A 2016 report by the Federal Department of Infrastructure and Regional Development found that “the most efficient variants of top selling passenger vehicle models offered in Australia … were about 27 per cent worse on average than the most efficient model variants offered in the UK.” “[Emissions standards] are something that would assist in the transformation towards either zero or very low emissions,” Spear says.
Rethinking real estate
The deep retro-fitting of Australia's buildings, both public and private is another clear avenue of post-pandemic infrastructure investment. Buildings account for 23 per cent of the country’s GHG emissions. And while energy efficiency is the less sparkly part of decarbonisation, it is perhaps the most highly-effective in terms of cost, quality of life improvements and job creation.
Investing in the decarbonisation of buildings is something that Australian governments have already committed to. COAG has an agreement that the residential building codes will go towards net zero energy by 2030. Likewise, an EY report for COAG has set in train similar trajectories for commercial buildings, that account for over 10 per cent of Australia’s greenhouse gas emissions. Our report identified six priority policy options that together would result in a net present value of $8.4 billion and an average Benefit-Cost ratio of 2.5.
If the pathway to net zero in the building space is efficient buildings run on renewables, minimum standards will be absolutely necessary to actually hit that efficiency. As companies start to invest, another piece in the energy market puzzle needs to shift: a simple pathway for utilising those renewables. “There’s quite a lot complexity at the moment in the energy market about when you can and can’t use renewables in the grid,” says Rooney, speaking from her Green Building Council of Australia office in Sydney. “That pathway needs to be substantially simpler.”
For residential housing, overcoming the problems of split incentives in low-carbon building is a key barrier to increasing demand. In simple terms: the person who pays up front ie the builder or developer, is more often than not the person who ultimately saves ie the owner. While a builder or developer might accept that installing energy efficiency measures is a logical thing to do, they also know that the consumer doesn’t always understand why they’re paying more for the builder to recoup their costs.
Home buyers might understand a new granite benchtop or an extra sunroom at the back but they don’t understand energy efficiency. The rise of solar and battery technology is a chance for the market to cut through the ambiguity and reduce energy bills to nothing. “People understand a house with no bills a lot easier than they understand ‘less bills’. Zero is a lot sexier than 10 per cent, 20 per cent or 50 per cent less on your power bills. Zero is definitive and saleable in a way that ‘less’ isn’t,” says Rooney.
In addition to pushing for standards that are net zero, comfortable and resilient, the GBCA is bringing zero bills together with partners seeking to deliver innovative finance options. They are partnering with some of the biggest volume builders as well as more innovative building companies, to offer a voluntary consumer differentiated standard housing coupled with a “green mortgage” with interest costs contingent on energy efficiency. “From this we can collect the data that shows how you get from today to net zero housing in the future, from how much it costs to what that business case looks like at scale.”
Procurement underpins resilient infrastructure
Scaling from niche markets to large, nation-wide approaches is crucial to how well and quickly decarbonisation investment can be realised. And within the complex chain of individual cause and effect that creates wholesale change, the government holds one of the most powerful levers: procurement.
In 2018, the ACT set out to make their government passenger vehicle fleet zero emissions. It was to be done within three years, because that is the average fleet lease cycle. Changing the procurement parameters had every major carmaker wanting a piece of the action. Now, the entire fleet is not only carbon neutral it is cost neutral. Running costs on EVs are 80 per cent cheaper which balances out the higher upfront costs.
As a result, the ACT has moved from a three to a four-year lease term. That experience shows how changing procurement rules to favour decarbonised assets and systems, or low emission supplies and suppliers can be cost neutral, and in some cases, save governments and organisations money. With federal government goods and services procurement contracts worth $64.5 billion in 2018-19, this represents a powerful driver for market change. And given federal and state government COVID response stimulus packages are likely to trigger a mini-infrastructure boom, having carbon and emission reduction targets in construction material procurement rules would provide powerful market signals with limited inconvenience for the procuring bodies.
Using recycled material in government-funded infrastructure builds does two things: it reduces the distance materials have to travel, as virgin materials are usually located in central distribution centres whereas recyclables can be procured closer to build sites. It also keeps investment directed locally, for the same reason.
In September 2020, 16 metropolitan Sydney councils set new procurement standards so that 100 million glass containers can be recycled into roadbase, reducing the need for virgin sand being used. The initiative aims to create a market for turning over 20,000 tonnes of containers into crushed glass roadbase a year. According to NSW Environment Minister, Matt Kean, “this is about empowering business and local government through innovative and sustainable initiatives that helps to build essential infrastructure, creating jobs and driving a robust economy.” m
Spear agrees. “We think the combination of getting the policy settings right at the front end, the infrastructure supply chain in the middle and then building the end market as well, is one of the key decarbonisation investment opportunities for Victoria,” he says. “Industry needs clarity on standards for recycled product so that they can create markets for the product. If you don’t have clarity of product standards and commitment by both other industry players and governments to purchase recycled product then all you end up doing is collecting material and stockpiling.”
Rooney also believes that drawing clear targets and settings is critically important for investment. “You need to set up the procurement pathways for the property and construction industry,” she says. “That then builds the workflow for that cohort which then builds their business case for better.
“Our call to action is for governments to mandate in their procurement or in their planning of fast track projects higher and clearer sustainability expectations than they ever have,” says Rooney. As part of this, the GBCA last year, in partnership with the Property Council of Australia, launched Every Building Counts, to develop policies that can help drive a low-carbon built environment.