Australia must adopt tighter energy standards in new homes and apartments now or risk building more homes with poorer energy performance over the next three years, a new report has warned.

Releasing its latest report, climate change advocacy body The Climate Council has called on state and Commonwealth building ministers to adopt a proposed increase to the energy efficiency requirements for new homes and apartments in the 2022 update of the National Construction Code (NCC) when they meet for the Building Ministers Meeting in July.

The report says the changes – which would require new homes and apartments to meet 7-star energy ratings (see below) – would save average households $450 per year, deliver more comfortable homes with fewer greenhouse gas emissions, and would pay for themselves within six years.

(image above, The Avoca 265, a 7.1-star home by Gracious Living Constructions at the Ginninderry estate on the ACT and NSW border)

Climate Councilor and economist Nicki Hutley says the importance of improving energy efficiency now should not be underestimated.

“Australians cop some of the most expensive energy bills in the world, with as many as 85 percent of us experiencing bill shock last year,” Hutley said.

“Greater energy efficiency means fewer greenhouse gas emissions, which is essential for tackling climate change. But that’s not where the benefits of making homes more comfortable to live in stops: we can also improve people’s health and wellbeing, reduce electricity bills, strengthen our energy grid and create jobs …”

“… It’s time Australians got to enjoy better living in better quality new homes. It’s a win-win that will raise our standards of living, cut our energy bills and help address climate change.”

The report comes as state and Commonwealth building ministers are set to meet in July to decide upon the final adoption or otherwise of the proposed changes in NCC2022

As part of the proposed changes, the stringency of energy efficiency provisions in the residential sector will be increased to an extent that all new homes will need to meet 7-star ratings under the Nationwide Household Energy Rating Scheme (NatHERS).

This represents an increase from current performance requirements through which homes need to meet 6-star standards.

The update also proposes a new ‘whole of home’ energy budget that sets requirements for appliances and encourages the uptake of rooftop solar.

The budgets, labelled Options A and B in the draft update, will consider overall energy use and factor in thermal efficiency, appliances, and onsite solar. This allows for the efficiency of different appliances and solar generation to be traded off against one another to fall within a mandatory limit.

(Full details of the proposed changes to energy efficiency requirements can be seen in Stage 2 of the Public Comment Draft for NCC 2022.)

The changes represent the first upgrade to the stringency of requirements to residential premises under the Code since 2010.

They follow a 2018 agreement by ministers to establish a long-term trajectory toward zero energy buildings. As part of that agreement, ministers agreed that a stringency increase would be applied to energy efficiency provisions for commercial buildings in 2019 and residential buildings in 2022.

Apartments in the the Nightingale 1 complex in Brunswick in Victoria achieve an average of 8.2 stars and operate on 1000 percent renewable energy with no gas in the building.

The proposed changes have attracted support from some stakeholder groups but have been opposed by others.

On the side of support, the Property Council of Australia has argued that the changes will save homeowners up to $576 per year (according to Government figures – see link below) and would make homes cheaper to run, more comfortable and more environmentally friendly.

Its NSW Executive Director Luke Achterstraat told Sourceable that the Council ‘strongly supports’ the proposed changes and has strongly advocated for a trajectory of changes to the NCC which will eventually lead to NetZero buildings.

Achterstraat further points out that (as noted above) the changes represent the first meaningful upgrade to the energy efficiency requirements of new homes in more than a decade.

The architecture profession agrees.

Tony Giannone, National President of the Australian Institute of Architects, said the AIA is ‘fully supportive’ of the proposed upgrade to 7-star ratings.

Indeed, he argues that argues that the Code should go further compared with the current trajectory and to aim for net zero buildings by 2030.

Giannone argues that the architecture profession is already well aware about how to design net zero residences.

This is a journey which should be commenced immediately, he says.

Indeed, Giannone says a recent AIA survey of its members found that three in four architects believe that creating a net zero future was critical.

“The Australian Institute of Architects is fully supportive of the move to 7-star energy requirements for homes under the proposed National Construction Code,” he said.

“However, the Institute believes the Code should go further.

“As Australia’s leading voice for architects and the custodians of the built environment, we know already how to design net zero residences. We could – and should – start this journey immediately. The Institute has called for the building and construction industry to achieve the transition to net zero by 2030 for new buildings.

“This can only be achieved with a step change in the energy requirements of the 2022 Code.”

Others, however, are pushing back against the changes.

Those arguing against point to a Consultation Regulatory Impact Statement released last year which found that costs associated with the tighter energy standards outweighed the benefits by either $2.366 billion or $1.795 billion depending on which of the two household energy budget options referred to above are adopted.

