Landcom’s Precinx tool is a winner

By Tina Perinotto

In the sustainability revolution, things are getting serious. You can tell by  the  number of  ratings tools that are under way. It’s as if the time for talk and promises and green bling are over and the industry wants “real measures” for “real people”. It sounds like another bit of marketing, we suppose, but let’s not  be cynical.

Ratings tools are being developed for building materials (see our recent article) and neighbourhoods. There’s been a stream of new tools from the Green Building Council of Australia and from  property companies for their own internal use. Now NABERS, whose rating system is approaching the 10-year mark, has announced it will do a through review and revamp of its system (see our story in this issue).

Last week Landcom dazzled Sydney’s development industry when it lifted the bonnet on its new rating tool for neighbourhoods, Precinx.

At a briefing at Parramatta’s Sebel Hotel, Landcom director sustainability Steve Driscoll introduced the tool, and its designer Bruce Taper, of Kinesis, explained the mechanics.

The industry audience, comprising a high-level bunch of the type of people who work the technical numbers behind developments, as well as some who are developing internal tools of their own, were impressed.

It was almost a mobbing for Driscoll: “When can we have it? How much will it cost? Why doesn’t the Government roll it out? After all, the taxpayer has paid for it.”

Nigel Howard of Edge Environment, whose company is developing the life-cycle assessment and rating tool for building materials mentioned above, and who has been involved in some of the most high-level rating tools in Britain and the US, was impressed.

“The key thing I liked about it was the underlying intelligence of the way that it programmed into the precincts the mix of property types likely to arise … and the way it produces results in terms of solid metrics,” Howard said.

“I could see it can be pretty aligned with the tools we’re working on in building design. And I can see that, down the road, there could be a building tool and a precincts’ tool that could be harmonised to produce a whole set of joined-up thinking.”

As Taper unwrapped the algorithms and calculations, the reasons for the enthusiasm became clear.

Taking Landcom’s 800-house Bunya development at Doonside, NSW as a model, Taper showed how the tool could calculate the embodied CO2 of each house and of the total development, as well as other measures such as affordability.

Then, in a few key strokes, the operator varied the size of the houses, the building materials, construction type and energy and water systems,  even the road design. The results were instant, startling and sometimes counterintuitive.

“The first thing you can do about CO2 is reduce the house size,” Taper said. “The other thing you can do is vary the assembly type and the materials that make up the house, or the retail or commercial buildings.”

For example Taper showed that each building was sitting on 31.2 tonnes of embodied CO2.  By reducing the house size and changing the assembly type, the result dropped to 29.6.tonnes. By changing the concrete mix to 22 per cent slag, the result dropped to 26 tonnes.

“The purpose of linking embodied energy into the operations is to work out where do I get the best bang for my bucks,” Taper explained.

In the same way, the operator can vary the input of different water systems to calculate the overall impact. The local water authority could then use that data to work out how it should provision infrastructure and manage demand in future

With energy installations, Taper showed the how individual solar panels compared to a large community solar plant or a gas-fired co-generation plant.

If the co-gen plant is able to supply four times its own power needs, then the greenhouse savings can also be factored into the result, cost included.

Driscoll explained it was important to Landcom that the tool is able to factor in cost, so it could measure the risk to the community of say, gas prices for the co-gen plant going through the roof.

“We have to factor in our social sustainability charter, and the legacy issue of, say, signing up people to a co-gen, which they will own, and then leaving them exposed to the vagaries of the gas market.”

In the same way the tool can calculate what happens to the cost of living for residents if the price of petrol doubled.

Even appliances could be factored into the mix, since Landcom has bulk purchasing power and to prove that off-the-shelf washing machines, for instance, could provide “a free kick for water and greenhouse and it’s cheaper than any other technology”, as Taper put it.

Quite frankly the depth and sophistication of the tool took the board by surprise. It was clear that Precinx had wider application and scope than had been anticipated. The questions now are should the application be extended beyond Landcom? Who could pay for it to be further developed? Already it’s cost several hundred thousand dollars and the estimates to web-enable it are about $750,000. Is there a case for it to be made available to the community at large, since it’s in the public interest?

