The long awaited expansion of the Commercial Building Disclosure (CBD) program is finally here.
In its current form, the program requires owners of office buildings that are more than 1000 square metres to obtain and disclose their National Australian Built Environment Rating System (NABERS) energy efficiency rating at the point of sale or lease.
The roadmap released on Tuesday by Assistant Climate Change and Energy Minister Josh Wilson sets out a 10 year plan to expand the requirement beyond just office buildings owned by corporations, to other commercial buildings.
By 2030, the expansion will require offices with large tenancies to obtain energy ratings periodically for their tenanted space, and hotels will need to disclose their NABERS rating to help government and sustainability conscious travellers make informed decisions.
Also in the short term are amendments to the legislation to include increasing obligations to obtain and disclose ratings periodically, as well as expansion of the type of owners that need to disclose, so all owners of a building need to participate and disclose their ratings.
The roadmap said that the government will later decide on other priorities; in the medium term, these might include smaller office buildings and spaces, shopping centres and retail stores, data centres, aged care and retirement living.
Long term sectors will also be considered at a later stage and warehouses, cold stores and other assets yet to have a specific rating tool.
Many of the government’s policies under this roadmap seem to be based on an “unfinalised review of the CBD program in 2019”.
Decisions for assets such as data centres and shopping centres hinge on an update to this review before the government decides whether the expansion will cover these assets.
The government said the move to disclose energy ratings for more commercial buildings will help unlock energy savings and emission reduction for more businesses, and that historically, office buildings that improved from 4 to 6 stars NABERS rating saved an average of $280,000 a year.
Following the “high priority” expansion, the government said energy savings are expected to more than double and emission savings to almost triple.
Along with the expanded program will come $20 million in federal government funding, with half allocated to expanding the existing program and the other half used to increase the range of energy ratings tools and services for NABERS.
Wilson said the changes came after extensive consultations with industry last year and will continue to consult industry and stakeholders on potential changes. It is part of the government’s larger Built Environment Sector Plan to achieve net zero.
“Finding ways to use energy more efficiently is good for the climate and good for the bottom line because commercial buildings are responsible for about 10 per cent of our national emissions and 24 per cent of electricity consumption,” Wilson said.
“Doubling the global rate of annual efficiency progress could cut energy bills in advanced countries by one-third, and account for half of emissions reduction by 2030.”
The Energy Efficiency Council, Green Building Council of Australia and Property Council of Australia all welcomed the move.
How it will work and report findings
Office tenancies: Under the expansion, office tenants will need to acquire a NABERS tenancy energy rating after at least 12 months of occupancy.
Currently, the tenancy rating has been available for voluntary tenants for more than seven years and is also offered for buildings interested in a “co-assessment” with the Co-Assess tool, which allows base building and tenancies to be rated together.
First to be targeted will be “large” office tenants, to be determined by a threshold such as utilising space above 1000 sq m. Office tenants could be responsible for up to 50 per cent of energy use from office buildings, according to the roadmap.
Hotels: Under the expansion, large hotels will need to acquire and disclose their NABERS hotel energy rating at all times, such as through their website and booking pages.
The tool has been in operation since 2009 and has recently been updated. The policy will target larger hotels (likely over 100 rooms) first, and heritage buildings will be subject to independent assessments to determine whether energy efficiency can be improved – and if not, may be exempt. The roadmap said this was inspired by the increasing need of government and corporate travellers to look for accommodation in line with sustainable procurement.
Mixed-use office buildings: Currently, buildings with less than 75 per cent net lettable office area are not included in the program. The expansion will reduce this to require large buildings of with between 50 and 75 per cent office space to disclose their ratings.
Broader metering and sub-metering requirements under the National Construction Code (NCC) will also support this by ensuring the facilities have the required metering to measure energy consumption.
In the medium term it’s an order of priority
According to the report, instead of definitive building types being included in the expansion, the government has an “order of priority” where it will undertake further analysis of policy impact and cost benefit before deciding whether these will be included.
Potential building types that may be prioritised include:
- Office buildings and spaces between 500 sq m and 1000 sq m – the report suggests further analysis is needed as to whether the “industry burden” would compare to the “size of benefits”, pointing at the City of Melbourne, where this cohort is less than 6 per cent of total estimated floor area.
- Shopping centres – the report argues almost half of the nation’s shopping centres were voluntarily rated in 2022-23, and this is expected to grow as more owners take on net zero ambitions. The unfinalised review of the CBD program in 2019 found that “expected behaviour change was not likely to outweigh costs to the shopping centre at that time” – and the government will “respect the draft findings” but require an updated impact assessment before determining whether “intervention is still needed”.
- Retail – Retail currently accounts for more than 11 per cent of energy consumption. The report states that whether the CBD program will be expanded to include retail will be determined at the same time as shopping centres
- Data centres – the 2019 review said that the program “should not extend to data centres at this time”. The new roadmap said consultation with data centre stakeholders suggests that the NABERS data centre tool, which has operated since 2014, needs “further refinement” before the CBD program can effectively apply to data centres.
- Aged care and retirement – the facilities are currently rated with three types of NABERS ratings available, with the aged care and retirement living energy rating introduced in 2021. While efficiency is “of great importance due to vulnerable people being dependent on them”, the roadmap deemed this “not to be of high priority” as the new rating is too “recent” and more details are needed on the sector’s operational performance.
In the long term
- Warehouses and cold stores – while a warehouse and cold store energy rating was released in 2022 which has been “useful for certain warehouse owners and tenants” and would cover a “large gross floor area”, the report argued that the relevant rating would need to be a whole building rating measuring tenants’ operational energy use and would not “wholly be in the owner’s control.” This would “disadvantage owners”. It also argued that it was unclear what the impacts of public disclosure would have on owners, tenants and others.
- Sectors without NABERS – Those yet to have a NABERS rating can use the NEPI (NABERS Energy Performance Indicator) tool, which can be used by private hospitals, medical centres, supermarkets and higher education buildings, which means the CBD program could still expand to cover these buildings. The report says that if the government and NABERS decide to update the NEPI tool for this purpose, then this could be elevated to a “high priority change.”
- Additions to the CBD program – the program does not cover other significant sources of emissions from buildings outside of energy ratings, said the report. If the government were to change to include all sources of emissions from buildings, then embodied carbon from the construction of the building and operational emissions such as refrigerants, heating, cooling and ventilation systems, “could be considered”.