This post was first published in CityMetric.
Launching the countdown to the COP26 climate talks last week, the prime minister was right to say climate action presents a huge industrial opportunity, one that can drive “our national agenda of uniting and levelling up our country”. The UK’s success in renewable energy is a clear example of what real policy ambition can achieve.
So why are we not taking even the most basic steps in other areas? One obvious target is the shocking level of energy UK offices and commercial buildings still waste, where there has been little improvement since the early 2000s.
Energy waste is costing businesses millions
In the financial district of the City of London, Green Alliance estimates that, every year, offices are wasting the equivalent energy used to power over 65,000 homes. That’s a similar number to the entire housing stock of the London Borough of Kingston upon Thames. This waste is costing City businesses £35 million a year and generating the same annual carbon emissions as 46,000 cars every year.
This seems hard to explain, particularly when cheap and readily available digital technologies can help businesses track and modulate their energy use. AI optimisation systems have been shown to cut energy use by as much as 14 per cent in commercial buildings and pay for themselves in just a few months.
Yet companies often find it hard to identify the inefficiencies in their operations, and don’t have the strategic foresight to feel comfortable with longer payback periods. What’s needed to change this?
Local industrial strategies could support the shift
With over 65 per cent of local authorities now having declared climate emergencies, there is a strong political mandate for innovative local solutions.
The local industrial strategies mayors and others are publishing could provide targeted support for business energy efficiency measures. Cities like Bristol, which are already pioneering adoption of smart energy systems, should take the lead on this. Green Alliance estimates that Bristol’s offices could save nearly £2 million on energy bills within a year by using energy optimising AI systems. A similar programme in cities with bigger business districts could save more, with estimates of £3.3 million in Manchester and £2.6 million in Leeds.
Some councils already have powers to raise funding for this through a supplement to larger companies’ business rates. The Greater London Authority used this approach to fund Crossrail and the Greater Manchester Combined Authority is considering it to fund the retrofit of commercial buildings. This could help to channel funding into local clean growth, stimulating the market for energy efficiency and enabling local supply chains for smart energy and sustainable construction to expand.
But success will be limited if there isn’t support at national level too. In its 2017 Clean Growth Strategy, the government committed to improving business energy efficiency by at least 20 per cent by 2030 but it has yet to set any policy to deliver on that.
Australia is ahead on office energy efficiency
A key failing of the system at the national level is that building efficiency is estimated rather than measured, with actual carbon emission up to ten times higher than usually assumed.
A successful scheme in Australia has proved it is possible to spark radical change. The National Australian Built Environment Rating System (NABERS) has cut the energy use of office buildings across Australia by nearly 40 per cent over 13 years, using a rating systems based on their actual performance in use and by promoting digital solutions to save energy. The better understanding this has led to has also improved the design of new buildings. Newly built prime offices in Melbourne use less than half the energy per square metre of similar new offices in London. Before the scheme, they were comparable.
Rather than trusting in “sheer determination and technological optimism” to do the magic, as the PM was implying last week, the government should be doubling down on this agenda. Boosting business energy efficiency would help UK businesses save £6 billion a year by 2030 – a welcome shot in the arm and a route to “levelling up our country” by raising resource productivity in parts of the UK where the economy is lagging behind.
It would also be one of the most basic steps to cut our climate impact and, alongside action on transport, agriculture and housing, a vital measure to get the UK on track towards net zero. If the prime minister wants the rest of the world to come with us and ensure the UK is seen as a credible host of the COP26, we should really be getting our house in order, starting from the basics.