Introduction
7.1
Governments at all levels acknowledge the importance of transitioning Australia’s built environment to a more environmentally sustainable future. Across the last two decades, there have been many federal, state and territory initiatives to promote sustainability transitions, including ‘international commitments to carbon reduction targets; performance-based regulatory schemes for the built environment; and incentives to support the integration of renewables’.
7.2
The private sector has also demonstrated its commitment to a more sustainable built environment by implementing building sustainability rating systems such as the Green Building Council of Australia’s (GBCA) Green Star Rating and the National Australian Built Environment Rating System (NABERS).
7.3
However Australia’s built environment still accounts for almost a quarter of the nation’s greenhouse gas emissions and more than half of electricity consumption.
7.4
This chapter examines the current environmental sustainability of Australia’s built environment, specifically:
commercial office buildings; and
7.5
This chapter outlines the importance of continuing to enhance the environmental sustainability of Australia’s built environment, before considering three strategies to achieve this:
strengthening the National Construction Code minimum standards for environmental sustainability;
establishing a National Plan Towards 2050 Zero Carbon Buildings; and
extending mandatory disclosure schemes for buildings’ sustainability ratings and rating schemes in general.
Environmental sustainability of existing built environment
7.6
According to the Australian Sustainable Built Environment Council (ASBEC), the built environment accounts for almost one quarter of Australia’s carbon emissions, ‘divided equally between residential and non-residential buildings’.
7.7
Energy use by residential buildings is responsible for approximately 51 per cent of carbon emissions from buildings. The remainder arises from commercial buildings such as retail, office buildings and education and health facilities.
7.8
Most submitters to the inquiry who provided evidence on the environmental sustainability of Australia’s buildings focussed on either commercial office buildings or residential properties. The environmental sustainability of these two asset classes is examined below.
Commercial office buildings
7.9
Australia is now recognised as a world leader in the design, construction and operation of sustainable commercial office buildings. According to the GBCA, commercial office buildings in Australia routinely rank highly in international real estate ratings:
The 2016 Global Real Estate Sustainability Benchmark (GRESB) - which assessed 759 real estate companies and funds (representing 66,000 assets and $3.7 trillion in gross asset value) – ranked Australia the world’s most sustainable real estate market for the sixth year in a row.
7.10
Submitters suggested that three initiatives have been particularly instrumental in driving sustainability gains in commercial office buildings, specifically:
the Commonwealth Government’s Commercial Building Disclosure (CBD) Program;
the joint Commonwealth-state government National Australian Built Environment Rating System (NABERS); and
the Green Building Council of Australia’s (GBCA) Green Star Rating Scheme.
Commercial Building Disclosure (CBD) Program
7.11
The CBD Program is an initiative of the Council of Australian Governments (COAG). It was established by the Building Energy Efficiency Disclosure Act 2010 and is managed by the Commonwealth Department of the Environment and Energy.
7.12
The CBD Program requires most sellers or lessors of commercial office buildings above 1 000 square meters to acquire a Building Energy Efficiency Certificate (BEEC) before a building is listed on the market for sale, lease or sublease. BEECs are valid for up to a year and include:
the building's NABERS energy for offices star rating; [and]
a tenancy lighting assessment of the relevant area of the building.
7.13
The NABERS energy rating included in a BEEC typically reflects the energy efficiency of the ‘base building’, meaning an office building’s central services and common areas (for example lifts and bathrooms), excluding tenanted areas. However, if it is difficult to distinguish between base building energy usage and tenancy energy usage, then a whole building rating, which includes tenanted spaces, may form part of the BEEC.
7.14
The BEEC must be provided to potential buyers or lessees of the building and be included in any advertising material for its sale, lease of sublease. It must also be accessible on the public Building Energy Efficiency Register.
7.15
Disclosing the energy efficiency of a building through the BEEC provides all potential buyers or lessees with information about the building’s energy efficiency. This makes it easier for companies to seek more energy efficient office buildings and creates a market incentive for building owners to improve the energy efficiency of their office buildings to make them more attractive to buyers or tenants.
7.16
The CBD program is operating in conjunction with NABERS to encourage all parties involved in the purchase or lease of commercial office buildings to consider, and value, energy efficiency.
