Greening Government - Environmental Audit Committee Contents


Memorandum submitted by Boris Johnson, Mayor of London

INTRODUCTION

  1.  The Mayor of London welcomes the opportunity to provide a written submission to the Environmental Audit Committee. The Mayor, along with his Director of Environment—Isabel Dedring, has an ambitious environment agenda to meet challenging targets including the reduction of CO2 emissions from buildings across the Capital.

  2.  The Mayor believes progress on reducing buildings emissions across the public sector has been underwhelming so far. This has been exacerbated by the lack of national solutions to deliver improvements at a large scale.

  3.  The Greater London Authority (GLA) is eager to tackle the problem of building emissions and have developed and piloted an innovative commercial model to retrofit buildings. This uses guaranteed energy savings from energy services companies to enable the funding of initial improvement costs at effectively zero net cost.

  4.  The GLA is currently working to rollout this approach across London and will make it open to all public sector organisations.

VIEWS ON CURRENT PERFORMANCE & AMBITION

  5.  A good way to view the current poor performance of government buildings is through the Operational Rating on a building's Display Energy Certificate. The Sustainable Procurement & Operations on the Government Estate Delivery Plan Update—December 2008, showed nearly 40% of buildings across the public sector received the lowest possible rating of G.

  6.  The GLA have undertaken significant engagement across London in developing a programme to help tackle emissions from non-residential buildings. We found little evidence of public sector organisations being under any notable central government pressure to improve or having clear programmes in place to drive significant improvements. Where drivers did exist these appeared to be internally created.

  7.  Numerous projects, often supported through Carbon Trust work, are happening but these tend to be extremely small-scale compared to the organisations overall property portfolio and often only cover one or two measures in a single building. The overall impact against total energy consumption was likewise extremely small.

  8.  The seventh annual Sustainable Development in Government assessment (SDiG) stated encouraging improvements. However, given large savings have been driven from estate rationalisation, this could show a significant lack of ambition regarding energy on retained building stock given the possible emissions savings of over 25% that have been demonstrated by GLA in its pilot phase of the London Buildings Energy Efficiency Programme.

  9.  The GLA Group have undertaken considerable work in this area, including engaging numerous public and private sector organisations in London and beyond. Common problems stated regarding retrofitting buildings with energy efficient measures to reduce emissions are:

    — Significant upfront investment is required to improve building energy efficiency;

    — Many energy conservation measures have significant payback periods making them unaffordable;

    — Uncertain returns as some emissions/energy saving projects fail to deliver;

    — Contracting energy services can be costly and complex;

    — Piecemeal changes require significant procurement activity and are inefficient.

  10.  These views are demonstrated in a brief survey of public sector organisations in London that suggests the major challenges in delivering large-scale reductions are constraints on capital and internal capacity to mange such changes.

Figure 1

BARRIERS TO IMPROVING ENERGY EFFICIENCY


VIEWS ON POTENTIAL IMPROVEMENTS AND SOLUTIONS

Position of current solutions

  11.  The Mayor believes that a major programme to retrofit buildings with energy efficiency measures is required to deliver substantial savings on CO2 emissions and energy costs. This is however, a new and developing market and therefore limited knowledge and the lack of standard approaches make organisations reluctant to undertake the activities.

  12.  The lack of a clear, cost effective and easy to implement Government led solutions to enable the significant reduction in emissions across the Government buildings portfolio is a concern and major block to delivery.

  13.  Some work is being undertaken by the likes of OGC on specific technologies, but piecemeal change is intensive on scarce internal resources and inefficient for buyers and suppliers when compared to a more complete building retrofit.

The GLA Buildings Energy Efficiency Programme

  14.  The Greater London Authority Group have undertaken extensive work to develop the Buildings Energy Efficiency Programme (BEEP). This work, in conjunction with the Clinton Climate Initiative (CCI), is part of a flagship international initiative to reduce the carbon footprint of cities globally. The CCI brings together the world's most significant cities to tackle climate change and the London BEEP is the first project to be delivered through the Initiative. It provides a mechanism to make it financially feasible for cities to radically cut emissions from their buildings.

  15.  The Buildings Energy Efficiency Programme is a cost neutral means to reduce energy bills and carbon footprint of buildings. An energy services company guarantees a set level of energy savings—therefore financial saving—over a period of years. This guarantees a future savings/income stream to fund investment for retrofitting buildings with energy efficiency improvements.

