It’s face off time

20 July 2011 – Two men sitting at a bar, eyes blazing. One with excitement, the other with anger. Man Number 1, a serious type from the insurance underwriting industry, has a fantastic scheme to make millions from the carbon price. And don’t worry, it will go through this time.

The other man is furious. Same issue. But this one hates the Prime Minister, hates her partner and would like them both to disappear. He owns a firm of 300 lawyers. Why should he pay an extra dollar for a carbon price and others not? Why should he subsidise someone out west with 10 kids? He doesn’t give a damn, he says. It’s socialism.  If the tax comes in he will sack people.

Sound familiar? This vignette sums up parts of the nation right now, split along the wallet line.

At the Green Capital forum run by the Total Environment Centre this week on Monday the Prime Minister Julia Gillard gave a sanguine portrayal of the challenges. Of course it’s going to be tough, she said, every major reform in this country has been fiercely resisted. (See our full story)

In property there’s a mix of sentiment, from fear about the costs –  the glass and glazing industry for instance, is worried that its investment in energy efficient, carbon saving new products will ironically be damaged by cheaper imports –  to those who can’t wait for the ink to dry on the legislation.

Green Collar
Green Collar is an example of the positives.

Started nearly three years ago in Sydney, ironically opening its doors on Black Friday on 8 October 2008 when the bottom fell out of the sharemarket, the team now has about 16 full time staff and up to 25 people in total it can call on for consulting work in a range of green work from recruitment, to carbon trading and general sustainability.

Now it’s planning to open an office in Western Australia.

From Monday when the climate change package was announced, the phones have been running hot, says co-founder Peter Hooper.

“Since the carbon package everyone’s moving straight into renewable energy [and energy efficiency for buildings], definitely. Straight away we were getting calls,” Hooper says.

Among the inquiries last week were two serious start up propositions, both in the energy efficiency for buildings market, both well funded – one by a home building company and another by a bunch of lawyers, Hooper says.

WA is already an emerging hot spot in the green economies. A chief source is demand is from mining companies searching for alternatives now that subsidies for diesel– already imported and expensive – are being phased out.

“It’s going to stimulate renewable energy straight away,” and will be sufficient to fund large scale solar, Hooper says.

Urban Development Industry Association
Urban Development Industry Association NSW chief executive Stephen Albin said,  “This debate is fraught…there are those are totally anti it and those who are for it. It’s unbelievably confused and there are different stories coming out of everyone.”

Some estimates from the housing associations say the cost of an average house will rise by $5000 to $6000, but Albin is not convinced.

“I doubt it’s going to be any where near that expensive,” he says.

The problem is that not enough work on modeling has been done yet. By contrast in the lead up to the GST, there “everyone had done all the modeling and they knew the impact.”

Albin points to another issue: the push for a lower carbon product is no longer such a dramatic ask as when the first energy efficiency measures for housing hit the market. Then the housing lobby led a riot of protest at the measures and attacks on the Building Codes Board.

“This industry has moved in leaps and bounds in respect of energy efficiency,” Albin says.

A big issue yet to be grasped is the need to replenish old inefficient housing stock. Or at least to retrofit it – just the same as we need to upgrade commercial buildings, Albin says.

Caroline Pidcock, director Pidcock architects, said that the carbon price would have little impact on her own firm since it was already trying to reduce emissions and design for energy efficiency.

“We already voluntarily try to reduce our emissions and this will probably make us more cost effective,” Pidcock says.

“In building materials there could be some increases, but I’m not seeing it will have a bigger impact that the Aussie dollar [on imports].

“When the GST came out we were all going to die and not survive and it proved not to be true. People make adjustments and it works out.”

The reconstruction of the tax system with a carbon price will encourage low carbon behaviour, Pidcock says. Right now the pricing encourages big use of carbon.

“That might mean encouraging people to walk more or take public transport, which gives great positive side effects.

“All we have to focus on is this ‘oh my god’ [attitude]. Here we are, one of the richest nations in the world and bitching about minor change, which might help us continue the human experiment.

“It’s reprehensible that the opposition is whipping up this fear. Finally people will see it’s all bullshit.

Green Building Council of Australia

Robin Mellon, executive director advocacy and international, Green Building Council of Australia, said, “We had surprisingly little reaction to our paper (on the impact of the carbon price.”

[ see our story on this]

“The way this affects the property industry and individuals is not well understood.”

Property Council of Australia said last week it will seek a joint government–business working group to “undertake more detailed modelling of the price impacts of the carbon pollution scheme for residential and commercial property industries.”

“Comprehensive modelling should show how much abatement the scheme buys over its first three years and provide a better understanding of the potential price impacts that will occur when the scheme transitions into its full emissions trading scheme phase.

“Better targeted and designed incentives are also required to encourage building energy efficiency and improve affordability,” it said in a statement to members.

“The government’s own analysis spotlights ‘disturbing risks’ for the property and construction industry that should be addressed before carbon tax arrangements are finalised, the PCA

The PCA said positives from the plan are:

  • A large commitment to renewable energy programs that could be tailored to promote embedded generation in buildings and precincts
  • An investigation into a national energy efficiency incentive scheme that will tie together and expand existing arrangements and,
  • The potential to rationalise existing environmental reporting arrangements for large investors.

Negatives are:

  • A shrinking construction industry (compared to other major economic sectors)
  • The absence of any modelling on housing affordability – which is likely to decline as construction costs rise
  • The absence of transition arrangements for fixed price contracts, such as leases
  • The lack of protection from unwarranted energy price increases flowing from the electricity sector.

For details see

Australian Glass and Glazing Association executive director Nigel Carpenter said, “there is no doubt” the tax will have a detrimental effect on his members.

“The government is providing transitional assistance to the only float glass manufacturer in Australia, but not the many glass processing businesses in Australia that create value added end products such as laminated, toughened and heat strengthened glass, as well as double glazed units,” Carpenter said.

The big problem is the amount of investment  the industry has already undertaken to produce more energy efficient products and these manufacturers are heavily trade-exposed, he says.

As can be expected the association advocates for a delay or a subsidy for the industry.

The Fifth Estate  – green buildings and sustainable property news