7.17
Mr Anthony Marklund, Principal ESD Engineer at Floth Sustainable Building Consultants, suggested that the CBD Program is ‘the reason that the commercial sector in Australia’s been so successful’ at improving the environmental sustainability of its office buildings. In a joint submission to the inquiry, the Australian Centre for Cultural Environmental Research at the University of Wollongong and the Faculty of Architecture, Design and Planning at the University of Sydney described environmental sustainability improvements to commercial office buildings driven by the CBD Program:
Over the first four years of its operation, the Compulsory Building Disclosure legislation delivered over $72 million in energy savings (ACIL Allan 2015). In July 2017, the threshold for disclosure was lowered from 2,000 m2 to 1,000m2. The NSW Office of Environment and Heritage estimate that this will add up to an additional 1,000 buildings to the scheme, producing an estimated $50 million in energy savings (OEH 2016).
National Australian Built Environment Rating System (NABERS)
7.18
NABERS is managed by the New South Wales Office of Environment on behalf of Commonwealth, state and territory governments. It is a national building rating scheme which assesses the operational performance of Australian commercial offices, shopping centres, hotels and residential buildings and awards a star rating reflecting efficiency. For example, a one star rating signifies a building with considerable scope for improvement, while a six star rating indicates a highly environmentally sustainable building.
7.19
Buildings can achieve a NABERS star rating in one or more of four categories:
indoor environment quality.
7.20
Assessors use performance information, such as utilities bills, to determine buildings’ energy efficiency, water usage, waste management and the quality of its internal environment.
7.21
Under the CBD Program, most commercial office buildings above 1 000m2 are required to obtain a NABERS energy efficiency rating before they are sold, leased or subleased.
7.22
According to the Australian Centre for Cultural Environmental Research at the University of Wollongong and the Faculty of Architecture, Design and Planning at the University of Sydney, requiring the disclosure of NABERS energy ratings during the sale or lease of commercial office space has driven significant energy efficiency gains:
… [NABERS] has proven particularly catalytic in driving energy transitions in the commercial built environment in Australia. To date, NABERS energy ratings have been used to rate 72 per cent of Australian office space, with rated buildings reporting an average of 8.5 per cent improvement in energy efficiency.
7.23
They also noted that the operation of the CBD program in conjunction with NABERS has highlighted the financial value of sustainable buildings:
This legislation has factored energy efficiency into the financial decision-making process of commercial office building investors and tenants. Tenants are not only seeking to manage their reputations as good environmental citizens by leasing high-performing office space, but they are also motivated by operational reasons – managing ongoing costs.
In markets operating at close to capacity, such as those in the CBDs of Sydney and Melbourne, NABERS has become a way of knowing a building, and a proxy for the quality of office space. It informs portfolio investment decisions and management strategies of property corporations, and shapes competition for quality tenants. The impetus to perform competitively in ratings terms is feeding market demand for innovative ways to enhance energy performance.
Green Star Rating Scheme
7.24
The Green Building Council of Australia (GBCA) describes its Green Star Ratings as ‘Australia’s only national, voluntary and holistic rating system for sustainable buildings and communities’ developed by Australian industry for the Australian market.
7.25
The GBCA’s Green Star Ratings are much broader than other building rating schemes, such as NABERS. They assess both environmental and liveability factors at each stage of a building’s lifecycle from design and construction through to operational performance. GBCA awards Green Star Ratings in four categories:
Design and As Built – assessing the environmental sustainability of the design and construction of brand new buildings or major refurbishments;
Performance – examining the ‘operational performance’ of buildings;
Interiors - assessing the environmental sustainability of the interior fitout of a building; and
Communities - assessing the design and development of sustainable and liveable precincts and neighbourhoods.
7.26
In awarding a Green Star Rating for Design and As Built, Performance or Interiors, GBCA assessors consider both environmental and liveability factors including:
the energy and water efficiency of a building;
the environmental impact of the construction materials and emissions associated with the build;
land use and the ecological impact;
how management of the buildings supports sustainable outcomes;
whether the building facilitates occupants use of environmentally friendly transportation; and
whether innovative practices are being deployed to support sustainability outcomes.