  16.  Improvements to buildings will typically include a range of around twenty measures including new building control systems, lighting upgrades and improved insulation. Through using a blended payback across the improvements it has been possible to include other more progressive measures such combined heat and power units and solar/photo voltaic technology.

  17.  100 GLA buildings have been committed to the BEEP model. A pilot covering a wide range of buildings including operational police stations, fire stations and listed properties has so far seen 42 buildings generate energy savings guarantees of 25% over an average six-year simple payback. The pilot phase alone will result in annual savings of over 6,000 tonnes of CO2 and over £1 million on energy bills.

  18.  We believe that the BEEP model creates a highly scalable solution through directly tackling the two major problems identified by public sector organisations:

    — Access to capital - guaranteed savings through the BEEP model reduces risk and enables easier internal or third party funding solutions;

    — Internal capacity - using a standard approach with pre-tendered capable suppliers allows high resource efficiency.

Delivering value for money investment in public sector buildings

  19.  Significant funding is required to reduce carbon emissions from public sector buildings. Work undertaken by Ernst & Young[13] shows that the BEEP model could deliver, with a positive business case, over £400 million of investment in the physical infrastructure of public sector buildings in London alone. This would generate a reduction in CO2 emissions of over 300,000 tonnes per annum, whilst enabling significant green-collar job creation and large reductions in energy bills.

  20.  Central to the BEEP proposition is the establishment of a framework of approved energy services companies with pre-agreed contracts and defined deliverables. This allows public sector organisations to avoid lengthy and complex procurement processes, whilst securing value for money from strong pre-agreed commercial terms. It also provides users the option to add their own bespoke requirements.

  21.  To further enhance value for money, the GLA are working with the CCI and major world cities in a procurement alliance to reduce the costs of individual energy efficient technologies and also help progress cost-effective production of newer technologies.

A scalable solution to deliver across the public sector

  22.  Work to date with both public sector organisations and private sector providers has shown that BEEP is highly scalable and can provide significant benefits including:

    — Reducing emissions and energy use—it is possible to retrofit London's commercial buildings with energy efficiency measures to reduce energy consumption by at least 25% and costs by millions of pounds;

    — Guaranteeing savings—the performance based contract provides guaranteed energy savings across the portfolio of buildings supported by stringent monitoring processes to provide verifiable reductions;

    — Allowing cost neutral improvements—effectively cost neutral using guaranteed savings to pay back investment over a defined period;

    — Low disruption—approach fits with existing facilities management provisions;

    — Fast procurement—BEEP is compliant with EU public procurement rules and pre-agreed suppliers and contracts enable a simplified procurement process;

    — Greater buying power and standardising approach—commonality allows improved procurement collaboration to reduce costs for buyers and suppliers whilst making improvements more efficient and effective.

  23.  There has been significant interest across London's boroughs, universities and NHS Trusts and a major tender programme is due to be completed in late 2009 that will help enable this important market to grow rapidly and cost effectively deliver millions of pounds of investment in London's buildings. This Framework will be open for use by all UK public sector organisations.

  24.  Work on the BEEP pilot and development of the model has also demonstrated a low disruption approach that provides a payback within 12-18 months. Savings of 10%-20% are anticipated from a combination of energy management, green IT and improved control systems. This light-touch method would quickly enable organisations to reduce emissions and build confidence in the benefits of energy reduction. This approach could also be highly applicable to areas such as schools where budget and capacity constraints are combined with a limited time period for making improvements to buildings.

RECOMMENDATIONS

  25.  BEEP shows that innovative procurement can deliver a solution to reduce emissions and save money through retrofitting buildings with energy efficient technologies. This cost effectively delivers millions of pounds of investment in London's public sector buildings that will produce significant job creation. The Mayor believes that this approach should be utilised across the public sector to reduce emissions and develop a strong UK retrofit market.

  26.  The BEEP pilot shows that the public sector can be more ambitious in reducing emissions. The Mayor has committed to achieving significant emissions reductions and believes that the Government should set higher and clearer targets across public sector buildings.

  27.  To support achievement of higher emissions reductions the Mayor believes central Government should help support the development and use of wide scale solutions, such as BEEP, that can deliver value for money improvements to generate significant emission reductions and energy savings from buildings.

April 2009






13   Prospectus for London, the Low Carbon Capital. March 2009. Back


 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2009
Prepared 5 August 2009