Back in 2010, Australia had its last significant upgrade to the stringency of energy efficiency requirements in respect of both residential and commercial buildings under the National Construction Code (NCC).
In respect of commercial building, upgrades to the stringency of energy performance requirements have been incorporated into the NCC 2019 Public Comment Draft and are likely to be incorporated into the Code in 2019.
In residential, however, no stringency adjustments are in the cards for 2019, though there are some important changes in terms of the introduction of separate load limits for heating and cooling. Accordingly, the next increase to the stringency of household and apartment energy performance requirements under the Code is not expected until the next updating cycle in 2022.
This has several implications.
First, new houses and apartments which are commenced throughout Australia over the next four years will be constructed according to energy performance requirements which are around 10 years old. Based on previous levels of home building commencements, this could equate to anywhere between 600,000 to 800,000 new dwellings.
Beyond that, current patterns of upgrades for energy performance requirements see long periods without any stringency increases followed by a sudden ‘jump’ in stringency requirements within a singular updating cycle. For the property sector, this creates uncertainty. Moreover, it means the industry lacks a clear vision and pathway about how it is going to contribute toward meeting Australia’s commitments under the Paris Agreement on climate change.
Because of this, moves are afoot to replace the current approach with a long-term trajectory under which upgrades to the stringency of energy performance requirements under the NCC would occur according to long-term program of target upgrades which have been demonstrated to be realistic and achievable.
Toward this end, a new report has laid out a proposed trajectory for NCC energy performance upgrades covering the period between now and 2034.
In the final report of their Building Code Energy Performance Trajectory Project, ClimateWorks and the Australian Sustainable Built Environment Council (ASBEC) have mapped out proposed energy reduction targets for eight building types across four different climate zones.
ClimateWorks and ASBEC based their targets for each building type across different climate zones on two different scenarios. First, the ‘conservative’ scenario set targets and performance requirements at levels where the two organisations’ research had demonstrated that societal benefits outweighed any additional capital costs involved. Beyond this an ‘accelerated deployment’ scenario for each building type and climate zone is set at levels beyond which benefits would outweigh costs on current projections.
The cost of achieving these scenarios could be lowered, however, if either industry adapts to energy efficiency measures faster than assumed or if government implements measures in ‘market transformation’ such as research and development to reduce the cost of key technologies.
Take, for example, the case of a school set in climate zone 2, which runs along the south-east coast from Coffs Harbour in northern NSW to Mackay on the Queensland central coastline. Under the trajectory, targets for average annual energy consumption under a ‘conservative’ scenario would be set at 57.8 kilowatt hours per square metre (kWh/m2) for buildings constructed under the 2022 Code or later and further at 44.1 kWh/m2 for buildings constructed under the 2028 code or later. This is down from a 93.5 kWh/m2 base case using DTS requirements under the current NCC. Under the accelerated deployment scenario, these numbers would fall to 42 kWh/m2in 2022 before falling further in 2028.
In another example, consider a detached house located in zone 6, which covers parts of Victoria, eastern NSW, south-eastern South Australia (including Adelaide) and parts of the southern coast of WA in and around Albany. Conservative scenario targets would equate to 36.9 kWh/m2per year for buildings constructed under NCC 2022 and onward followed by 33.2 kWh/m2for those constructed under NCC 2028 or later. This compared with the base case now of 45.6 m2 kWh. Were the accelerated deployment scenario to be adopted, these numbers would fall to 31.3 kWh/m2and 30.6 kWh/m2in 2022 and 2028 respectively.
Cost savings could be significant. Taking the example of climate zone 6, even moving to the conservative scenario target proposed for 2022 would save detached homeowners whose homes were constructed under NCC 2022 or later $690 per year (averaged over 15 years) in household energy bills. This increases to $994 by 2028. In the case of offices, annual energy bill savings of $33,141 and $49,144 are on offer under the proposed conservative scenario targets for buildings constructed under NCC 2022 or later and NCC 2028 or later respectively.
As well, ClimateWorks and ASBEC argue, the proposed trajectory would provide the building sector with a pathway to playing its role in meeting Australia’s commitments under the Paris Agreement. Under this accord, Australia has committed to reducing its greenhouse gas emissions by between 26 per cent and 28 per cent compared with pre-2005 levels by 2030. Ultimately, the agreement included an additional goal of reaching net zero greenhouse gas emissions by 2050.
Depending on the climate zone and the scenario adopted, ASBEC and ClimateWorks say adoption of the trajectory could, by 2030, deliver between 19 and 25 per cent of the energy savings required to move toward net zero energy consumption in residential buildings. In commercial and public buildings, those proportions are between 22 and 34 per cent and 34 and 35 per cent respectively.
In many cases, this would be achieved through relatively simple measures. In residential, these include better airtightness, double glazed windows, increasing insulation, adjustable outdoor shading or larger eaves, ceiling fans and more efficient air-conditioning, lighting and hot water systems. In commercial and public, it could be delivered through better air tightness, better insulation, increasing thermal mass, more adjustable outdoor shading and greater efficiency of lighting and air-conditioning.
In their report, ASBEC and ClimateWorks call for a three-step action plan.
First, the COAG Energy Council and Building Ministers Forum should commit to deliver a ‘Zero Carbon Ready’ Code. This includes establishing targets and a process to upgrade the Code’s energy requirements. The ultimate goal would be that, by 2050, all new buildings which are constructed according to Code requirements would have net zero energy requirements.
