Government's eco incentive faces tough print challenge

By PrintWeek Team, Friday 18 March 2011

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The government hopes its energy efficiency incentive scheme will coax lessees into improving the eco performance of their facilities, but many in print are sceptical of its fitness for purpose

 

The government wants to strike a deal with you. You see, the bods in Whitehall have done some sums and come to the conclusion that the rental sector in the UK, including the hundreds of print firms in leased buildings, is not pulling its weight when it comes to helping the country hit its carbon reduction targets.

So, to encourage this sector to play its part, tucked away in December’s Energy Bill was ‘the Green Deal’, a scheme whereby you improve your building’s energy efficiency and the government will fix it so you pay no up-front costs and the work will be paid for by cost savings generated by the efficiency measures.

Sounds good, right? Up until now, there has been little impetus for printers to improve the energy efficiency of leased premises, due to the operation of the so-called ‘split incentive’ – the landlord won’t pay for the work as it is the tenant that sees the return on investment in the form of lower bills. By removing the need for up-front payments and enabling the tenant and subsequent tenants to pay for the investment through instalments on their energy bills, that split incentive barrier is overcome and print can set about making property improvements.

 

Deal or no deal?
Delve a little further into the initiative, however, and cracks begin to appear. The deal is very much one-size-fits-all and, for print, that raises quite a few issues. In addition, the kind of measures the Green Deal facilitates are not, according to printers, targeted at the areas the government should be most worried about.

But let’s take a look at the nuts and bolts before we judge. The Green Deal basically works like this: a tenant in rented property can decide to improve the energy efficiency of that property via things like cavity wall or loft insulation. The work will be carried out by an accredited Green Deal provider for no up-front cost. Then, on the tenant’s next energy bill, an instalment is charged to pay for the work. This instalment must obey the ‘golden rule’ of the deal: it cannot exceed the savings made by the energy efficiency measure. So, if you put some roof insulation into your building, and this cuts your energy bill by £20 per month, your repayment instalment for that period cannot exceed £20. This charge is attached to the property so if you move, the next tenant picks up repayments where you left off.

This rather clever initiative is applicable to both residential and SME properties and works in broadly the same way for both, other than for a few fairly significant factors, according to Phillipa Heap, spokesperson for the Department for Energy and Climate Change (DECC).

"The kind of measures you can get under the Green Deal will be more flexible for businesses – so heating, lighting, building management services and air conditioning, rather than just insulation measures. Also, for businesses, we have no plans to cap the amount of investment a company can make using the deal."

The DECC estimates that around 60% of SMEs lease their buildings, but in the print industry that figure is likely to be much higher. Hence, print will be one of the key industries the Green Deal will be looking to for a successful take-up.

Tim Taylor, environment manager at Ricoh UK, says that while many of the newer industrial units printers use are relatively efficient, he agrees that many of the older print buildings do need a drastic update as their heat loss is "atrocious". He believes the Green Deal is a good method of encouragement.

However, he points out that, though the split incentive may have been overcome, the landlord still has to give his permission and there is no guarantee he will. Also, in most lease contracts, buildings have to be returned in their original condition and Taylor fears that, when the lease ends, any measure would have to be ripped out to avoid any action from the owners.

Gary Marshall, group risk manager at Polestar Group, agrees. "Measures will require quite a lengthy conversation with the landlord about how you can do it and the landlord still has to approve it. If they don’t like it, they can still ask you to take it down or prevent you from doing it in the first place."

While this is true, there is a clause in the Energy Bill that would grant the secretary of state powers to force landlords to allow tenants to use the Green Deal. These powers would only come into force if, when the success of the deal is assessed, it is found landlords have been blocking action.

But even if the landlords are open to the Green Deal, printers remain sceptical about how well it can work for them. While putting energy efficiency measures into other SME property, such as a shops or offices, may well bring benefits, printers tend to occupy large, open plan industrial units that are slightly trickier propositions.

"In principal, the Green Deal sounds like an interesting idea," says Tim Hill, managing director at Speedscreen. "However, if you look at most modern print facilities, we work in large, open-plan environments that are hard to heat efficiently and pretty impossible to air condition."


Print-specific issues
Steven Brown, director at YourPrint-Solution, agrees. "If you have 500m2, the cost of insulation for a roof that size is extremely high and the benefits are likely not to make that cost worthwhile."

Ricoh’s Taylor says another problem would be that most printers leave their roll-shutter doors, present in almost every industrial unit, open for practical reasons, rendering building energy efficiency measures pointless. Countering this with electronic doors for fast and easy opening and closing is pricey and Taylor suspects they’d still be left open anyway.

He adds that the former examples are some of the many quirks related to the practical use of print buildings that the Green Deal fails to consider. Other SMEs will have their own nuances and differences, he says, so the deal’s one-size-fits-all approach risks fitting no one.

"The trouble is that this sort of legislation is created by people who have not gone out and seen the reality of factories and offices," Taylor explains. "They don’t realise these properties all have different needs."

If the government did take time to do some research, many in the print industry believe it would find that, for print, the need for energy efficiency improvements would have nothing to do with the buildings. As YourPrintSolution’s Brown explains, the kit is the worse offender.

"When I turn on my digital press, or my finishing kit, we know the electricity company is rubbing its hands with glee at the energy we are sucking in," he says.

Hence, Brown says a free, in-depth analysis of his energy usage, centred on his kit, that made recommendations beyond the standard ‘turn your lights off’ would be much more useful in cutting energy bills than insulation or an air conditioning unit. Polestar’s Marshall agrees that subsidising this form of advice, which currently is extremely pricey, would be a more fitting solution for print than the Green Deal. Tim Hill, meanwhile, believes the emphasis should be to enable companies to update an old machine to a new, more energy efficient one by offering a grant for the purchase if energy savings can be proved.

DECC’s Heap says these ideas are exactly what the department is looking for. She stresses that the communication lines are always open and that, if the industry sees a more effective route to helping to meet carbon targets, then they should pick up the phone and talk to the DECC.

So while some printers will no doubt use the Green Deal to good effect for sales offices or the more segmented areas of their property, for the open-plan printrooms it seems a difficult fit. The good news is that the deal does have the benefit of provoking discussion about energy efficiency and it sounds like the DECC are willing to listen to print’s ideas. This will be critical in print being able to keep up with what is surely going to be increasingly stringent energy legislation in the future as deadlines for carbon targets loom closer.

 

THE GREEN DEAL
In its December Energy Bill the government introduced ‘the Green Deal’. This is designed to bring the rental sector up to speed in helping the UK hit carbon reduction targets. Here’s how it will work:
• A company decides to install some energy efficiency measures to its
buildings
• It approaches an accredited Green Deal provider who agrees to carry out the work, for no up-front cost
• The company seeks permission of the landlord
• Permission granted, the Green Deal provider completes the work
• On the company’s next energy bill is a section for Green Deal repayment. This repayment is less than the savings made by the energy efficiency measure. For example, if insulation cuts a monthly energy bill by £20, the repayment for the work carried out has to be less than £20
• If the company stays in the building for the long term, it repays the cost of the work and enjoys the benefits of lower bills. If the company moves, the next tenant picks up the repayments through the energy bill

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