7.27
In awarding a Communities star rating, GBCA assessors examine how a precinct or community facilitates good governance, liveability, economic prosperity, minimises environment impact and supports innovation. The Communities rating is discussed in further detail in Chapter 11–Global Best Practice.
7.28
The Committee heard evidence that both governments and the private sector are embracing GBCA’s Green Star Ratings to establish design parameters for, and to verify the performance of, high quality, environmentally sustainable and liveable buildings.
7.29
Parramatta City Council noted that it is mandating minimums of five or six Green Star Ratings as part of the design specifications for its urban renewal projects. Similarly, the Queensland State Government has set Green Star Rating targets to improve the sustainability of its building portfolio.
7.30
Floth Sustainable Building Consultants described its use of Green Star Ratings to verify the environmental and liveability credentials of over 45 construction projects, including office buildings, residential units and schools. For example, Floth’s Brisbane headquarters:
Notably, our new head offices in Brisbane received the first 6-star Green Star design as built v1.1 certified rating in Australia in 2015… it is the first building to meet the Australian Sustainable Built Environment Council's standard definition of a zero-carbon building. It was recently also awarded the first 6-star NABERS indoor environment rating in Australia and it was the first Australian winner of the World Green Building Council Asia-Pacific leadership in sustainable building design and performance commercial category.
7.31
According to GBCA, there are over 1 260 Green Star rated projects across Australia, notably:
37 per cent of Australia’s office space is Green Star certified;
5 per cent of the workforce head to a green office each day;
40 000 people live in Green Star-rated apartments;
1.3 million people visit a Green Star-rated shopping centre each day;
170,000 people are moving into Green Star communities – this is double the size of Toowoomba, Australia’s 13th largest city.
7.32
GBCA submitted that the environmental impact of Green Star rated buildings is significantly lower than that average Australian building:
Produc[ing] 62 per cent fewer greenhouse gas emissions than average Australian buildings;
Us[ing] 66 per cent less electricity than average Australian buildings;
Consum[ing] 51 per cent less potable water than minimum industry standards; and
Recycle[ing] 96 per cent of their construction and demolition waste.
7.33
Furthermore, GBCA submitted that a Green Star Rating can deliver financial benefits including:
lowering building operating costs;
increasing the value of built assets;
reducing risk and ‘future proof’ investments; and
delivering a competitive edge in a crowded marketplace.
Residential buildings
7.34
Commonwealth, state and territory and local government regulation and programs have also supported sustainability gains in residential buildings, particularly newly constructed homes.
7.35
Australian Sustainable Built Environment Council (ASBEC) presented analysis based on data from the Office of the Chief Economist which showed that energy efficiency measures targeting residential buildings implemented between 2005 and 2015 have driven a 15 per cent reduction in energy usage, compared to projected energy usage. It also noted that improvements have been driven, in large part, by increases to the National Construction Code’s (NCC) minimum energy performance standards.
National Construction Code (NCC)
7.36
The NCC is maintained by the Australian Building and Construction Board (a Council of Australian Government standards body) and is administered by state and territory governments. It establishes minimum standards for safety, health, amenity and environmental sustainability in the design and construction of new buildings or the renovation of existing buildings in Australia.
7.37
While the NCC’s primary focus is building safety, it includes energy efficiency standards for residential properties which incorporate building materials, insulation, window glazing and utilities such as hot water.
7.38
State and territory governments supplement the NCC with their own regulation requiring environmentally sustainable residential buildings, for example the New South Wales Government has implemented a Building Sustainability Index (BASIX). Local governments may also have their own development controls accounting for local conditions. However, they primarily rely on Commonwealth and state regulation.
Strategies to improve the sustainability of Australia’s built environment
7.39
Although the environmental sustainability of Australian commercial office and residential buildings has improved, there is broad recognition amongst stakeholders that further sustainability gains are needed. Witnesses to the inquiry suggested that improving the environmental sustainability of Australia’s built environment would:
complement action to mitigate climate change;
support the Australian Government to achieve its greenhouse gas emission reduction target of between 26-28 per cent below 2015 emission levels by the year 2030;
deliver energy cost savings to home owners and businesses and support the Australian Government to achieve its energy productivity target of 40 per cent between 2015 and 2030;
support international investment in Australian building stock; and
avoid future inefficiency costs associated with the built environment.
