It’s a story of deep resistance to sustainable change, embarrassing mistakes and scientists at 20 paces. Now the clever people have turned the spotlight to the humble real estate agent. Welcome to the wild world of the residential market.

By Lynne Blundell

28 October 2010 – FAVOURITES… The national energy ratings for houses have come under attack recently with claims of inconsistency in results and software flaws. And now with the likely introduction of mandatory disclosure of energy efficiency for residential buildings, accuracy of ratings will be even more critical. So is the system in as much mess as the critics claim it is?

Many experts who spoke to The Fifth Estate believe the ratings scheme and software is not perfect but that it is providing a good framework for creating more sustainable housing – the real problem, they say, is the housing industry’s resistance to regulation and a failure by government to provide adequate funding for training of assessors and for research and development.

Rumblings about the Nationwide House Energy Rating Scheme, or NatHERS, which operates to energy-efficiency regulatory compliance for residential buildings under the Building Code of Australia, have been going on for some time.

Industry bodies such as the Housing Industry of Australia and Master Builders Association have been vocal critics of increases to sustainability requirements for housing – when standards were raised to five-star NatHERS several years ago both bodies claimed that builders would go broke and houses would become unaffordable. Similar claims were made last year made when the Council of Australian Governments agreed to raise the standard nationally to six stars.

Earlier this year the HIA funded a review of the ratings, which it said showed major inconsistencies in the ratings. The Australian newspaper also published a number of articles quoting Terry Williamson, Associate Professor at The University of Adelaide, and others, criticising the residential ratings scheme because of what they believed was a lack of correlation between actual energy performance of houses and their star ratings.

As a result, the CSIRO and Australian Building Sustainability Assessors reviewed the data to determine whether the claims had substance. The findings, according to a spokesperson at the CSIRO, revealed that apart from a few minor glitches with the way the software was running, the main issue was due to errors made by assessors and incorrect interpretation of the results.

The Department of Climate Change and Energy Efficiency told The Fifth Estate last week that the CSIRO had found that a piece of software code that models underfloors and attics in the engine that runs the ratings software had not been activated. As a result the engine effectively uses constant, not variable, heat transfer coefficients.

“Constant heat transfer coefficients are commonly used internationally and the CSIRO believes that the current accredited version of the calculation engine is suitable for continued use,” a department spokesperson told TFE.

“State and territory governments, along with the Commonwealth, discussed the issue and agreed that as with all other improvements to the software, the revised modelling approach will be considered for inclusion in future versions of NatHERS software.”

Assessors can use any of the following software accredited under NatHERS:

  • AccuRate (version 1.0) – developed by the CSIRO
  • BERS Professional – granted provisional accreditation 8 November 2007
  • FirstRate 5 – granted provisional accreditation 31 August 2007

NatHERS requires each software developer to demonstrate the compatibility of their software with specific minimum standards.

One of the key criticisms was that the ratings of houses do not correlate to actual energy use. NatHERS provides a star rating of 1 to 10 from worst to best practice, based on an assessment of the fabric of the building and is essentially measuring its thermal efficiency. It measures layout, construction, orientation and shading, and how well all of these are suited to the local climate, rather than consideration of energy consumption of water systems, lights or household appliances as these are generally replaced throughout the life of the home.

There are 69 different climate zones used to assess the ratings.

Dr Stephen White, Research Team Leader at the CSIRO, says the recent claims that there is no correlation between ratings and actual energy consumption, misrepresent what the ratings set out to do.

“The claims that we should be able to measure future energy consumption of houses is a nonsense – it’s like saying if you buy a car with a particular fuel consumption rating it should always achieve exactly that amount. Of course it depends on how the car is driven.

“Similarly, the current ratings of houses are a very good measure of how effective the building fabric is for achieving thermal performance. We can’t predict whether or not the occupant will use energy efficient appliances or install an airconditioning system that is run all the time,” says White.

If you look at the whole energy pie of a house, says White, only one quarter is being regulated under NatHERs – the thermal potential. There are different regulatory regimes for water use, lighting and appliances, such as minimum energy performance requirements managed through the manufacturing process.

