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Spotlight on changes to CBD Program

  • March 28, 2017

Spotlight on changes to CBD Program 

Expanding the Commercial Building Disclosure Program promises to deliver $ million in energy savings and cut 3.5 million tonnes of emissions over five years. So, what do building owners need to do to comply?

Last June, Minister for Energy Josh Frydenberg announced changes to the CBD scheme, which will require an additional 1,000 commercial office buildings to disclose their energy efficiency at the time of sale, lease or sublease.

From 1 July, the mandatory disclosure threshold drops from 2,000 sqm to 1,000 sqm, and affected building owners must produce a Building Energy Efficiency Certificate (BEEC) and display a current NABERS Energy rating on all advertising.

These changes follow a comprehensive review and public consultation which found overwhelming support for the program.

Property Council chief executive Ken Morrison says the CBD Program has led to improvements in energy efficiency, reductions in emissions and has “strengthened the market for high-performing buildings”.

“At first glance, the CBD scheme seems to increase the compliance burden, but the industry’s experience is that it creates significant benefits that far outweigh the costs,” Morrison says.

Lexia Wilson, a partner with Piper Alderman Lawyers, says building owners need to be prepared.

“Some private investor owners may not be across the changes to the program and may not have embraced NABERS, so they’ll have a bit of work to do gathering information to obtain a BEEC certificate,” she says.

“These changes will also capture tenants with smaller premises wanting to get out of their leases as the threshold has reduced from commercial office premises of 2,000 sqm to 1,000 sqm. If you want to sublease your tenancy and the area is 1,000 sqm or more, you will need a BEEC to do so.”

Stanford Harrison, manager of commercial buildings in the Department of the Environment and Energy’s energy productivity branch, says the commercial building sector is responsible for around 10 per cent of Australia’s total greenhouse gas emissions.

“Improving building energy efficiency is one of the quickest and most cost-effective ways to reduce greenhouse gas emissions and help mitigate climate change,” he says.

“Mandatory disclosure helps inform purchasers and tenants of building energy costs, and lowering the threshold to 1,000 sqm is anticipated to deliver more than $ million in energy savings and around 3.5 million tonnes of emission reductions over five years,” Harrison says.

“Using a NABERS benchmarking standard to rate the buildings means tenants can factor in a building’s running costs in their purchase or lease decision by comparing high performing and low performing buildings.”

Harrison says transparency motivates building owners to invest in upgrades that improve the energy efficiency of their buildings.

“The CBD Program is helping to improve Australia’s building stock by encouraging all parties in a purchase or lease transaction to consider energy efficiency.”

Not all buildings are required to have a BEEC when they are sold or leased. Exemptions include new buildings where there is a certificate of occupancy less than two years old, strata-titled buildings, buildings with less than 74 per cent office space or buildings where ownership is transferred through the sale of shares.

What can building owners do?

Harrison’s advice is to plan ahead. “Allow time to obtain a BEEC before leases expire or sales processes are initiated,” he says.

In April and May, the Property Council and the Department of Environment and Energy are running a national roadshow to help building owners better understand the Commercial Building Disclosure program.

The first event will be held in Perth on 11 April. Events in Sydney, Melbourne, Brisbane, Adelaide, Darwin and Hobart will follow.

“An informed market rewards better performing buildings,” Harrison says.

“It creates a strong market-based incentive for owners to improve their properties with cost-effective energy efficient upgrades that are attractive to buyers and tenants and increase return on investment.”

More information on the Commercial Building Disclosure (CBD) program is available online.