Hampshire County Council

Buildings Land and Procurement Panel Item *

14 July 2008

A Strategy for Managing the County Council's Built Estate in Relation to Climate Change and the Government's Climate Change Agenda.

Report by the Acting Director of Property, Business and Regulatory Services

1.0

Introductory Summary

1.1

The purpose of this report is to raise awareness and open up discussion with the Panel about the issue of climate change in respect of developing a Carbon Reduction Commitment from the County Council's property portfolio, through a series of corporate work streams. This report also draws attention to the following related climate change legislation and its impact on the built estate:

· The Government's draft Climate Change Bill (expected to receive royal assent summer 2008).

· New regulations in respect of a Carbon Reduction Commitment - Carbon Trading.

· The European Energy Performance of Buildings Directive.

· New National Performance Indicators relating to carbon dioxide emissions from local Authority operations.

1.2

The proposals contained in this report contribute to each of the Corporate priorities by enabling the development of a compliance strategy for achieving the required Carbon Reduction Commitment (CRC) relating to the County Council's property portfolio. The CRC will help to make an important contribution to reducing energy consumption carbon dioxide emissions and the global agenda on climate change.

2.0

Recommendations

That the Buildings, Land and Procurement Panel:

a) Advises the Executive Member for Policy and Resources to promote best practice and as part of the County Council's community leadership role in relation to climate change, the Acting Director of Property, Business and Regulatory Services be asked to investigate and report on how the County Council can develop and establish a body of high level knowledge and expertise to support the achievement of Carbon Reduction Commitment.

b) Note the proposals to investigate alternative energy technologies - combined heat and power at the Yateley School campus and wood fuel boiler at Hillers Arboretum.

3.0

Background

3.1

At its At its meeting on the 31 March 2008, the Cabinet received a policy and strategy report in connection with proposals by the Government to introduce a Carbon Reduction Commitment (CRC - a capped carbon trading scheme) for large non intensive energy users, such as the County Council. The Cabinet report outlined a CRC compliance strategy through targets and a series of corporate work streams aimed at reducing the County Council's carbon footprint from buildings and street lighting. Before setting carbon reduction targets the Cabinet wanted to see the corporate work streams developed further and agreed that, in respect of building matters, they should be developed in consultation with the Panel.

3.2

Other important matters that are relevant to this report relate to the fact that:

The County Council is a signatory to the Aalborg Commitment. One of the target areas for improvement against this Commitment is that of reducing primary energy consumption and increasing the County Council's share of renewable energy.

· Last November the County Council agreed to set targets and actions endeavouring to achieve a zero carbon status. This is an ambition that goes beyond the requirements of the above legislation in respect of buildings. The development of the three corporate work streams will, however, begin to identify the opportunities that can contribute to the County Council's zero carbon ambition.

· The cost of energy for County Council buildings is running at nearly £1 million per month and set to rise. For example it is predicted that the price of electricity could rise significantly when the supply of electricity contracts are renewed later this year. The Corporate Procurement report found elsewhere on the agenda provides more detail on this matter. In light of this, discussion is opened up in this report about exploring opportunities for self generation of energy and increasing the County Council's share of site based renewable energy, as a means of managing down energy costs over the long term and helping to improve the security of future energy supplies.

4.0

SECTION 1: AN OVERVIEW OF NEW CLIMATE CHANGE LEGISLATION

4.1

Draft Climate Change Bill - A Brief Overview

4.1.1

Following its Energy White Paper in 2007, the Government is planning to introduce a Climate Change Bill that will set legally binding carbon dioxide (CO₂) emission reductions targets in the UK. The Government is targeting 60% reduction in CO₂ emissions by 2050 with real progress by 2020. The draft Climate Change Bill is widely expected to receive royal assent later this year. This Bill will become a piece of over-arching legislation from which other regulations will be made. The first of these regulations are planned to be introduced later this year in respect of requiring large non-intensive energy users, such as the County Council, to enter into a Carbon Reduction Commitment (capped carbon trading scheme).

