Driving Change: Buildings hold the key to unlocking an electric future
The UK recently became the first major economy to pass net zero emissions (Net Zero) law. In June 2019, legislation set a new target for the UK to bring all greenhouse gas emissions to Net Zero by 2050.
Achieving Net Zero in the UK by 2050 will require significant change in all sectors and transport remains a substantial contributor to emissions. But change is on the way, as the Government has brought forward the ban on the sale of new petrol and diesel cars from 2040 to 2035 (in line with the Committee on Climate Change recommendations) and has extended the ban to hybrid vehicles too. At that point, the only new cars on sale will be electric or hydrogen - but the cost of electric vehicles (EV), and the lack of charging infrastructure remain significant barriers to wider take-up.
Two key legislative proposals to be implemented in 2020 seek address those barriers and encourage wider adoption.
The first key change addresses infrastructure. To develop the necessary charging infrastructure, the Government recently consulted on changes to the Building Regulations to require electric charging infrastructure in new buildings and those undergoing major renovations. This builds on the Automated and Electric Vehicles Act 2018 which legislates for the installation of chargepoints in motorway service areas and large fuel retailers, and aims to introduce a consistent approach to charging infrastructure in buildings across the country. The consultation (which closed in October 2019) proposes the following:
- All new residential buildings with associated car parking spaces each to have a chargepoint. This would include buildings undergoing a material change of use to create a dwelling.
- Every residential building undergoing major renovation with more than ten car parking spaces to have one chargepoint and cable routes for EV chargepoints in every car parking space.
- Every new non-residential building and every non-residential building undergoing a major renovation with more than ten car parking spaces to have one chargepoint and cable routes for an EV chargepoint for one in five spaces.
- At least one chargepoint in existing non-residential buildings with more than 20 car parking spaces, applicable from 2025 (to be implemented in separate legislation).
Some exemptions are proposed, including for listed buildings and buildings in conservation areas – and where installation costs exceed particular thresholds. The revised Building Regulations are expected to come out in the first half of 2020.
The proposed changes will have a significant impact on all buildings in England (Northern Ireland, Wales and Scotland have their own arrangements) and are likely to go a long way to achieving Government intentions of making chargepoints widely available (particularly for new residential buildings). For some, it will be business as usual, but for others the challenge is to adapt to these new requirements on scale – and to do so rapidly. Securing the necessary power capacity at an early stage is likely to become increasingly important, and decisions on cable routes, specification of equipment, and choice of installers/operators need early consideration.
The second change is aimed at accelerating the transition to EVs. Draft legislation published by the Treasury last Summer reduces the benefit in kind tax rate for electric company cars to 0% from 6 April 2020 (and it is set to remain at low levels through to 2021/22).
This change adds to a number of existing tax benefits for low emission vehicles, including exemptions from Vehicle Excise Duty, lower VAT rates on electricity (compared to petrol/diesel), and ability to participate in salary sacrifice schemes. The reduction in benefit in kind could provide a further 'pull factor' to incentivise employees with company cars to make the switch - and shows that the Government is taking a more joined-up approach to policy in this area.
For employers and business owners in the UK, attention needs to turn to the chargepoints that are likely to be required as uptake increases. The commercial property market is already seeing early adopters requiring chargepoints (regardless of legal obligations) – particularly in the hotel, retail and leisure sectors where destination charging is a key feature. The challenge for decision makers is timing. Those installing infrastructure now may be doing so in the absence of considerable demand for chargepoints, but leaving it too late could mean grid capacity is limited – or that it comes with significant grid upgrade costs.
The UK's initiatives will resonate with the UAE's wider objectives through its Energy Strategy 2050. Under the strategy, the UAE aims to increase the contribution of clean energy in its energy mix to 50% by 2050 and reduce the carbon footprint of power generation by 70%. In line with these commitments the UAE has also a begun a number of interesting EV initiatives. For example, Dubai has set a target of having 40,000 EV registrations by 2030. Additionally, Dubai's Roads and Transport Authority has a plan to turn 90% of its 6,500 fleet of taxis green (with three quarters of the green vehicles to be hybrids and a quarter as EVs) by 2026.
As plans in the UK unfold for supporting EV chargepoints and related infrastructure through buildings it will be interesting if similar initiatives can be rolled out in the UAE and wider Gulf region.