“The NatHERS scheme is providing a good tool for managing part of a building’s predicted energy use and contributing to lower energy housing. There is no point throwing out the baby with the bathwater. To say there is no correlation between the ratings and a building’s actual energy use is not right – we have validated results and they actually compare very well,” says White.

The housing industry and other critics of the ratings have argued that there should a trade-off allowed under the scheme for including features such as solar PV systems in houses.

Terry Williamson cites studies he and other researchers conducted where they compared ratings received by houses with their actual energy consumption. One study looked at five houses across Australia that had won awards for design. A common feature of the houses was an absence of airconditioning and installation of solar PV systems. The paper proposes that their relatively low NatHERS ratings did not reflect their actual energy efficiency.

But Stephen White points out that there is no guarantee that such houses would not have airconditioning installed at some stage in the future or that the solar PV systems would not be removed by a different owner. He says the ratings are designed to look at the envelope of the buildings and their potential energy efficiency, not the add-ons that can change with ownership and usage patterns.

Inadequate funding and administration

According to Alan Pears, Adjunct Professor at RMIT, the whole debate highlights the adversarial nature of policy making in Australia, with industry opposing regulation per se, and government assuming it can introduce regulations without backing it with adequate administration and training.

Alan Pears

Pears has been a major contributor to energy policy reform and energy efficiency schemes in Australia, including helping to formulate the Green Star ratings system for buildings and reforming the Building Code of Australia. He says the level of funding for training of ratings assessors is inadequate, as is government commitment to educating the public about how the building code works and the importance of sustainable housing for reducing greenhouse gas emissions.

“The software could be better but it is nothing short of miraculous that it works as well as it does given the complete lack of funding for research and development in this area. It is appalling that the government has spent so little developing and improving these rating tools.

“What we do have is a tool that if used properly, provides a reasonably reliable ranking of a house’s potential for thermal efficiency. But we have a sad conflict based system where the government brings in standards and regulations and industry opposes them. You end up with the problem of everyone on one side saying everything is OK and everyone on the other side saying it is a complete disaster,” says Pears.

In past decades when energy authorities were government owned a considerable amount of funding and time was allocated to research and development. This all disappeared with privatisation of energy, says Pears, with money now allocated to energy suppliers rather than demand-side measures.

“Governments now seem to think it is more important to write elegant policy than to administer their schemes properly. The quality of the implementation of government programs is very important,” says Pears.

The failure of the Green Loans and home insulation programs were a wake-up call to the federal government regarding administration of its schemes, says Pears.

Calls for better training
The recent report by the Prime Minister’s task Group on Energy Efficiency highlighted training and improvement of the residential rating scheme as an area for increased funding, including higher standards for assessor training.

Currently NatHERS assessors are trained through the NSW accredited Short Course in Thermal Performance (Residential Building), a four day course.  According to the DCCEE, the course is due for re-accreditation in September 2011.

The Department recently commissioned a scoping study to review the current course and identify the skills and qualification requirements of NatHERS assessors.

The scoping study, completed at the end of September 2010, recommended the development of a nationally endorsed qualification for NatHERS assessors. This recommendation has been agreed by all governments through the National Framework on Energy Efficiency and work to develop the qualification is expected to commence soon, the department said.

Last year COAG agreed to reform the current rating and assessment processes for building energy efficiency standards with the objective of achieving consistent application across Australia.

A discussion paper on a national Building Energy Standard-Setting, Assessment and Rating Framework was released by the Senior Officials Group on Energy Efficiency in March 2010 for public consultation. Since then, Commonwealth, state and territory officials have been working together on developing the details of the framework for consideration by COAG.

Mandatory disclosure 0n the way

The DCCEE told TFE it is currently working with state and territory governments to develop a scheme for mandatory disclosure of energy efficiency for residential buildings. It said a regulation impact assessment process is underway and will be opened up for public consultation early next year.