Driscoll has already shown Precinx to industry groups in Melbourne and ACT  and next will be Queensland. In the main Driscoll says the roadshow is about scoping the potential and meeting the board’s request to come up with a few possible business scenarios.

But the word is that the development industry is about to get a kicker to its decision-making base and therefore an ability to deliver more sustainable housing to the nation.

See the link to a facts sheet at the bottom of the page on this link

tperinotto@thefifthestate.com.au

The Fifth Estate
sustainable property
news and forum

Matthew Clark

By Tina Perinotto

NABERS, the environmental rating system that today measures the performance of about half of Australia’s CBD office space is under review - and the property industry has been promised full consultation.

11 March 2010 - For many people NABERS, the performance rating tool managed by the NSW Government, is a relatively straightforward way to measure energy use in a building – or water, waste or indoor environment quality, for that matter.

Nothing particularly controversial, you might think.

In fact the birth of NABERS was probably one of the most contentious events in the history of commercial property. Its commercialisation – or distribution to the industry – by the NSW Government caused even more fireworks.

The tool started out innocently enough. Perhaps.

Its inventors, Roger Fay and Robert Vale, nutted out a system that could measure the impact of any human structure on a piece of land. Essentially it rated the overall impact of a building on land which had been previously undeveloped. It measured everything from embodied energy to how many carbon miles would be needed to get to work. So you could earn full points for a fully sustainable building, for instance, but lose significantly if the workers in the building needed to travel long distances to get there.

The Federal Government spent four years and about $600,000 to further refine the tool. The property industry watched and became concerned.  Chief executive officer of the Property Council of Australia, Peter Verwer, was particularly critical. He questioned the incorporation of tenancy environmental performance in the overall score. He was scathing about some of its features, such as how waste would be measured.

The Green Building Council, then headed by Maria Atkinson, suggested it would be more useful as an academic research tool.

In August 2004, NSW Government won a tender to take over further development and commercialisation of NABERS – against a determined pitch from the Green Building Council of Australia, with the tussle played out in daily newspapers.

Today, NABERS reveals barely a trace of this early baptism of fire.

The industry has not only accepted NABERS, but embraced it.

NABERS manager, Matthew Clark, manager built environment for the Department of Environment, Climate Change and Water, says more than 60 per cent of the Sydney CBD and 50 per cent of all Australian CBDs have NABERS ratings. That’s 10.5 million square metres of rated commercial space in more than 1000 buildings.

In the period from its first iteration the rating system was fundamentally transformed and today bares little resemblance to its origins. The first component, NABERS energy essentially a rebadged Australian Building Greenhouse Rating system.

Subsequent tools were based on the ABGR methodology and measure waste, water and indoor environment and today they can be applied to offices to hotels and shopping centres, and soon to schools, data centres and hospitals.

Many of the early issues, such as separation of tenancy and base building, were ironed out and industry suggestions adopted, so that separate ratings can be obtained.

The biggest win for the industry was that the tool now measures the performance of a building against benchmarks based on “actual industry performance and achievable targets,” says Clark, instead of a rating against an idealised outcome, such as undeveloped land that underpinned the original version of NABERS.

But why is comparison to a peer group useful if the peer group has a low average performance?

The beauty of the tool, says Clark, is that it not only allows a practical comparison to be made from which improvements can be measured, but it sets a “stretch target” so that the building owner can aim to outperform the average. It “plays on the competitive nature of the market,” he says.

And it’s working.

Clark says most building owners and tenants who re-rate their buildings tend to produce better outcomes the next time –achieving an average 13 per cent improvement, or 200,000 tonnes of carbon savings a year. And the stretch target of five stars is also having an impact.

“It’s not a matter of course to get to five stars. It’s not an easy achievement. We’re only just now starting to get to that five-star operating outcome, and now newer buildings are starting to push beyond it.  It’s transforming the market from within,” Clark says.

Time for a review
But now that NABERS has notched up the gains, it’s time for a review and consultants have been engaged to analyse the options. A draft report is already in and a final report is due in a few months.

