EUROPE - The UK government is to set up a board including property industry representatives to hammer out agreement ahead of a 'carbon plan' to be published later this year.

Business minister Mark Prisk and government chief construction adviser Paul Morrell will represents the government on the new board.

Neither the eventual size of the board nor the identities of the other participants have yet been disclosed.

However, ministry spokesman David Leslie said: "There is no lack of volunteers from the industry side, judging from this morning's response."

It is unclear whether pension funds and other property investors will be invited to sit on the board.

Leslie said: "It depends on the terms of reference. There will be a broad range of participants, and investors will probably be part of it."

Investors have long urged the property industry to engage with government on sustainability to avoid potentially market-damaging regulation.

A lobby group, Institutional Investors Group on Climate Change (IIGCC), has 70 members, most of them pension funds.

Tatiana Bosteels, head of responsible property investment at Hermes Real Estate, one of the IIGCC's members, said: "It's clear the government needs our view to get regulation right, to come up with something that enables a sustainable market rather than damages it."

Other measures announced in yesterday's plan to "decarbonise the built environment by 2050" include an expansion of the government's financial incentives programme and reform of public procurement for infrastructure projects.

The plan comes amid rumours the senior partner in the coalition government planned to shelve some new regulations on sustainability as 'red tape'.

Energy secretary Chris Huhne responded to the rumours this week, saying: "We are certainly not going to be letting regulations go."

Yet while the property industry - and especially among carbon-conscious pension fund investors - have focused on retrofitting existing building stock, the government has focused on new development, which accounts for only 2% of annual carbon emissions.

Despite its appearance in yesterday's announcement, retrofitting lagged construction as the major issue.

"An efficient, effective and profitable construction industry is at the heart of any growing economy," Prisk said in the statement.

Regeneration would be a strong theme, said Leslie, but he implied that it would be left to the Department for Energy.

"It's important to establish what 'zero carbon' means for different industries," he said. "The property industry needs to decarbonise. This is the starting point, not the endpoint."