Legislative update
Since our last edition of the Global Sustainability Perspective on sustainability legislation for the property sector there have been a number of changes for the countries we covered. You will be able to find an update in the section below. Most changes apply to legislation for energy efficiency and carbon emissions, although there is also one important potential change for corporate reporting legislation.
Global / United Nations
In preparation for December's global Climate Summit in Durban, South Africa, participants in a recent meeting in Bonn, Germany, concluded that the current commitment levels of countries worldwide will still exceed the 2°C limit on global warming over the coming decades. What is more, recently published calculations by the International Energy Agency (IEA) forecast a rise in global warming by over 3° C over that period. This puts additional pressure on nations to agree to prolonging the current Kyoto Protocol for a second period, after 2012, or to find a successor instrument that obliges countries to decrease their carbon emissions and to help fund developing countries finance their efforts in combating climate change.
UK
A piece of legislation with significant implications for the commercial and residential property sectors is currently going through the UK Parliament – the Energy Bill. As at the end of June two new developments had taken place:
- The Bill now contains a duty on government to bring forward regulation which will prevent the leasing of the worst performing property from 2018. The detail is not prescribed in primary legislation but Ministers have indicated that “worst performing property” will mean all buildings which are EPC-rated F or G, and therefore landlords will need to invest in energy efficiency improvements to upgrade them.
- Zac Goldsmith, a Member of the UK Parliament, tabled an amendment to the Bill, which, if accepted, would require the UK Government to legislate to make Display Energy Certificates (DECs) mandatory for all commercial buildings within 12 months of the Energy Bill becoming law. DECs provide the actual energy consumption and performance of a building. While this amendment still faces the challenge of being agreed during Report stage, it is a significant development.
The UK Department of Energy and Climate Change hopes that the Energy Bill will achieve Royal Assent in July 2011. We will provide a full update on the implications of this legislation in the next edition of the Global Sustainability Perspective.
In another important development, the corporate reporting of greenhouse gas emissions may also become mandatory by 2012. Moving a critical step towards this decision, in May 2011 the UK Government opened a consultation on the different mandatory reporting options for greenhouse gas emissions. These options are as follows:
Option 1: Enhanced voluntary reporting
Option 2: Mandate under Companies Act for all quoted companies: around 1100 companies would be covered by this option.
Option 3: Mandate under Companies Act for all large companies: this will include large private companies as well as quoted companies, i.e. between 17,000 and 31,000 large companies in the UK.
Option 4: Mandate under Companies Act for all companies whose UK electricity consumption exceeds a threshold: this would potentially be linked to the qualification criteria in the Carbon Reduction Commitment Energy Efficiency Scheme (CRC).
The consultation is due to end on the 5 July 2011 and Jones Lang LaSalle will be submitting a detailed response to the consultation and impact assessment. Jones Lang LaSalle favors Option 3 as we consider it will deliver an enhanced understanding of carbon liabilities by finance teams, is fairer for public and private entities and will drive the greatest aggregate carbon reductions in the UK.
France
As part of the French “Grenelle” Environment Laws, every building permit application will require the developer to provide certification that the new, and very strict, building energy code has been fully integrated into the building design. This obligation enters into force on 28 October 2011 and applies, initially, to all commercial office and education buildings. Further certification will also need to be provided on completion of the building. Under current regulations, the authorities had assumed that applicable building energy requirements were respected without confirming that was the case.
China
To improve the energy performance of existing buildings, the Chinese Central Government will provide a subsidy of 20 Yuan (US$3) per square meter to revamp public buildings in selected cities to reduce energy consumption by more than 20% in five years, the Ministry of Finance said.
The Beijing Municipal Government is inviting international organizations to participate in drafting the “Beijing Green Building Design Standard.” The standard will be completed in early summer 2011 and officially released by the end of this year.
India
The Central Electricity Regulatory Commission under the Government of India is introducing Renewable Purchase Obligations applicable to various utilities. For the of state of Maharashtra (Capital Mumbai), for example, utilities that fall under this obligation need to generate at least 9% of their electricity from renewable energy sources by 2014, of which 0.5% from solar energy.
Canada
The Canadian federal Government published its Sustainability strategy in its recent report “Planning for a Sustainable Future” which targets greening its Government operations. One of the key measures that will come into force from 1 April 2012 is aimed at new construction, build-to-lease and major renovation projects. These buildings will need to achieve LEED NC “Gold” or Green Globes Design “3 Globes” performance levels.