The final form of the scheme will not be decided until this is complete and the commencement date in individual states and territories will be “a matter for those governments to decide.”

Once the scheme is up and running the residential ratings will be an important marketing tool for house owners when selling or leasing their properties.

Australia lagging behind in housing
Several sustainability consultants told The Fifth Estate that Australia has lagged behind the rest of the world on residential energy efficiency for too long. One source said industry bodies such as the HIA and Master Builders Association were irresponsible in their opposition to sustainability regulation and if they had their way there would be “a continuation of McMansions from Melbourne to Alice Springs.”

“We’ve been building leaky, thin, inside-out houses for far too long and the housing industry has been able to cash in on this,” one consultant said.

Elsewhere in the world minimum standards for houses are much higher, including California where the average rating is (a comparable) seven stars.

Lorina Nervegna, former director building policy with the Victorian Department of Planning and Community Development, and now with Cundall in a national sustainability role, told TFE that the housing industry, along with the rest of the built environment, must be realistic about transitioning away from a carbon based economy by 2050. The key is good design.

“It’s been established by many researchers around the world that well designed buildings do not cost more to build and in the long term represent greater value for money, society and the environment over their lifecycle. A poorly designed building ends up costing more all round, particularly to the environment and users or owners,” Nervegna says.

“It is true however that some sectors of the building and construction industry continue to see good design as an expensive add-on. This could shift rapidly in the next few years when the link between high quality design and broader outcomes are more widely accepted.”

Nervegna believes there is a lot of room for improvement in how the housing sector, particularly the speculative housing market, is integrated for sustainable outcomes.

“More than ever before, architects and engineers, particularly mechanical engineers, need to talk more at the design stage and work more closely together. In the housing sector, I do believe that the building and construction industry is more than capable of rising to the challenge of creating more quality sustainable housing and there are good examples around now,” Nervegna says.

Regulations alone would not work as they were there to set minimum standards and eliminate worst practice. To get to the required low or no carbon economy would mean best practice design and construction must be adopted as a matter of course.

“The key is good design, and simply put, for housing this includes basic principles of low energy or passive design. This is not new – much of the knowledge on passive design, particularly for housing, has been around for decades and is based on knowledge that goes back hundreds of years. There are many examples of seven, eight and nine star rated houses around, some recent other 20 or more years old,” says Nervegna.

Unlike the commercial property sector, where NABERS and Green Star ratings are an important promotional tool for developers and building owners, residential ratings are not yet widely promoted by real estate agents or owners. This is likely to change with introduction of mandatory disclosure for residential buildings.

Curtin University Sustainability Policy Institute is currently conducting nationwide research to investigate drivers and barriers to sustainability in residential housing. Researchers at the Institute point to UK research that has found that real estate engagement is crucial to the success of mandatory disclosure.

The Institute, in collaboration with Green Gurus, is also conducting workshops to train and engage real estate agents on sustainability in housing. A key aim of the research is to identify ways to build capacity within the real estate profession to communicate sustainability measures to sellers, buyers, landlords and renters.

Some agents are starting to see the potential, such as SHARE (Sustainable Housing And Real Estate), a group of green-minded real estate agents from across the country (see our story on this ). The group aims to market the idea of sustainable urban housing to councils and developers, with a focus on proving its monetary value.

Lisa Roberts, a SHARE member and Sydney real estate agent, pioneered the promotion the successful inner Melbourne eco-development, WestWyck. She says properties can be sold for $80,000 to $100,000 more if they have sustainable features. Westwyk was a good example of this with units in the development selling for $50,000 more than similar properties just around the corner.

Alan Pears would like to see a great deal more spent on educating both the public and real estate agents about the benefits of sustainable housing.

“When appliance labelling came in for energy efficiency there was a lot of effort put in to educating people about the whole scheme and it really worked – people are very aware of the energy efficiency of different appliances. But the same can’t be said for sustainability measures in housing,” says Pears.

“Australians respond very well to incentives –I’d like to see a restructuring of the First Home Buyers Scheme with incentives for buying smaller, energy efficient homes.”

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