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Government’s final ERF is a bit like last year’s sushi

Greg Hunt

In the finest tradition of governance that doesn’t want to be noticed, the official Emissions Reduction Fund methodology for commercial buildings passed into law on January 14 without even so much as a ministerial photo opportunity.

Environment minister Greg Hunt put his signature to the legislation, but there was no press release, no Greg Hunt Facebook or official minister web page announcement, not even a general update to the CFI webpage that tells anyone exactly how to push the “go” button and put in a proposal under the Emissions Reduction Fund to get cracking on a project.

As one industry source commented, “I’m not giving it much energy to be honest: I’m focused on other, positive things.”

Angus Nardi, executive director of the Shopping Centre Council of Australia, was still trying to be positive about the ERF, but struggling.

“We want the ERF to be a success and for our members to be able to benefit,” he said on Thursday afternoon in a emailed response.

“We understand that some minor changes to the methodology have been made since it was exhibited, but that these changes don’t address some of the big barriers to entry for shopping centres. The determination (of the methodology for commercial buildings) came despite our advice to government that it is unlikely that shopping centre owners would find opportunities under the ERF.

“We’re staying positive and will keep working with the Government to try and find different opportunities for our members.”

So what’s in the bill, the Carbon Farming – Commercial Buildings Methodology 2015? No great happy New Year surprises compared to the draft from what we can tell, despite the submissions sent in during the consultation period from numerous industry players pointing out ways it could have been improved to be truly great and green and good.

In the final legislation, eligible projects still only include any building that has, or is eligible for, a NABERS rating – ruling out many smaller buildings.

Specifically CFI projects for commercial buildings must involve “modifying, installing, removing or replacing energy consuming equipment; or equipment that generates electricity for consumption at the building; or a building component or other equipment that isn’t either of those; or, changing how energy consuming equipment is controlled or operated; changing the energy sources used by energy consuming equipment; or promoting behaviours by occupants of the building that affect energy consumption by energy consuming equipment at the building”.

There is no requirement for equipment that is disposed of as part of an energy efficiency upgrade to be recycled, although it may be broken down into components and recycled, it can simply be “disposed of”. It cannot be refurbished, re-used or on-sold, unless it is on-sold to someone who will break it down and recycle it.

There appears to be a free pass for project proponents to decide on a period where they simply won’t calculate greenhouse gas emissions abatement because energy use might have an effect on abatement. The clause reads:

(1) For the purposes of working out the carbon dioxide equivalent net abatement amount for a reporting period, the project proponent for the project may choose not to calculate abatement for a building in the project for a measurement period in the reporting period.

(2) However, if:

(a) the project proponent undertakes an activity (whether or not a project activity) at a building in the project; and

(b) under legislative rules made for subparagraph 27(4A)(c)(ii) of the Act, the activity must not be included in an eligible offsets project; and

(c) the activity could reasonably be expected to have an effect, that is not minor or trivial, on the abatement that would be calculated for the building in the measurement period;

the project proponent must not calculate abatement for the building for the measurement period.

Does anyone else get a whiff of last year’s sushi left in the sun too long from that clause?

The legislation includes the equations and calculation process for working out abatement, and these are anchored in relation to a baseline determined by the pre-project base building NABERS rating.

Finally, a project can only be divided in such a way that each part is a whole building within a larger project that is a group of NABERS-eligible buildings, not on a partial building basis.

On the local council front, the news is poor, as expected.

Alexi Lynch, business manager sustainability strategy for consultancy Ironbark, which specialises in local government work, gave his assessment, as follows.

Overall it’s not great news for councils who will be largely excluded in relation to commercial buildings given the chosen methodology and requirement for NABERS ratings and reports. A typical council’s building stock will include a small number of large buildings and a large number of small buildings. It’s common for the large buildings – such as civic centres, administration centres, town halls, leisure centres, recreation centres and large libraries – to be responsible for the majority of a building stock’s energy use and greenhouse emissions.

Then there are a number of smaller buildings such as Maternal and Child Health Centres, depots, kindergartens, community centres and smaller libraries. This can be anywhere from a few dozen to a few thousand, depending on the council. On their own they consume little energy. Cumulatively they consume a lot and given they are often similar in size and building type there is scope to implement energy efficiency actions affordably.

However only council administrative buildings would be eligible under the methodology released last week because a commercial buildings are defined as “an office building, a shopping centre or a hotel”.

The methodology and calculations are based exclusively on NABERS energy ratings, which only has tools for… office buildings, shopping centres and hotels.

So this excludes energy-intensive council facilities such as recreation centres and swimming pools. It excludes the hundreds of small community facilities that councils own and operate such as maternal child health centres, community centres and libraries that, when aggregated, could have resulted in large abatement.

It’s possible that the department is not confident with methodologies for other building types but given the ERF is all about real emissions reductions, it shouldn’t have been too hard to widen the scope.

There are alternative mechanisms for small buildings. NABERS is great but there are other ways to accurately report on emissions reductions and these have been used in the past, for example through systems such as theNational Greenhouse and Energy Reporting system

Theoretically a council could work with commercial buildings in their local government area and assist in aggregating emissions to reduce administrative costs. However in practice this is unlikely to happen, as it’s not council core business. Plus the types of commercial buildings they are targeting (that is,, big ones) will have their own sustainability managers. Think Colonial First State and large hotel chains. Even these players might struggle to compete with larger emitters in the mining or agriculture sectors

Other final methodologies that passed into law this month are those for Alternative Waste Treatment and Landfill Gas.

  • Read the full legislation for the Commercial Buildings methodology here. Also Alternative Waste Treatment here, and Landfill Gas here.

 

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