Energy efficiency disclosure is rapidly moving from the concept stage to statutory enforcement affecting both owners and tenants. The proposed scheme and Federal legislation will be phased in starting next year.
Federal Environment Minister Peter Garrett has released a Consultation Regulation Impact Statement and Consultation Regulation Document for public comment a few months ago. The documents outline a proposed mandatory disclosure scheme that will require energy efficiency ratings and advisory reports to be disclosed at the point of sale or lease for any commercial office space with a net lettable area (NLA) of 2,000sqm or more by 2010.
It is claimed that 23 percent of all carbon emissions come from buildings and their occupants, with 10 per cent of Australia’s greenhouse gas emissions (excluding emissions associated with building and construction), and that those emissions have grown a remarkable 87 per cent between 1990 and 2006.
The central requirement of the proposed scheme is that when a commercial office building of 2000sqm or more, (or any part of such a building), is to be sold, leased or sub-leased, an appropriate energy efficiency rating and assessment report of the building must be disclosed:
1. in any advertisement about that sale or lease
2. to prospective buyers and tenants and
3. to a central registry
The government intends to progressively expand the scheme’s coverage to future and additional building types. So it’s not just commercial offices in the firing line, retail property is likely to be next.
On 30 April 2009, the Prime Minister announced that the Council of Australian Governments (COAG) endorsed the design of the expanded Renewable Energy Target and agreed to the introduction of new 6 star standards for houses and strengthened energy efficiency standards for commercial buildings by:
Increasing the stringency of energy efficiency requirements for all classes of commercial buildings in the Building Code of Australia from 2010
Phasing in the mandatory disclosure of the energy efficiency of commercial buildings and tenancies from 2010
Increasing energy efficiency requirements for new residential buildings to six stars, or equivalent, nationally in the 2010 update of the Building Code of Australia, as well as introducing new efficiency requirements for hot-water systems and lighting
Phasing in mandatory disclosure of residential building energy, greenhouse and water performance at the time of sale or lease, commencing with energy efficiency, from May 2011
The potential impact of these proposals should not be underestimated. The “lease-ability”, saleability and value of commercial property is now in the front line of climate change initiatives. Federal (and then State) Government departments and agencies will progressively move towards leasing only those premises that fall within “acceptable criteria”. It won’t be long before national private sector tenants follow this lead in the name of “corporate citizenship”. Those buildings with low or unacceptable energy efficiency ratings are likely to find it increasingly difficult to attract prime class tenants.