PC Thomas: a personal view of how the NABERS story got started

GREEN BUILDING RETROSPECTIVE: PC Thomas is one of Australia’s best known integrated building design specialists who’s worked closely with the NABERS energy rating system for buildings. This is a lightly edited version of a presentation he made to the Building Simulation 2025 conference in Brisbane in August, before an international audience, to explain the origin of the system and how it evolved. It follows another view of the origins of the green building movement from Sue Salmon – who is also credited here.

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Australia has a serious track record in innovation. Here are a few favourites of mine:  refrigeration, the electric drill, baby safety (an Australian invention), spray on skin (Dr Fiona Woods is known all over the world for that), electronic pacemakers, Wi Fi. And my favourite, plastic banknotes.

So, we’re innovative. And we also have an innovative NABERS building rating system, which now rates many different kinds of buildings. But it all started with offices.

In the mid 990s, people started to get interested in the greenhouse gas emissions from non-residential buildings. We had reports, and we had estimated emissions from buildings. If you looked at the non-residential building estimates, they were far and above everything else.

Those emissions were predicted to double over the Kyoto Protocol period. If you remember what the Kyoto Protocol was: estimates for what’s happening now, and  predictions for what might happen in the future. I want you to remember those two terms, estimated and predicted.

We had a feisty activist Sue Salmon. She happened to be the head of the Sustainable Energy Development Agency in New South Wales.

Sue looked at it and said “emissions come from office buildings, so, we need to get a rating for office buildings. New buildings only make up 3 per cent of the building stock every year. Let’s find something to rate existing buildings.”

That’s what became NABERS.

The initial benchmarks for this rating system were for greenhouse gas emissions, energy, and water consumption. And these benchmarks were developed from looking at real buildings.

My understanding is that data was collected from about 40 buildings from each of the major cities.

Getting real data is still pretty difficult, even after so many years. And the system was developed in about 1999 and 2000, so we now have almost 25 years of verified performance.

When the system launched, the top rating was 5 stars. When you looked at the average performance of the data that they had gathered, they set the benchmark at about two and a half stars.

At that point, it’s quite interesting to think that if you were rated at 2.5 stars at the time and you wanted to achieve a 5-star performance, you needed to reduce your greenhouse gas emissions by 60 per cent. That was the scale.

Of course, if you tell people this is your target, and you tell them, This is how we’re going to rate you, Australians – and I’m sure the rest of the world too –  will find a way. We did, and by about 2009, lots of buildings were starting to get to five stars.

That’s when we thought maybe we need to change the scale. I had a hand in that report. The scale is now six stars.

Once that happened, in the last two decades, NABERS has done a lot. We’ve saved an enormous amount of money. That’s my song and dance routine today: money, money, money.

We’ve reduced emissions significantly. I’m guessing that’s about 2.5 per cent of our total emissions, about 20 per cent of office emissions. NABERS has rated almost 80 per cent of the Australian office market. That’s not estimated or predicted. It’s actual verified meter readings.

We’re only talking office buildings today, but NABERS rating covers other sectors as well. But most of the early success has been from office buildings.

The base building rating accounts for all energy use that is the landlord’s responsibility. So in this case, central airconditioning, common area, lights, car parks, hot water systems, miscellaneous ventilation, and all of the other bits and pieces that the landlord needs to provide, at least within the Australian marketplace. As I said, the most common kind of rating.

You can also rate a tenancy. You can provide data on energy use used by lights, for instance and on this thing, which is kind of strange in Australia, called supplementary airconditioning. This is anything additional beyond what the landlord has provided.

We do have a whole-building rating that adds all these things together, but that’s not normally used in our marketplace.

It makes sense for an owner-occupier.

The other reason you do it is because you might not have metering to separate the base building from the tenancy loads. I’m glad to note that the National Construction Code in 2019, it mandated sub-metering requirements

Base building rating

So, what do you need for this base-building rating? Actually, very little. You have four, maybe five items to put in. One is a postcode that adjusts the equations for climate. Another is the square meterage you use for your financial transactions, and there’s a very specific standard in Australia that measures it. There is also whatever you burn in the building – whether it’s electricity, gas, diesel, or, in the old days, coal.

Nowadays, we ask for one more piece of information – how much renewable energy is generated on-site or purchased. So for those five inputs, we have a 100-page rule book, okay? We are innovative, maybe in the right ways, maybe in the wrong ways, but there you are.

Leasing the building

To lease or sell your building, you need a certified NABERS base building rating.

 If you want a government department to lease your space, you need a minimum star rating. The benefits of that include the regular income and long leases. But the NABERS rating is only valid for 12 months, and you cannot display an expired rating certificate.

That’s the secret sauce for NABERS. You have to continually monitor and maintain your building if it’s going to retain its NABERS performance. This means you get the opportunity to improve the building’s performance by a couple of per cent at a time.

We have a database for the past two decades that shows what’s happening. By the time you’ve done 13-14 ratings, you’ve dropped your energy use by about 42 per cent and greenhouse gas emissions even further.

