Buildings boost global warming
Copyright: David Lawson - first published Financial Times November 1994
The disappearance of belching smokestacks is generally seen as a sign of how far we have progressed towards a more efficient, civilised society. Few would accept living and working in such conditions today. But most of us still do. Gleaming modern factories, warehouses - and even homes and office blocks - pour out a noxious flow of wastes. We just cannot see it. Buildings emit twice the amount of carbon dioxide as vehicle exhausts, making a major contribution to fears about global warming.
This has led to a major rethink by the government in the light of pledges under the Montreal Protocol to cut C02 emissions over the next decade. Housing, for instance, which consumes half the UK's gas and a third of its electricity, has been uprated under new building regulations. Ministers claim this will increase energy efficiency by 20 per cent, with a corresponding reduction in emissions from their chimneys and power station stacks.
Factories face a similar tough regime, but the ubiquitous office block has proved more of a problem. Air-conditioning appears to be a minor irritant, contributing less than 1 per cent of the UK's carbon dioxide output. Yet it has become a symbol of energy excess in the commercial sector. Designed to cope with the extra heat generation of electronic equipment, developers insist it is necessary in town centres, where windows must remain sealed against dirt and noise. But such energy-hungry techniques became almost a standard fixture during the property boom no matter where buildings grew.
Building regulations aimed at restricting this growth were shelved earlier this year - but only for further investigation into workable rules. Progress is more likely to come from the bottom up, however. Almost 90 per cent of occupiers in a study by property consultants Richard Ellis said they did not want air-conditioning. A few years ago such complaints might have been ignored. Tenants had to take what they could get when space was in short supply. Nowadays, the boot is on the other foot. In a market awash with empty buildings, landlords are desperately trying to anticipate what will attract occupiers.
Air-conditioning will not disappear. Fund managers who have a stranglehold on development of new buildings insist that it is essential for modern working conditions. And Mike Warner, a senior partner with Richard Ellis, admits that occupier complaints probably stem from poor maintenance and design.But air-conditioning is only part of a growing demand among occupiers for cheaper accommodation. These complex networks of ducts and fans add not just to building costs - which push up rents - but can also add 30 per cent to service charges, according to another property consultant, Jones Lang Wootton. The pendulum is now swinging towards buildings which more closely match occupiers' needs. Heating and ventilation should be both more user-friendly and energy-efficient in future.
But with so little development taking place, it is hard to find examples of this change in approach. One is a striking glass and steel block going up at Finsbury Pavement in the City of London. The 125,000 sq ft of offices over a Marks & Spencer store is being watched closely by the property industry, as this is the first major speculative development in the City since the crash. Developer London & Manchester called in two pioneers in energy-saving design, engineer Ove Arup and architect Sheppard Robson. The building makes maximum use of natural light - one of the major demands by occupiers in the Richard Ellis survey - controlling solar gain through a system of external louvres which automatically adjust to internal temperatures.
More significantly, however, this has been balanced by "low-tech" method of cooling called d chilled ceilings, a technology widely used on the Continent but ignored in favour of energy-hungry variable air volume (VAV) systems in the UK. Other developments are also on the drawing board which show how developers are adjusting to tenant demand. Sheppard Robson is also working up plans for a 140,000 sq ft block in Croydon for Norwich Union with a different cooling system which could cut normal energy costs by 30 per cent. Meanwhile the same partnership is considering chilled ceilings for an office block in central Leeds.
Another major investor, the Prudential, may test these waters with a 250,000 sq ft development in Reading being prepared by Tim Battle, a veteran campaigner for energy-saving with engineers Rybka Smith Ginsler and Battle. The whip-hand lies with occupiers, however. Most developers will not start building until they snare a tenant attracted by such low-energy offers. London & Manchester has more friendly economics on its side, as it pocketed £75m for the City site in the boom and then reacquired it for £17.5m in 1992.
Even if tenants swarm in, however, more efficient new development will hardly dent the total energy bill of commercial buildings as a whole. More significant is the constant upgrading by a host of specialists. AHS Emstar, for instance, claims it can reduce energy costs by up to 30 per cent by anything from replacement of heating systems to changing the mix of fuels used. Emstar cut the energy bill for Hoover in South Wales by £750,000 a year, while British Gas saved Inco Alloys in Hereford half its costs by designing new equipment. Groups like NatWest and Bass have ordered energy audits on all their property, says Ken Ordish of ESS Projects. One of his biggest clients is the health service, as new trusts work their way through hospitals which have thrown money away on poor heating systems for decades.
This kind of energy-saving is likely to accelerate over the next decade. Occupiers who got into the habit of examining costs more closely during the slump are now anticipating heavier fuel taxes because of wordldwide moves against global warming. This is proving a fertile area for energy consultants, particularly with the fierce competition between gas and electricity suppliers since privatisation. Like office tenants, companies no longer accept what they are offered often using brokers to bargain with energy-producers for the best tariffs.