Nick Champion (Wakefield, Australian Labor Party) Share this | Hansard source

I rise to support the Building Energy Efficiency Disclosure Bill 2010. It is great to hear that this bill has bipartisan support and will get a speedy passage through this chamber and, hopefully, through the other place. This bill addresses two main problems that affect the commercial market. Firstly there is a market failure in this area because at the moment energy efficiency is not valued in a coherent way by the market. You only have to look at the building you work in, including this magnificent building, to know that often energy efficiency has not been valued in the past. That is one of the reasons this bill has come before the House.

Secondly, because energy efficiency is not valued by the market, buildings are often designed to be grossly inefficient and this designing locks in high carbon emission for the operational life of a building, and forces tenants and the broader community to wear the long-term costs of those designs. It is all very well to tell people to switch off their lights and other things but unless a building is designed to be efficient, unless those things are built in at that very early stage, often the actions of individuals are made very small. If energy efficiency is implicit in the design then individual actions have a much greater effect.

The commercial building sector currently accounts for 10 per cent of Australia’s total greenhouse gas emissions. It is a very significant proportion of our emissions. The strategic importance of targeting commercial buildings is highlighted by the fact that energy efficiency represents one of the fastest and cheapest ways to reduce Australia’s greenhouse gas emissions. Just think about it: there is residential energy use and emissions from driving a car to work, but a big factor is the building you work in—turning on the lights, using the conveniences, heating and cooling the building all have a very big effect on an individual’s greenhouse gas emissions.

As part of the National Framework for Energy Efficiency, the bill before the House will require large-scale commercial buildings covering 2,000 square meters or more to display information regarding the buildings energy efficiency. A building energy efficiency certificate, BEEC, will be required when a commercial office space is advertised for sale, lease or sublease. The disclosure will include three main components: a national Australian built environment rating system, NABER, star rating—and these are used at present; an assessment of the energy efficiency of the lighting; and generic advice on how energy efficiency may be improved.

This disclosure is aimed at countering the current market inefficiencies that are preventing the implementation of economically feasible energy efficiency improvements by commercial building owners. Just the simple act of providing this knowledge will arm tenants and owners with some information about how they might improve things, and how they impact on Australia’s emissions overall. These inefficiencies include an asymmetry of information between building owners and potential buyers. Potential buyers currently do not have access to adequate energy efficiency performance information. This is due to the fact that the energy efficiency of a commercial building is not immediately observable.

Potential buyers or tenants generally use a comparison between design qualities to establish differences in the energy efficiency of particular buildings. However, there is often no substantial correlation between good design features and energy efficiency performance. This results in a building’s energy efficiency having little, if any influence, upon a buyer’s or a tenant’s decision to invest. Referred to as ‘adverse selection’, buyers and tenants are not able to differentiate between a building of high energy efficiency and low energy efficiency. It basically results in owners of commercial buildings having no financial incentive to improve the energy efficiency of their buildings. This process produces, at the moment, sub-optimal market outcomes and an under-utilisation of valuable resources. So this measure will provide information to incentivise improvements. This bill aims to put an end to this vicious cycle, which currently promotes energy inefficiencies, by rectifying these market failures and making sure that in the future there is a real incentive to make all buildings efficient.

The BEECs will result in potential buyers or tenants directly benefiting through an ability to choose a premise with a higher energy efficiency rating over one with a lower efficiency rating. These benefits will be in the form of considerable savings to individuals who choose to occupy energy efficient premises. There are many businesses out there that seek to market themselves in this way; they have a social conscience or corporate responsibility. It is a very big thing now. Not only do they aim to save money but they aim to communicate to the community their values. The other day I saw a truck which had ‘carbon free transport’ emblazoned right across the truck. Obviously that is designed to market their product to consumers who are concerned about our emissions. The indirect benefits of this bill will arise through voluntary energy efficiency improvements of commercial building owners and the subsequent greenhouse gas reduction that these improvements will produce. The brutal reality is that the more well informed the marketplace the better the performance of businesses.

This bill will reward current market leaders and encourage more attention to energy efficient opportunities. This can be the actions of individuals switching off lights and heating systems when the building is unoccupied. Some improvements have been made to this building: removing the permanent heating of hot water in members’ offices and encouraging us all to use kettles. Things like that do have an effect. It will also involve more complicated and sophisticated methods of building management. The benefits of this scheme will outweigh the costs if just 3.9 per cent of sale and lease transactions result in the disclosed information of commercial buildings being used to purchase or lease office space that is more energy efficient by one star.

There is a substantial amount of work to be done if Australia is to reduce its greenhouse emissions, and this bill demonstrates our commitment to action on climate change. It also represents our ability to deliver on election promises. Energy efficiency is a big part of the overall task and this bill is an important step towards preparing the commercial building market for a low carbon future and a stronger and more environmentally friendly posture. I congratulate the Minister for Climate Change, Energy Efficiency and Water for the introduction of this bill and I commend it to the House.

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