With 2023 approaching, readers are reminded of the Climate Action and Low Carbon Development (Amendment) Act 2021 which came into force in September 2021.
The Climate Act commits the State to pursue and achieve “a climate resilient, biodiversity rich and climate neutral economy by no later than the end of 2050.” This is known as the National Climate Objective.
One of the significant changes introduced by the Climate Act are the Carbon Budgets, which are prepared by the Climate Change Advisory Committee and approved by the Government. Each Carbon Budget will dictate the total amount of greenhouse gases that are permitted to be emitted in every five-year interval commencing on 1 January 2021.
The first two Carbon Budgets proposed to provide for an ambitious 51% reduction of greenhouse gas emissions by the year ending 31 December 2030, in comparison to the emissions reported in the year ending 31 December 2018. Furthermore, the Government can, within the limits of the Carbon Budget, impose a maximum amount of greenhouse gas emissions that are permitted in different sectors of the economy during a budget period. Certain sectors of the economy, such as electricity, transport and real estate, in particular, will be targeted by such limitations.
The Climate Act imposes a clear obligation on the State to become carbon neutral by 2050 and this will have significant implications across every sector of society, the economy and the environment. Real estate is one of the primary sectors subject to greenhouse gas emission limitations. The environmental status of property will become an increasingly important consideration in light of the Climate Act, which may be currently overlooked.
It is expected that sustainability in the design and operation of commercial properties will be at the core of negotiations of real estate transactions in an environmentally-conscious future. Property owners are encouraged by experts to invest in commercial property to improve energy performance. That investment will improve the energy performance of existing buildings and will also enhance their appeal in attracting potential buyers, investors or tenants.
It is important that businesses consider the effects that the Climate Act may have on their property interests when investing in property, entering into commercial leases or seeking to secure property finance. For advice on how your business can prepare for environmental changes in real estate, contact Patrick Ryan or Emer Wilkie.
See our previous article – "What does the Climate Action Bill mean for Irish Businesses and Investors?"
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