Mandatory Disclosure of Commercial Building Energy Efficiency: Concept Report

KEY FINDINGS

1. Office buildings are responsible for the most significant proportion of energy consumption and greenhouse gas emissions for the commercial building sector. Office buildings should, therefore, be the priority of any mandatory disclosure regime.
2. Given the different ownership and tenancy arrangements of commercial properties, a mandatory disclosure regime needs to enable the rating of whole buildings, base buildings and tenancies. Furthermore, disclosure should occur at both the point of sale and lease of commercial buildings in order to maximise the opportunities for disclosure to occur.
3. The rating of commercial buildings needs to be presented in a relatively straightforward and meaningful manner to enable a simple comparison of buildings on a ‘like-with-like’basis. To be fully effective, the information disclosed should also identify impediments and opportunities for improving the energy efficiency of the building.
4. The ABGR scheme provides an established framework for rating office buildings throughout Australia. It enables the rating of existing buildings and provides a methodology for predicting the energy efficiency of new buildings. The ABGR scheme is supported by a rigorous training, accreditation and auditing program. In theory, the ABGR scheme could also be extended to cover other types of commercial buildings.
5. A methodology for establishing a mandatory disclosure scheme for all types of commercial buildings is detailed in Appendices B, C and D. This methodology could be used as an alternative to, or possibly in conjunction with, the ABGR scheme, Green Star or another rating methodology. It is acknowledged that any methodology would need to be specifically enhanced for these purposes.
6. The training, accreditation and auditing of assessors is essential to ensure that ratings are consistent and accurate.
7. Adequate energy metering of buildings is essential to the operation of a mandatory disclosure regime. Energy data is necessary for establishing benchmarks for different building types and for ratings to be carried out on the actual performance of buildings. There is a potential privacy issue regarding information about energy used by tenants.This issue needs to be further assessed in the regulation impact assessment.
8. A mandatory disclosure regime must be underpinned by an administrative framework that supports the technical processes. Ideally, for consistency and uniformity, this function should exist in one national administrative body responsible for the implementation and ongoing development of the regime.
9. There are a few overseas examples of mandatory disclosure regimes for commercial buildings. A relatively detailed mandatory disclosure scheme for commercial buildings has been developed in the UK. This scheme is due for staged implementation over the next three years. Examination of the UK scheme and its effectiveness, once implemented, could be useful in the development of an Australian scheme.
10. Legislation for the mandatory disclosure of commercial building energy efficiency could be enacted by the Commonwealth or by the States and Territories. However, a single federal scheme enacted under Commonwealth legislation provides the simplest opportunity for a nationally consistent scheme. Enforcement mechanisms could be modelled in a number of different ways.
11. The market for commercial buildings greater than 2000 m2 is made up of sophisticated. Investors who are generally aware of the costs implied in building operations and have the means to conduct energy efficiency investigations. Aside from the externalities caused by greenhouse gas emissions, the main market failures in this sector seem to be based on information issues such as a lack of awareness about privately cost-effective energy saving measures. An emissions trading scheme will add impetus to energy efficiency improvement to commercial buildings. However, preliminary calculations indicate that this will only slightly increase building operating expenses.
12. Data limitations and the heterogeneity of commercial buildings have prevented this study from reaching any firm conclusions about the effectiveness of mandatory disclosure. In light of this and the issues raised above, priority should be given to having a detailed regulatory impact assessment undertaken into the effectiveness of mandatory disclosure in achieving meaningful increases in commercial building energy efficiency. The study should be undertaken in accordance with the requirements of the Office of Best Practice Regulation and precede any further work on this policy.
13. Additionally, a pilot study could be undertaken to test the hypotheses of the economic analysis. A pilot study would clarify the issues that need to be overcome in order to implement an effective national mandatory disclosure regime for commercial buildings.