Tougher policy could help Singapore achieve better energy efficiency
WHEN I lived in London, I first moved into a property built in 1998. It had been fully refurbished the year before I arrived, which means the walls had fresh paint and the sinks had mixer taps.
The building’s insulation, however, left a lot to be desired. I was eternally cold, and finally resorted to buying a portable oil-filled radiator to prevent my feet from freezing under my desk.
Later, I moved into a building built in 2008 by a developer that prides itself on energy-efficient homes. I wore shorts and T-shirts in my flat in winter. When I moved out, I still didn’t know how to turn the heating on.
It is therefore welcome news to me that more than 30 per cent of the assets in European commercial real estate portfolios are considered “stranded” due to energy-efficiency requirements being rolled out in Europe – meaning they are losing their values earlier than expected.
The European Union’s Energy Performance of Buildings Directive is gradually introducing minimum energy performance standards for non-residential buildings with the aim of triggering the renovation of buildings with the lowest energy performance.
Buildings are the single largest energy consumer in Europe. According to European Commission data, 85 per cent of the bloc’s buildings were built before 2000 and 75 per cent of those have poor energy performance.
Good energy performance is a win for the environment and for occupants of buildings, but landlords probably would have dragged their feet on expensive renovations if not for policymakers’ resolve.
In Singapore, many office workers will also understand what it means to be eternally cold – thanks to the wonders of air-conditioning. Poor building design and outdated cooling systems mean I have yet to find an office where employees do not feel compelled to keep hoodies on the backs of their chairs.
Economic imperatives are pushing some landlords to make improvements. CapitaLand Investment has announced it will adopt cooling-as-a-service systems at several flagship properties, which should reduce energy consumption by 30 per cent from 2023 levels.
As a listed company with environmental goals, CapitaLand’s move makes financial sense. The company has committed to reach net zero emissions by 2050, and as a blue chip stock with institutional investors it must meet certain environmental expectations.
For many other building landlords, however, there is little imperative to act. The Building and Construction Authority (BCA) last year announced a Mandatory Energy Improvement regime that will be implemented by the end of this year.
Energy-intensive commercial buildings, healthcare facilities, sports and recreation centres, and institutional buildings with a gross floor area of 5,000 square metres and above will be required to undergo energy audits and improve their energy use intensity.
This regime is unlikely to cover more than 100 buildings, though. Stranded assets will not be a problem for Singapore landlords just yet.
As BCA deliberates the finer points of the regime’s implementation, I would venture one constituency in particular is hoping for tougher regulations: the building’s occupants.