In its submission to aforementioned Public Comment Draft last year, Housing Industry Association (HIA) argued that costs associated with the new requirements would exceed benefits.

Furthermore, HIA contends that the Consultation RIS referred to above understates the true level of costs which the changes will add to new housing delivery.

Costs relating to house redesign, internal layout changes and compromising internal room configurations, structural building changes and the specification of current industry standard building materials and products, are underestimated, it said.

Moreover, HIA argues that there is little more that can be done to boost energy performance through relatively simple provisions. For this reason, the move to seven stars will require significant design and construction changes in housing across most regions, it says.

Even to achieve the current six-star rating requires the highest insulation levels standard that walls and roof/ceiling cavities could readily and economically take based on the common construction methods in Australia along with double glazing in moderate and colder climates, HIA says.

Meanwhile, Master Builders Association of Victoria CEO Rebecca Casson said the changes would increase the cost of new home delivery through higher requirements for glazing, greater ceiling and wall insulation and stricter provisions for heating, air-condition and hot water systems.

All of this, Casson said, would add to costs and was part of the reason the Consultation RIS had concluded that benefits were outweighed by costs.

Casson also raised concern that tighter energy efficiency requirements could lead to greater incidences of condensation and mould. This in turn could have implications for personal health and wellbeing and could compromise the building’s structure, she said.

(As homes have become more airtight courtesy of energy efficiency requirements, there have been concerns about reduced airflow leading to greater instances of mould.)

In response, Master Builders would like to see the stringency increase in energy efficiency postponed until the Code has been updated to include more stringent condensation requirements and industry awareness about condensation and mold has been improved.

In its report, the Climate Council modelled the additional costs and benefits of building 7-star all-electric homes as opposed to 6-star homes across cities and regions in Australia.

Across the eight capital cities, it found that the proposed tighter energy requirements would add an average $2,306 to the cost of a new home.

Nevertheless, it found that households would save an average $450.55 each year on heating and cooling costs.

This means that the additional cost of building to seven stars would have been paid for in just under six years.

Source: Tents to Castles Report, Climate Council, May 2022

Moreover, the report argues that adding an extra star to each new home being delivered would deliver additional benefits.

These include:

• A 25 percent reduction in greenhouse gas emissions compared to a six-star home – the equivalent of taking a car off the road each year. In the detached house building segment alone, this would equate to around 120,000 cars each year.
• Delivering homes which are more comfortable year-round; and
• Reducing electricity network costs by lowering the need for network expansion.

In addition, the report argues that Australia’s minimum standards are lax compared with those elsewhere.

A Tasmanian home which is constructed to current NCC minimum standards has an annual energy consumption which is more than double that of an Irish one which is constructed to NZEB standards in the EU, it said.

On the additional build cost, the report argues that builders who are currently working on 7-Star rated homes and higher have identified that additional costs associated with building to a higher standard are generally modest following an initial learning curve.

It points to the case of Tony O’Connell, a builder in Gippsland Victoria who currently builders 25-30 homes each year which are routinely eight stars and above.

Whereas his premium to move from 6 stars to 7.5 stars was originally around $14,000, his premium now to improve homes from 6 stars to 8.2 stars is now just $6,000.

In addition to supporting the higher energy standards, the Climate Council has called for:

• Additional updates to the Code to ensure that all new homes are future ready
• Mandatory energy efficiency disclosure at point of sale
• Minimum energy efficiency standards for rental properties (including existing properties) by 2025
• Upgrades to improve the energy performance of social housing stock
• Greater incentives for home energy efficiency improvements including appliance replacement and thermal performance upgrades
• Phasing out of gas from all new housing developments by 2025
• Investigation of opportunities to incentivise the replacement of all residential gas appliances
• Ensuring that housing standards are sufficient to ensure that new housing stock is prepared for worsening climate impacts.

Adjunct Professor Hilary Bambrick, a Climate Councilor and had of the School of Public Health and Social Work at Queensland University of Technology, said Australians deserved better homes than are currently being delivered.

“Poor energy efficiency standards have left too many Australians living in substandard homes dubbed as ‘glorified tents’, which are unbearable during summer and freezing in winter,” Bambrick said.

“In a sunburnt country like Australia it’s appalling that houses, which are too cold, contribute to six percent of deaths per year. That’s double the rate in Sweden, where winter temperatures reach minus -30 degees Celcius.

“If we urgently update our new build standards as well as upgrade poorly built existing homes we’ll all be much happier and safer, and as a country we’ll be contributing fewer emissions.”