_Rates%96not_a_green_tax.pdf
installed after 1 October 2008. This exemption is limited from the date of installation until the date the next
rating list is compiled.
However, the latter means that, unless the government decides to extend the exemption, from 2015
owners of microgeneration technologies, such as photovoltaics, solar heat, wind and micro-hydro,
will be required to pay business rates. This will act as a disincentive to install such technologies
because it will increase payback periods. It is also inequitable. An investor could be exempt for
between 1 day and 6.5 years, depending on when it is installed.
EU Emission Trading System
CRC Energy Efficiency
Climate Change Levy Refer to the Policy table for details.
taxation Climate Change Agreements
Carbon floor price
Mandatory reporting on
(Market Green Deal and Energy
Refer to the Policy table for details.
"pull" Company Obligation
Feed In Tariff
Renewable Heat Incentive
Refer to the Policy table for details.
Allowances Refer to the Policy table for details.
Domestic VAT Rebates
Stamp duty rebate for zero
Subsidies Refer to the Policy table for details.
Energy Company Obligation
Green Investment Bank
Other sources Public Sector Energy
Refer to the Policy table for details.
of funding Efficiency Loans
DECC's Innovation Fund
Category Scope (current and projected) Source
To promote the uptake of sustainable techniques or upgrades it is critical for developers, landlords, investors, tenants and
facilities managers to be able to: (a) attribute costs and financial benefits; (b) understand how those costs and benefits
apply over time, and be able to evaluate alternatives on a comparable basis across the project life cycle; and (c)
understand the basis of those comparisons.
Life Cycle Costing (sometimes referred to as Whole Life Costing) provides a basis for comparing different approaches in
terms of their likely costs and benefits over the project life cycle. There is now an international standard for Life Cycle
Costing and, in the UK, an agreed method that supports this standard. In addition, there is a common European Making the Case for a Code for Sustainable Buildings: Value &
methodology for Life Cycle Costing with a particular emphasis on sustainable construction. Business Case (UK-GBC, 2009)
Life Cycle Costing is increasingly becoming widely used in construction and property investment decision making. There is
also a growing body of data on the life expectancies and performance characteristics of buildings and their constituent
Whole life components. This data, and the analysis methods available, will support clients and decision
costing (WLC) makers in considering all costs and benefits associated with the design, construction, operation and disposal of
their buildings. A further issue is that in the UK, it is very rare that all costs associated with the lifecycle of a
Life cycle building are channelled through the same profit centre.
costing (LCC) The IGT presented the difficult reality faced by designers and the perverse incentives created by the current focus on
operational carbon. There is currently little incentive to reduce the carbon embodied in construction materials, for
example if it is cheaper to use heavy materials such as bricks from abroad than the UK, the additional carbon emissions
generated from transporting them would not be considered in an assessment of the final building. Equally, materials are
rated on their contribution to improving energy efficiency and may be selected even if their production generates more
emissions than they can save over their lifetime.
IGT IGT Action Plan, June 2011
It is therefore essential that we understand where carbon emissions are being generated in order to reduce them.
Operational approaches do not account for the emissions resulting from the manufacturing or processing of components,
their transportation, the construction process or the later demolition, recycling or disposal of waste. This whole life
approach can be extended to encompass varying degrees of the construction process, which is reflected in different
Dispersed responsibility for sustainability and climate change initiatives, inconsistent spending patterns within the same
sector and noisy marketing obscure the true extent of spending by firms on sustainability initiatives. To overcome these
challenges Verdantix created the Critical Moments model for budget benchmarking and market forecasting. We define
climate change and sustainability (CC&S) spending as:
Spending on employees, equipment, consulting, implementation services and support services directly linked to a firm’s
strategic and commercial objectives in relation to sustainability, climate change, carbon management and energy
Verdantix Critical Moments
The assessment of CC&S budgets applies explicit inclusion and exclusion criteria to provide a transparent basis for
comparison. This definition excludes spending on consumables in manufacturing (including energy), goods for resale,
investment flows, corporate transactions, large-scale renewable energy investments, financial trading of environmental
assets like carbon credits and public sector spending. The Critical Moments model only includes incremental spend (if any)
directly linked to CC&S goals for projects such as building a new
“green” data centre. Business as usual spend is excluded.
