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Australia has opened the door to higher performing homes, at lower cost

In the midst of agreements on national reforms to address the cladding crisis and improve the fire and structural safety of buildings, decision makers at the recent Building Ministers’ Forum also reached another significant milestone  – one that could set Australian homes on a path towards lower energy bills, reduced strain on the electricity network and fewer greenhouse gas emissions.

On 18 July, national, state and territory building ministers agreed to develop stronger minimum energy standards for new houses and apartments. 

The stronger standards would come into effect in the next iteration of the National Construction Code, in 2022. The Code sets minimum energy performance requirements for all new buildings and major renovations in Australia and applies at the point of design and construction. This is often the easiest and cheapest time to deliver energy performance outcomes.

Stronger energy standards help with energy bills, health, resilience

Consuming energy is costly for households.  An average Australian family now spends about $2115 on their electricity and gas bills each year, adding up to almost $20 billion across the country. Low-income households are particularly vulnerable to energy costs, spending up to five times more (as a proportion of disposable income) on electricity than higher-income earners. Personal experiences with energy aren’t just about the bills though, as growing evidence demonstrates how a home’s energy performance influences mental wellbeing and safety during heatwaves. 

Research led by ClimateWorks Australia and the Australian Sustainable Built Environment Council found stronger energy standards in the National Construction Code could reduce household energy bills by up to $900 each year. This would add up to $20.9 billion in reduced household energy bills between now and 2050 and avoid 45.3 million tonnes of greenhouse gas emissions during that time.

This step towards improved energy requirements in the Code is timely.  New construction adds up fast: 51 per cent of the buildings expected to be standing in 2050 will have been built from 2019 onwards. 

Energy standards for new homes have not been strengthened in a decade. With around half a million homes to be built between now and the next Code upgrade, delaying the change until 2022 is already predicted to have locked in $1.1 billion in extra energy bills between now and 2050. But the building ministers’ recent decision to develop stronger residential energy standards is a positive step towards lower energy bills, reduced emissions and healthier homes.

Transforming energy use in buildings

In addition to stronger energy standards for residential buildings, there have been two other recent developments which are changing the way Australians use energy in buildings.

Late last year, minimum energy standards for commercial buildings were strengthened by around 35 per cent and enshrined in the 2019 National Construction Code. The other significant reform was the Building Ministers’ Forum decision in February to progress the Trajectory for Low Energy Buildings. 

The policy includes adding stronger energy performance requirements to the Code at regular intervals and committing to these several years in advance. This is the first time a forward trajectory for regularly strengthened minimum standards, has been introduced at a sectoral-level in Australia. 

Until now, there has never been a policy direction determining whether, when and by how much energy requirements in the Code must change over time. 

With energy requirements set years in advance, consumers and industry will have a regulatory signal that encourages innovation and investment in new technology, design and construction practices, potentially delivering higher performing buildings at lower cost.

For example, the Trajectory requires new energy requirements that would come into force in 2025 to have been agreed in 2021, for new 2028 requirements to be agreed in 2024, and so on. This is particularly important for innovations that require a long lead-time, such as the development of new products by manufacturers, as it allows the industry to plan ahead for future regulatory requirements.

The next step: Establishing a forward trajectory for energy standards

With broad support for the establishment of a trajectory for minimum energy standards, it is now incumbent on ministers to outline that pathway in detail and set ambitious targets that will significantly reduce energy costs and emissions. 

A joint report by ClimateWorks Australia and ASBEC, Built to Perform set out a series of feasible forward pathways for Code energy requirements covering a range of building types and climates across Australia. This provided a benchmark for governments to support the adoption of targets for future revisions of the Code. 

The report showed that a forward trajectory for energy standards in the Code, for both residential and commercial buildings, could deliver up to $29 billion in reduced energy bills and 78 million tonnes of cumulative emissions savings across the economy by 2050. 

Implementing the recommendations could also relieve pressure on Australia’s ageing energy infrastructure, by reducing electricity demand during peak times by 6,500 megawatts across the country by 2030. 

These peak demand savings are significant when compared with the 1800 megawatts stripped from generation capacity during Melbourne’s heatwave in January, which contributed to rolling blackouts.

With the concept of a trajectory for energy regulations firmly on the map in Australia, the next step is for building ministers to set stringent targets in the Code that align with reaching a net zero emissions built environment by 2050.  

To ensure we stay on track there also needs to be a clear, rules-based process for setting and reviewing targets and a process for monitoring and publicly reporting on progress. Regular scheduled reviews would help identify opportunities to strengthen targets and take advantage of faster improvements in technology or design practices that can drive down costs. 

Implementing a forward trajectory that has stringent energy performance targets is essential to achieving low emissions buildings and provide the policy certainty required by industry to innovate and invest in new practices.

Michael Li is a project manager for ClimateWorks Australia. 


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