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CBD program up for review – and axing

The Commercial Building Disclosure program is under review and it’s the last thing the energy efficiency industry needs to hear, coming as it does on the back of a barrage of attacks on energy efficiency and clean energy programs.

Some companies have been forced to retrench staff; and some have managed to hang on to staff – and their business –  by the skin of their teeth.

The most recent attack on the industry was the removal of the Energy Efficiency Opportunities Program, the review of the Renewable Energy Target that seemed pre-ordained to find against it, the axing of the carbon tax and the Victorian axing of its Greener Government Building Program and the Victorian Energy Efficiency Target.

The news this time is mixed if you listen to the Property Council. But it’s bleak indeed if you look at the government’s terms of reference and the language in Monday’s announcement.

The tenancy lighting assessment component of the program is likely to be axed and that’s bad enough in some views. However, the Property Council is keen for the TLA to be removed but says the federal government would find “no friends” if it attempted to remove the overarching energy efficiency program that many in the commercial property industry says has changed the game.

The Property Council needs to look closely at what the government is saying and make some serious representations if it wants the CBD program kept. Here’s the wording:

The purpose of the review is to assess the CBD Program’s objectives, the effectiveness of the program in promoting energy efficiency and its interaction with the Emissions Reduction Fund.  The review will provide recommendations on the merits for continuing the program and any options for its future funding, including cost recovery if appropriate.Terms of Reference

The Review will assess:

  • the objectives of the Commercial Building Disclosure (CBD) program:
    •  whether the objectives are clear and remain relevant;
  • whether the CBD program is the most effective/appropriate and least cost mechanism to achieve these objectives, including consideration of the benefits and costs imposed on industry;
  • the effectiveness of the program in promoting energy efficiency, both in its own right and in the context of the current framework of energy efficiency initiatives, and
  • the interaction of the program with the Emissions Reduction Fund.

The Review will provide recommendations on:

  • the merits of continuing the program or not, both in terms of the public interest as well as the private interest of property owners and tenants;
  • the lessons for assessing possible extension of mandatory disclosure to other building types;
  • options for its funding, including cost recovery, if appropriate;
  • the most appropriate governance framework, and
  • the potential for improvements to the operation of the program.

Luke Menzel, acting chief executive of the Energy Efficiency Council said the Commercial Building Disclosure program has been “incredibly effective at informing prospective buyers and tenants on the energy performance of larger buildings, giving them the information they need to make better decisions.”

The Energy Efficiency Council would welcome any recommendations coming out of this review that improve the operation of the CBD program, he said. “However experts in the sector would be extremely concerned about any moves to downgrade or dismantle the program, and we will be putting that case very strongly if there are any moves in that direction.”

Chris Nunn, sustainability director, Australia Jones Lang LaSalle said the CBD program was working, “so why would you mess with it? I would think most businesses who have reporting obligations and have to do NABERS ratings would agree. Yes it  costs us a bit in time and effort but while they repealed the EEO I would be surprised if they repealed the CBD.”

Mr Nunn said the Property Council sustainable development committee with “all the players” such as Beck Dawson from Investa, Bruce Precious from GPT, and Greg Johnson from Stockland – had met Monday afternoon and the issue had not been raised. The business case for energy efficiency was as “strong as ever” and he would be surprised in any property owners would want to see the CBD program removed.

Appointed to the CBD review is ACIL Allen Consulting, fresh from the review of the Energy Efficiency Opportunities program. It won the contract against a field that included Energy Action, the company that in March acquired Paul Bannister’s Exergy and Pitt & Sherry. Both Mr Bannister and Pitt and Sherry’s Paul Harrington are veterans of several policy programs and reviews in the energy environmental performance space.

On Tuesday afternoon national policy manager for The Property Council Charlie Thomas told The Fifth Estate the PCA was “very excited” that the Tenancy Lighting Assessment tool, or TLA, was being reviewed and likely to be removed.

“We’ve been saying that [it should be scrapped] for a few years,” Mr Thomas said.

Others did not share his view, with experts such as WT Sustainability director Steve Hennessy saying rather than get rid of the TLA the problem could be solved by better educating the tenants.

Mr Thomas said the TLA had been costing owners time and money.

“It takes a lot of time and effort and consultancy fees to undertake the assessment and the views of our members is it doesn’t provide more than what’s provided through the NABERS rating. That’s what the data shows.”

Steve Hennessy disagreed. He said, “I think it would be a big mistake to get rid of the TLA. I think giving tenants information about energy systems they will inherit is a valuable thing.”

