Building Energy Label – Mandatory

Here in Hong Kong 89% of all electricity consumed, and 63% of Carbon emission are created from our buildings, and these rise every year. I had argued that mandatory building labelling is the future, and until customers can see an easy to read, third party verified, building energy label there is little incentive for building owners and operators to reduce energy consumption and carbon emissions from buildings. The disconnect in speculative buildings (for leasing) is obvious, since the building operators profit from inefficiency [refer note 1].

Now Australia will likely become the next country to bite the bullet, realising the importance of energy usage in buildings, a mandatory label scheme is planned for mid of 2010. It seems the popular NABERS scheme will form part of the system.

Overseas, in the United Kingdom has a mandatory label scheme is in place for all government buildings, a certain forerunner for the private sector.

Mandatory building labels will create job, employment, and better buildings, REITs, fund managers, and consumers will have a choice, a choice I believe they will exercise. At the recent HKGBC conference, a building fund manager endorsed building labelling for this very reason, and early adopters and users of of the green building labels [refer note 2] would testify.

Notes:
[1] A building with numerous owners or tenants cannot be managed effectively, therefore a property management company is employed to operate and oversee all the building common area operations, for example the central chilled water equipment. For multi-owner buildings, it is common for a committee to drive the scope of the property services provided. However, many of these property management firms are compensated on a percentage fee basis or cost plus basis, therefore if more fuel used, the management charge is also higher.

Also all tenants typically pay a management fee based on Gross Floor Area (GFA) of the leased accommodation, irrespective of the actual energy usage, therefore we have a situation where there is no financial incentive to lower the use of central services such as central air conditioning because they don’t benefit from the saved costs or lower emissions.

[2] BEAM is the local green building label system. Buildings are assessed against various criteria, and can be awarded a green building label to distinguish them from other buildings. Once a valid scheme is established customers and facilities personnel have a choice and often use that label as a key criteria for choosing accommodation – that is exactly what happened in Australia, the voluntary NABERS scheme became a customer requirement.

– John Herbert, Consultant, Kelcroft E&M Limited
lowering the cost of doing business in Asia.

the misguided role of energy benchmarking?

The IPMVP blog has an interesting post from John Cowan, Chairman EVO regarding the misguided role of benchmarking. The argument is based on the notion that benchmarking is at the end of the day a pretty pointless exercise.

It is a good question since all most every energy audit RFQ demands a benchmark, even in sectors when a benchmark for that business type is not published, you need an apples to apples comparison. Comparing a hotel to commercial building is clearly pointless, hotel to hotel is certainly feasible, however comparing a hotels with integral casino, and shopping mall, etc. to those without is just futile.

Clearly he key advantage for a using benchmarking – its a shortcut, giving management access to simple index so that they can easily grasp their energy situation without delving into kwh charts. The reality of modern life is that we all need shortcuts, in the financial world listed companies are compared based on debt/equity ratios, P/E ratios, etc. it is not the full picture, its a snapshot summary for the finance side of particular business and practitioners know these need to be used wisely.

Studies have shown us already that merely public posting of neighbours energy bills creates a competitive environment in the neighbourhood to lower energy consumption. So there are needed, if only for self comparison, but practitioners need to apply then carefully.