The momentum has come partly because NABERS will be the tool used by the Mandatory Disclosure legislation, which will require all buildings of more than 2000 square metres to declare their energy use at the time of sale or lease. And partly because of industry concerns about inconsistencies in the methodology, which suggest that a particular star rating does not mean the same thing across state boundaries.

The concerns have some merit says Clark. NABERS was set up on the framework established by the ABGR, with 2.5 stars signifying an industry average. But because standards were different in each state, the benchmark of 2.5 stars also varied state to state.

So it is possible that in Victoria the average rating could be around half a star higher than NSW, and in Queensland half a star less, he says.

However, Clarke says the variations are most apparent in the mid to lower range of the rating.

“It’s less of an issue at 4.5-star to five-star.  It’s pretty consistent at five-star but the variations get bigger as you move away from that.

“If we change to the national average, we may see the lower ratings go up a bit in some states, and in others go down a bit.”

The review will also examine if there is a need to go beyond five stars, says Clark.

“When we set the five-star point and did the energy simulation, it was almost ten years ago. Knowing what we know now about energy simulation, do we need to change what we understand?

“One option is to extend the scale – keep five-star where it is and adding stars. It would mean less of an impact on current ratings.”

Another issue is to decide what happens to existing ratings if the underlying algorithms get a shakeup.

One solution might be to have NABERS Version I and Version II.

“So we’re looking at the technical and theoretical basis of NABERS.”

There will be no change NABERS role as a comparative tool: “We want NABERS to compare one building against its peers,” Clark says.

But all questions are all up for discussion.

“Once we’ve got the [final] reports, we will go to a full industry consultation and make it clear how this will impact.

“We need consultation.”

Quite separately and coming after the review was commissioned was the initiative to sign a memorandum of understanding between the Green Building Council and NABERS to work towards a more harmonious approach.

Clark says the idea was to create “a formal way to engage with each other, so that we’ve got an arena to work with each other, rather than dealing with issues on an ad hoc basis.”

And that’s just the way the NABERS team prefers it.

NABERS Facts:

• 767 office buildings have rated their building for some combination of Energy, Water, Waste and Indoor Environment

• 293 office tenancies have rated their performance

• 18 hotels

• Cost depends on the charges made by assessors – generally between $2000 and $6000

By Lynne Blundell

India is determined to reduce carbon emissions and to supply renewable power to its enormous population. But with the massive hydro power generation dam projects under way in the sensitive Himalayan foothills, the cost is high. Lynne Blundell recently travelled to the region and here presents a rare insight into the harsh conflicts that India faces in its search for a sustainable future.

11 March 2010 - Australia’s dismal record on renewable energy was thrown into stark relief for me during a recent trip to India. In that country, despite enormous economic and social obstacles, 10 per cent of power already comes from renewable sources and the figure is rising.

Impressive as this is, it has not come without its costs; the insatiable demand for power from a huge and growing population has driven the Indian government to allow some energy sectors, in particular hydroelectricity schemes, to push ahead despite a rising tide of protests from environmentalists and local communities.

Such conflicts are not new, but they highlight the dilemma facing governments seeking to meet present and future power needs, including through less carbon intensive alternatives. 

As energy shortages around the world mount, these battles are likely to become increasingly common. Renewable energy sources might reduce carbon emissions but they still impact on local communities –wind turbines are large and loud, hydro schemes require dams and large-scale solar plants need space.

Similar issues are now emerging in Australia where communities have opposed wind farms, citing noise and visual pollution.

Boosting the renewable energy sector
The Indian government has shown remarkably strong commitment to boosting the renewable energy sector. According to the Prayas Energy Group, a charitable trust and research organisation, almost 10 per cent of India’s power now comes from renewable sources. This compares to 5 per cent in Australia and 3.8 per cent in the United States.

In addition, the Indian government has implemented strong energy efficiency standards for new appliances and buildings and launched an efficiency-based cap-and-trade scheme involving 700 large industrial companies. Massive subsidies for solar technologies are also planned.

All this, despite the fact that India’s carbon and energy use is far lower than  in Australia, the US or China, albeit that this is largely a result of high levels of poverty.

