6 May 2010 – In the absence of an emissions trading scheme, the mandatory disclosure legislation due out in about October is expected to work magic to transform the office property sector to a more sustainable profile.
But maybe not so much.
Sure, property owners with a premium brand to protect will care what the tenant or prospective buyer thinks of the energy rating – especially if they want a premium tenant.
In fact, market drivers to energy efficiencies and sustainability have already had a huge impact. NABERS manager Matthew Clarke told The Fifth Estate in a recent interview that he expects only incremental take-up of new energy ratings with MD because the majority of the CBD majors are already up to speed with current NABERS energy ratings, and they are already publicly displayed on the rating system’s website.
But for the small private investor or unlisted trust with one or two B or C grade buildings, the response may well be: “who cares?”.
That, at least is what Peter Moser thinks could happen.
As the Adelaide based general-manager of energy and sustainability for Johnson Controls, Moser confronts the realities of trying to convince property owners of the benefits of energy efficiency on a daily basis. And – speaking strictly from his personal perspective and not that of the company, he emphasises – the outlook from where he stands is nowhere near as good as it needs to be.
“Apathy is still dominating,” he says.
“If everyone in the market decided to do the right thing, there would not be enough skill and talent in the industry to satisfy the demand.’
The problem is the huge number of tenants who focus only on low rent.
“They are there because [the rent is] cheap and they are not going to move to another building simply because their building has only two stars.”
The feeling in Australia, he says, is that “if we improve our buildings, the economy will grind to a halt”.
Even energy performance contracts (where the energy services company installs energy efficient measures and, as part of the deal, guarantees the savings and takes on the financial risk) are hard to get across the line.
“It’s a good investment,” says Moser. “Apart from the fact that it makes the environmental footprint smaller, it’s really at no cost over 10 years. It’s a well-proven financial instrument.”
In the United States, the country so often depicted as recalcitrant in sustainability issues, turnover in EPS work for Johnson Controls, one of the largest energy service companies globally, has seen significant increases after the federal government enabled a favourable financial environment for private companies to undertake this kind of work, Moser says.
“The US is often described as the worst polluter, but they are doing fantastic stuff over there and as a result have surrounded themselves with fantastic people – great people – and the knowledge they bring is invaluable.”
The key, says Moser, is that the accumulated knowledge and intellectual property that stems from steady signals on energy efficiency in the US means the industry “gets better and better”.
“It’s capacity building,” he says.
In Australia, the scenario could not be further removed.
Investment signals sent by government are stop-start.
But what if the government mandated not just energy disclosure but energy improvement – as European countries are doing?
The result would be vastly different. Moser says that the industry could count on work and it would immediately begin capacity building,
Instead there are piecemeal reforms and confused investment signals, which add up to a lack of compunction.
Moser says the MD’s supposedly tough penalty regime could be a toothless tiger, like much other environmental legislation in which maximum penalties are rarely invoked.
“The only way it will change is if, one day, there is a compelling event. It’s like the boiling frog syndrome. People get up in the morning and the sun is shining and they say: “There’s nothing wrong”.
“The compelling event is something that develops very slowly.
“Everyone thinks we are doing well because the politicians say we are doing fantastically. “But nature doesn’t care about spin or factions or political news,” Moser says.
“Nature has a fantastic, amazing ability to forgive and it will do that for quite some time. That’s why I’m afraid that eventually it will be too late and that history will see our generation as the one dominated by greed and stupidity.
“I’m at the coalface of this. I see this every day and I’m telling you, [climate action] is not happening anywhere near as fast as it needs to.”