PETER LOVETT from Green Pass Australia offers his assessment of the upcoming Mandatory Disclosure of Commercial Building Energy Efficiency program.
What I overheard recently stopped me in my tracks. “We can’t get new business investment from Europe to establish in Australia unless we can show that we have improved energy-efficient buildings – it’s always the first question I get asked.”
I couldn’t help but recall the times in Europe where I observed stone masonry rotting off hotel walls, huge gaps under ill-fitting doors in offices and lifts grinding their way from floor to floor – and now these people were coming to Australia demanding more than they provided themselves! That was a few years ago, but it highlighted the rapid changes that have occurred around the world, with people wanting to see more responsible corporate attitudes towards energy use and emissions reductions. And fair enough – but what has brought about these changes?
In late 2008, the Commonwealth’s Department of the Environment, Water, Heritage and the Arts (DEWHA) supported documentation that proposed a Mandatory Disclosure of Commercial Building Energy Efficiency scheme. This required that the energy efficiency rating and assessment report of commercial office buildings be disclosed, where they contain over 2000 square metres of net lettable area, or for any part of a building greater than this that became subject to sale, rental or sub-rental.
Enter NABERS (the National Australian Built Environment Rating System). This system does more than keep qualified NABERS assessors in a job – it goes back to basics about survival and preserving our living and working habitats. Professor Ross Garnaut captured the essence when he observed market failures for information-based energy efficiency measures for commercial buildings.
In Australia, if we ignore emissions during construction, commercial buildings account for more than 10 percent of the nation’s greenhouse gas emissions. What’s more, these emissions climbed 87 percent for the 15 years prior to 2006, indicating a need for something to be done, since market forces were not leading the way. Of the options provided as solutions, the one chosen was the NABERS scheme, where certain property owners would have to report a NABERS energy rating to office buyers or tenants over the critical size of 2000 square metres.
Expect to see explicit action on this through advertisements about property sales or leases that disclose an energy efficiency star rating, with reports being provided to buyers and tenants, as well as a central registry to house this information. The BEEC (Building Energy Efficiency Certificate) will enable prospective owners and tenants to compare building efficiencies; the EEAR (Energy Efficiency Assessment Report) allows owners and tenants to obtain targeted advice on energysavers for their new occupancy.
These are the new acronyms, but what are the administrative arrangements that sustain such ratings? DEWHA will administer the scheme, with advice from the Department of Climate Change, while the New South Wales Department of Environment and Climate Change will continue to administer NABERS. DEWHA’s role is important as its secretariat will be responsible for hearing and responding to complaints and, presumably, initiating penalties that could be around $8000 for offenders.
Base building assessments will need to be provided to potential lessees, whenever available, where a lessor wishes to sub-lease their premises.
Improved energy efficiency technologies are starting to come into their own, since a post-2000 review of 500 buildings revealed that the median performance for a base building was assessed as 2.5 Stars without Green Power offsetting, equating to 150 kilograms of carbon dioxide for each square meter per year.
In October 2008, some 33 commercial buildings achieved a NABERS energy rating of 4.5 Stars or better, much of the improvement due to the purchase of Green Power products to offset consumption.
With higher standards being imposed in a new carbon-measured world, as well as expected higher energy prices, the stage is set for new commercial office buildings to achieve this level of performance without using Green Power offsets. What I find really interesting in all this activity, is that had we applied more environmentally sustainable business practices years ago, all of this may have been averted.
Humans, however, don’t always act in a timely manner and end up paying for their omissions later. The property investment market may show us the way forward, as it is one of the most risk-exposed sectors of the economy, where quick returns or leverage off investments often competes vigorously with longer-term decisions about what is best for the environment.
Environmental issues arose because of the human impact on our settling of this nation and trying to extract natural resources for economic gain. This inevitably put pressure on an ancient continent that was subject to salinity, soil removal into streams, rivers and oceans, as well as forest and scrub clearing that destroyed home and habitat for much of our native wildlife. Awareness of our fragile ecosystems grew as studies led the way to explain, or justify, the impacts of commercial activities on those natural systems.
But does environmental action pay dividends for business? To answer this question, I refer to a recent study by the University of California that found environmentally rated commercial buildings outperformed their peers in terms of rental and capital returns. It is imperative that Australian investors consider their environmental and social responsibilities as they help defi ne investment wisdom and prices, based on measurable ratings such as NABERS.
Certainly, the expectations of new energy-efficient commercial facilities have surprised many that could not see the changes coming. Maybe we will now be ‘the place’ in which European investors will make their investments.