The Indian government has implemented strong energy efficiency standards for new appliances and buildings and launched an efficiency-based cap-and-trade scheme involving 700 large industrial companies Photo: Lynne Blundell

Green Buildings a $40 billion market
At the recent Green Cities 2010 conference in Melbourne, India’s Green Building Council senior director, Sundaresan Raghupathy, told delegates about India’s determination to overhaul its building sector, with plans to increase the number of green buildings from the current 502 to 1000 by 2012.

“There is huge potential in India. Green building materials are expected to grow by US$40 billion by 2010,”Ragupathy said.

During my visit to India, which coincided with the Copenhagen climate summit, India’s environment minister, Jairam Ramesh, appeared on national television, promising significant cuts in emissions and a commitment by government to policies to address climate change.

It was an impressive performance. Ramesh acknowledged the effects of climate change were already being felt in India, pointing to shrinking glaciers and erratic monsoons.

”There is no country that is as much impacted by climate change as India…. First, we are dependent on monsoons, the southwest monsoon and the northeast monsoon.  They are the lifeline of our country.  Two out of every three Indians still depend on agriculture for their livelihood,” Ramesh said.

Flows in Sikkim's Teesta River, in northeast India, have declined dramatically since the construction of dams Photo: Lynne Blundell

“Secondly, we have the Himalayan glaciers – anywhere between 9000 and 12,000 Glaciers. There is a great deal of scientific debate on what is happening to these glaciers but we do not have to wait for perfect science. The warning signals are already there. Most of the glaciers are receding.”

Ramesh announced that regardless of the outcome at Copenhagen, India would cut carbon emission by 20 to 25 per cent by 2020 compared to 2005 levels. This would be achieved through mandatory fuel efficiency standards for vehicles, environment-friendly building codes and the introduction of clean coal technologies for power plants.

The challenges for India are enormous. The second most populous country in the world after China, India occupies only 2.4 per cent of the world’s land area and supports over 15 per cent of the world’s population.

According to a report on India’s energy use by researchers from Stanford University, The Institute of Technology Madras and Prayas Energy Group, over two thirds of India’s renewable capacity comes from wind power, approximately 10 Gigawatts (GW), which has grown at an annual rate of 26 per cent since 2000.

“This is in spite of the fact that India has unfavourable wind resource conditions in comparison the US, China and the EU [European Union]. Since 2000, India has added 14.4 GW of Hydro-power capacity. This trend is likely to continue.

“The Indian government proposes to support 20GW of solar capacity by 2020. Seventeen states, which account for roughly 92 per cent of the power consumed in the country, have Renewable Purchase Obligations (RPO) in place, which range from a few per cent to 20 per cent by 2012,”says the report.

Since 2000 capacity additions from renewables comprise nearly a quarter of total additions in the Indian power sector. This rises to 50 per cent if large hydro projects are included.

A dam on the border of the Dzongu Reserve, the land of Sikkim's indigenous Lepchas Photo: Kerry Little

The conflicts of power generation

But it is in its approach to hydroelectric schemes that some cracks emerge in India’s energy strategy. Inevitably, with a rapidly growing population, increasing urbanisation and an ever-rising demand for power, the mighty rivers flowing down to the plains from the Himalayas are an attractive option for power generation. The government has targeted hydro schemes for huge growth.

But as the Prayas report points out, this comes at considerable social and environmental cost:

“Social and environmental externalities related to big dams are well known. India does not follow the decision-making process recommended by the World Commission on Dams. The Indian government has perpetually faced criticism for its record on the rehabilitation of displaced people and on dam performance.

“Nevertheless, the government aims to build 50GW of hydro-power projects. Most of these projects are in the Himalayan region and in the northeast part of India. Ironically, water flows in these areas are highly susceptible to changes due to global warming. To ensure promotion of private investment in these dams, the regulator has passed on the full hydrological risk to the consumers, with a high potential cost.”

The Indian government’s determination to forge ahead with large-scale hydroelectric projects in the fragile Himalayan region defies warnings from climate scientists that the glaciers of the region are shrinking. The recent debacle over inaccurate figures in the Intergovernmental Panel for Climate Change report does not alter the trend of declining precipitation and shrinking glaciers.