Category Scope (current and projected) Source
Despite operating in a tough economic environment, there continues to be an appetite for
sustainability among enterprises and supply chains, and from investors and other stakeholders. This
is because sustainable business is about value creation over the short to long term, and the
intentional migration toward desirable future outcomes for all groups of stakeholders.
· For investors, desirable future outcomes include sustained revenue growth, increasing earnings per share,
improving materials conversion yields, and reduced cost to serve.
· For regulators and society at large, desirable future outcomes include environmental stewardship, social responsibility,
proactive and organizationally aligned community engagement, and increasingly transparent supply-chainwide reporting of
· For consumers, desirable future outcomes include fit for purpose; reliable, price-efficient goods; and services designed with
environmental, sustainable and other constraints in mind.
· For employees in an increasingly talent-constrained environment, desirable future outcomes include workforce diversity, an
Predicts 2012: innovative and learning organizational culture, and a commitment that internal activities are matched
Achieving a in kind by the sustainability-enabling attributes of products and services.
Business Focus on
Sustainability, It is always the case, and even more so in tough times, that organizations will focus on strategies, Predicts 2012: Achieving a Business Focus on
Shareholder projects and programs that offer relatively low investment hurdle rates and rapid time to value.
Energy, Sustainability, Energy, Performance and
demands Sustainable business is no exception. In response to the prolonged challenging economic
Performance and Technology
Technology environment and increasing concerns over the price, sources and security of energy, our current
basket of predictions presents a pragmatic drive by organizations toward increases in technology enabled
(Nov, 2011) efficiency and performance.
Companies are seeking to use sustainability to improve performance and manage risk, rather
than merely comply with reporting requirements.
Energy-intensive industries, such as paper and pulp, metals, and aviation, have long had strong
capabilities in running energy-efficient operations (demand side). Similarly, many have
demonstrated strength in managing market-related risks on the supply side. They are able to
manage demand and supply, market, and reliability risks in a much more integrated way. While
these industries will continue to benefit from monitoring and investment in new and emerging
energy-related technologies rather than just relying on the tried and trusted, many are in a good
position to mitigate their energy-related costs and risks. However, the same is not true for most
other enterprises for whom energy costs and risks are not material, and as such have very limited,
fragmented capabilities, with little or no focus on supply-side options beyond basic procurement.
Even at the height of the boom market, the price of sustainability was an issue, as the cost Making the Case for a Code for Sustainable Buildings:
savings arising out of energy efficiencies were typically ignored as too small, or requiring Value & Business Case (UK-GBC, 2009)
too long a payback period.
In a recent survey undertaken for the British Council for Offices, the three factors which are expected to increase in importance
most significantly will be those relating to environmental performance, utility cost and proximity to public transport. Whilst
these shifts are not at the expense of other requirements, this highlights not only the rapid escalation of these issues as
occupier requirements in relation to other factors, but also the likely effect it will have on the supply and pricing of office
products of the future.
Offices BCO, 2011
A major increase in the requirement for low and zero carbon offices is also anticipated, but – critically – the parallel rise in the
importance of refurbished space within the overall supply mix.
(Refer to graphs in the report)
Occupiers will continue to need space which suits their operational and corporate requirements and this will largely boil down
to staff (location and skills base), location (transport and product promotion) and cost. For some occupiers their requirement
will now include space which is energy efficient and has a good environmental rating (under BREEAM or an equivalent scheme).
Many organisations, especially corporate and consumer-facing businesses, now see their buildings as fundamental to their
brand communication, staff retention and, most importantly, a visible reflection of how they do business.
CoreNet Global and Jones Lang LaSalle, 2011
The CoreNet Global and Jones Lang LaSalle Sustainability Survey (February 2011) indicates that sustainability is becoming an
increasingly important consideration for office tenants worldwide. Conducted in the fourth quarter of 2010, the results of the
international survey reveal that property executives are in the process of reconciling the focus on reducing environmental
impacts of buildings with the need to control costs and support corporate financial performance. Key survey findings are shown
Sustainability is a critical business issue today for 64 per cent of respondents
92 per cent consider sustainability criteria in their location decisions
The number of respondents willing to pay more for green leased space rose from 37 per cent in 2009 to 50 per cent in 2010. An
additional 23 per cent said they would pay more in rent if it were offset by lower energy costs.
