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Australian Homes' Energy Performance Lag Behind International Standards

Updated: Sep 4, 2019

For a decade now, Australia's minimum energy rating for new homes has remained stagnant. Currently VIC, TAS, ACT, SA, and WA have a minimum of 6 stars set for new homes under the Nationwide House Energy Rating Scheme (NatHERS).

Before the implementation of this minimum energy rating, Australian homes had an average performance of 1.5 stars. Policymakers have hoped that with the minimum set at 6 stars, the market would naturally adjust to allow for an increase in supply and demand for homes built to the optimal standard—7.5 stars and beyond.

However, recent research has surveyed 187,320 ratings of new homes in VIC, TAS, ACT, SA, and WA, finding that this assumption has not held. Four in five new houses are built to the minimum standard and no more, with 82% of the homes surveyed revealing a dismal rating of 6.0 to 6.4 stars. 16% were at 6.5-6.9 stars. Only 1.5 % of homes boasted a rating of 7.5 stars and beyond.

The overwhelming majority of new homes being built to only the minimum standard represents a significant issue—not only is the minimum of 6-stars energy rating below that which is set by many other countries (meaning that Australia is, in fact, falling behind the international standard), research by ClimateWorks Australia and the Australian Sustainable Built Environment Council indicates that stronger standards could reduce household energy bills by up to A$900 each year.

Considering that the average Australian household spends A$2,115 on electricity and gas bills each year, this means that stronger standards could nearly halve household expenditure on energy. The research also finds that in raising minimum energy standards immediately, from now to 2050, this would reduce household energy bills by A$20.9 billion across the country, as well as greenhouse gas emissions by 45.3 million tonnes.

On the other hand, 'a delay in increasing minimum performance requirements from 2019 to 2022 will result in an estimated A$1.1 billion (to 2050) in avoidable household energy bills'. Alternatively, that is an additional 3 million tonnes of greenhouse gas emissions being released into the atmosphere.

In other words, raising minimum energy standards would not only alleviate stress on household expenditure and benefit the environment, but it would also ensure that the Australian construction industry is producing housing supply that is on par with the international standard.

Why, then, do consumers continue to pay more for lower-performing homes?

Across Australia, the average energy performance rating is 6.2 stars. Victoria's average rating has remained stagnant since 2016, 2017, and 2018, sitting solidly on 6.2 stars. This is the same as in WA and SA. Tasmania saw a 0.1 increase to 6.5 stars from 2016 to 2017. ACT was the only state to have seen a steady increase in average energy performance ratings, beginning at 6.5 stars in 2016, rising to 6.6 in 2017, then 6.9 in 2018.

The ACT is also the 'only region with mandatory disclosure of the energy rating on sale or lease of property'. This suggests that despite policymakers' assertions, a key factor contributing to the stagnation of energy standards in newly constructed homes is the lack of accessibility/visibility to vital information.

Furthermore, the fact that the industry has clung to the lower limit of minimum energy standards indicates that the energy performance of Australian homes is driven by regulation, not economic optimisation.

Plans from the Building Ministers' Forum

Fortunately, the issue of energy efficiency in Australian homes has recently drawn attention from the Building Ministers' Forum. On 18 July 2019, the Building Ministers' Forum agreed to 'the development of enhanced energy efficiency provisions for residential buildings in the National Construction Code' —i.e., revising the National Construction Code to improve minimum energy standards for new homes. These standards would come into effect in 2022 with the next iteration of the National Construction Code.

Another significant reform that the Building Ministers' Forum has decided to progress with is the Trajectory for Low Energy Buildings. This reform would determine 'whether, when and by how much energy requirements in the Code must change over time'. The implementation of a timeline could facilitate rising energy standards by encouraging the market to progress ahead of time, working towards innovations in design and construction that would accelerate increases in energy ratings.

Currently, there is no concrete framework in place. However, the indication that the Building Ministers' Forum is willing to take a more active stance on raising energy standards is an encouraging step closer to catching up with international standards and alleviating stress on household energy expenditure. (ET)

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