I visited this region, where construction of dams along the Teesta River in Sikkim, in north eastern India, have been a source of ongoing conflict between Indian authorities and the indigenous people, the Lepchas.

Traditional village life in the Dzongu reserve, in the Himalayan foothills, is threatened by damming of the Teesta River Photo: Lynne Blundell

In Sikkim there are currently more than 20 dams planned or in progress, several within the boundaries of the Dzongu Lepcha Reserve, an area set aside for the exclusive use of Lepchas and protected by legislation.  These dams are hailed by the state government as the path to economic independence as Sikkim is heavily dependent on the central government for funding.

To put these hydro schemes into perspective - according to a report on the environmental and technology website Ecoworld, at capacity China’s Three Gorges complex produces around 17GW. India’s current entire hydroelectric capacity is estimated at around 35GW and the Teesta river systems will add another 5GW into India’s power grid. Sikkim will be an energy exporter. The dams will also change the landscape and ecosystem of this area forever.

Ironically, local and state authorities also heavily promote Sikkim as an ecotourism destination with signs everywhere proclaiming its green credentials. This is hard to swallow when you venture into the Himalayan foothills in northern Sikkim, only to be confronted by massive dam construction and dwindling water flows of this once majestic river.

The sounds of the forest are now punctuated with the deep rumblings of explosives. Landslides, already a problem in the area, are now more common say locals – construction at one of the dams in Sikkim was halted last year when 12 dam workers were washed away in dam collapse.

The construction of hydroelectric power plants in remote communities faced with few opportunities for earning an income is an ethical minefield. In northern Sikkim the villagers increased their wealth in the past by growing cardamom crops. Soil depletion and crop disease in recent years caused the collapse of the industry, giving landowners a compelling economic reason to sell their unproductive land when approached by government and hydro companies.

Tenzing Lepcha and Dawa Lepcha on hunger strike Photo: weepingsikkim.blogspot.com

It is the encroachment of the dams on what they consider their sacred river and land that drove a group of young Lepchas to protest against the construction. They formed the Affected Communities Of Teesta and began a peaceful protest including several hunger strikes.

Two of ACT’s members, 33 year old Dawa Lepcha and 23 year old Tenzing Lepcha twice ended up in hospital, desperately ill after many weeks on hunger strikes, their first strike going for 63 days and the second for 96 days.

While in Sikkim I met these young men, both passionate about protecting their land. Dawa Lepcha, a filmmaker and secretary of ACT, who lives in Lingdong Village in the Dzongu reserve, was quoted in local media at the time of the hunger strikes:

“The proposed hydropower projects will have a drastic effect on the social, cultural and religious well-being of Lepchas, not to mention on the fragile environment of Dzongu, our ancestral and present homeland in north Sikkim.”

The protesters have attracted the support of other Lepcha communities as well as leading environmentalists both from within India and outside the country. Facing mounting pressure from hunger strikes, the state government ordered a halt to four of the projects in Dzongu, which were also inside the borders of the Kanchenjunga National Park.

Film maker Dawa Lepcha in Lingdong Village - “The proposed hydropower projects will have a drastic effect on the social, cultural and religious well-being of Lepchas, not to mention on the fragile environment of Dzongu, our ancestral and present homeland in north Sikkim.”

One dam on the border of the Dzongu Reserve went ahead and protesters are now fighting to stop the Panan project, a 280 MW dam inside Dzongu and on the border of Kanchenjunga National Park.

But victory for the members of ACT is bitter sweet - the protests have divided the local community. While some regard the damming of the rivers as destructive, others see the dams as a positive, bringing much needed development and income to local communities.

And as the world inevitably moves to a less carbon intensive future and seeks alternative sources of power, the balancing act between making the most of natural resources and exploiting them, along with local communities, will become increasingly difficult.

lblundell@thefifthestate.com.au

The Fifth Estate –

sustainable property
news and forum

by Michael Mobbs

Ah! As I write this, it’s such a perfect day for a Burr. A beauty of sun, clear light and, here and there, drops of silence. But Burrs will be burrs, so buckle up.