48 per cent of occupiers would pay up to a 10 per cent premium for sustainable space, while 2 per cent expect to pay more
than 10 per cent
31 per cent of corporate executives ranked employee productivity and health as their top sustainability concern (up from 29
per cent in 2009), and an additional 11 per cent rated employee satisfaction as the most important factor
57 per cent regarded one to three years as an acceptable payback period for energy efficiency measures in owned space.
Just 4 per cent said they expect strategies to pay for themselves the first year, while 30 per cent said payback periods of three
to five years may be acceptable
Respondents still focus on energy efficiency (65 per cent) and waste recycling (61 per cent)
Green building certifications are considered by 88 per cent and energy labels by 87 per cent in administering their portfolio.
E.ON Sustainable Energy
& Self Energy
Low Carbon Workplace
Skanska / Arup / GE
Carbon Trust Implementation
Services and Siemens Financial
Collaborations Greater Manchester Low Carbon
Economic Area (GM LCEA)
Stoke-on-Trent City Council:
creating a self-sufficient city
Birmingham Energy Savers
Pathfinder Programme - Green
Scope (current and projected)
The Energy Energy Performance Guarantee delivers a guaranteed reduction in energy consumption and carbon
emissions over a partnership period that can be implemented with little or zero capital expenditure by the client.
In this way, both public and private sector buildings can make the step changes necessary without taking on the
technical risk of the project.
An Energy Performance Guarantee is a partnership between Self Energy and an energy user that allows Self
Energy to make the capital outlay required to minimise the energy costs & carbon emissions and increase the
security of energy supply for the energy user.
Self Energy will pay for (and manage where required) the optimal system containing energy saving and
generating assets and will recover this investment over a period of time through a shared savings approach. The
full savings approach and associated benefits are agreed beforehand. At the end of the contract, the energy user
benefits from the full savings for the rest of the operating life of the equipment.
A unique partnership between the Carbon Trust, developer Stanhope and fund manager Threadneedle, to
design, build and manage bespoke and contemporary offices for organisations committed to eco-friendly
The Partnership acquires buildings and updates them to provide modern, financially competitive and energy
Low carbon Workplace Ltd Works with occupiers, providing ongoing support enabling them to minimise their
carbon emissions and to achieve the Carbon Trust's Low Carbon Workplace Standard.
Skanska has formed alliances with consultant Arup and technology giant GE to target the green retrofit market.
The construction firm's strategic partnership with Arup will see the pair jointly delivering green retrofit and
refurbishment, and pilot projects are expected in 2011. Its separate partnership with GE aims to develop new
environmental technologies and processes for the sector, and it too has pilot projects in the pipeline.
Through the partnership Arup and Skanska are integrating architectural, engineering, and financial risk analysis.
Collaboration will give them the capability to:
• assess buildings, identifying how value can be enhanced through physical interventions and return on assets
improved and develop a strategy
• provide design and construction expertise
• provide managed service options and monitoring.
All companies have their sights set on a UK retrofit and refurbishment market that could, according to estimates,
be worth more than £10 billion a year.
Four leading construction industry firms have established a unique venture to create the world’s first green
retrofitting business for commercial building stock, which launched in the UK in February 2011. Brookfield
Construction joined with architectural practice Woods Bagot, engineering consultancy WSP, and M&E contractor
Mercury to create Brookfield Green. Brookfield Green combines construction, engineering and design skills to
offer a comprehensive building upgrade service, catering for a market estimated to be in the region of £500bn.
The key element of the Brookfield Green offer to clients is the finance backed guarantee of operational
performance that is the first of its kind to be offered by a contractor in the global market. The public sector is
also a significant target for Brookfield Green. With the Coalition’s pledge to be the greenest ever government,
retrofitting offers a significant opportunity to improve financial and environmental performance across the
ageing estate, valued at an estimated £370bn.
“Brookfield Green’s unique, consultative approach means that not only can we deliver returns on investment
ensure compliance with sustainable regulations, but we can also contribute to improved business performance
delivering outcomes with the potential to enhance staff health, wellbeing and productivity, as well as improving
the attraction and retention of key resources. It is our unique combination of leading engineering solutions,
construction technology and cutting-edge workplace design that will deliver real value for our clients, when
compared with traditional models of project procurement.”
