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10 PROPOSAL TO REVISE ENERGY EFFICIENCY REQUIREMENTS OF THE BUILDING CODE OF AUSTRALIA FOR COMMERCIAL BUILDINGS Summary This report serves as a Consultation Regulation Impact Statement (RIS) that assesses the costs and benefits of proposed amendments to energy efficiency requirements in the Building Code of Australia (BCA) for commercial (non-residential) buildings (equivalent to Class 3 buildings and Classes 5 to 9 buildings in the BCA). The report is aimed to assist a wide range of built-environment stakeholders in providing feedback to the Australian Building Codes Board (ABCB) on the proposed changes to the BCA. Depending on the findings of this Consultation RIS and following public consultation, a decision will be made as to whether a final RIS will be developed. Policy context of this RIS The Australian Government, and more widely, the Australian community, have identified the objective of reduction in greenhouse gas (GHG) emissions and energy efficiency as a priority. The primary instrument proposed by the Government to address this problem is through the Carbon Pollution Reduction Scheme (CPRS). It has been widely recognised that there is also significant scope for the reduction of GHG emissions from the building sector. A range of technical reports have provided evidence that substantial abatement of GHG emissions could be achieved at low or possibly negative cost in the building sector - relative to reductions available in other sectors of the economy. Moreover, this abatement could be achieved through the best-practice adoption of known energy efficient technologies. Persistent market failures and policy rigidities however, impede the take-up of these technologies and hence, addressing these barriers could require additional measures to complement the CPRS. Scope of this RIS The Coalition of Australian Governments (COAG) has already made an assessment of these market barriers in the context of the CPRS. The National Strategy on Energy Efficiency Memorandum of Understanding (COAG 2009c) states: www.TheCIE.com.au
PROPOSAL TO REVISE ENERGY EFFICIENCY REQUIREMENTS OF THE BUILDING CODE OF AUSTRALIA FOR COMMERCIAL BUILDINGS 11 A carbon price will provide an incentive for households and businesses to use energy more efficiently. A carbon price alone, however, will not realise all the potential cost effective opportunities to improve energy efficiency across the Australian economy. [emphasis added] Market barriers, such as split incentives, information failures, capital constraints, early mover disadvantage and transaction costs need to be addressed to remove impediments to investment in energy efficiency by households and business. This RIS confines itself to considering the impacts of the amendments to the BCA as the only means of dealing with these barriers. This omission recognises that: a) COAG has already acknowledged the need to adopt a range of policies and tools so as to address the diversity of market barriers that exist, and b) the BCA is already in place and these amendments are only acting to increase its stringency. The proposed amendments have been developed in accordance with an agreement between the Australian, State and Territory Governments to pursue a National Strategy on Energy Efficiency (COAG 2009a and 2009b). The amendments include provisions to increase the stringency of energy efficiency requirements for all Classes of commercial buildings in the BCA from 2010. It is worth noting that on this occasion, COAG has signed a National Partnership Agreement on Energy Efficiency (COAG 2009c) that supports the use of increased energy efficiency standards through the BCA by 2010, as long as they demonstrate their cost-effectiveness. Additionally, for commercial buildings, COAG has set a target benefit to cost ratio of 2. By comparison, the benefit to cost ratio for the BCA 2006 measures was 4.9. The scope of this report is strictly limited to quantifying the benefits and costs of the proposed amendments in a way that is consistent with the Office of Best Practice Regulation (OBPR) guidelines. Business as usual case An important ingredient of the quantification of the benefits and costs of the proposed amendments is the establishment of a Business-As-Usual (BAU) scenario. The BAU represents what may happen ‘without’ the proposed amendments to the BCA. It accounts for: • growth in the building stock and shifts in population location; • baseline improvements in energy efficiency and changes in energy prices; and • major policy initiatives and other factors. www.TheCIE.com.au
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