Sheila Irvine: No more playing nice over energy efficiency

Leading the charge with this spirit of collective global responsibility is Scotland, where The Climate Change (Emissions Reduction Targets) (Scotland) Bill, completed Stage 1 of its passage through Scottish Parliament on 2 April. It aims to maintain Scotland’s place among countries at the forefront of global ambition on reducing greenhouse gas emissions.

The Bill proposes more ambitious targets than those set by the Climate Change (Scotland) Act 2009, with the headline changes being a reduction in Scotland’s greenhouse gas emissions of 56 per cent (relative to the 2009 Act’s baseline levels) by 2020, and 90 per cent by 2050.

The Bill also allows for the setting of a target date for a 100 per cent reduction, known as the “net zero” target. Discussions of what this target date might be are expected during Stage 2 of the Bill, following publication of a report by the UK Committee on Climate Change, anticipated in early May.

EDINBURGH,SCOTLAND - APRIL 16: Climate change protesters block one of the main roads into Edinburgh's city centre on April 16, 2019 in Edinburgh, Scotland. Supporters of Extinction Rebellion Scotland targeted North Bridge as part of the Extinction Rebellion, which has taken place in a number of cities across the UK. (Photo by Jeff J Mitchell/Getty Images)

A big part of the drive on emissions involves taking a closer look at improving the energy performance of the country’s older non-domestic building stock – indeed it is a central component of the Scottish Government’s climate change policy.

Generally speaking, and subject to certain exemptions and exclusions, the Assessment of Energy Performance of Non-domestic Buildings (ASEP) Regulations apply to non-domestic buildings with a floor area greater than 1000 square metres and which fail to comply with 2002 building standards. The regulations are triggered on sale or lease and oblige owners to make an “action plan” available to prospective buyers or occupiers.

Action plans (prepared by registered advisors in collaboration with the owner following a building assessment) set out a programme for implementation of energy performance improvement and emissions reduction measures. Where the advisor identifies a need for physical improvement works to be carried out, these must be set out in the action plan.

If an action plan contains a statement that “operational rating measures” are required, the owner can choose to defer carrying out any physical improvement works by arranging instead to record and report actual emissions and energy use via a Display Energy Certificate on an annual basis. Where the owner opts for physical improvement works, 42 months is allowed to carry out the work. Local authorities are responsible for enforcement of the ASEP Regulations, and have power to impose a penalty charge of £1000 for failure to comply.

The current approach in Scotland, where owners are encouraged rather than compelled to carry out works to improve energy performance, is quite different England and Wales where the “MEES regulations”, (short for “Minimum Energy Efficiency Standards”) impose restrictions on landlords wishing to let buildings in England and Wales with an EPC rating below E. Generally speaking, owners of commercial premises with an EPC rating of F or G have been prohibited from granting new leases since 1 April 2018, and will be prohibited from continuing to let such premises under an existing lease from 1 April 2023.

Given Scotland’s ambitious climate change targets it comes as no surprise that the current “light touch” approach looks set to change.

In May 2018, the Scottish Government published an “Energy Efficiency Routemap” which discusses the possibility of extending the scope of the ASEP Regulations to require mandatory assessment and improvement of energy performance of all non-domestic buildings, with phased target dates by which different sizes of buildings must be assessed to identify works required to achieve a specified standard of energy efficiency.

Although a public consultation on the detail of the proposals is expected to take place in 2020, the Routemap hints that the Scottish Government are considering setting a target date of 2026 by which all buildings with a floor area of over 1000 square metres must be assessed and improved (to the extent that is technically feasible and cost-effective), with the intention being that buildings of all sizes must be assessed and improved by 2040. If these ambitions are realised, the property sector will have made an important contribution towards Scotland meeting its climate change targets in the years to come.

Sheila Irvine is a partner, DLA  Piper