MEES, mussel beards and more

In this week’s edition of Real Green Estate, I dived into the Carbon Budget Delivery Plan off the back of the UK government’s recent court defeat (the second in about as many years), before getting excited about mussel beards.

?? High Court finds government’s climate plan ‘unlawful’ – again

It’s strike two for the UK government as they face defeat again from environmental campaign groups that argued that the government's climate plan was signed off without evidence it could be achieved.?

The reason that the government can lose a court case at all is due to the pesky little Climate Change Act 2008, which commits the UK government by law to reducing greenhouse gas emissions by at least 100% of 1990 levels (net zero) by 2050. This is the legal grounds by which Friends of the Earth, ClientEarth and The Good Law Project can challenge the government, and win - twice.

In response to the outcome of the first legal defeat, the government produced the Carbon Budget Delivery Plan last year, detailing all the policies that would result in CO2e reductions if implemented between now and 2050. Salient word being “if” here, which was exactly the winning argument by the environmental groups: the energy secretary did not consider the risks to deliver the plan and signed it off assuming all the policies would be achieved.

Side note: in some thrilling bedtime reading, I looked through the Carbon Budget Delivery Plan and lifted out policies that related to decarbonising buildings. There are 57 in total and 11 which are currently implemented. Of those that are implemented, it’s predicted that there will be a saving of 18.4 MtCO2e this year. However, considering that the UK’s residential emissions in 2022 were 512 MtCO2e, this estimated reduction would account for c.3% of total emissions. Which, for me, doesn’t seem to add up considering operational emissions alone from the built environment contributes to c.28% total carbon emissions. Also, interestingly, just 2 of the implemented policies apparently account for almost 80% of total emissions reduction. And they’ve got nothing to do with EPCs, despite EPCs being splattered all over the Heat and buildings strategy, which sets out how the UK will decarbonise homes, commercial, industrial and public sector buildings…

What happens now? Well, the government has 12 months to go and redraft the plan and hope that third time’s a charm. What makes things a little more challenging is that there will be a general election in between drafting and submission, so I am very curious to follow the progress here.?

?? Don’t you forget about MEES: Green Property Alliance calls for more guidance

Related to the above, the Green Property Alliance has called for more guidance on the Minimum Energy Efficiency Standards (MEES) for non-domestic properties.?

Back in 2021, the government ran a consultation to understand the feasibility of increasing the MEES for non-domestic buildings to EPC B by 2030, which would mean that all non-domestic properties (e.g. offices, retail, hospitality, etc.) would need to achieve the second highest EPC rating in order to be sold or rented out.?

I can’t emphasise enough how massive of a challenge this would be. 85% of the current non-domestic building stock would be affected and billions would have to be spent on upgrades. Beyond the scale of retrofit needed, time would be incredibly tight. Retrofitting a single building can take anywhere from several months to a year or more from start to finish. We’re talking about retrofitting c.1 million buildings in the next 6 years with this proposal.

So, it’s understandable the industry wants answers. Signatories do support higher minimum standards and are asking for the results of the consultation to be published so that they can properly prepare for any incoming regulations.?

Strangely, I didn’t find any mention of MEES increases for non-domestic buildings in the Carbon Budget Delivery Plan.

?? Real estate lenders and borrowers still hesitant to engage with green lending

Following on from my Bisnow shout out last week, they have another fantastic report on the resistance to green loans for both commercial real estate lenders and borrowers. Recommended reading and highlights include:

• Despite their eco-benefits, green loans are underused in commercial real estate, with many lenders still doubtful about their financial payback compared to regular loans.
• Japan's Mizuho Financial Group has kicked off a friendly green lending scheme for real estate, offering perks like lower interest rates for hitting green targets, hinting at a gradual shift towards greener financial practices.
• Green lending uptake varies by region, heavily swayed by local laws and politics—like the U.S.'s new incentives under the Inflation Reduction Act and Europe's tough anti-greenwashing regulations.
• Green loans can be a tough sell for developers due to their complex and stringent requirements, which often seem to outweigh the long-term benefits of lower environmental impact and utility costs.

?? Insulation made from mussels

I love learning about eco-friendly building materials and I recently met the founder of Seastex, a startup that transforms mussel waste into products. They have developed a material that has solid acoustic and thermal insulation properties, while being naturally fire retardant and completely biodegradable.

That’s all gang, thanks for reading! ??