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  • Property-a-holics

    Achieving carbon emission neutrality - can it be profitable?

    I now have one year of measured gas consumption data after installing a Class A gas boiler at home, and nine months of measured electric consumption data after installing 100% LED lights at home. I set myself a financial target that the capital investment had to demonstrate a minimum of 15% return on capital, or a six to seven year payback as a minimum criteria to justify investment in green credentials. I am pleased to report that the electricity investment far exceeded that criterion and the gas boiler investment also cut the mustard - just.

    At this stage, I was able to calculate the total equivalent CO2 emission that, as a family, we chuck into the atmosphere from our home energy consumption and also from our annual driving habits for three cars. Our 2013/2014 emission was 21 tonnes and our target 2014/2015 emission is 17 tonnes, a 19% reduction. I have plans for a further 10% reduction by positive action, but the same criteria will apply - namely that I will not consciously ask anyone to change their consumption patterns, and I will seek other means of achieving reductions by reduction, replacement, and eventually offset.

    Knowing our baseline emission in tonnes of CO2 enables me to measure future changes against a baseline. You can't improve what you can't measure. Subsequently, I made initial enquiries about the cost of offsetting the carbon emissions in the charitable market.

    My first port of call from an initial google search was

    http://www.carbonbalanced.org/calculator/household.asp

    From which I estimated that we would pay around £350 to offset the baseline CO2 emission, and for which we would pay around £280 for the current year emission estimate. Whilst I was preparing to discuss this subject of charitable redirection of funds with my wife, we had a presentation workshop at work from an internal not-for-profit organisation whose reason to exist is awareness of travel journey cost offset in the carbon trading market, and to encourage all group companies to think about offsetting their total business journey costs with carbon credits. The same offset cost for the 17 tonnes of our emissions was estimated at £74 + credit/debit card charges, so I didn't wait for validation. I took the decision to spend a total of £76 and immediately offset our current year emission of carbon, both as a feel good factor, and knowing my spend for change was still comfortably within the self imposed criterion of 15% ROIC from savings already made to date.

    https://www.bptargetneutral.com/uk/

    Furthermore, as an exercise in the workshop, we calculated that the carbon offset cost of a flight to Iraq from London was £5, staggeringly less than one would think intuitively.

    What has this got to do with property?
    On the drive up from London on Friday, it occurred to me that if it was that easy to offset our family's CO2 emissions, how difficult would it be to offset the emissions from all our BTL properties? The total commit cost was less than 1% of the total cost of electricity, gas and car fuel for the year. And how could I justify that on the basis of a minimum of 15% ROIC for each property? Since the introduction of the bedroom tax we have had to rent some of our properties to less than maximum LHA family units. I am now thinking on how to use reduction initiatives (like provision of LED lights to benefit the tenants) and carbon offset credits as a business differentiator for councils and agents to promote social responsibility as a potential lever to ensure that ALL our properties can get preferential right-sized families in them.

    I'd appreciate any thoughts or actions that may have been undertaken by other landlords in this area of either energy cost reduction for tenants, or carbon offset initiatives for other stakeholders like agents and councils. I start with the assumption that nobody will be interested in anything that costs THEM any money, but that they may think more positively about a landlord who cares to spend time and effort on improving energy efficiency, and if that is not practical on a cost basis, is prepared to provide evidence of carbon offset contributions to minimize environmental impact on the properties they live in.
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