New commercial buildings in Sydney will need to be designed to achieve net zero energy and carbon emissions in operation as a condition of being granted development approval from 2026 onward.

But property developers are warning that moves by individual councils to go above and beyond state and national energy efficiency requirements could lead to inconsistent requirements and greater costs.

In what it says an Australian-first, the Sydney City Council voted on Monday night to incorporate energy efficiency and renewable energy targets into development applications for new commercial developments.

Under the new policy:

• From 1 January 2023, all new commercial and multi-residential buildings within the City of Sydney municipality will need to meet specific energy efficiency standards as a condition of receiving planning approval.
• From 2026 onward, all major new commercial/multi-residential buildings within the City will need to achieve net zero energy as a condition of approval.

The new requirements will apply to offices towers, hotels and shopping centres. They will not apply to residential buildings as these in NSW are covered by the BASIX SEPP, which generally does not allow local planning controls to impose higher requirements.

The new controls will also apply to approval applications for major refurbishments of such buildings.

Requirements may be met through energy efficiency, on-site renewable energy and any provision of offsite renewable energy which is recognised by the NSW planning system.

A City of Sydney spokesperson says the new controls improve on current energy efficiency requirements for commercial buildings as specified under the National Construction Code.

The new controls come as the City of Sydney aims to achieve net zero carbon emissions by 2035.

They have been developed over four years in consultation with developers, investors, industry bodies, consultants and government agencies.

Final amendments were made in response to feedback as part of a public exhibition last year.

All up, the Council says the measures will deliver energy cost savings worth more than $1.3 billion between 2023 and 2040.

This includes annual savings of $2,750 per 1,000 square metres in office buildings and $170 per hotel room in accommodation settings.

Additional public benefits and savings in health, energy network and emissions costs are estimated at $1.8 billion.

The Council also believes its measures could create a model for other councils across Greater Sydney to follow.

Sydney Lord Mayor Clover Moore says the new controls will deliver substantial benefits.

She says the importance of climate action can be seen through the recent NSW floods.

“Commercial office space, hotels and apartment buildings contribute 68% of total emissions in the City. If we’re to meet our target of net-zero emissions by 2035, we need the building sector to play its part,” the Lord Mayor said.

“These new controls, four years in the making, require developers to reduce emissions through increased energy efficiency, on-site renewable energy production and offsite renewable energy procurement. They are ambitious but achievable and provide a clear pathway for developers to improve energy performance and transition to net zero buildings.

“Working with our major developers and building owners to address the climate crisis could not be more important. Not only will this program help us reach our target of net-zero emissions by 2035, it will provide energy savings of more than $1.3 billion for investors, businesses and occupants across Greater Sydney.”

However, development lobby groups have expressed caution about individual councils going above and beyond energy efficiency requirements in state and national regulations.

“Urban Taskforce recognises and supports measures to reduce the carbon footprint of housing and workplace development,” said Tom Forest, CEO of the Urban Taskforce, a development lobby group.

“However, we do not support Councils going beyond the requirements of the relevant guidelines and obligations.

“When Councils seek to go beyond these standards this creates confusion, supply issues (different rules for different locations), and additional costs.”

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