7.40
As already noted, recommendations for improving the sustainability of Australia’s built environment include:
strengthening the NCC minimum performance standards for environmental sustainability;
the establishment of a National Plan Towards 2050 Zero Carbon Buildings; and
the extension of mandatory disclosure schemes for buildings’ sustainability ratings and rating schemes in general, beyond commercial office buildings to other classes of buildings.
7.41
These recommendations are considered in more detail below.
Strengthening the National Construction Code (NCC)
7.42
The Committee heard evidence that the NCC’s energy efficiency performance standards for residential buildings should be strengthened to improve the environmental sustainability of Australian homes.
7.43
ASBEC and the GBCA both suggested that the residential building performance standards required by the NCC are outdated and fall short of best practice:
While energy efficient design and technology continues to improve – with many buildings in Australia now energy neutral or energy positive – the… gap between minimum practice outlined in the NCC and best practice grows wider by the year.
7.44
Concerns were also raised that there is little market incentive for developers or investors in residential properties to go beyond the performance standards required by the NCC. Ms Romilly Madew, Chief Executive Officer of the Green Building Council of Australia explained why apartment developers aren’t as motivated to build sustainably as commercial asset developersthat home buyers are generally more concerned with affordability than environmental sustainability when selecting a property:
When it comes to housing, it really comes down to location, money, what they're looking for. One of our staff makes a really flippant but lovely remark when he says, 'When someone's looking for a house, they're not worried about the Paris agreement.' It's a flippant remark but, let's be serious, it's possibly true. They're looking for close to a shop, close to a school, whether it has a view and whether they can afford it. The householder wouldn't know what the term 'sustainability' meant.
7.45
Home buyers’ relative ambivalence to the environmental sustainability of residential properties provides little motivation for developers to construct homes that exceed the performance requirements of the NCC. Ms Megan Motto, Chief Executive Officer of Consult Australia, pointed out that developers build for sale:
We heard about the split incentive issue that exists in the residential sector, for example, where the builder of the asset is building to sell. So there is no long-term incentive to make that building more sustainable because they're going to sell it and that will become someone else's problem.
7.46
Similarly, CSIRO shared research indicating that, like developers, investors have little incentive to improve the sustainability of their residential assets. This leaves low income renters vulnerable to accommodation which is poorly adapted for climate:
At the moment, there is a ‘split incentive’ between landlords and their tenants that discourages investment in sustainability retrofits, where those paying the utility bills are not the building owners (Gabriel et al. 2010). This has been identified as a particular problem in private rental low income housing, where tenants that are vulnerable to extreme heat events, have limited options for climate adaptation (Barnett et al. 2013).
7.47
A number of stakeholders to the inquiry reasoned that, as residential properties are generally built to the requirements of the NCC, raising those minimum performance standards offers a good opportunity to reduce greenhouse gas emissions and contribute to Australian Government’s reduction targets. Mr Johnathon Cartledge, Head of Public Affairs at the GBCA suggested that updating the NCC is critical to achieving targets:
…there is still an enormous opportunity, with all the built form that is delivered to the minimum standard, to meet the emissions potential we need. Raising minimum standards through the National Construction Code to do that is critical.
7.48
ASBEC made a similar point, adding that raising NCC performance standards would also reduce operation cost of buildings:
Lifting minimum standards for energy efficiency in the NCC will ensure that new buildings in Australia do not miss opportunities for emissions reduction, as well as creating opportunities to reduce running costs over the life of buildings.
7.49
The Northern Alliance for Greenhouse Action suggested that ‘strong energy efficiency standards’ would increase the resilience of buildings in the face of rising temperatures.
7.50
The Property Council of Australia pointed out that the NCC’s energy performance standards for commercial buildings will be reviewed and strengthened in 2019 and argued that residential buildings should be examined at the same time. It advocated for the establishment of a trajectory for further increases to the energy efficiency performance standards of the NCC, to send a clear signal to developers.
7.51
GBCA also recommended the introduction of a trajectory for increases to the energy efficiency standards required by the NCC. It suggested that such a long term view would support industry to prepare for changes:
To ensure future updates to the NCC occur regularly, a trajectory should be established for future energy provisions in the NCC. A shared ultimate goal of net zero emissions for the NCC supported by a trajectory of planned updates over time will encourage innovation and regular upskilling of industry, and deliver more high performing buildings.
