Perth, ready for EUAs

24 June 2014 — The City of Perth is pushing ahead with work to encourage Environmental Upgrade Agreement programs for retrofit work to commercial buildings, as the program continues its slow and steady roll out around the country.

A recent roundtable in Perth hosted by Norman Disney & Young, and facilitated by global sustainability leader for NDY Tony Arnel, drew a number of key industry participants including from the Property Council, state government, Australian Institute of Refrigeration Air Conditioning and Heating, the Facility Management Association and HFM Asset Management.

Also included was Scott Bocskay, chief executive of Sustainable Melbourne Fund, which manages Environmental Upgrade Agreements for the City of Melbourne, who shared some hard-won hands-on experience of EUAs in Melbourne where the program first kicked off.

HFM Asset Management’s Damien Moran provided an overview of building stock from data collected by his firm.

Mark Taylor

According to NDY manager, sustainability group, Mark Taylor, “the discussion on strategies to upgrade existing buildings on the west coast is underway.”

And it’s good news, but as Taylor pointed out in a note to sum up the findings of the group, the same stubborn problems that have stymied faster rollout of EUAs in the eastern states were similarly detected by the Perth roundtable.

Most are perceived rather than real problems, and most are connected to the mistrust that plagues the industry’s great divide between tenants and landlords, (as The Fifth Estate has found in its Tenants and Landlords guide to Happiness series.)

But the wild-card illogical politics under way right now, with the federal government’s war on renewable energy extending to attacks on money-saving energy efficiency programs, is also having an impact. Victoria ditched its Victorian Energy Efficiency Target not long ago and WA recently culled its Public Utilities Office Program Facilitation and Review Branch, which was the only department – of a handful of people – that could support the NABERS and NatHERS programs, and other energy and water savings programs.

In somewhat of an understatement, Taylor said this presented some “unique challenges in WA”. (Other members of the property industry have expressed much stronger reactions.)

“However,” Taylor said, “whether or not state and federal support is available, the inefficiency within the existing building stock is something that needs to be addressed.”

He pointed to work by the City of Perth to investigate opportunities for reducing the local government area’s carbon emissions.

Among the biggest opportunities, he said, was the logic of energy efficiency in commercial buildings.

“Having Scott Bocskay in the room to give the real world background on how the Sustainable Melbourne Fund functions was invaluable,” Taylor said. “As some of the myths and misunderstandings about the EUA system evaporated, a more realistic sense of how this approach might work in WA emerged.”

Among the bigger barriers to uptake identified by the group were summed up by Taylor in his note. They included:

  • Perceived complexity of the process; perceptions the landlords might profit
  • In WA, landlords profit from inefficiencies. Electricity profit margins exist, especially for smaller landlords
  • There are various lease terms in multi-tenanted buildings; tenant consent is problematic for such buildings
  • Lease arrangements for net verses gross lease; in Perth, tenants are in the driver’s seat
  • Uncertainty of leadership – is this a robust tool that is part of a bigger strategy from the City and the State Government?

There was good news though: “a sense that the EUA mechanism could be part of the solution”.

“It might not suit everyone, and bigger portfolio owners probably don’t need the support of an EUA, but small to medium scale private owners are likely to be interested and stand to benefit,” Taylor said.

According to Taylor the interest in EUAs is strong and already extends to well beyond the group that was able to attend the roundtable.

South Australia recently gave its version of the EUA program, Environmental Upgrade Finance, a boost with funding in the state budget last week to develop the program over the next four years.