When commonsense isn’t working – regulation needs to step in

It has been said repeatedly that improving the performance of buildings is one of the most powerful and practical methods available for dialling down on anthropogenic greenhouse gas emissions. What stands in the way is a reluctance on the part of many building owners to take action beyond simply switching to green energy retailers for their electricity supplier.

This is where programs such as the Australian Commercial Building Disclosure Program (CBD), UK’s Minimum Energy Efficiency Standard and Singapore’s Building Energy Benchmarking requirements provide the necessary impetus through regulation.

There are also the motivated exemplar asset owners and asset managers that have acted ahead of regulation, out of a sense of corporate social responsibility and appreciation of both the short-term and long-term business case. Lower operating costs and securing asset value and relevance into the future are obvious and common-sense incentives!

The expansion of the NABERS rating tools to encompass new asset classes such as retail stores, schools, and the new Energy Performance Indicator for buildings not covered by existing tools indicates that market interest in understanding energy use is shifting well beyond commercial offices.

That said, there are still too many asset owners and asset managers in Australia that are unmotivated to improve the energy efficiency, passive performance and emissions footprint of their buildings. For this reason, the proposed expansion of the Commercial Buildings Disclosure Program is welcome news.

What is puzzling, however, is that the timeframes in the roadmap signal a depressing lack of urgency.

Costs of delay vs the swift wins

For new asset classes proposed to be ushered into the scheme, the target date for implementing minimum energy performance standards is around 2030. This means there will be no immediate pressure on large energy users, such as data centres, retail shopping centres, hotels, and private hospitals, to significantly contribute to Australia's Nationally Determined Contribution Goal under the Paris Agreement of 43% emissions reduction by 2030.

It also means that efforts to transition the national energy grid to 100% renewable will probably need to plan for an ongoing level of energy consumption that is greater than it technically should be.

There are numerous fast wins for reducing energy use from a large building or facility, including retrofit of smart energy monitoring and management, lighting upgrades, improving air tightness of the building, reducing solar gain in summer and heat loss in winter through installation of blinds, switching from gas boilers to heat pumps, and so forth.

Even mandating basic energy audits and a NABERS rating will reveal energy reduction opportunities, as this is part of the deliverables for any audit conducted in accordance with the relevant Australian Standards.

The potential wins for both energy efficiency and emissions reductions are also often greater in older buildings that were designed and commissioned before the introduction of mandatory energy efficiency provisions in the National Construction Code (NCC). Most large hospitals, hotels, retail centres and even many data centres fall into this category.

Making gas visible

Another proposal in the discussion paper for the scheme’s expansion is that disclosure is broadened in scope to encompass factors beyond energy use including Scope 1 emissions from on-site sources such as gas use, diesel use and refrigerants. This would be extremely valuable for several reasons.

Firstly, we know that transitioning all buildings to 100% electrification with energy derived from renewable sources is vital. What we do not know is exactly how large the task is ahead of us, as there is no central data source that shows which buildings are currently reliant on gas in building services.

Having this information would be invaluable for mapping out the supply chain requirements in terms of skills, labour, and equipment for the electrification transition. This in turn helps governments and the private sector plan for the training and accreditation of the relevant workforce and provides a sound business case for ramping up investment in local manufacturing of items such as heat pumps and smart energy control technology.

Refrigerants are another emissions source where increased disclosure is needed, to support initiatives such as introducing improved maintenance to reduce leaks, and to gain clarity on the task ahead in switching out high GWP refrigerants for low or zero GWP alternatives.

When a sector loses appetite for carrots, we need the stick.

There is no sound reason to delay pushing for mandatory improvements to the performance of all buildings that are substantial energy consumers. Given the sluggish uptake to date of NABERS ratings outside commercial office properties already subject to existing CBD legislation, regulation is most certainly the best way to proceed.

After all, it will mean reduced demand on the grid, improved asset values, reduced operating costs and reduced carbon emissions – which must be seen as a win for everyone.