7.52
However, it did note that although the costs of building more sustainable office buildings is largely insignificant, there may be additional cost associated with building more sustainable residential buildings, such as apartments:
If you are talking about now and we're just talking about a normal building in the city, some of the developers will say to us that the only cost that they will have—this is on record—will be the cost of registration… You wouldn't have said that five, if not six, years ago. But, from today, it is just the way that it's built…If you're looking at different asset classes, I think there would be a cost and we have to be realistic about that. If we're looking at apartment buildings, that asset class is not as sophisticated.
7.53
The Housing Industry Association (HIA) suggested that industry requires further time to ‘catch up’ with existing NCC energy efficiency performance standards and contended that the current standards should be maintained:
Energy efficiency standards for residential buildings were introduced into the National Construction Code in 2003 and have been increased twice, along with numerous changes being undertaken in the intervening years to improve the application of these requirements.
The residential building industry needs time to ‘catch up’ with the constantly changing standards and effectively implement these into their business practices.
7.54
Further, it warned that increasing the NCC energy efficiency performance standards would result in marginal sustainability gains, unjustified by associated compliance costs.
7.55
ASBEC also acknowledged that there are uncertainties surrounding the construction industry’s compliance to the existing energy efficiency performance standards:
Even though homes are supposed to be built to six-star NatHERS ratings, there's not a lot of evidence to show that they actually are—in fact, I think we've seen from the very broad-ranging conformance and compliance issues across the country that enforcement of the code. At the very basic level, it looks like energy efficiency is not being embedded according to the minimum standards.
7.56
Nonetheless, it recommended that the Australian Government establish strong minimum efficiency standards and a forward trajectory for future increases to the standards:
Set strong mandatory minimum standards: Creation of strong minimum standards for buildings, equipment and appliances, and establishment of a forward trajectory for future standards.
7.57
While the Queensland Government did not express a view on strengthening the environmental sustainability performance requirements of the NCC, it did note concerns regarding what it termed the ‘increasingly complex’ regulation around residential buildings.
National Plan Towards 2050 Zero Carbon Buildings
7.58
Several stakeholders, particularly ASBEC, urged the Australian Government to implement a national plan to achieve a zero carbon emitting built environment by the year 2050:
Establish national plan towards zero carbon buildings by 2050: This includes supporting policy frameworks, governance arrangements with interim and long-term targets, clear responsibility at Ministerial level, coordination across different government levels and departments and public reporting requirements.
7.59
In presenting the recommendation, ASBEC referred to its Low Carbon, High Performance report, produced in 2016, which advocated for a range of policies to reduce carbon emissions from the built environment, including a National Plan Towards 2050 Zero Carbon Emissions. The report acknowledged that achieving a carbon neutral built environment will be challenging as ‘impediments are numerous and complex’:
Numerous stakeholders are involved, including multiple levels of government, multiple different government departments, agencies and regulators, and multiple private and community sector stakeholders.
7.60
Nonetheless it suggested that a zero emissions built environment is not only possible by 2050, but ‘would deliver almost $20 million in energy cost savings for households and businesses by 2030’ and contribute more than 10 per cent of the Australian Government’s 2030 carbon emissions reduction target.
7.61
ASBEC argued that a national plan is needed to guide the long term, coordinated action that is required to reduce carbon emissions from the built environment:
Achieving a step change in buildings will require a sustained national effort. A National Plan Towards 2050 Zero Carbon Buildings dedicated to buildings will help to drive this effort, and coordinate actions across the country.
7.62
It suggested that a national plan would cultivate the ‘stable governance arrangements’ needed to encourage all stakeholders to work towards reducing carbon emissions from the built environment:
… stable and certain governance arrangements can send a strong signal to the community, companies and investors and underpin planning and investment of time, resources and effort to prepare and innovate.
7.63
However, ASBEC did recognise that a National Plan Towards 2050 Zero Carbon Emissions would need to incorporate policies which go beyond the built environment, addressing issues such as the electricity market and energy efficient appliances. This would make it difficult for just one Minister to implement.
