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Business could see energy bill climb by more £880m due to climate change, warns RICS

Green building news - by GreenWise staff
16th March 2012
Hotter summers and more extreme weather mean businesses face massive increases in their energy bills over the next two decades, with the retail and warehouse sectors likely to be hit the hardest.
The annual electricity bill for business could rise by more as much as £880 million by 2030 due to the effects of climate change, according to new research by the Royal Institute of Chartered Surveyors (RICS).

Rising temperatures and more extreme weather will force occupiers of commercial buildings to use significantly more electricity. The RICS report warns that businesses that use warehouses will be hit the hardest with an annual increase in bills of up to £355 million, but retail and office-based businesses will also face significant costs as they have to rely more on air conditioning for cooling, for example. The report estimates the retail sector could see an increase in electricity costs of as much as £273 million. Office-based businesses, meanwhile, could be paying more than £226 million a year because of changes to the UK’s climate, while the leisure sector's bill could increase by £26 million. 
 
By 2030 a commercial property of around 2,500 square metres in London can expect to pay more than £5,000 per year in electricity alone, the report estimates.

And it predicts that some of Britain’s commercial properties could become obsolete by 2030 as refurbishing current buildings to cope with the impact of climate change may cost too much. 

"Many of Britain’s current commercial buildings as they are, are just not energy efficient and suitably equipped to cope with the future predicted changes in climate. Many existing properties may become too pricy to run and unsuitable to provide employees with the right conditions to work," Martin Russell-Croucher, RICS director of Sustainability and Special Projects, said.

Research findings
The RICS research was undertaken by Sturgis Carbon Profiling and analysed the current energy consumption contained in Display Energy Certificates of more than 60,000 non-domestic buildings across the country. 

It shows the average commercial property is ill equipped to cope with the more extreme temperatures the UK is likely to face in the future. Summer temperatures throughout most of the UK are predicted to be up to two degrees higher by 2030 and up to two degrees cooler in the winter.

London hardest hit
Climate change could push up the cost of commercial properties by approximately £2.87 per square metre in Newcastle, for example, while in in London – where temperatures are expected to be highest – increases in electricity demand are expected to add an additional £3.20 per square metre to the cost of running a commercial building. 
 
The report reveals that a building’s function, design and technology and external temperature and climate volatility all impact electricity demand and use, with volatility between more extreme cold and warm weather causing the greatest impact as more power is used to maintain a 'comfortable environment’ for employees.

"It is important that property professionals and businesses understand how they can and should adapt, and maintain their buildings now to ensure they are not only cost efficient but also sustainable for generations to come. Failure to do so, can result in electricity costs spiraling out of control," said Russell-Croucher.

Climate Change Impact Assessment
The RICS research follows the Government’s own groundbreaking study into the risks of climate change to businesses and communities, published in January. It looked at the challenges facing the UK due to climate change over the next 70 years and warned that by the second half of this century warmer temperatures in the summer could cost businesses £15 billion in staff absenteeism a year. The cost of flooding to buildings and properties in England and Wales, meanwhile, could increase more than 11-fold over the next 70 years – from £1.2 billion to £12 billion. 

Double whammy
As well as the cost of climate change, business energy bills are expected to be impacted severally over the next two decades by Government policies to keep the lights on and emissions down. Analysis by the Department of Energy and Climate Change released in November, estimated energy and climate policies, such as the Carbon Reduction Commitment (CRC) Energy Efficiency Scheme, will on average add 19 per cent onto the bill of a UK business with a medium-sized energy consumption by 2020 – and 28 per cent by 2030.

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Business could see energy bill climb by more £880m due to climate change, warns RICS
A commercial property of around 2,500 sq metres in London can expect to pay more than £5,000 per year in electricity by 2030
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