4.2

Carbon Reduction Commitment

4.2.1

The Cabinet received a detailed report in March 2008 outlining the Government's proposals for introducing a Carbon Reduction Commitment (carbon trading) in respect of large non-intensive energy users such as the County Council. That report can be accessed using the following link I:\Property Business & Regulatory Services\Shared Folder\Cabinet Climate Change Report A briefing for Members was provided on the 27 June 2008 in order to explain the impact of carbon trading on the County Council. This report outlines the salient points of carbon trading but its primary purpose is to inform the Panel about developing the three corporate work streams agreed by Cabinet. See Appendix 1.

4.2.2

Although the regulations have yet to be finalised, the Government's carbon trading scheme will require the County Council to compete with other private and commercial sector organisations for available CO₂ emissions allowances from 2010. The carbon trading scheme will apply to energy used in buildings and street lighting. At this juncture it is not clear if schools will be mandated into the scheme.

4.2.3

From 2010 there will be an initial introductory period whereby available CO₂ emissions allowances can equal actual emissions. From 2013, the Government will apply a cap reducing the available allowances as a means of encouraging large non-intensive energy users to cut their carbon outputs. No allowance will be made in this scheme for the purchase of "green" electricity and off site generation of energy supplies but renewable energy generated on site will count as a carbon reduction.

4.2.4

It is anticipated that the cost of purchasing CO₂ emissions allowances will be at the rate of £12 per tonne of CO₂. It is conceivable that this figure will rise over time. Based on present assumptions the cost of carbon trading for the County Council is estimated to cost around £1.2 million per year. The cost of any carbon abatement measures will be additional to this trading cost. Most of the costs connected with carbon trading should be recycled back to the County Council in the year in which carbon allowances are purchased. There is however, an opportunity/risk that the County Council will get back more/less than the cost of purchasing it's carbon emissions allowances, depending on its position in a performance league table. In effect the performance league table will establish a `polluter pays' principle whereby those organisations that appear low in the league table end up paying more for carbon allowances than those organisations that perform well. An organisation's position in the league table will determine the amount of revenue recycling that it receives, which could be up to plus or minus 50% of the annual cost of carbon allowances. It will be important to note that an organisation's position in the league table will be affected not only by its own performance but on the relative performance of other organisations in the trading scheme

4.2.5

The report to Cabinet identified three corporate work streams to help ensure the County Council develops a CRC compliance strategy. It was agreed that these work streams should be developed through this Panel. A later section of this report details the progress in developing the corporate work streams and the support required from the Panel.

4.3

European Energy Performance of Buildings Directive

4.3.1

It is estimated that nearly half of all carbon emissions in the UK come from buildings. The principle underlying this Directive is to make energy efficiency transparent by the issue of an Energy Performance Certificate (EPC) on the sale, rent or construction of a building. An EPC will show the energy rating of a building and be accompanied by a report making recommendations on how to improve it's energy efficiency. Once produced an EPC is valid for ten years.

4.3.2

For public buildings over 1,000 square metres, a Display Energy Certificate (DEC) is required. A DEC will illustrate an energy performance of a building, expressed as a rating from `A' (best) to `G' (worst), similar to that use in rating the performance of "white goods". Appendix 2 gives an example of a Display Energy Certificate. A DEC has to be renewed every year and be accompanied by an energy report that lasts for up to seven years. It is estimated that up to 400 buildings will require a DEC.

4.3.3

This Directive must be fully implemented by October 2008 and all EPC's, DEC's and their associated reports have to be registered with the Secretary of State.

4.4

New National Performance Indicators 185 and 194

4.4.1

These two national indicators require carbon dioxide and nitrous oxide emissions to be measured in relation to Local Authority operations and for year on year improvements to be established. They are part of a set of new National Performance Indicators that will be used to assess the County Council's performance under the Audit Commission's Comprehensive Area Assessment (CAA) framework. NI 185 and 194 will cover buildings, including schools, street lighting and transportation. Coverage is also extended to outsourced operations. As part of the CAA framework it has been decided that the County Council will co ordinate the collection of data for NI 185 and NI 194 with all district and borough local authorities in Hampshire. Property, Business and Regulatory Services will lead on these two National Indicators across departments. This will require professional and support time to collect data, establish a new data base and coordinate with the district and borough local authorities.

