A render of EQ Tower in Melbourne. Constructing the building to net zero standard would generate over $9 million in economic benefits.

Eq. Tower in Melbourne and Australia Towers in Sydney could be developed to net zero standard, resulting in millions in economic benefits, new research shows. But it all depends on reforming Australia’s weak building regulations, particularly NSW’s BASIX, which is underperforming other states and undermining a much-needed industry transformation.

It is both technically and economically feasible to build net zero high-rise apartments in Sydney and Melbourne, a new report from pitt&sherry has revealed, though the move is being hampered by weak regulation.

Accelerating Net-Zero High-Rise Residential Buildings in Australia, commissioned by the City of Sydney, is currently in draft version and out for stakeholder feedback, but a version viewed by The Fifth Estate found that a single net zero high-rise could generate around $9 million in economic benefits.

However, the problem is that policy gaps and barriers mean the wider societal benefits of net zero aren’t being appropriately valued, and therefore these buildings may not appear cost-effective for building developers and owners.

Barriers and gaps include:

  • a lack of carbon pricing, which weakens the business case for saving emissions
  • low energy performance standards for new buildings, which means industry learning around high performance buildings is less than it could be
  • a lack of market transformation strategies for high-performance building designs and materials, which keeps key elements like high-performance glazing in high-cost, niche markets
  • electricity network pricing arrangements that do not fully reward the developer for avoiding the need to enhance network capacity, or for reducing peak demand, which means that these benefits are socialised to all consumers in the network
  • a lack of mandatory disclosure for high-rise apartments or other information-based strategies that would help build market demand for high-performance buildings

However, even without addressing these barriers, the report’s cost-benefit analysis found that it would be economically rational for owners’ corporations to go for net zero because of lower operational costs and higher capital values outweighing increases in construction costs.

Monetise the benefits otherwise transition to net zero will be glacial

A key take-home is that reform is needed to “monetise the social benefits” of net zero, otherwise the transition to net zero buildings – described by many as key to meeting Paris Agreement obligations – will be glacial.

Key reforms needed include carbon pricing, higher building standards, market transformation initiatives for high-performance building elements, and changes to the structure of energy prices, the report said.

Market demand would be supported by mandatory disclosure of building performance and other information-based strategies.

Building code performance set too low so there’s low familiarity and high costs

The report said low energy performance set in the National Construction Code meant that, apart from at the very top, there was low familiarity in the industry with high-performance designs and elements, which has also led to high unit costs, constraining both supply and demand.

It said there was a lack of a market transformation strategies to mainstream sustainable technologies, meaning elements such as high-performance glazing were kept in high-cost, niche markets.

This is backed by recent industry commentary on the poor performance of the mid-tier and below in terms of sustainability.

BASIX too basic, and NSW has fallen behind Victoria

A key finding of the report was that the poor energy performance standards in NSW’s Building Sustainability Index (BASIX) were undermining a move towards more efficient buildings, performing worse than Melbourne counterparts that used National Construction Code energy efficiency requirements.

BASIX, the NSW code variation of NCC requirements, has been described by the state government as “one of the strongest sustainable planning measures to be undertaken in Australia”, however in terms of thermal performance outcomes appear to be weaker than in Victoria.

In NSW the average NaTHERS rating for Sydney apartments modelled was 4.4, compared to 6.5 in Melbourne.

Most NSW buildings do not achieve NCC compliance on energy

“BASIX compliance requires achievement of overall emissions and water scores based on a variety of attributes of the development,” the report said. “As a result development compliance is commonly achieved without the building envelope meeting the nationally mandated 6 stars [NatHERS] (average) and 5 stars (minimum) performance. It has recently been reported that 53 per cent of new 2014 NSW dwellings did not achieve NCC compliant energy ratings.”

Property lobbies lobbied against tougher BASIX

The NSW government had planned to increase BASIX requirements back in 2014, but appears to have reneged in the face of strong lobbying against any changes from property bodies and misleading mainstream media coverage, even though the benefits were shown to greatly outweigh the costs.

Lift NCC, get the building fabric right – best bang for your buck

The report suggests that the NCC energy performance requirements, and particularly BASIX, be lifted “substantially” in the short-term to support the net-zero transition.

The report recommends a “design/fabric first” approach – getting the basic building design, orientation and shell right in terms of energy efficiency.

This provides the most bang for buck, and includes the use of high-performance glazing, design strategies such as daylighting, air-tightness and insulation.

“Key design and construction opportunities include translucent walls, exposed thermal mass, phase change materials, reducing thermal bridging, along with active elements such as demand response and standby/kill-switch power management of plant and equipment,” the report says.

“High efficiency heat pumps, variable speed drives, improved pressure management in ventilation systems, heat recovery strategies, ceiling fans (as an alternative comfort strategy to airconditioning), and lighting and ventilation issues specific to the large car-parks that are generally required with such buildings, all offer excellent emissions-savings opportunities.”

Onsite renewables brought buildings in Melbourne and Sydney down to net zero

Renewable energy is another element in the transition, with the report finding while there has been little inroads in solar due to limited roof space and overshadowing, advances in building-integrated photovoltaics could see it play a large role in the future.

In modelling scenarios of two real-world Melbourne and Sydney apartments – Eq. Tower in Melbourne and Australia Towers in Sydney – after getting the buildings to a “global excellence” standard (which involves virtual elimination of loads such as heating, cooling and to some extent mechanical ventilation, through adoption of established passive design principles), BIPV could get the buildings down to net zero for between 1.1-1.5 per cent of construction costs.

While BIPV was not found to be commercially attractive under current policy settings, it was justified when taking into account indirect benefits such as avoided greenhouse gas emissions and network infrastructure costs, and increased building value.

“Both the Melbourne and Sydney buildings achieve their highest values of net social benefit in the net-zero specification, of $9.3m and $5.4m respectively, when compared to the still-significant improvements implied in the Australian and global excellence specifications. Attractive social benefit cost ratios of between 1.6 (Melbourne) and 1.7 (Sydney), and social returns on investment of 12 per cent and 13 per cent, respectively, are evident for the net-zero buildings.”

A key point made in the report is that while there are technical barriers to overcome, the key barriers relate to the market and policy contexts described above.

City of Sydney will use the report to lobby for improvement

The report is expected to be used by the City of Sydney to lobby for improved building regulations, including increased BASIX standards, as part of its 2050 net zero commitments, which include an upcoming competition to construct Australia’s first net zero high-rise.