With the election behind us, it’s time for the re-elected Albanese government to get on with the job, including taking the next steps to expand the Commercial Buildings Disclosure program for NABERS energy. But not everyone is waiting for it with bated breath, shopping centre and data centre owners in particular.
The federal government last year released a roadmap for the expansion of the CBD NABERS energy disclosure program. Alongside was a report by KPMG that outlined a trajectory for expanding the current provisions to office tenancies, retail centres, hotels, aged care, industrial, educational buildings, data centres and hospitals, among others.
The proposal was for the progressive inclusion of each asset type within mandatory reporting requirements for energy efficiency and emissions, using NABERS as the key tool for assessing asset performance.
The roadmap also incorporated the phased introduction of mandatory minimum energy performance standards (MEPS).
Consultation closed in September 2024, and the Department of Climate Change, Energy, Environment and Water (DCCEEW) which administers the CBD program updated the program website to state that there will be further consultation to come as the final roadmap was released.
It also noted that CBD expansion will require amendments to the Building Energy Efficiency Act 2010 and Building Energy Efficiency Regulations 2010.
In addition, the changes to the CBD program need to align with the revisions to the government’s Trajectory for Low-Energy Buildings, which were slated to be made public at the end of 2024. These have yet to be released.
The DCCEEW’s website noted that “feedback from the (2024) consultation including a preference for an early focus on larger buildings and buildings with a greater potential to reduce emissions will be reflected in the roadmap.”
The Fifth Estate has asked DCCEEW to clarify what is meant by “larger buildings” and “buildings with a greater potential to reduce emissions”.
A question has also been asked to clarify the timeframes for release of the revised roadmap and the trajectory.
Two sectors that are regarded as substantial energy users, data centres and retail centres, have both expressed opposition to being subject to mandatory energy performance reporting.
Data centre owners not keen on disclosure
In its submission to the consultation, Asia-Pacific Data Centre Association raised multiple objections, including potential disruption to crucial services if DCs had to undertake any works to retrofit for reduced energy consumption.
APDCA also stated that owners and operators of DCs are already doing their part, without the need for regulation, because clients and the market drive sustainability.
“APDCA does not see the necessity to include DCs as DCs are mature and self-incentivised in ensuring their energy efficiency, and urges DCCEEW to carefully consider the concerns, existing regulations, and the nature of DCs to minimise disruptions to DC operations,” the submission concludes.
Operator AirTrunk, one of the largest DC owners and operators in Australia, also lodged a submission.
Among reasons given for not supporting expansion of the CBD scheme to existing DCs was a statement that data centres face “technical and financial barriers to obtaining a NABERS rating, such as the need to install sub-metering, the cost of certification, and the potential loss of confidentiality and competitiveness.”
It also stated the company does not support MEPS for data centres as “it would impose unnecessary regulatory burden and stifle innovation and competition in the sector.”
Both APDCA and AirTrunk said that if the CBD program was to expand to cover data centres, only new facilities should be subject to obtaining a NABERS rating and disclosure should only be required when signing a new customer contract or when requested by a potential customer.
“This implementation would help the CBD Program accommodate DC market dynamics, minimise resulting disruptions and unnecessary additional costs to existing DC facilities, and yet allow for the program to account for the potential increased power demand by emerging technologies such as AI,” APDCA said.
Retail centre peak body objects
The Shopping Centre Council of Australia, which represents the owners of Australia’s biggest retail centres is also opposed to being in the scheme.
It says on its website that the SCCA “opposes the translation of regulation which currently applies to the commercial office sector (that is, Commercial Building Disclosure) to shopping centres.”
We’re different!
“Shopping centres operate differently to commercial offices due to the highly regulated landlord-tenant relationship and a scheme cannot be translated in a ‘like for like’ fashion. We support the continued, voluntary use of sustainability measures, including the NABERS for Shopping Centres tool.”
The reasoning behind the opposition
A source within the retail centre industry told The Fifth Estate there is a technical basis for opposition.
In its current form, CBD provisions use NABERS ratings as the benchmark and key disclosure mechanism. However, the ratings are based on comparing peers, and that’s more challenging in retail than office buildings.