5.0

SECTION 2. CORPORATE WORK STREAMS:

5.1

Corporate Work Stream 1: Raising Awareness and Promoting Good Local Energy Management. Changing Behaviour

5.1.1

Whilst this work stream will have one of the lowest capital outlays, in many ways it is one of the more challenging work plans as it has to influence long term behaviour of the County Council's staff and local managers. Given that schools consume over 50 % of the total energy used in buildings (see Appendix 3), a starting point would be to work with schools in respect of improving local energy management. From discussions that have already taken place between PBRS and secondary school headteacher representatives, schools are keen that such an initiative is pursued.

5.1.2

It is therefore proposed that the Carbon Trust be engaged, as a corporate initiative, to work closely with three pilot secondary and primary schools in order to build a detailed understanding of how and where energy is used and the opportunities for managing energy more efficiently. This pilot study will be used to engage with both staff and pupils and the out puts used to inform other schools of best practice. The lessons learned will be used to help establish local energy champions and inform future governor training events in respect of energy management, thus helping to fulfil two further elements of Corporate Work Stream1. The areas of energy use that will be scrutinised in the schools study include:

· Meter reading and monitoring energy consumption by local managers

· Implementing energy awareness and targeting

· Investigation of sub metering

· Switch off policy

· Lighting improvements and controls

· Improving efficient use of IT and other equipment

· Upgrading heating controls

5.1.3

As a further corporate initiative it is also proposed to work with the Carbon Trust in respect of their spend to save Salix programme using the outputs from the three schools pilot study to help determine best areas of investment. Salix is a financial arm of the Carbon Trust offering grant match funding for energy saving measures. One stipulation of the Salix spend to save initiative is that the value of the energy saved has to be put back into a ring fenced pot, over a 5 year period, for investment in further energy saving measures. Again this has been discussed with headteacher representatives who have asked that we help them to develop a business case for utilising available Salix grant funding.

5.1.4

This will leave two remaining areas of significant work within Corporate Work Stream 1:

· Develop a corporate energy policy

· Improving meter reading and billing information.

5.1.5

Subject to agreement with the Panel it is proposed to work with the Carbon Trust and the Director of Environment in order to establish a corporate energy policy for the County Council. As a starting point, an energy policy for the County Council will consider the following:

· Best practice in end energy use. Article 5 of European Directive 2006/32 (Energy End-Use Efficiency and Energy Services) require local authorities to be exemplars in end energy use.

· The contribution that the procurement of energy has in helping the County Council to fulfil its zero carbon ambition.

· Opportunities for exceeding Building Regulation thermal performance standards as part of Capital Programmes.

· Improving the thermal performance of existing buildings and equipping the existing built estate with renewable energy.

5.1.6

The Government's 2007 Energy White Paper sets out an ambition for having smart metering within 5 years for large businesses not already subject to half hourly metering. It is proposed to seek early engagement with the energy utility companies in connection with improving meter reading and to reduce the reliance on estimated bills. It is proposed that this piece of work is undertaken in conjunction with the County Treasurer and IT Services in order to explore improving the link between utility company billing and the County Council's financial systems.

5.2

Corporate Work Stream 2: Small and Medium Scale Capital Investment Opportunities to Improve and Upgrade Existing Buildings

5.2.1

This is a work stream that is principally looking to capitalise on many of the initiatives that the County Council is already doing. To some extent this is about repackaging existing work programmes in such a way as to secure reductions in primary energy use and CO₂ emissions. In other words, working within the existing resource base.

5.2.2

Improving The Thermal Performance of New and Existing Buildings: Appendix 4 gives a profile of the built estate, in terms of its thermal performance, from which it can be seen that 78% of the property portfolio was constructed before thermal performance standards were a requirement of the Building Regulations. The County Council's capital programmes for new and refurbished buildings over the last 7 years account for just 10 % of buildings meeting modern day thermal performance standards and only 3% of new buildings meet the very latest Building Regulation thermal performance standards. This appendix highlights the challenges ahead in seeking to lower the carbon footprint from the existing built estate, particularly against a trend of rising energy consumption.

