While the tools and techniques for delivering all-electric, low emissions and high-performance buildings are well understood, shifting the entire property market will require some regulatory tinkering.

In the case of the NSW Government Sustainable Buildings SEPP (State Environmental Planning Policy), while the intention is sound, in the key sector of logistics/industrial property it misses the mark. One of the reasons this oversight matters is the sector is one of the growth areas for property investment, development and construction, with a boom in facilities being planned around the country to cater for growth in consumer product demand, speed of delivery and resilience.

The SEPP has been interpreted to require all industrial, warehousing and logistics developments with a total office area of greater than 1,000m2 to achieve a NABERS Commitment Agreement for the office component. However, having worked on many, many of these projects as a sustainability consultant, we know the energy performance of the office area is responsible for only a small part of the overall environmental footprint.

The NABERS process also adds cost and impacts initial planning timeframes. For assets such as retail, office tower and data centres this cost is small per square metre of total rated floorspace and delivers measurable benefits to incentivise reductions in energy use intensity per square metre. However, by only applying it to the office component of logistics/industrial projects, those benefits are unlikely to be achieved across the whole project gross floor area.

The SEPP also requires some non-residential developments to report on embodied emissions in the construction materials. If this is only applied to the commercial office area, again, the majority of impact will not be captured. It’s the same scenario for another otherwise excellent aspect of the SEPP, which is the requirement for post-occupancy data to be collected two years after completion to verify energy and water performance targets have been met.


The missing pieces of the carbon puzzle

Logistics and warehousing developments involve significant pavement areas of concrete, reinforcing and asphalt – all high in embodied emissions – along with the structural steel, cladding and building services utilised for the big sheds. Again, all high-impact materials. We have been working on projects where we have been able to refine design of pavements and specify low-carbon concrete to reduce the embodied carbon, however, it is still significant.

The same is true of the structure, where modelling enables optimisation of the dimensions and quantities of steel and of the dimensions of the slab for the building to identify possible reductions in materials (and embodied carbon) achieving better outcomes than the blunt instrument of a conventional, deemed-to-satisfy approach.

Importantly, there is an embodied carbon trade-off between façade and building envelope construction and the resulting thermal performance, which may mean needing more insulation for the office area. Also, while the form of logistics and warehouses are a no-brainer for solar PV to minimise operational energy emissions, there is an embodied carbon impact from the PV itself and we need to consider the carbon of increasing roofing strength and structural steel to cater for the weight of solar PV.

None of this is captured in the SEPP with its focus on the office area. Instead, meeting the requirements of the SEPP will add substantial cost to projects, without delivering major environmental performance gains for the facilities or the sector overall.


The future is coming – are we ready, or not?

Another aspect of the SEPP as it will apply to the sector is it does not address contextual factors, nor does it align with the future directions of the sector as articulated by the Australian Logistics Council (ALC) and the Federal Government’s National Freight and Supply Chain strategy.

Both the ALC and the Federal Government have highlighted the transition of the vehicle fleet from high-emissions diesel to electric and/or hydrogen fuel sources as a significant direction for improving sustainability.

The NSW SEPP missed an opportunity to ensure new logistics and warehousing is an enabler for this shift, as it does not stretch to requirements around right-sizing electrical systems for vehicle charging, or necessary safety standards relating to construction specifications for on-site energy storage.

What we know is designing for the future now will always be more efficient in terms of lifecycle costs and operational convenience than planning for potential retrofits in future. Across all building types, this is another major weakness in the SEPP – it mandates all new non-residential buildings be designed for capability to transition to all-electric operations by 2035 – five years past our major target of 43% emissions reductions under Australia’s updated Nationally-Determined Contribution to the milestones agreed under the Paris Accord.

If a project puts in for Development Approval today, that means it can be waved through with gas for various building systems that have logical gas-free replacement options, so long as the proponent can successfully make a case that the design allows them to take all that equipment out and replace it with electric alternatives by 2035.

If embodied carbon is indeed part of the focus of the SEPP, this is entirely counter-productive, as the operational life of gas-using equipment such as a boiler, stove or ducted heating system is more than a decade, which means taking it out to replace it with electric systems will be an embodied carbon blowout.


We can, so we should

To put it simply, in all things design, specification and delivery of any building we need to start now as we mean to continue in the future. The current SEPP settings enable the locking in of Scope 1 (on-site combustion) emissions across new developments for many years to come.

For industrial and warehousing, the majority of logistics buildings do not need to use gas equipment, so all-electric is straight-forward to design and specify for. As most facilities operate at ambient temperature, aside from managing extreme heat risks, the need for conditioning space is minimal.

In general, natural ventilation with appropriate supplementation to prevent build-up of vehicle and equipment fumes is straightforward, and as the vehicle and equipment fleet transitions to electric trucks and electric forklifts, the level of fumes from equipment operations will dramatically decrease. But the corresponding reduction in energy use won’t affect any NABERS rating as the rating only applies to the office, not the part of the building where equipment is being used.

Ultimately, a sensible approach to this sector will serve the interests of the wider community. Our goal is to transition to a net zero economy, and logistics and freight underpin the majority of economic activity. Emissions – including development supply chain emissions – are material for the retailers, the manufacturers, the customers and the financial institutions served by the sector. As these stakeholders themselves increasingly decarbonise, none of us want the logistics function to be the wonky link in their net zero supply chains.

So, while we support the intent of requiring improvements in environmental performance for all buildings including industrial assets, the current SEPP pushes in the wrong areas – delivering low outcomes at high cost. Within the same cost ballpark, so much more could be done that would have benefits across the wider economy and for the environment.

By David Collins, Director, Cundall



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