Parliament House, Canberra

by Lynne Blundell
17 June 2010 –
The Senate committee conducting the inquiry into the Building Energy Efficiency Disclosure Bill last month delivered its final report, recommending that the Bill be passed, with some changes. In doing so it appears to have glossed over opposition to the proposed scheme, claiming it has “widespread support” despite key industry players expressing concern that the scheme has major flaws.

Both the Property Council of Australia and Lend Lease/WSP Lincolne Scott were outspoken in their opposition to key aspects of the Bill during the inquiry process, in particular the scheme’s use of the NABERS rating tool in its current form. However, NABERS’ Matthew Clark from NSW Department of Environment, Climate Change and Water – which is managing the tool – flagged in an extensive interview with The Fifth Estate in March that a major review of the rating tool was underway partly in response to industry criticisms.

This week Mr Clark told The Fifth Estate that his department was continuing to lead a review of NABERS Energy, “to support the industry that depends upon NABERS to measure and understand their building sustainability.

“We are currently in discussions with the peak industry groups through our Stakeholder Advisory Committee about potential adjustments to the rating to ensure NABERS Energy continues to provide fair and effective results,” he said.

In its submission to the Senate Committee, the Property Council recommended that, “an alternative rating system to NABERS that delivers accurate environmental performance disclosure should be negotiated with industry to provide a complementary compliance pathway.”

Property Council chief executive Peter Verwer told The Fifth Estate that if the mandatory disclosure scheme goes ahead as it stands the government will be overlooking the industry’s objections. He says he has major problems with the scheme as it is currently proposed because it is poorly designed, too complex and has major flaws.

“We haven’t opposed increasing the transparency of energy use in buildings. But we do have fundamental issues with the scheme as it is currently proposed. It should focus on the base building performance and the tenant lighting aspect should be scrapped,” Mr Verwer said.

“There should also be an alternative pathway to NABERS. We have always supported NABERS but it has well known technical flaws. The deal was that NABERS would be fixed but it will be months at best before that is the case.

“We were also told there would be a thorough, transparent public review of NABERS but that hasn’t happened.”
Mr Verwer told the Senate Committee inquiry into the Bill that while recognising that NABERS was currently under review, he believed NABERS needed to be overhauled.

“We support NABERS. We helped to launch NABERS when it was ABGR. We promote NABERS. But that is when it was a voluntary tool. The sort of rigour that is required for a mandatory tool is far higher than for a voluntary tool. For several years we have been requesting that a total analysis and overhaul of the NABERS based building energy tool be undertaken. That process has commenced but it is not finished yet. There are classic flaws in that tool. Lend Lease and WSP Lincolne Scott have outlined them in their submissions and we agree with them, ” Mr Verwer said.

Peter Verwer

The Property Council’s submission cited inconsistent allocation of ratings between different states as one area where the current NABERS tool could be improved: “Victorian buildings suffer an effective penalty of up to one Star compared to NSW—this means that a 3 Star building in Sydney may only achieve a 2 Star NABERS rating in Melbourne.”

However, NABERS has pointed out in its discussion of its review that the inconsistencies only appear at lower rated stars such as around 2.5 and disappear at the higher levels.

Leading engineer Steve Hennessy from Steenson Varming also backed this view.and said the variations between states were not significant

The variation needed to be “put in perspective. And I don’t even know whether you should call it an inconsistency,” he said in a separate interview with TFE.

“In Victoria it is a little harder to get a higher rating than it is in NSW at the lower end of the scale. In other words  if you were expecting a two and half star rating it might be two star in Victoria.”

“Any decent property owner is targeting the higher rating.”

Mr Hennessy also defended NABERS, saying several international experts had cited NABERS as a “leading way of thinking. They say, ‘why are you asking us, you’ve got the best system in the world’.”

Matthew Clark also disputed the claim that there had not been transparency, telling TFE there was a full public consultation for the proposed Building Energy Efficiency Disclosure regulation, with responses received from across the industry.

“The overwhelming majority of stakeholders expressed support for the use of NABERS Energy as the accredited rating tool through the consultation process. A small number of stakeholders did raise some concerns. We are addressing these concerns, and anticipating the future needs of the industry, through the NABERS Energy review.

“Our priority is to continue to support the needs of the industry that now depends on NABERS to understand and communicate their sustainability.  We are committed to balancing technical excellence with ease of use and communication.”