Next, there should be a ‘step change’ in the energy requirements in the 2022 updating cycle for the NCC. This should include a strong focus on residential standards (stringency requirements for which are not being updated in NCC 2019) along with a further incremental increase in non-residential standards.
Finally, ASBEC and ClimateWorks argue, the COAG Energy Council and the Building Ministers Forums should jointly establish work programs which investigate expanding the scope of the Code to prepare for future sustainability challenges. Simultaneously, the Code should be complemented by a broader set of policies such as measures to improve building code enforcement and strengthening energy standards for equipment and appliances.
When implementing these recommendations, the report says issues will have to be addressed across several areas. There should be a clear, rules-based process for Code updates and target adjustments over time. Opportunities to incorporate on-site renewables into the Code should be investigated. Serious compliance issues must be addressed. This includes through nationally consistent training of building practitioners and better regulatory oversight and enforcement.
Action is needed on air leakage and ventilation. This includes quantified mandatory air-tightness requirements with corresponding ventilation standards, better education for designers and builders and incentives to encourage greater air-tightness. Whilst much work is needed to determine the best way for this to happen, gas usage needs to be phased out of buildings. ‘Market transformation’ policies based around promoting the research, development and deployment for new technologies which are currently not cost effective could be considered.
Finally, ASBEC and ClimateWorks would like to see additional policies which are beyond the scope of the Code. This could include tougher energy requirements for household equipment and appliances, investigating the possibility of minimum standards for existing buildings and rental properties, financial incentives to accelerate investment in high-performance buildings, and government leadership through its own procurement.
In a joint interview, ASBEC executive director Suzanne Toumbourou and ClimateWorks program manager Eli Court told Sourceable the importance of establishing a trajectory should not be underestimated.
To help meet our commitments under the Paris Agreement, Toumbourou said the building industry needs a trajectory to guide it in doing its part. A firm and long-term trajectory would also afford the industry greater certainty about what will be required of it in the transition to a low carbon economy. This will help promote confidence in long-term investment decisions.
As for relying on the market to deliver better outcomes, Court says past experience has shown that whilst market leaders are driving world class innovation at the premium end of the market, broader uptake of better practices has been restricted by a range of market failures and persistent barriers. Home buyers, residential tenants and commercial tenants often lack the data, information and skills to fully realise the benefits of low-energy building when making decisions to rent or purchase properties, he says.
With properties offered for lease (commercial or residential), there is also a split incentive whereby the benefits of greater investment in energy efficiency from the viewpoint of landlords is limited notwithstanding the benefits of lower energy bills for tenants.
For this reason, he says the majority of building stock is simply constructed to minimum standards. Those standards thus need to be lifted over time in order to raise the performance levels of the majority of buildings.
Tony Arnel, global director of sustainability, NDY and industry professor at Deakin University, agrees. Buildings, Arnel says, generate 23 per cent of Australia’s greenhouse gas emissions and 55 per cent of our electricity consumption. Accordingly, the built environment sector is crucial for Australia to achieve not only our Paris Agreement commitments by 2030 but also a net zero economy by 2050.
Despite this, he agrees with Court about the aforementioned barriers. As a result, he says most buildings are simply built according to minimum standards required by the Code. The best way to raise these standards is to raise Code requirements over time.
Furthermore, Arnel argues that significant savings in energy costs are on offer. Between now and 2050, he says $19 billion in residential energy bills and $8 billion in non-residential energy bills could be saved by simply raising minimum building code standards. This equates to around $900 per household annually and thousands each year in the case of commercial buildings.
Not all are on board. In a statement released in June (prior to the report’s final release in July), the Urban Development Institute of Australia raised what it said were ‘serious concerns’ about the idea of a ‘zero carbon ready building code’ and to the proposed increase in stringency provisions.
UDIA national executive director Kirk Conningham said this could increase the cost of home ownership and lock those on lower incomes out of the housing market.
“We can all see the sense of investing in energy efficiency,” Cunningham said.
“But the difference between double and single glazing can be the difference between home ownership and a lifetime of renting,
“Future savings are only relevant if you can squeeze together enough to buy in the first place.”
Court and Toumbourou say this is misleading. Pointing to a CSIRO report released in 2013, they say evidence observed during the period where mandatory five star NatHERS ratings were phased in to the then Building Code of Australia in 2006 indicated that in fact, homes constructed to the new five star standard were cheaper to build compared with lower rated homes to the tune of $5,000 in Adelaide and Melbourne and $7,000 in Brisbane. This was despite similar industry claims that this would lock people out of the market.
Whilst there would be some additional construction costs up front should the proposed trajectory be adopted, these would on a conservative basis amount to less than four per cent of construction costs (and an even lower percentage of new home costs, since construction costs are only part of the costs of building a new home). At any rate, the trajectory (under conservative scenarios) was demonstrated through the project to deliver net economic benefits to households.
Finally, Court and Toumbourou say, such criticism ignores the long-term nature and process of the trajectory which will also provide a framework to help builders to innovate and reduce costs. Accordingly, Court says, any additional cost as a result of this trajectory essentially amounts to ‘noise’ in the context of the overall costs of delivering new housing.
Australia’s building sector must act to reduce carbon emissions and energy consumption.
A pathway as to how energy performance requirements could be tightened over time to achieve this has now been laid out.