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Landlords and retailers join forces to prepare for carbon tax

An estimated 5000 businesses will be affected by the legislation, many of them large landlords such as Westfield and British Land who will have to work with their retail tenants to forecast emissions and buy allowances for those emissions. Similarly, large occupiers, such as Marks & Spencer and Barclays will have to do the same.

Traditionally, energy has not been one of the more significant operating costs for offices and shops. But from April 2010, the CRC will allocate a price of £12 per tonne of CO2 from the start of the scheme making energy costs much more relevant to the bottom line. After three years allowances will be auctioned, meaning the price could rise – resulting in a league table of carbon winners and losers. Depending on where they sit in the table, organisations could face either a net cost or gain of between 1-3% of their total energy bill.

The BCSC, BPF and BRC have published a guidance paper providing a general overview of the CRC as well as setting out the timetable for its introduction. The guide provides simple advice to those affected and points businesses to more detailed information.

This guide will be followed in the spring by further advice for landlords and tenants on how to apportion the costs and benefits of the scheme between both parties.

Jeremy Collins, BCSC president and head of retail development at John Lewis said: “BCSC welcomes measures that encourage businesses to improve their energy performance, and while we acknowledge that there are significant pressures on the industry in the current economic climate, we cannot afford to be complacent about sustainability issues in the long term.

“We have launched this awareness-raising campaign to try and fill the significant gap in information and understanding about the effect that the CRC scheme will have across the retail property industry.

“Because of the way the CRC has been structured – using the principle of ‘polluter pays’ – there are some quite complex issues relating to the responsibilities of both retailers and landlords. This will be especially challenging in shopping centres where there are multiple tenants and common areas, which is why we will continue to work with the BPF, BRC and other industry bodies to provide quality advice to ensure the scheme is implemented in as practicable way as possible.

“We are urging occupiers in particular to assess whether they will be caught by this scheme and start putting the systems in place to collect their annual energy consumption data.”

Liz Peace, BPF chief executive, said: “Many landlords supply energy to their tenants as a service. In such cases, they will have to work constructively with their tenants to reduce energy use and therefore costs under the CRC. We are currently working with the Government and a range of other bodies to find a practical way for this to happen.”

Charlotte Eddington, CBRE’s Energy and Sustainability Director for EMEA said: “The property industry welcomes the release of guidelines on the CRC. It is going to be a complicated scheme in many respects and raising awareness and educating key stakeholders is extremely important. The sooner that business begin to deal with the implications of the scheme, the easier it will be for them to manage their risks and manage their energy usage accordingly.”

The BCSC, BPF and BRC guidance note – The Carbon Reduction Commitment: An Overview – is available to download from BCSC.

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