The Climate Change Act introduced the world’s first long-term legally binding framework to tackle climate change. Although it became law in November 2008, supplementary Orders and Regulations that form part of the implementation package for the Act are expected to come into force at the end of May.

The main thrust of the Act is to ensure reductions in green house gas emissions of at least 80% by 2050 and in CO2 emissions by at least 26% by 2020. The Act also introduced a carbon budgeting system, for capping emissions over five-year periods and reporting by Government of its policies and proposals to meet those budgets.

One of the Orders expected in May, will increase the 2020 target reduction to 34% while another sets carbon budgets for the periods 2008 - 2012, 2013 - 2017 and 2018 - 2022. The Regulations introduce a carbon accounting system to monitor compliance with the targets for reducing greenhouse gas emissions.

So what are the implications for businesses? Although this new legislation does not directly impact on local companies, in order to achieve the magnitude of reductions imposed, significant savings will need to be made throughout many industry sectors. Enforcement of savings is likely to be imposed by policy and legislative changes.

We have already witnessed some such changes - the introduction of the Carbon Reduction Commitment (whereby high electricity users have to buy allowances in a bid to reduce energy use); Energy Performance Certificates (EPC); changes to the Building Regulations; and to planning policies encouraging energy reduction and sustainable development. Also, last month’s Budget saw the introduction of a range of measures to encourage investment in energy efficiency, renewable energy and carbon capture.

Other changes are quite likely to focus on the property sector and building owners/developers will be under increasing pressure to ensure that buildings are as environmentally friendly as possible. Examples of measures that may be put in place include: making all new housing supply carbon neutral; making the currently voluntary recommendations in EPCs compulsory; ensuring that all new homes meet higher levels of the Code for Sustainable Homes; and implementation of the Community Infrastructure Levy.

In an increasingly low carbon economy, a monetary value will be attached to carbon reduction. Investors will want to ensure that their property portfolios are 'green'; tenants will seek out buildings that are cheaper to run and show their business’ green credentials - so developers and landlords need to be able to supply green buildings in order to attract investors and higher rents.

Joanna Nicholls is an Associate specialising in Commercial Property at Howes Percival LLP.