“NABERS was invented for offices, which have a nice, enclosed envelope with doors that close and generally have central plant. The buildings also have well-behaved and fairly predictable customers,” the source said.
Occupants generally enter and exit during a consistent window of time, Monday through Friday. This makes it “quite a controlled environment”, and comparing one office to another office is quite straightforward.
“However, with a shopping centre they are all so different, not a single one is the same as any other.”
For example, a centre may be fully enclosed, or it may have one supermarket plus a couple of small stores that all open directly to an open air, on-grade carpark.
It may have multiple malls and levels and basement carparking, or it may combine open malls with some enclosure. Doors may be fully open during operating hours, or they may be automatic doors.
Operating hours also vary considerably, with some centres having 24 operations, others standard commercial business hours.
Plant configurations are equally as varied.
There may be central plant, or each tenancy may have its own airconditioning and heating system. Plant locations also vary considerably.
Investors aren’t pushing
Another big difference is the absence of financial drivers for NABERS.
In commercial office property, there is a significant number of investors who care about NABERS ratings, in particular investors and government tenants that want to align their operational and climate policies with property decisions.
“But there aren’t many investors out there calling for shopping centres to have NABERS ratings.”
That doesn’t mean retail portfolio owners don’t care about sustainability, the source says.
Many of the big portfolios participate in GRESB reporting, which requires transparent disclosure of energy, emissions, waste and social indicators.
And the push for net zero in the sector is visible, with adoption of solar PV at scale, renewable energy procurement, energy efficiency upgrades and in some cases elimination of gas use.
“There are more than 30 global sustainability benchmarks that can be utilised for reporting on environmental achievements and progress (in this sector),” the source said.
Let’s get on with it
Chief executive officer of the Energy Efficiency Council, Luke Menzel, told The Fifth Estate that the re-elected government has put out broad timeframes for the next 10 years in the roadmap, but a “firm commitment” has not yet been seen for implementation.
“We have seen multiple reviews and expressions of good intentions,” Menzel said.
What is needed now is the tangible policy and programs, incentives, resources and support that will achieve emissions reductions.
“What we are looking for now is follow-through.”
Timeframes need to be rolled out for the new sectors and for tenancies in commercial offices, which is another property class the government proposes to include in the revamped scheme.
Lightweight regulation that delivers
Menzel describes CBD as “lightweight regulation” that requires benchmarking against peers in a way that provides “useful, interesting and actionable” information on energy performance and energy efficiency opportunities.
The proposal for MEPS for many classes of buildings is an “ambitious agenda”, he said.
The government has assigned the energy efficiency homework.
“What’s needed is the due dates for the homework”.
The Trajectory for Low Energy Buildings has been caught up in sectoral decarbonisation plans, and as buildings are one of the sectors, having two different plans would not make sense. Instead, the sectoral decarbonisation plan and the trajectory should align, Menzel said.
He points out that while a lot of the communications around climate change and emissions reduction highlights buildings as a major opportunity area, the emissions reduction task “doesn’t just happen by itself”.
There are lots of opportunities to help deliver what is needed in the way of emissions cuts by 2035, but it will take “joined up collaboration across government departments to ensure we can meet the high-level targets and also get the detailed work done.”
I recall that the commercial property sector had almost exactly the same arguments back in 2008, when mandatory disclosure for offices was first mooted. Many of the arguments against disclosure were wrong then, and they’re wrong now (just ask a NABERS assessor). No one wants regulation in this area, and I understand why organisations might not like their stakeholders questioning their relative performance, but look what’s happened to the Office sector since mandatory reporting came in. The average energy saving for buildings caught up in the first tranche is now over 30%. And let’s not forget that no one told the Building owners that they had to reach a certain target, they simply had to disclose their NABERS rating. When you have to tell everyone else how you are performing, human nature dictates that we will all want to try and do better. On the Kubler-Ross change curve many of the soon to be impacted organisation’s are sitting at anger and rejection. I get that. When mandatory disclosure is extended I am sure it won’t take long for these organisations to see the real benefits, and like so many in the commercial office space, they will wonder what all the fuss was about (whilst quietly making meaningful improvements and saving a lot of energy)
My apologies – the average energy saving for buildings caught up in the first tranche is actually 40%