Property developers and commercial landlords who use mass timber in construction of commercial, public or multi-residential buildings throughout Australia may be able to access finance from the Commonwealth Government under as the Government moves to further promote development of the mass timber building industry and supply chain.

The Clean Energy Finance Corporation (CEFC) – which invests in behalf of the Australian Government – has unveiled a $300 million program to encourage mass timber building across the building sector.

Under the program, eligible projects will be able to access Commonwealth funded debt-finance of between $20 million and $75 million.

Eligible buildings will come from across Australia and may include office, retail, industrial, healthcare, education, multi-residential apartments, seniors living or student accommodation.

The type of finance which is offered will be considered on a case-by-case basis but is likely to take the form of senior secured project finance debt or corporate debt.

Concessional finance may be available under some circumstances.

To be eligible, projects will need to:

• Use low carbon engineered wood products in large-scale construction
• Have secured appropriate materials source, accreditation and embodied carbon outcomes
• Require $20 million-$75 million in CEFC debt finance
• Be commercially sound and meet investment requirements of the CEFC
• Comply with the CEFC Investment Policies, Guidelines and Risk Approach.

The new program comes amid growing recognition of the potential role of mass timber in reducing the volume of ‘embodied carbon’ which is emitted during the construction process and the construction supply chain.

Worldwide, embodied carbon in buildings accounts for 28 percent of global carbon emissions.

In a report released last December, the CEFC found that use of timber in commercial or multi-residential buildings could reduce embodied carbon by up to 75 percent when compared to similar buildings using traditional concrete and steel.

As things stand, however, this type of construction still represents a modest proportion of new building construction in Australia and there are a relatively small number of projects of this type which have been completed or are in the pipeline.

The program therefore aims to lock-in mass timber construction for a series of new projects and help develop local skills and experience, supply chains and delivery capabilities.

CEFC chief executive officer Ian Learmonth said that whilst timber had been used in construction for generations, innovations in engineered wood products have created new opportunities for mass timber construction to be used in larger projects.

“Our new Timber Building Program will help finance this transition by encouraging owners, developers and builders to use lower carbon engineered wood products in their projects,” Learmonth said.

“The CEFC has a strong track record in financing new market developments, from large-scale solar to cleantech start-ups. We are excited to bring this expertise to sustainable construction.”

CEFC Director of Property Investment Ryan Rathborne agrees.

“The time is right for the development of more timber buildings across the property sector,” Rathborne said.

“By locking in mass timber construction in new projects, we can also help develop local skills and experience, supply chains and delivery capabilities, all of which can catalyse more timber-based building activity into the future.

“We are already seeing early adopters incorporating these new materials in their construction. Our goal is to accelerate this trend, working with the property sector to create a cleaner, more sustainable built environment.

“Our property-related investment commitments have included demonstration projects with the ability to deliver best-in-class performance around energy efficiency, along with the effective integration of renewable energy into new and existing buildings. Cutting emissions from embodied carbon is the next frontier for the construction sector, with enormous potential from development through to occupation.”

Master Builders Australia CEO Denita Warn welcomed the announcement, saying that the new program would help bring down the cost of construction, develop local capacity in low-carbon timber product manufacture.

This in turn would help to deliver healthier and more sustainable buildings in a way which does not impose excessive cost on the industry or consumers.

But she repeated calls which Master Builders has issued jointly with the Australian Wood Products Association for measures to tackle what she says is a forecast a major shortfall of timber housing frames in the next decade.