Extension of mandatory disclosure and rating schemes
7.64
The success of the CBD program in driving sustainability gains in large commercial buildings has led to support for:
the CBD program to be extended;
the introduction of a similar environmental sustainability disclosure scheme, targeting residential buildings; and
broader government use of industry building rating schemes.
Extension of the CBD Program
7.65
The Australian Centre for Cultural Environmental Research at the University of Wollongong and the Faculty of Architecture, Design and Planning at the University of Sydney suggested that the CBD Program could be leveraged to improve the environmental sustainability of smaller commercial office buildings, as well as the management of larger office buildings.
7.66
They recommended increasing the range of commercial office buildings subjected to the program by lowering the participation threshold from commercial office buildings sized 1 000m2 and above to those sized 500m2 and above:
This may provide incentive for owners of ‘mid-tier’ B, C, and D-grade assets to consider energy consumption as part of their upgrade and maintenance processes. Traction around energy efficiency has historically been difficult across these assets.
7.67
They suggested that information resources and ‘appropriate incentive measures’ be provided to support the owners of smaller commercial office buildings to participate in the CBD Program.
7.68
The two groups also proposed that the CBD Program be strengthened by mandating the disclosure of NABERS energy ratings for both the base building (common spaces such as bathrooms and lifts) and tenanted spaces, for all commercial office buildings sized 1 000m2 and above which are subject to the program:
Currently… only the base building [common spaces and services, such as lifts or bathrooms] is mandated for compulsory disclosure. Yet tenancies are currently responsible for more than half of a building’s energy consumption.
7.69
They contended that extending compulsory disclosure to tenancies would motivate large corporate tenants to ‘demonstrate their commitment’ to energy efficient performance, in the same manner that building owners do, ‘especially where they hold a public and visible sustainability agenda’.
Rating disclosure scheme for residential buildings
7.70
A range of stakeholders to the inquiry were of the view that an environmental sustainability rating disclosure scheme, similar to the CBD Program, should be introduced to facilitate sustainability gains in residential buildings.
7.71
The HIA suggested that introducing an online, voluntary disclosure scheme would promote the improvement of older, less energy efficient residential buildings, constructed before energy efficiency standards were mandated by the NCC. It believed that such a scheme would support owners to identify how best to improve their properties and suggested that the scheme could eventually be transitioned to mandatory disclosure at the point of sale:
… home owners must have access to a reliable and cost effective method to determine what improvements can be made. The Commonwealth Government should lead the introduction of a free online voluntary disclosure scheme for residential buildings, with the capacity for the scheme to be expanded in the future to a mandatory disclosure mechanism that is triggered at the point of sale or lease of an existing home.
7.72
ASBEC supported the implementation of a similar National Framework for Residential Ratings, to ‘assess the sustainability of residential buildings, set minimum standards, benchmark building performance, and communicate value’. Ms Suzanne Toumbourou, Executive Director at ASBEC argued that such a scheme would support home owners to understand the energy efficiency of their home and identify how to improve performance.
7.73
The Property Council of Australia also urged the Australian Government to develop ‘a nationally consistent approach to residential ratings’, pointing out that individual jurisdictions are implementing a patchwork of different rating schemes in the absence of a national approach:
In the absence of Commonwealth leadership, jurisdictions have begun developing tools offering ratings and performance metrics for individual elements of the sustainability performance of housing. This increases complexity, confusion and cost for industry and consumers alike.
A single framework, applied consistently across jurisdictions, will result in better sustainability outcomes and encourage continuous improvement.
7.74
Ms Toumbourou noted that Victoria has already piloted a scheme on a voluntary basis:
In Victoria they have piloted the Victorian Residential Efficiency Scorecard, which basically looks to apply a star-rating to a home... The pilot occurred earlier this year and they are exploring how they might take this to market on a voluntary basis over the next year.
7.75
Ms Romilly Madew described a thermal performance rating scheme for residential buildings operating in the Australian Capital Territory. She noted that it has already had some positive effect, although it could be strengthened.