We have here a classic case of do-gooders who, in seeking to do good, actually do harm.

The local council did some works to some local streets — Buckland, Myrtle and Meagher — in Chippendale in inner-city Sydney. The aim the council and its consultants set themselves was to make these streets more attractive to citizens, safer for pedestrians and to clean up stormwater entering Sydney Harbour.

Nothing was done for the birds, insects and little critters in the ground that help to produce good soil, and strong trees and plants to sustain us; or to increase biodiversity. There are other criticisms, but let’s discuss, on this lovely sunny day, something that has an element of farce and laughter to it.

The failure to design for, understand, and get it right on, stormwater.

After $1.8 million of ratepayers’ money and some rainfalls, it’s possible to identify some design defects in some of the new works with the self-serving titles of “water-sensitive urban design” and “rain gardens”.

It’s a natural reaction to turn up the volume of our inner sceptic when folks give themselves favourable titles. Who would dare to criticise someone who, for example, is the author of a “water-sensitive urban design”? Surely such a person sits on the right hand of the gods, particularly when they bless one’s community with a “rain garden”? And that’s what we have here, according to the consultants and the council; “water-sensitive urban design” and “rain gardens”.

Still, the urge in this citizen Burr is not to fall to our knees in the presence of such works and blessings. It is, simply, to look, ask questions and ask some more.

(Now is not the time to discuss the stupidity; the rationalisations; the cost; the embodied energy; the maintenance costs, and the unusually poor thinking that has produced these things that will never be “rain gardens” – importing gravel, then later planting the gardens with the few foreign plants that will survive in gravel. The Burr will return to this thorny topic at some other time).
Yesterday I photographed a truck in Myrtle Street, roaring away, sucking up gravel that had been washed into a large concrete pit in a “rain garden”. A couple of days beforehand I photographed bags that had been placed to slow down the stormwater entering the “rain garden”.

Even the slightest rainfall erodes the “rain gardens”, washing away the gravel, which is soon replaced by some more. How much embedded energy does this take, and who pays for it?
We can merely speculate at the true impacts of these “water-sensitive” works on our lovely, but torn, mother Earth.

Michael Mobbs is a sustainability coach who works with developers, governments and communities to design and obtain approvals for houses, units and subdivisions. He is based in the inner Sydney suburb of Chippendale, where in 1996 he pioneered the conversion of his inner city terrace into a sustainable house, which has now been disconnected to mains water and sewerage and is powered by solar energy. www.sustainablehouse.com.au

by Nicola Woodward -

FAVOURITES - 21 April 2009 - Accelerated Depreciation is a core platform of the property industry as a way to green buildings – but there are major flaws in this approach and better ways to achieve the desired outcomes….

“Green depreciation” is a term that has recently been coined for providing accelerated tax depreciation for property related capital expenditure that provides a green payback.

Tax depreciation is a tax deferral mechanism that already provides capital allowance deductions for refurbishment works as well as write offs for any plant or building items that are demolished or disposed of as part of the project.

The rationale for the introduction of green depreciation has been this: there is an environmental need for existing buildings to be brought into the “green” fold but there is a cost premium in refurbishing an existing building to green standards over traditional design.

There is an existing framework for providing tax deferrals for capital expenditure in the form of tax depreciation, so by accelerating those deferrals for green refurbishments existing building owners will be encouraged to spend that extra capital whilst at the same time being revenue neutral to treasury.

Not so fast

There are a few flaws in this logic.

Firstly, there is the problem of definition. What is green and how is it measured? What are the real differences between the environmental impact of refurbishing a 2.5 star NABERS rated existing building using traditional building materials and demolishing that building and replacing it with a 6 star Green Star building?

The current rating systems available in the Australian market do not allow such a comparison to be made. Green Star is a tool that looks at the design aspects of building whereas NABERS measure actual operating data and scores a building on 12 month periods of use.

Immediately, green depreciation hits another hurdle – if you use NABERS as a benchmark of green how do you match the timing of finishing a project and getting a rating done based on occupation and usage when tax depreciation would be available upon practical completion?