“NABERS is in fact the world leading tool for rating the actual environmental performance of buildings.  It enjoys tremendous industry support throughout Australia.  After 10 years, the take-up of NABERS is stronger than ever, with 40 per cent more ratings this financial year compared to last year.”

“Buildings containing 11 million square metres of office space, or 50 per cent of the national office market, have rated their energy efficiency using NABERS Energy.  Property organisations have embedded NABERS in their management practices and rely upon the rating system to understand and communicate their sustainability.  NABERS has created real change in the Australian property market, by enabling stakeholders to understand and control their environmental performance relative to their peers.”

Changes to the Bill recommended by the Property Council in its submission include:

  • an extension of the transition period
  • the provision of an alternative approach to NABERS
  • simplified exemption provisions
  • clearer definitions of key terms
  • reduced penalties
  • more rational powers for auditors

Minister for Climate Change, Energy Efficiency and Water, Penny Wong this week announced that the lighting provisions would be deferred to the second year of the scheme and she also announced there would be reduced penalties.

The Property Council was also concerned there would be a logjam caused by the number of buildings needing to get a new NABERS rating and recommended the transition period for sale of buildings be lengthened to 24 months and that the disclosure requirements for leasing transactions should also be delayed for two years until “the proposed tenancy metric has been released, tested and reviewed in line with industry capacity.”

In his interview with TFE NABERS’ Matthew Clark dismissed forecasts of logjams because so many property owners had already obtained NABERS ratings – 60 per cent in the Sydney CBD and 50 per cent of CBDs nationally on average.

Che Wall

Ché Wall, managing director of WSP Lincolne Scott, and Maria Atkinson, global head of sustainability for Lend Lease, have also been harsh critics of the NABERS ratings tool, claiming it is inaccurate as it distorts or “normalises” its reporting of CO2 intensity per square metre by correcting for externalities such as hours of use, variations in climate across states and numbers of computers in a workplace.

In addition to its inaccuracies, Wall and Atkinson believe NABERS’ reliance on the use of independent expert assessors makes it very expensive to operate.

Maria Atkinson said the number of “fixes” required to make the NABERS tool suitable for the mandatory disclosure scheme would mean the new version was so different it would not be NABERS any more, and all existing ratings would be invalidated.

“The update detailed the areas of technical fixes that are being necessitated by the proposal to use NABERS Energy in the federal government’s mandatory disclosure scheme. As these changes are extensive, it can only be concluded that NABERS is not currently fit for purpose. Even with these fixes, the carbon accounting within NABERS Energy is considered fundamentally incompatible with the aims of calculating and reporting greenhouse gas emissions.

“The normalised energy benchmarks for 4 Star rating (base-building and tenancy) are different between the various states. Therefore the improvement from a 4 to 5 Star rating represents a different percentage reduction in energy consumption in each state – this is different to what most members of the industry expect, which is that a 1 star rating equates to about a 30 per cent reduction in energy consumption,” said Ms Atkinson.

These discrepancies made it more difficult for a 4 star base-building rating to be achieved in Melbourne, Adelaide and Perth, but easier in Tasmania, she said. For NABERS tenancy ratings it was more difficult for a 4 star NABERS tenancy rating in Melbourne and Perth but easier in Sydney and Canberra.

Maria Atkinson

Despite these objections, the Senate committee did not recommend replacing the NABERS tool under the scheme, saying it in its report that it understands the NABERS Energy rating system was currently under review with a view to addressing technical flaws and stakeholder concerns with the system.

“While the review is confidential at this stage, the committee understands that the proposed changes to NABERS are intended to be released for consultation over the coming months,” the report said.

The Senate Committee has taken on board some of the other industry suggestions regarding the need for a broader measurement of a building’s environmental impact. It recommended in its report that the Building Energy Efficiency Certificates issued under the scheme contain information about a building’s greenhouse gas emissions which is consistent with relevant Commonwealth schemes, including the National Greenhouse and Energy Reporting Scheme.

The Committee said the benefits of doing this were twofold:

“It would inform potential purchasers and lessees of the carbon footprint of an office space, albeit with the operational impacts of the most recent occupant embedded in the data. Second, it would prepare the broader commercial market for the future introduction of a carbon trading scheme and help to transition the market to a low carbon future.”

This is a key concern for Lend Lease/WSP Lincolne Scott as they argue that the use of the NABERS scheme will not provide meaningful information to existing policies and schemes that report energy and greenhouse performance, such as the National Greenhouse and Energy Reporting Scheme and the Energy Efficiency Opportunities program, as the information it gathers is not complementary with those schemes.