7.76
Furthermore, Ms Madew informed the Committee that GBCA is currently developing an online rating tool to educate home buyers about the practical value of environmental sustainability in residential buildings:
… what a householder is looking for is fundamentally different to what the industry is looking for. They're more looking for, 'Can I afford this on energy bills? Does it have a view? Is there comfort? What's the air like? If it's an apartment building, is it managed efficiently? Is it close to a park? How close is it to a school? How close is it to a train station?'…
I believe that in the future we will be creating the type of rating tool that actually listens to the consumer and meets the needs of the consumer. Hopefully we will take them on a journey and they will buy the green apartment because it means something to them...
Government use of industry rating schemes
7.77
Stakeholders to the inquiry also advocated for the broader application of industry developed building rating schemes, such as the GBCA’s Green Star Ratings. Mr Anthony Marklund suggested that the Australian Government could require Green Star Ratings for its portfolio of buildings as well as for ‘buildings that people actually inhabit’. He suggested that the Australian Government could require stakeholders to achieve Green Star Ratings as part of City Deals:
In terms of what the federal government's role could be in enabling and embedding sustainable building outcomes, it should be to require measurement verification plans as part of city deals, including Green Star ratings, to receive a final payment for the deal.
7.78
However, GBCA did acknowledge that building Green Star Rated buildings can be more expensive, although not significantly so:
In order to dispel the myth that Green Star is too expensive, in 2014 the GBCA launched the Green Star Financial Transparency Innovation Challenge, with the aim of increasing the information available to industry and government on the costs and benefits of sustainable building. On average, developers/building owners are achieving Green Star ratings with 3 per cent of their overall project budgets. The data shows that Green Star projects can be delivered for less than one per cent of the overall project budget. On average, projects are spending an additional:
1.5% per square metre to achieve a 4 Star Green Star rating;
2.7% per square metre to achieve a 5 Star Green Star rating;
3.2% per square metre to achieve a 6 Star Green Star rating.
Committee conclusions
7.79
The Committee believes that enhancing the environmental sustainability of Australia’s built environment is critical to maintaining the prosperity, liveability and resilience of settlements of all sizes.
7.80
The Committee recognises that substantial sustainability gains have already been made, particularly amongst top tier commercial office buildings which are now well established as examples of global best practice in office design. However, it is firmly of the view that more can be done to facilitate ongoing improvement to the environmental sustainability of Australia’s buildings.
7.81
To this end, the Committee sees scope for expanding the successful CBD Program to require the participation of smaller commercial office buildings, sized 500 metres squared and above. The Committee acknowledges that participation in this program may be a significant impost on smaller operators and support may be required to ease their transition into the program.
7.82
The Committee also supports the expansion of the CBD Program’s mandatory disclosure requirements to include information about the energy efficiency of tenanted areas of commercial office buildings above 1000 meters squared, given that this is already occurring in some cases.
7.83
The Committee recommends that the Australian Government:
complete a regulatory impact assessment on lowering the participation threshold of the CBD Program;
investigate the feasibility and cost implications of extending the CBD Program’s mandatory disclosure requirements to include information about the energy efficiency of tenanted areas of commercial office buildings above 1000 metres squared.
7.84
The Committee heard from witnesses that a lack of market incentive for sustainability measures means that residential buildings are largely being built according to NCC minimum performance standards. It also received evidence that the construction industry is struggling to demonstrate compliance with these standards. As such, the Committee does not consider it prudent to raise the minimum performance standards contained in the NCC at this time, although it would like to see this in future. Rather, the Committee believes the market should be incentivised to implement sustainability measures beyond the standards of the NCC, through the introduction of a building rating and disclosure scheme, similar to the CBD program.
7.85
Although the Committee received little evidence regarding the environmental sustainability of other classes of building assets, such as community and industrial buildings, it anticipates that Australian Government leadership will be critical to driving sustainability gains.
7.86
The Committee heard two suggestions for driving broader improvement to the environmental sustainability of Australia’s built environment:
the implementation of a National Plan Towards 2050 Zero Carbon Emissions; and
mandating minimum environmental sustainability ratings as part of funding agreements or design specifications.
7.87
These are both avenues for investigation, but evidence to the inquiry was insufficient to draw a conclusion. The Committee would like to see the Australian Government consider these issues as part of the development of a national settlement plan.
7.88
The use of rating tools, such as Green Star, will be discussed further in Chapter 10- Global Best Practice.