And the nice thing about this data set is that it is not cherry picking the best building or the best buildings. This is an average of all the buildings in the NABERS database.

This is all verified data because we use utility bills. In my 40-year career of working in energy efficiency in buildings, I do not believe I have ever seen a rating system that can give you that sort of output.

The system was released as a voluntary scheme in the 2000 financial year. Nothing happened for three years –  there were three NABERS ratings, I believe. Why? Why would you like to show your building to be two and a half stars? The scale is five stars, right?

So what did Sue do during that time? She went and knocked at every single politician’s door. I met her, 25 years later, and she told me how hard it was to get people to listen.

In 2003, Bob Carr, as Premier of New South Wales, signed NABERS into law.  He said that all buildings owned, leased, or operated by the NSW government will receive a NABERS rating.

We had 200 ratings that year because the crown portfolio, as it was called, had 200 buildings, okay? And then after that, it started to die down again, because, again, who wants to rate buildings?

Then slowly, other governments got into the picture. In 2006, the federal government said, Okay, we want you to rate the buildings. But now we want the buildings we lease or operate to have 4.5-star NABERS ratings.

Once the federal government got involved, the other governments followed suit. They said, Yes, we all want four-and-a-half-star-rated buildings.

They were base building ratings, so the landlord was responsible. The ratings started to take off. In 2010 the federal government passed an Act of Parliament around this, but not in isolation. It’s not like they surprised the market. Most of the big building owners had actually started to get buildings rated. They were already up there. They said, Okay, fine, we’re happy to come to the party.

Mandatory disclosure

By 2010, there was mandatory disclosure – so it was essential that at the point of sale or point of lease, you had to provide a NABERS certificate.

In 2017 the threshold for needing a NABERS rating was changed from 2000 square meters of lettable space to 1000 sq m. of lettable area. So we caught more buildings under the mandatory disclosure scheme.

The fun part is that existing buildings were getting their ratings. New buildings had to wait until they were completed and were in operation for about 15 months.

New building owners wanted to get in on the act. They came knocking on government’s door. It was no longer the other way around. So the government said, Okay, you guys want to onboard, come and sign a legal agreement.

You know what happens when lawyers get involved? Money.

So, if your anchor tenant is a government, and they say, I want to rent 50 per cent of your building, you will make it happen. When lawyers get involved, things go really strange.

The lawyers had come up with this double whammy of a contract. Okay? They said, Well, you need 12 months of data to get a NABERS rating. Fine. What we’re going to do is, every month, we’re going to ask you to take the last 12 months, do a NABERS rating. If you don’t meet the rating, we’re not going to pay rent this month. Now that really focuses the mind. It has nothing to do with sustainability. You get your sustainable outputs, but it’s money that is the motivating factor.

Local governments got in on the act with the City of Sydney saying you could not get development approval unless you committed to a five and a half star NABERS rating.

That’s so nice for the local government; they don’t need to do anything. You just come sign the document. After that, they can sit back, the NABERS team will take over. You get a building that works.

Building energy performance simulation took on a completely different tack. You’re not trying to predict, you’re trying to manage risk. What is the risk of my building not meeting its NABERS rating? That is the question that we’re trying to answer nowadays.

Commitment agreements

A commitment agreement is very simple.

When you sign this document, NABERS gives you a limited licence to market the building.

You can go out to the market and say, “We are committing that this building will work at a five-and-a-half-star rating after it is built, after it’s operating normally.” 

To do that, you need to build a model. To build a model, you have to do a design first, right? Once you do that, then you need an independent design review from an independent design reviewer.  

The final rating is given when the building is fully operational. You can use models—stochastic or spreadsheet—whichever fits best.

We are starting to see people with projects in Australia having a BMS contractor, a building management system contractor and an EMS contractor, which is the energy metering system, and the two should work together, right?

Now, nobody has been teaching us about systems.  We know all about components in airconditioning systems. We know how to size chillers, fans, and boilers. We don’t really know how to connect them together, and what the limitations might be when we do that. We’re learning, and it’s going to be interesting to get AI to work correctly. You assume that you’re giving it learning material that is a correct set of data.  But I suspect there isn’t too much correct data for this kind of thing.

Longevity

Your building is going to last 20 years. But no one’s interested in 20 years. They want to know whether you’re  going to get across the line tomorrow, or next year. Then you’re going to sell the building off to somebody, so it will be somebody else’s problem. Or they’re going to hand it over to some facility manager.Who says, I just need to get my building across the line. But if you own the building, you might want to think about something a bit longer term. And it’s why I believethat modellers from Australia are considered to be pretty good.

The Australian system works

So how does the Australian system work?

First we know it works.

It’s also important to say that you save money not only when you design a building system correctly, you also save money when you have smaller systems or better systems –  all of those things actually do count.

And the rating system has built in improvement factors.

When buildings started to hit the five star target very quickly, the scale was expanded. You don’t want to have a building that you know was five star this year and suddenly became four star because the scale got tighter.

Instead you extended the scale.

So today the challenges remain. It actually gets harder to go from five stars to five and a half stars, and then it gets even harder when you start to get to six stars.