Carbon Trust Implementation Services and Siemens Financial Services have combined forces and together are
offering leases, loans and other financing options to all types of organisations seeking to reduce their energy use.
The scheme is available to all kinds of businesses and organisations. Financing from Siemens Financial Services
can be arranged from £1000, and there are potentially no upper limits.
There are 6 stages to the business finance application process, from first submission through to equipment
Immediately after the equipment is installed, businesses will be required to sign a Certificate of Acceptance upon
which Siemens Financial Services will settle the payment direct with the supplier.
The programme is not supported by a specific allocation of Government funds and its delivery will depend upon
Greater Manchester’s ability to attract and deploy private investment in new and innovative ways ahead of the
UK market as whole. The Plan aims to catalyse and shape that market through private and public investment
and deliver jobs and growth while creating the necessary longer term market conditions to make significant
reductions in CO2 over the next 20 years and beyond.
Talks have already been held with the European Investment Bank and other private investment institutions and
projects are being actively developed with a number of authorities that if scaled up in sufficient quantity across
Greater Manchester could become attractive for such investors.. Discussions have been held with the HCA in the
context of their single allocation to Greater Manchester and the specific element of that programme that might
support residential retrofit. Low Carbon projects are also identified within the pipeline for the new NW Jessica
However maximising this opportunity for Greater Manchester will demand a scaling up of activity and the
development of projects into large portfolios for market investment. This will require a new and innovative
way of working on the part of AGMA, individual authorities and partners
The programme identifies how through this new way of working it will be possible to unlock a range of new
investment opportunities including:
• In social housing (which makes up 25% of the residential housing stock in Greater Manchester) securing
from the Homes and Communities Agency and seeking funding from European programmes. Through close
with a Greater Manchester consortium of RSL’s, a potential pipeline of £140m of schemes has already been
With support from the proposed Centre of Excellence districts and RSL’s will be able to take this pipeline and
a portfolio of social housing projects for both HCA and private sector investment.
• In the private residential sector, through the fast and early deployment at scale of national programmes such
Pay-as-you-Save and Feed in Tariffs.
• In the public sector - through local authorities and other bodies such as hospitals and universities working
to assemble portfolios of properties that can allow private investment opportunities that are becoming available
energy companies and others to offer up-front capital investment on the basis that there is an apportionment of
The city council is one of 17 local authorities who have been selected by NESTA (the National Endowment for
• In the commercial sector working to overcomeGovernment Group to take part in the ‘Creative Councils’ be
Science, Technology and the Arts) and the Local some of the existing difficulties to allow for investment to
programme, which aims to support pioneering councils to develop, implement and spread transformational new
approaches to meeting some of the biggest medium and long-term challenges facing communities and local
NESTA, along with the Local Government Group, will provide expert advice to the city council to help develop its
idea for how the city can fuel itself in years to come.
The city council’s idea involves using surplus fuel generation capacity within Stoke-on-Trent, from businesses and
industry, to power the city itself, reducing a reliance on externally provided energy, attracting investment by
cutting fuel bills, giving new businesses an incentive to base themselves in the city, and safeguarding existing
Birmingham City Council is planning to set up the one of the first Green Deal programmes (Birmingham Energy
Savers Pathfinder Programme or BES PP). An OJEU notice was published in July to procure a delivery partner. The
delivery partner will help guide customers through a simplified process of assessing needs and costs to identify
the measures that improve the energy efficiency of each house – insulation, glazing, heating controls, draught-
proofing, replacement heating systems. The householder will be advised which of these meet the “golden rule”
(the costs of installation are less than the savings achieved through reduced fuel costs).
The delivery partner will commission local companies to install (and maintain) these and BES PP will pay for the
work upfront. Householders will then repay BES PP over time, using the fuel cost savings to pay a fixed charge
through their energy bills. Measures funded from Feed in Tariff and Renewable Heat Incentive will also be
The numbers of installations planned in Birmingham alone are staggering – 15,000 by 2015, 60,000 by 2020,
200,000 by 2026.
One of the big questions is can the West Midlands construction industry rise to the challenge?
And the second challenge will be to find households willing to take advantage of the scheme. Often these will be
home owners already planning to renovate or extend the properties. So the second question is whether the
refurbishment suppliers and DIY retailers are willing to partner BES PP? Will they be ambassadors to home
at the time that they are most likely to take advantage of the BES PP scheme?