5.2.3

Using Existing Capital Funding Streams: It can be argued that the annual Landlord's capital repairs programme has the potential to contribute up to 700 tonnes of CO₂ emissions saving per year at present programme values. This has to be seen against a background pressure of building users increasing energy consumption in respect of things like the extended schools agenda and increased use of the County Council's assets for community purposes. Future Landlord's programmes should be used to achieve energy and CO2 emissions reductions.

5.2.4

Current Building Regulations require new and substantially refurbished buildings to achieve approximately 25% carbon emission improvement over the previous 2002 Regulations. Current designs will achieve this standard, but it should be noted that the Building Schools for the Future programme demands a 60% improvement over the 2002 standards which will be a challenging target. Future funding through the BSF programme will be dependant on the County Council being able to demonstrate at least this 60% reduction in carbon emissions. Appendix 5 provides information about some of the initiatives being employed to improve the energy performance of new buildings. In addition it is intended to identify a future new primary school project in Hampshire to explore the implications for meeting these target reductions on the primary capital programme.

5.2.5

Spend to Save External Funding Opportunities: As mentioned in paragraph 3.1.3 above, the Carbon Trust operate a Salix spend to save grant funding scheme. The total available grant is in the order of £1Million to £2Million and has to be match funded. Eligible schemes for Salix funding must have pay backs of around 5 years and at least 60% of the value of energy saved must be put back into a locally managed pot and reinvested in energy saving measures. Agreement of the Panel is sought to work with the Carbon Trust in order to develop a business case for accessing the Salix spend to save fund. Schools have indicated their interest in taking part in such a scheme. A progress report regarding the Salix scheme will brought to a future meeting of the Panel.

5.2.6

Bio Fuels Grant: Defra is currently inviting bids against a £4 Million grant fund in connection with bio fuel projects. The bid covers up to 40% of the extra over cost of utilising new bio fuel plant rather than conventional fossil fuel plant, but not infrastructure costs such as new boiler rooms. Subject to agreement with the Panel, it is proposed to submit a bid against this Defra fund in the autumn for a new wood burning boiler at Hilliers Arboretum in respect of the Jermyns House suite of buildings. Such a scheme builds on the experience gained from the installation of the wood fired plant at the Queen Elizabeth Country Park, and would be a good demonstration project for the use of sustainable bio fuels. It could also become part of the visitor attraction and support learning and development for the future. Such a project would also have the benefit of removing an existing environmental risk from oil pollution (spillage/leakage) associated with the existing heating system in this environmentally sensitive area. Appendix 6 illustrates an initial financial appraisal in readiness for making a bid to Defra this autumn.

5.2.7

Solar Energy Opportunities: A number of schools are being approached direct with offers of specialist grant funding for the installation of Photo Voltaic (PV) and Solar Thermal systems for small scale generation of electricity and heating for hot water. An approach has also been made to PBRS by the Portsmouth Sustainable Energy & Climate Change Centre (PSECC) to undertake feasibility work looking to roll out solar energy technology across a large number of schools in Hampshire. The Building Research Establishment (BRE) and other agencies/government appointed framework contractors are offering similar services to schools. It is therefore proposed that PBRS work with the BRE, PSECC and other agencies and report back to a future meeting of the Panel regarding the opportunities for this type of on site generation of solar energy.

5.2.8

Blueprint For Improving Existing Buildings: In order to help guide sustainable investment in the existing building stock for the future, the department will be committing professional resources to undertake feasibility work to examine the opportunities for improving the thermal performance of SCOLA school buildings. The feasibility work will examine options for:

· Improved thermal performance of the building fabric

· Efficient heating and controls

· Efficient lighting

· Options for adapting buildings for climate change, i.e. solar shading

5.3

Corporate Work Stream 3: Strategic Capital Investment - Major Strategic Opportunities for Energy Savings and Generating Renewable/Alternative Energy

5.3.1

This is a work stream that not only looks at improving the energy/thermal efficiency of the property portfolio but also is starting to take a longer term view of how the County Council acquires its energy in the future. By their very nature these are higher risk strategies. The main drivers for raising discussion around this subject are:

· The County Council's Aalborg Commitment in reducing primary energy consumption and increasing its share of renewables.

