The government has agreed targets for the reduction of the country's energy use and greenhouse gas emissions. Residential and commercial buildings are responsible for almost half of the emissions, so if the government wants to stand any chance of meeting its targets, existing buildings must become 'greener'.
What's the issue
At the moment not enough is being done to make the country's existing buildings more energy efficient. A way is needed to encourage property owners and occupiers to take action to reduce their buildings' emissions. We've been exploring how the tax system could be used to encourage commercial property owners to 'green' their buildings.
Why is it important
The government has focused most of its attention on ensuring that new buildings are as energy efficient as possible. However, only 2% of the building stock is replaced every year (less during a recession), which means that most of the buildings that will exist when the target deadline is reached already exist now. If nothing is done to improve these buildings, the government will fail to meet the target.
At present, there are no significant fiscal incentives in place for green investments. We believe such incentives could prompt the changes that are needed.
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What we're doing about it
Working with our members, we have explored the possibilities and presented our suggestions to the Treasury. We followed this up with a paper on fiscal incentives that was submitted to the Treasury in October 2009, and discussions are ongoing.
The provision of these fiscal incentives could be through existing tax mechanisms, such as:
- reduction in VAT for refurbishments
- stamp duty
- business rates
- enhanced capital allowances (ECAs).
