Irish Government to Publish Voluntary Code of Conduct for Commercial Leases to Reduce Carbon Emissions
The Irish Government has published its Climate Action Plan 2024 (CAP24) which sets out the roadmap to deliver on Ireland’s legally binding economy-wide carbon budgets and sectoral emissions ceilings agreed by Government in July 2022. CAP24 is the third annual update to Ireland’s Climate Action Plan and was approved by Government on 20 December 2023, subject to Strategic Environmental Assessment and Appropriate Assessment. A public consultation on the plan will commence shortly. Read our briefings on Irish climate legislation here and CAP23 here.
Voluntary Code of Conduct for Commercial Leases to Reduce Carbon Emissions
The Climate Plan reports that the Commercial Built Environment Working Group (CBEWG) (a working group of the Heat and Built Environment Delivery Taskforce established by the Government to accelerate and drive delivery in relation to decarbonisation of the building stock) is developing a voluntary code of conduct for commercial leases (the Climate Code) that promotes reduced carbon emissions from commercial businesses and identifies opportunities to align incentives for lease parties to better unlock environmental performance.
Though a welcome development in terms of attempting to address the so-called ‘split incentives’ for landlords and tenants in improving a building’s environmental performance, a voluntary code will not change the underlying legal relationship or lease between the parties. Accordingly, The Chancery Lane Project Irish Property Working Group’s Green Clauses for Irish Commercial Leases (published in February 2023 led by Arthur Cox) will continue to play a key role in the incorporation of ESG/green clauses into Irish commercial leases.
The Government published a voluntary Code of Conduct between Landlords and Tenants for Commercial Rents during the COVID-19 pandemic. Notwithstanding the voluntary nature of the code, it provided a useful framework for lease parties to agree temporary rent payment arrangements to deal with income shocks caused by the pandemic. The Climate Code should also prove to be a useful tool for lease parties when negotiating green clauses in leases.
To ensure compliance with the sectoral emissions ceilings for the built environment, the Climate Plan sets out some key actions to be taken:
- Publication of regulations and the Dwelling Energy Assessment Procedure by Q4 2024 to ban fossil fuel boilers in new dwellings and those undergoing major renovation, and continued resourcing and implementation of the National Residential Retrofit Plan.
- Measures to decarbonise residential heating including the development of district heating and the drafting by Q2 2024 of the General Scheme of a Heat Bill to establish a regulatory model for district heating, and to mandate all Public Sector buildings and facilities to connect to district heating.
- Measures to decarbonise heating generally including the publication of the General Scheme of a Bill by Q4 2024 to provide the legislative basis for the regulation of geothermal energy and the implementation by Q4 2024 of the Commercial Built Environment Roadmap (which has yet to be published but is currently being developed by the CBEWG).
CAP24 is published against the background of ever-increasing climate change regulation at EU level. A milestone in the negotiation of the Recast Energy Performance of Buildings Directive was achieved in December 2023 when the Council and Parliament reached agreement on the proposal for a Recast EPBD. Once the Recast EPBD is enacted, Member States will have 24 months to implement it in national law. Accordingly, the implementation of CAP24 and the legal obligations on Member States set out in the Recast EPBD (including minimum energy performance standards for existing buildings) are inextricably linked.