This is no time to delay raising minimum home energy ratings

Action to make Australia’s housing resilient in the face of climate change has never been more urgent – and the post-pandemic recovery should be the time to do it.

But this month, the nation’s building ministers announced that an expected increase of new home building standards to a minimum 7-star NatHERS rating will be delayed by a further four months. The update is now expected to come into force in September 2022.

This is a missed opportunity that will come at a cost.

When it comes to energy performance, Australia’s homes are lagging behind comparable countries. Despite improvements in technology and industry knowledge, energy standards for new homes haven’t been updated since 2010. We are still building new homes that fall short of what is possible and what is needed in the context of a rapid energy system transition.

There are significant benefits of improving home energy efficiency. Better energy performance means lower energy bills, more comfortable living, better health, lower greenhouse gas emissions, resilience to extreme weather events, and less pressure on the energy grid at peak times. Buildings consume over half of Australia’s total electricity; efficiency improvements alongside a transition from coal and gas to renewables are an important component of the broader urgent shift to net zero emissions.

There is typically a small upfront cost to building a higher-performing home – but the cost is decreasing and at most levels a resident will save money over the long run through lower energy bills, as well as living in a healthier home.

The upfront cost of energy efficiency measures means that builders and developers have an incentive to shift those costs from construction onto residents. While an increasing number of builders are leading the way in building highly energy efficient homes, clear regulatory standards alongside consumer information and ratings are needed to deliver change at a large scale.

Setting minimum standards through regulations works. Homes built before minimum standards were first introduced in 2003 are estimated to have an average energy performance equivalent to less than a 2-star NatHERS rating, compared to the current minimum 6-star rating. Energy efficiency requirements in the NCC mean better buildings and increased industry capacity to build them at low cost.

With the NCC updated every three years, an increase to energy efficiency rules in the 2022 edition has long been signposted.

The COAG Energy Council agreed in early 2019 to adopt the Trajectory for Low Energy Buildings, setting a pathway to the stringency increase. Public and industry consultation has been conducted and the Australian Building Codes Board has been working throughout 2020 on new draft provisions.

Following the results of a public scoping study, the ABCB has been directed to develop draft provisions requiring a minimum 7-star NatHERS rating. Furthermore, the provisions are set to include an option for net zero regulated energy use – in which onsite renewables would need to fully offset the energy used in space conditioning, hot water, lighting and pool pumps – as well as a second, less stringent option for net-positive regulated energy use.

It is clear that the benefits of these changes greatly outweigh the costs. Indeed, the changes can be delivered at low cost and are highly achievable. There is a good case that the proposed rules should be further strengthened to raise thermal envelope ratings and require renewable-powered heat pump technology.

Industry has had a long time to prepare for these changes. With developers already on notice for a change, it is hard to see what benefit a further delay can have – but the costs will be high.

Projections by Climateworks and ASBEC found that delaying a stringency upgrade to the 2025 NCC update would cost residents $2 billion in increased energy bills, as well as $720 million in additional network upgrade costs by 2030. Even a delay of four months will have a lasting impact.

Ultimately, the cost of a delay will be paid by residents. Homes built in the window before new rules are introduced will be standing for decades, leaving occupiers paying unnecessarily high costs for many years to come. Experience shows that renters and people on low incomes are most likely to face energy hardship and barriers to upgrading homes in the future.

The delay to NCC improvements is not the only impact of the Covid pandemic on housing energy efficiency policy. Other measures have been similarly delayed, including proposed new standards for renters in Victoria, which were due to come into force in mid-2020. Meanwhile, Western Australia is not just facing a wait for the 2022 code update: it is yet to enact the 2019 regulations, which due to multiple delays will not come into effect for another six months.

More broadly, governments are missing the opportunity to respond to the overlapping crises of inequality, economic downturn and climate change by investing in upgrades to our housing stock. Governments should be creating jobs following the pandemic through retrofit programs to make Australia’s existing homes healthier and more energy efficient, alongside large-scale builds of public, Aboriginal and community housing.

There are clear road maps available. In June, over 50 community, tenancy and environmental organisations released a plan for a National Low Income Energy Productivity Program that would retrofit up to 1.7 million homes. Similarly, Beyond Zero Emissions has proposed large-scale energy retrofits as part of the Million Jobs Plan.

Government investment and improved regulations can build confidence in a housing and construction sector that is facing serious challenges following the pandemic.

Forward-looking builders should get ready to meet 7+ star standards now rather than waiting for the change that is on its way. And governments must get serious about the action we need to make our homes healthy, affordable, and resilient in the face of the climate emergency.

Rob McLeod is Renew’s Sustainable Housing Advocate.