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On the problem with DEC's

I am quite aware that many well respected institutes (CIBSE, CIOB, RICS, UKGBC etc.) are currently lobbying for DEC's so I do feel like I could almost be delusional expressing the following views. I would welcome anybody to help me understand why on Earth such a policy measure as DEC's might be appealing (other than to create a lot of hype)! My thinking is summarised below and I would welcome any comments:


1. Most importantly, well-being is not only a measure of wealth but also the rights that one enjoys. A fundamental issue with DEC's is that they publicly give notice of the nature of a relationship between two private parties (landlord/tenant). Therefore, such an initiative would undermine their right to privacy, in effect making the relationship, and business energy consumption, a public service.


2. The risk is that DEC's are an inappropriate measure of service quality on their own, as they regulate the occupant and not the asset. There is a risk that DEC's could incentivise some rather wasteful behaviour, such as an asset being under-utilised.


3. I have yet to understand that the energy performance of an asset can be more simply measured using only actual energy consumption rather than a model. It would take a significant amount of effort (lots of sensors and alike) to measure the energy performance of an asset through actuals only. Of course, if this did ever become feasible it would be an ideal way of evaluating an asset and calibrating a thermal model to understand the effects of any improvements.


4. Certificates and labels are intended for use in transactions, and DEC's are not useful here. This is because DEC's are contingent on the nature of the relationship between landlord and tenant. One of which will be outgoing once the transaction is made.


5. I understand that actual energy consumption is very important to consider, and from my perspective the variance of actual energy consumption from energy performance is a useful means of determining risk in an investment appraisal process. However, I do not believe there is a market failure when determining actual energy consumption for a business, as I expect it would be illegal or highly devious in most cases for this not to be reported correctly.


6. Notice the difference here... In a transaction we have a competitive equilibrium where both parties may not want to exchange information freely on energy performance. In operation we have a cooperative equilibrium, where I believe any respectable landlord and tenant will act in each others interests over energy consumption (they both have a vested interest in developing property value).


7. The most important thing to remember is that there is no basis in economic theory for government to make interventions in markets where there is no evidence of a market failure. Property transactions have been proven to be real breeding grounds for them, I am not aware that this is the case in facilities management/tenant/landlord relationships in operation.


8. In the property industry I guess that the argument could be that by regulating occupancy it is more straight forward for managers to predict systems depreciation. But the EPC does also provide the potential for this if understood, and I think if properly used could be a more rigorous measure.


9. Personally I think the industry needs to stop lobbying and start measuring/modelling (properly - like spend some reasonable money on it). I don't see the need for an introduction of further certificates and labels here unless they considered the use of resources other than energy, or perhaps embodied measures (such as LEED/BREEAM). Of course this becomes much more complicated and it is probably a good thing that these remain voluntary.


10. Recommended reading: 'Winnie the Witch' - Oxford University Press. Think about which environment you would prefer.

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