Mandatory Disclosure of Commercial Office Building Energy Efficiency
The Commonwealth, State and Territory governments have recently established the ‘National Framework for Energy Efficiency’ (NFEE) which has proposed the ‘Mandatory Disclosure of Commercial Office Building Energy Efficiency Scheme’ (Mandatory Disclosure Scheme). The Mandatory Disclosure Scheme is currently being developed by the Department of the Environment, Water, Heritage and the Arts (DEWHA).
According to DEWHA, the Mandatory Disclosure Scheme
‘will require the energy efficiency of commercial office buildings to be disclosed at the point of sale or lease so that potential buyers and tenants can compare the energy efficiency of buildings on a ‘like for like’ basis...to overcome market impediments and ensure that both parties in a transaction have access to credible and meaningful information about a building’s energy efficiency’.
On 18 December 2008 DEWHA published the Mandatory Disclosure of Commercial Office Building Energy Efficiency Consultation Regulation Document (CRD)
and the Consultation Regulation Impact Statement (CRIS)
Basically these regulations proposed by DEWHA is that from 2010 the scheme will require the energy efficiency (NABERS energy rating) of commercial office buildings or tenancy equal to or over 2000m2 to be disclosed at the point of sale or lease so that potential buyers and tenants can compare the energy efficiency of buildings on a 'like for like' basis. The key objectives of the new scheme will be to encourage businesses through market forces to environmentally retrofit or improve energy efficiencies in their existing properties by ensuring that clients and potential clients have access information about a building's energy efficiency.
The government argues that in the absence of further intervention, information provision will continue to be voluntary, still with a strong selection bias, whereby owners of buildings with better than average energy efficiency undertake the assessment and volunteer the rating. Buyers and tenants will continue to be limited with regards to the extent to which they can compare energy efficiency ratings across the different buildings or office spaces. This in turn means that a strong risk of sub-optimal market outcomes remains. There is unequal access to information about commercial building energy efficiency, with property owners having little incentive to voluntarily disclose information on the energy efficiency performance of their property, particularly if the performance rating is below average (Consultation Regulation Impact Statement, p11).
The objective of the scheme is to overcome what are viewed as two types of market failure in the delivery of energy-efficient office buildings and tenancies. The first is that tenants may have an interest in energy efficiency but are unable to influence the owner, or that owners are interested in energy efficiency but have insufficient incentive to improve energy efficiency because costs are passed on to tenants. The second is simply that buyers or potential tenants currently find it difficult to easily and cheaply determine the energy efficiency of a building.
This is the same rationale governments have used to justify energy efficiency labels on fridges and fuel efficiency labels on new cars. Now they’re applying it to office buildings. “The essence of mandatory disclosure,” the Government says, “is to ensure that participants in the buildings market have access to credible information regarding the energy efficiency of a prospective building or tenancy” (Consultation Regulation Document, p23).
At this stage, only office buildings for sale or lease will require public disclosure of ratings in advertising material are covered by Mandatory Disclosure of Energy Efficiency but the Australian Government has signalled its intent to expand this measure to additional building types, subject to further cost-benefit analyses. This makes the scheme different to the European Union directive which mandates that any building occupied by public authorities or by institutions providing public services must have an energy certificate prominently displayed.
With the environmental performance of existing building stock increasingly coming under the microscope FM Innovations has designed WSM Sustainability, software created with NABERS guidelines (not official ratings, an official rating can only be provided by an accredited NABERS assessor) to manage the environmental impacts of both pre-existing and new building stock namely in the areas of energy, fuel, gas, water and waste. With Green Leasing now a key requirement for many savvy tenants and with the Mandatory Disclosure Scheme proposal the potential major push from both government and the concerned public to decrease the colossal carbon footprint in Australia, the management of the environmental impacts from the commercial sector is critical. Building owners and managers alike are responsible for the emissions percolating from their buildings. Ultimately, they are accountable and in the not too distant future they will be legally liable.
According to our extensive and thorough research, although there are some management tools specifically designed to monitor the environmental impact of commercial buildings, none of these systems are integrated into a day to day Property & Facility Management software. It is our belief that effective overall environmental management needs to combine the daily works maintenance management (ad hoc & planned maintenance schedules) together with the day to day management of the sustainability impacts of the building. This is reducing risk as well as deterring liability for building owners and managers.
Current Progress - April 2009
On 18 December 2008, a Consultation Regulation Impact Statement (RIS) and Consultation Regulation Document (RD) on a proposed new national scheme for the mandatory disclosure of commercial office building energy efficiency were released for public comment. The documents requested that written comments be forwarded to the Australian Government Department of the Environment, Water, Heritage and the Arts by 27 February 2009.
Information forums were also held in each capital city during January and February 2009. The purpose of the forums was to present the key elements of the consultation documents including the proposed overarching requirements of the scheme, how it would be administered and the economic analysis. Over 400 representatives from industry and government attended the forums. An industry workshop on mandatory disclosure of tenancy energy efficiency was also held to seek additional industry feedback on the design of the scheme.
41 written submissions on the proposed new scheme were received by the Department. Submissions authorised for public viewing are listed on the website below.
http://www.environment.gov.au/settlements/energyefficiency/buildings/submissions/index.html
At this present stage no decision has been made to introduce any legislation into parliament as the submissions are still out for comment, however FM Innovations will keep you up to date with any further developments.
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For more information on FM Innovations Sustainability Software please contact us.
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