THE Government’s new Carbon Reduction Commitment (CRC) energy efficiency scheme starts in April.
Hundreds of Merseyside public and private sector organisations will be among 20,000 obliged to register and disclose their energy consumption.
Around 5,000 of those organisations must participate fully, buying carbon allowances each year, which will be recycled to participants according to their position in a public league table of emissions.
The position between landlords and tenants is particularly controversial. CRC treats the organisation with the supply contract as having used the power. The position therefore differs if tenants are separately metered or are recharged by their landlord.
This affects participation thresholds, but also who has to buy allowances for that consumption.
The Government will not allocate CRC costs between landlords and tenants, and the property industry itself must therefore establish a standard. The results of a recent consultation by a working party led by the British Property Federation (BPF) are eagerly awaited.
Hill Dickinson carried out its own survey to inform its response and represent the views of its own clients. Respondents included local organisations Merseytravel and United Utilities, who will be full participants in the CRC scheme, as well as prominent local surveyors Mason & Partners.
It revealed widespread acceptance that tenants will ultimately pay all CRC costs incurred by landlords, both in buying allowances and administration costs, but, in return, should receive the benefit of recycling payments paid to landlords. Less clear-cut was whether tenants’ contributions should be on normal service charge proportions or linked to emissions, and whether tenants should pay before or after the landlord has bought allowances.
Undoubtedly the most surprising outcome was a near-unanimous agreement that recycling payments should be used to fund energy efficiency measures.
It will be interesting to see whether the BPF consultation mirrors the Hill Dickinson experience.
The working party is facing a huge challenge. If it fails, the landlord and tenant position will need to be dealt with on an individual case-by-case, lease-by-lease basis, leading inevitably to protracted negotiations on every affected transaction and inconsistency across the market.