The Senate Committee rejected this, saying the federal Department of Climate Change and Energy Efficiency had informed it that contrary to the concerns expressed by Lend Lease “the information provided for disclosure is aimed at allowing meaningful comparisons of building energy efficiency performance. Data required under the Bill can be used to calculate information for NGERS, EEO or other purposes. This information could also be of value in a [carbon] trading scheme.”

Mr Wall said he found the inquiry process for the Bill disappointing.

“These type of processes are quite disappointing when you make submissions in good faith and then a politically aligned report comes out saying ‘yes that’s all well and good and this is what we’re going to do’,” says Wall.

“You would hope these processes would be an opportunity to make positive changes. We said here is a chance to add value if it is done well and the process is technically robust. The committee appears not to have taken these suggestions on board.”

Last year Lend Lease and WSP Lincolne Scott proposed an Efficient Building Scheme, which was the basis of a Greens’ bill rejected in March by the Senate. This scheme was also submitted (along with a total of 187 submissions) to the Prime Minister’s Task Group on Energy Efficiency.
The EBS looks at “raw” CO2 emissions and provides a carbon footprint average for industry and building types. It proposes the establishment of a cap and trade scheme for all non-residential buildings including offices, retail centres, hotels, hospitals and schools. This contrasts with the government’s mandatory energy disclosure program, which only applies to commercial office buildings.

But the EBS was never meant to be an alternative to mandatory disclosure, said Mr Wall. Rather, it was a complementary scheme that put a money value on carbon. And it would work well alongside a mandatory disclosure scheme that was technically robust.

However, the current review of the NABERS tool had been less than transparent, said Mr Wall, with DEECW now “caught between a rock and a hard place” because if they significantly change the ratings method so it is suitable for the mandatory disclosure scheme it will materially affect existing ratings.

“It would be better to come up with a totally new tool for mandatory disclosure. NABERS was a world leader when it first came in, back when it was ABGR, but now the rest of the world is moving on to methods that take into account carbon measurements across world borders and corporate social responsibility. The worst answer for people who own buildings in different countries is for tools that are parochial and can only be applied in one market. The cost of compliance becomes enormous.”

The Property Council’s Mr Verwer agreed.

“Buildings are owned across portfolios and across geographic boundaries. At the very least the ratings tool should be consistent across states. Ideally it would conform to the United Nations Common Carbon metric.”

There is no reason, he said, why NABERS could not be changed to allow it to conform to the UN Common Carbon Metric.

“It could be done but it would take a more concerted effort to fix the tool than is currently taking place,” Mr Verwer said.

Matthew Clark

Matthew Clark disputed that NABERS was costly and said it provided a world class method of measuring energy efficiency.

“The simple approach taken by NABERS, relying on readily available data, ensures that the costs of rating a building with NABERS are very low,” Mr  Clark said.

“NABERS is more than just a carbon accounting tool – it is also an energy efficiency measure.  With so many buildings rated, Australia is now in a unique position worldwide of having a deep understanding of the efficiency of their buildings which can be readily communicated.”

The Building Energy Efficiency Bill 2010 is currently before Parliament and there is, of course, no obligation for the Senate to adopt the Senate Committee’s recommendations in its final decision.

But, it seems they might be listening, judding by Senator Wong’s  announcement this week at the Built Environment Meets Parliament conference in Canberra.

The Senate Committee’s recommendations in its final report include:

Recommendation 1
That the Department of Climate Change and Energy Efficiency continue to work with the relevant industry sectors and state authorities to ensure that the Building Energy Efficiency Certificates issued under the scheme contain information about a building’s greenhouse gas emissions which is consistent with relevant Commonwealth schemes, including the National Greenhouse and Energy Reporting Scheme.

Recommendation 2
That the government consider delaying the lighting measurement component of Building Energy Efficiency Certificates until the Department of Climate Change and Energy Efficiency has had sufficient time to develop, test and consult on the appropriate tool for measuring the efficiency of lighting.

Recommendation 3
That the government give consideration to whether the penalties proposed to be imposed by the Bill are appropriate.

Recommendation 4
That, subject to the recommendations contained in the report, the Senate pass the Building Energy Efficiency Disclosure Bill 2010.

The full report can be seen here.

lblundell@thefifthestate.com.au