· The County Council's desire to achieve a zero carbon status.

· The cost of energy

The cost of energy is becoming a more important driver. Appendix 7 A and B examines the trend in energy consumption and actual cost of fuel over the last fifteen years. Since LGR (Local Government Review) in 1997, an increased energy consumption for gas has been matched by a decrease in the consumption of oil. The trend in the consumption in electricity is showing a steady increase since LGR. What these graphs illustrate is the fact that despite all the work that has been done to improve the thermal performance of buildings over the last 10 years, physical energy saving measures are being out paced by rising fuel consumption and costs. The reasons for this overall increase in energy consumption will relate to things like the extended schools agenda, greater community use of the County Council's buildings and an increase in the use of electrical equipment, particularly in respect of IT.

5.3.2

Strategic Property Review: Members will be aware of the Strategic Property Review and its potential to improve the efficiency of the property portfolio, by the County Council rationalising its property holdings and through new ways of working. It is too soon to estimate the extent of energy/CO₂ emissions savings this will generate. However as an indication of what can be achieved, the Ashburton Court project is on target to save 50% carbon consumption per square metre.

5.3.3

Building Schools For The Future (BSF) Investment: BSF is an opportunity for the County Council to receive multi million pound government funding for investment in the rebuilding and refurbishment of secondary schools in Hampshire. As detailed in the BSF report found elsewhere on this agenda, the County Council was unfortunately not successful in the first wave of funding for eight schools in the Havant area. The next round of applications will be early in 2009 and the County Council will be undertaking preparatory work to put it into a strong position. BSF funding will come with a requirement to improve the energy efficiency and thermal performance of new and refurbished secondary school buildings. A target has been set by the Department for Children, Schools and Families (DCSF) that BSF projects are to achieve a 60% improvement in the energy/thermal performance of buildings, over and above the standards laid down in the 2002 Building Regulations. This will present some major challenges and is starting to point the way to the development of a significant element of renewable energy technology as part of the BSF programme.

5.3.4

Investigation of combined heat and power CHP Technology: CHP is the co-generation of heat and electricity in which the spare heat that is produced is used for hot water or heating a building and has the advantage of being classified as on site generation of energy for carbon trading purposes. Members will recall a report to the Panel in October 2007 regarding the use of CHP at the Yateley schools site. At the time it was felt that proposals for CHP plant was not viable. Given the rise in energy prices it is proposed to look at this proposal once again.

5.3.5

Exploration of other Alternative Energy Generation. Due to the increasing trend in energy consumption and energy prices, agreement of the Panel is sought to commit professional time to explore with the Carbon Trust opportunities that may be available to the County Council to generate it's own energy. The Carbon Trust's activities span across a number of complementary business areas including "Innovations" that help to develop low carbon technologies and "Enterprises" that help to develop partnerships for alternative energy generation.

5.3.6

Consultation with Local Member

Councillor A. Collett has been consulted on the use of CHP at the Yateley Schools site and his views will be reported at the meeting.

Councillor M. Cooper has been consulted on the wood burning boiler at Hillier's Arboretum in respect of the Jermyn's House suite of buildings and his views will be reported at the meeting.

6.0

Conclusion

6.1

6.2

It is anticipated that the pressures from new climate change legislation and carbon trading will have an increasing impact on the County Council's operations through it's property portfolio.

The County Council should play an important community leadership role in relation to carbon change, and should explore ways of helping to manage down energy costs and CO₂ emissions over the long term and improve the security of energy supplies. It is essential that the County Council engages in some degree of experimentation and risk taking if it is to be at the forefront of innovation and leadership on climate change issues.

LINK(S) TO CORPORATE STRATEGY

Yes

No

Hampshire safer and more secure for all

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Maximising well-being

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Enhancing our quality of place

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