The tool had a problem, though, namely that tenants had not been asking for information on lighting and this indicated an “issue”, mostly likely that they didn’t understand the value of the information.

Rather than remove the tool, Mr Hennessy said it would be better to create better education around the value of good lighting.

“The answer means there might need to be a better awareness campaign.”

Mr Hennessy gave an example of his own company’s tenancy, where lighting has a 5.7 nominal lighting power density (where anything lower than seven is “very good”), but this was the result of negotiating with the owner before taking on the lease.

A neighbouring tenant who was not aware of the implications, however, recently discovered through casual conversation that his electricity bill was about four times higher for the same space.

On the other hand, he said, the lighting assessment was not free. For a 10,000 square metre building it could be between $2000 and $2500.

“The Property Council is arguing that we’re spending the money but if no one wants the lighting assessment, why should be burden our members?

“So that’s their position. It’s not unreasonable if you’re producing all this paper work and no one paying any attention to it.”

However the issue was more about educating prospective tenants to make good use of information. And if they were making an informed decision it would “drive better leasing agreements”.

Mr Hennessy said the LEASA App produced by the Royal Institution of Chartered Surveyors and its best practice guide for leasing was a good place to start.

Mr Hennessy last year told The Fifth Estate CBD was driving buildings to perform better.

“When Commercial Building Disclosure started the mean NABERS rating was 2.5, so there’s a real push to increase performance thanks to the legislation,” he said.

The average is now over three stars.

CBD likely to stay

On the CBD there was no question that the Property Council and its members wanted to see the program retained, Mr Thomas said.

“We certainly want to see the continuation of the CBD,” he said.

In fact the government had taken some steps to improve the program already.

One provision that was likely to be amended was related to unsolicited offers. At present if an owner received an unsolicited offer to buy or lease an office of more than 2000 square metres, when the program requirements kick in, they are obliged to “hang up the phone” and terminate discussions if they did not have a current CBD assessment.

The amendment would rationalise that situation with a provision to allow a period of grace to comply with the legislation while continuing commercial negotiations.

On the CBD program overall the Property Council did not expect major changes; certainly Mr Thomas did not think there was little chance the review would recommend an expansion of the CBD program as had been mooted in the past, for instance into retail property.

“At this stage there is no proposal for expansion. The first thing before expansion would be to get the NABERS retail tool right.”

No mention of environment

Mr Thomas said he expected ACIL Allens would do good work on the economics of the CBD and as he understood it, the review was to look at cost/benefits of the program.

Not the environmental outcomes?

“Environment doesn’t enter it, but I haven’t seen the terms of reference.”

The review would find “good economic arguments” for keeping the CBD, he said.

It allowed transparency so tenants could see the cost of energy in buildings.

Any changes would enacted through the so-called “red tape” Omnibus Repeal Bill and separate to other repeal legislation that might face a hostile Senate.

Key findings are expected by November, a draft report by December and a final report by March 2015.

Comments

3 Responses to “CBD program up for review – and axing”

  • Australia is considered a world leader in building energy labelling like CBD and NABERS. Why would anyone want to scrap this when it has shown marked improvements to the energy performance of building?

  • Graham Agar says:

    $2,500 for a lighting assessment of a 10,000m2 office building!! Oh no! that’s a whole 25c per m2, my god, that’s roughly equivalent to a whole 4 hours of rent for that space!

    Stop this disgusting rip off right now! How could we possibly spend less than it costs to light the space for a day to have an accurate indication of how much it will cost to run the space, providing an excellent indication of long term costs.

    Dear me, I guarantee that spending this sort of money is likely to have around a 2-3 month payback period, who could possible afford that rate of return!

    Whilst we are at it, lets scrap capped electricity costs and remove any accuracy requirements for electrical meters, I cant recall any tenant ever asking me to see the validation certificate for their billing meter, so there must be no value to it.

    Ridiculous.

  • Alan Pears says:

    There are several issues here. First all markets require participants to be fully informed and empowered to act. CBD and the lighting calculator facilitate that. Second, government should consider factors that undermine the effectiveness of information in the market. As Steve Hennessy points out, if tenants are not educated to value the lighting calculator results, this is not a criticism of the calculator, but an argument for stronger action to empower tenants.

    A fundamental issue for government is to ask whether a market is delivering a societally least cost outcome. If it is not, it should support measures that help to overcome the market failure.

    Basically, if businesses are not investing in energy efficiency measures with a 10 year or better payback period, the market is failing on this criterion…..

    I have no problem with market based solutions, but our present government seems to support anarchy – at the expense of those who are not well resourced and empowered.

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