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Buildings Must be Part of Carbon Emissions Trading Scheme
4 June 2007
Source: Lend Lease intranet The Hive
By including buildings in Australia's carbon emissions trading scheme and allowing property developers and owners to accrue and sell carbon credits for energy efficiency improvements up to 700,000 tonnes of greenhouse gas emissions could be cut in the Sydney CBD alone – equivalent to taking more than 230,000 cars off the road.
It would also position Australia as a world leader and provide a huge economic opportunity.
"With 40% of global greenhouse gas emissions coming from the construction, operation, maintenance and demolition of buildings, the inclusion of buildings in Australia's carbon trading scheme makes sense from an environmental point of view, but just as importantly it makes economic sense," said Lend Lease Global Head of Sustainability, Maria Atkinson.
"The Issues Paper released by the Prime Minister's Task Group in February this year questioned whether emissions trading would have an impact on the take-up of low cost abatement options such as energy efficiency measures? Sadly the final report doesn't address this option but the answer is unequivocally yes.
"And by providing a financial incentive for developers and owners to install energy efficiency measures - at no cost to the tax-payer - it would also drive skills, technology and jobs for the Australian economy, and position us as a world leader and demonstrate Australian excellence in green building design and efficiency solutions.
"Given the number of Australian property companies heavily involved in construction in developing countries with massive urban development needs, such as China and India, it would also have flow-on effects in terms of assisting those countries in reducing their predicted emissions.
"Best of all, it could all be up and running almost immediately - there's no need to wait until 2012. And it's not complex or onerous - it's a very simple way to address a large part of the problem.
"In short, including buildings in Australia's carbon trading scheme would be a huge economic opportunity; not to do so would be a missed opportunity - environmentally and economically."
Ms Atkinson said that while big players in the property industry are already delivering real cuts in greenhouse gas emissions through a range of energy efficiency measures in buildings - Lend Lease's own global headquarters, 30 The Bond, has been measured at producing 48% less energy related greenhouse gas emissions than the average Sydney office building - the split incentive nature of the property industry means that it is more common than not that the entity responsible for developing the building is not the owner of the building, let alone the tenant. So there is no financial incentive for a developer to invest in energy efficiency and little incentive for an owner to make the investment either.
"The Government could be driving even greater and faster uptake of energy efficiency measures in buildings across the country simply by putting a dollar figure on the greenhouse gas abatements achieved through energy efficiency 2 measures - via a carbon emissions trading scheme that goes beyond the standard offsets of renewable energy and tree-planting to recognize abatement achieved through energy efficiency in buildings," Ms Atkinson said.
Ms Atkinson said Lend Lease is currently working with Origin Energy to develop a world-leading mechanism that would enable property developers and portfolio owners to measure the abatement from various energy efficiency measures. This would in turn allow them to accrue and ultimately sell those carbon credits into the market.
Even at the low rate of $8 per tonne, Ms Atkinson said a large office building to 5 Star Green Star standards can save 4 million kg greenhouse gas emissions a year from design efficiency initiatives which is worth about $30,000 in carbon credits.
Ms Atkinson noted that there was strong international support for buildings to be included in carbon emissions trading schemes.
Achim Steiner, UN Under-Secretary General and UNEP Executive Director, recently said: "By some conservative estimates, the building sector world-wide could deliver emission reductions of 1.8 billion tonnes of CO2e(greenhouse gas emissions)."
According to the Intergovernmental Panel on Climate Change, these reductions can be delivered with net economic benefit. They forecast that by 2030 energy efficient buildings can not only cut projected greenhouse gas emissions in the building sector by about 30%; they can also improve indoor and outdoor air quality, improve social welfare and enhance energy security.
Perhaps the most convincing analysis so far is by Vattenfall (1) and McKinsey (2) which clearly shows that improving the energy efficiency of buildings through improvements to heating, cooling and ventilation systems, appliances and lighting is not just the quickest but also the most cost-effective way to cut greenhouse gas emissions.
(1) Vattenfall AB, Global mapping of greenhouse gas abatement opportunities up to 2030, January 2007
(2) McKinsey & Company, A cost curve for greenhouse gas reduction, The McKinsey Quarterly 2007 Number 1
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