Property’s big-picture agenda ignores the minor irritations

By Tina Perinotto

Watch for fireworks this year as the pressure starts to mount on exactly how the green property industry should become more energy efficient.
At the Green Cities 2010 conference in Melbourne this week the tension started to manifest in small rents that appeared in the fabric of this normally cohesive industry.

Looming large is a whole raft of measures and pressures that will make some property investors uncomfortable and others glad that everyone else will be forced to do the tough, but right, thing that they have been practising for years – and at last produce a level playing field.

Sectors like retail property – shopping centres in particular – will come in for special scrutiny. One because they guzzle about 50 per cent of all commercial energy. Two because there are now tools such as NABERS retail to measure energy use and centres such as Chadstone, Orion Springfield and Rouse Hill have set the pace with 5- and 6- star ratings.

Also on the horizon is mandatory disclosure, whereby commercial buildings of 2000 square metres or more need to disclose their energy footprint at the time of lease or sale.

The Property Council of Australia’s chief executive, Peter Verwer, who is not averse to throwing a few grenades into a thinking space, told the conference that mandatory disclosure would be delayed.

TFE’s Canberra sources say that given a possible federal election later this year, and the workload, Verwer could well be right – and pleased. “Mandatory disclosure won’t save a single tonne of carbon,” he lobbed into one of the Green Cities’ sessions for good measure.
“I’m not surprised to hear him say that,” our source replied. “His association is not generally in favour of direct intervention by government, so in that respect he has to put forward his positioning.”

However, many people in the property industry are firmly in favour of changing the ground rules on carbon emissions, especially green building leaders such as Rod Leaver of Lend Lease, which has broken many of the barriers to sustainable buildings.

“Laggards should be incentivised or penalised, and that’s my strong opinion,” Leaver told a session, in his typically laconic style.

He went on to outline his support for a cap-and-trade mechanism for buildings, or the Efficient Building Scheme, which has been championed by Lend Lease and WSP Lincolne Scott. Leaver noted that Tokyo had adopted a cap-and-trade system after the failure of other schemes, and that Seoul, too, had jumped on board.

Verwer quipped later that these schemes vary markedly to the Australian scheme that is now also championed by the Greens in the Senate.

Certainly he is no fan. Verwer’s preferred way to stimulate a retooling of the 80 per cent of Australia’s commercial building stock that is 25-years-old, on average, is to introduce accelerated depreciation, even though Treasury could not be more adamant in opposing it.

Interestingly, the debate on how to create the best framework for reducing emissions is starting to gain a life of its own outside the official debate, in networking circles and at business lunches.

One method being touted is, strangely enough, a carbon tax. Strange because it’s unusual for any business entity to support a tax. The thinking is that it’s transparent and easy to lever up or down, unlike a carbon-trading scheme that creates an artificial market and wreaks havoc with job losses and wasted investment each time there is a policy change.

But a tax mechanism is also dangerous, especially because in this case it needs to be ramped up to make dirty energy less attractive and to encourage clean energy.
And government would need steel-belted resolve to keep raising taxes when the economy falters and voters get restless.

Talks between the government, the Greens senator Christine Milne and Independent senator Nick Xenophon seems to be chasing a carbon-pricing system right now as an interim measure, before another tilt at the Carbon Pollution Reduction Scheme can reasonably be put forward.

Another idea starting to gain momentum is some form of energy budget, which is what a cap on emissions does. But instead of letting the market allocate the budget, as a carbon-trading scheme would effectively do, the budget could be allocated according to household’s needs, or production outputs, in the same way as water was allocated in places like Goulburn when the dams started to run dry.

We’ve mentioned this idea before and now it’s emerging as a topic at business lunches and academics are starting to write papers on it.

The trigger for this idea was the success of the water-saving measures such as the restrictions — Level 3, Level 4 and so on. These were part-mandated restrictions, with stiff fines for certain activities such as hosing footpaths, and part self-regulating, with neighbours keeping an eagle eye for breaches.
In Melbourne the 155 (litres of water per person per day) campaign is understood to be highly effective. It’s not law, as one observer quipped, but the understanding is that “if we don’t achieve this we’ll all be stuffed”.

A budget is also underpinned by good old Aussie fairness.

Driving the demand side for energy efficiency in the industry is also the market itself — the self regulating element — with blue-chip tenants leading the ramp-up from 5 stars to 6 stars as the acceptable minimum. Soon it will be 7 stars.
Another element gaining momentum is the potential for the “back-end” of property, or facility management, to drive higher energy ratings by making sure machines work properly, and by better management practices, all for relatively low cost, as proved by the Warren Centre’s Low Energy High Rise project.
As visiting US green building expert Jerry Yudelson said at the Green Cities conference, a major building is the same sort of investment as a big aircraft therefore it surely deserves the same care and respect for its maintenance.
These are exciting times; exciting ideas.
Best of all is that they are gathering pace despite the rise and rise of climate change sceptics; despite the failure of an emissions trading scheme; the failure of Copenhagen to deliver an outcome, and despite the shambles of well-intentioned federal programs to green the built environment.
It’s as if these failures are nothing but specks in the bigger picture. But, then, that’s property. Big picture. Tomorrow’s world, created today.
The Fifth Estate – for sustainable property
contact: editorial@thefifthestate.com