The Government has said that the Senate can decide whether it will help slow climate change down, or whether it will help climate change accelerate.

But whatever the outcome of the Senate’s vote next week on the Carbon Pollution Reduction Scheme (CPRS) Bills, the sector of the economy that is responsible for more than a third of Australia’s greenhouse gas emissions, and up to 80% of emissions in our cities, won’t be affected.

We’re talking about the buildings we use every day — the office buildings, hotels, shopping centres, hospitals, schools and the like, owned by our governments, banks, public companies and private investors. Together they comprise the non-residential building sector.

Let’s be clear: Australia should have an emissions trading scheme but non-residential buildings won’t be affected by energy price signals that will flow from emissions trading schemes, including the CPRS.

If you want to drive emissions cuts in buildings you need to find a mechanism that will touch those who hold the purse strings for buildings — that is the owners. But the CPRS won’t do this because: energy costs are a small percentage of costs for a building owner, in the order of 1% of total costs; unlike householders who will bear the brunt of any energy price rises under the CPRS, these building owners can negotiate cheaper prices; and they do not pay the electricity bills — those who occupy the building do.

Around the world governments and authorities have struggled to find appropriate and effective solutions for reducing the emissions from buildings.

So Australia had a real chance to show the rest of the world how to do it.

But when we spoke to high-level bureaucrats in Canberra in 2008 we were told to “come back in 2013” for any action on buildings.

Garnaut put the building sector in the “too hard” basket. The Treasury didn’t consider the building sector in its modelling despite agreement by most international authorities, including the IPCC, that energy efficient buildings are the cheapest abatement solution. Indeed, as US Energy Secretary, Steven Chu, recently said: “When it comes to saving money and growing our economy, energy efficiency isn’t just low hanging fruit; it’s fruit lying on the ground.”

We took heart when the Prime Minister described energy efficiency as the second plank of the Government’s strategy on climate change. But beyond insulation for 2.7 million homes, and rebates for solar hot water systems, it seems the Federal Government has delegated most of the work on energy efficiency in buildings to the States via the Council of Australia Governments (COAG).

Sadly, it seems Senator Milne’s recent assessment that “The result of COAG is the lowest common denominator and the worst case scenario emanating” looks likely to be realised.

On 30 April 2009 the COAG announced a range of measures designed to accelerate energy efficiency in the building sector. While there are some good points, such as the introduction of mandatory disclosure of commercial building energy efficiency, none of the measures individually or collectively will deliver the size of emissions reduction from buildings that are possible or needed, not least because of their focus on voluntary action and the use of the NABERS Energy rating tool.

NABERS Energy has too many flaws to detail, but suffice to say it measures energy not carbon, and a tenancy that would score half a star in Victoria would score three stars in New South Wales. Why? Because each state set its own benchmark, not based on greenhouse emissions or climate, just their own arbitrary measure of average. So it’s not a fair national assessment of performance.

And voluntary action — which is the basis of the Coalition’s approach to energy efficient buildings — hasn’t worked wherever it’s been tried. In NSW the GGAS scheme had less than a 1% take up from the non-residential property sector over more than seven years.

Similarly, on a global scale, the Kyoto Clean Development Mechanism (CDM) has proved ineffective in the sector: of more than 4500 Clean Development Mechanism (CDM) projects, less than 10 were buildings*. Perhaps the most telling indicator is the fact that the UK Government has dispensed with its voluntary scheme in favour of the Carbon Reduction Commitment scheme — a penalty only scheme which requires owners of property portfolios to buy permits for each and every kilowatt hour of electricity used.

More pertinently, voluntary schemes fail because they do not stimulate energy efficiency improvements universally across the non-residential building sector, but simply reward “business as usual” or what would have been done anyway among those already committed to cutting their carbon footprint.

So we knew there had to be a better way — an appropriate and effective way to drive deep, fast emissions cuts in non-residential buildings.

The solution is surprisingly simple. It is also cost-effective; it does not require the government and taxpayers to spend millions of dollars. It just needs the Government to flick the switch on a cap and trade scheme for the non-residential building sector which will enable it to simply and cost-effectively reduce its carbon footprint.

Better still, it will also provide an economic stimulus, protecting and creating jobs, savings billions of dollars by deferring or avoiding investment in energy infrastructure, stimulating innovation, and delivering health and productivity benefits for Australians.

Last but not least, an Efficient Building Scheme can and must start NOW — we can’t afford to wait.

While government spends billions on funding for research into new technology, the fact is that we have the technology to achieve 50% cuts immediately … we don’t need to wait for some “breakthrough technology”.

Don’t take our word for it: a few weeks ago US President Obama talked about “technologies that are available right now or will soon be available”, which can “make our buildings up to 80 percent more energy efficient”.

We’ve heard parts of the Australian property industry argue against the Efficient Building Scheme on grounds that it won’t countenance penalties for building owners and it creates upside for the developers and contractors and occupants only. But greening existing buildings will increase asset values, yields and returns, so while we advocate appropriate and effective incentives for our sector, we also need to be accountable for our carbon footprint.

Even the UK property industry is excited by the prospect of offering UK Government a viable alternative to its penalty only Carbon Reduction Commitment legislation to come into effect next year – they see the equity of the Efficient Building Scheme.

Whatever the Senate decides on the CPRS, why wouldn’t our federal politicians – across the political spectrum — also be excited by a simple, cost-effective way to unlock the jobs, innovation, productivity, health and energy benefits from our buildings, and provide a prosperous, low carbon future for us all?

*The Kyoto Protocol, The Clean Development Mechanism, And The Building And Construction Sector A Report Prepared For The UNEP Sustainable Buildings And Construction Initiative

Peter Fray

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