Alternatively, if you use Green Star as a benchmark you could be left with a fantastically designed building that has not been commissioned well and operates well below its capabilities.

Next, let’s tackle cost.

It has long been held that transforming an existing building into a sustainable building incurs a premium cost. In the current economic climate building owners cannot afford to fund their current capital expenditure commitments let alone the extra costs relating to greening.

This is one of the key problems with the green depreciation argument. The acceleration of tax depreciation is merely a cash flow benefit in the period immediately following capital expenditure; it is not a long term solution to cost.

The whole point of sustainable development is that the whole life cost of a building is taken into account. When looking at whole of life costs, real benefits will be made in any ongoing reductions in vacancy periods, energy costs and repairs and maintenance or increases in the effective life of assets.

Accelerated depreciation not so effective in the long run

Accelerating the tax depreciation available will make almost no difference to the whole life cost of the expenditure. That is not to say that the accelerated depreciation will not make a difference at all, but it will be based on the time value of money and is more likely to be seen as the icing on the cake rather than the impetus to spend.

But it can help with marginal projects

I suggest that if building owners currently make green decisions based on cost, changing the timing on tax deductions will not make green expenditure more likely, although it may make some marginal projects viable where cash flow issues are the stumbling block.

I have yet to see any evidence that the new Investment Allowance which is a one off bonus tax deduction and not just a timing change has led to any meaningful new capital expenditure.

Those who do take advantage of the tax break will have been going to spend the money anyway and may alter the pattern of their expenditure but it is unlikely to make them spend more over the period of a year.

Another shortcoming of green depreciation, as it currently is being tabled, is the emphasis on spending capital rather than being smart with what you do with your existing building.

Where’s the benefit for good management and education?

For example, there is no benefit suggested for those who achieve a green building by good management and educating the tenants.

The fundamental question that needs asking is this; will building owners take into account the tax depreciation when planning their refurbishments?

My experience over the last 15 years of working in this area is that the answer will be no in the vast majority of cases.

It is still not usual practice to consider in detail the tax depreciation available when acquiring a building. Estimates of tax depreciation available are sometimes put into models but hurdle rates and valuations rarely take into account after-tax returns. When refurbishments are undertaken, available write offs are often overlooked and it is rare for the after tax position to be considered.

Again we come back to the fact that tax depreciation is a deferral of tax. When a building is sold the depreciation already claimed is clawed back by way of capital gains tax (buildings) or as a balancing adjustment (plant/depreciating assets).

And what if the owner plans to sell?

Therefore the building owner gains a timing difference on the tax. If the owner plans on improving the building and then to sell it on, green depreciation will not benefit them.

In the US tax credits work better

Other incentives that have been adopted around the world should be examined as there are simpler and more effective mechanism for encouraging green refurbishments and to date there has been little debate on this.

Tax incentives as a tool for improving the green profile of buildings can be found in many jurisdictions. For example, in Oregon USA there are tax credits available for LEED platinum rated developments that can be used by the building owner or passed on to a project partner. This is particularly useful where you have a non-taxpaying building owner who would otherwise not be able to take advantage of the incentives.

Federal, state and local governments have had great success with devising and implementing green building funding projects around Australia. The Green Building Fund announced in May 2008 is a good example of this. It provides up to 50 per cent of the cost of a green building project up to $500,000.

Melbourne City Council has an aim to have 1200 retrofitted commercial buildings in Melbourne by 2020 to achieve its zero net emissions by 2020 goal. This project takes a holistic view of the process and addresses the capacity of the property industry to undertake these projects as well as facilitating access to funds.

I would argue that this structured and targeted approach will provide more lasting green benefits to the building stock.

And where is the debate, anyway?

Green depreciation as a concept is not without merit. What is of concern is that there has to date been no debate around what alternatives are out there or how it fits in with where we want to go as a country to improve the performance of our commercial building stock.

If those issues can be resolved and green depreciation is deemed to be the way forward, then the problems with definition and equity as well as the practicalities of implementing such a complex overlay of the existing tax depreciation regime can be addressed.

Nicola Woodward is director, Apex Property Consulting Pty Ltd

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