Australia’s built environment is responsible for 25 per cent of the country’s greenhouse gases and in the wake of a damning UN report on climate change, the property industry is leading the world in its decarbonisation.
The Intergovernmental Panel on Climate Change report released in mid-August showed Australia had already experienced a global warming of 1.4 degrees as a result of climate change, which the UN has labelled a “code red for humanity”.
While Australia has committed to “working towards” The Paris Agreement, which aims to limit global warming to 2 degrees celsius or less, the IPCC report indicated global warming had already passed the point of limiting it to the 1.5 degree threshold.
The report stated that carbon dioxide levels were higher than they had been for at least 2 million years.
It also forecast Australia would be in line for more extreme weather events including worse bushfire seasons, longer droughts and more severe flooding, and sea level rises up to 55cm.
The groundwork for a zero-carbon building industry is yet to be formalised or committed to, with Prime Minister Scott Morrison focused on funding technology instead of taxing carbon emissions.
Morrison has pinned his hopes on the development of domestic use and commercial export of renewable green hydrogen by 2030.
According to the Australian Sustainable Built Environment Council a “do-nothing” approach is not an option as buildings would emit 4600 megatonnes of greenhouse gases by 2050, almost half of Australia’s carbon budget.
Globally the steel, cement and aluminium industries produce between 7 and 9 per cent of the annual global greenhouse emissions, according to World Wildlife Fund Australia, which established the Materials and Embodied Carbon Leaders Alliance in April.
The alliance brings together all aspects of the industry to reduce the embodied carbon in the built environment and the greenhouse footprint of these materials, which they say will be central to achieving a “zero-carbon economy”.
The Green Building Council of Australia has called for a plan for net zero emissions buildings by 2050 with interim targets for emissions and energy performance, supported by policy frameworks.
But big players within the industry are not waiting for political will to drive change.
Lendlease announced its Mission Zero campaign earlier this year, setting ambitious carbon emission targets globally.
The developer aims to hit net zero emissions for the fuel it burns and the power it consumes by 2025 while it looks at embodied carbon and energy consumption of tenants with a view to hitting “absolute zero” by 2040.
Lendlease managing director Scott Mosely said the fund’s management Australian office portfolio had been certified as carbon neutral earlier this year.
“Buildings that integrate the physical risks of climate change will increasingly contribute to investment performance and provide a competitive advantage,” Mosely said.
“Being carbon neutral in real estate will be critical in continuing to attract both capital partners and quality tenants.”
EY managing partner for Oceania real estate and construction Selina Short said Australia’s property industry had been “ahead of the curve” in driving down emissions and there were more opportunities to decarbonise.
Short said a recently commissioned report on megatrends had pinpointed carbon removal solutions such as cost-competitive renewables, microgrids, decentralised energy and electrification as vehicles of change in the property sector.
“With buildings being responsible for almost a quarter of Australia’s carbon emissions, technology that improves the energy efficiency of our buildings delivers obvious dividends,” Short said.
“Rapid transformation in the office and residential space, driven by technology, changing consumer demands and a rethink post Covid-19, means that future masterplanning will need to integrate the built environment and infrastructure in a way that increases resiliency to pending climate threats, while simultaneously rescuing their own impacts on the environment.”
Short said EY modelling had indicated that stronger energy efficiency policy settings and solar energy incentive schemes could shave commercial building emissions up to 34 per cent by 2030, and more than 97 per cent by 2050.
While investing in the decarbonisation of buildings would be costly it represents key carbon emissions savings and there is strong investor appetite for environmentally-sound technologies and businesses.
Australia is ranked 11th in the world on the ESG Index, which measures environmental, social and governance performance, representing a low risk for investors, according to Global Risk Profile.
A recent EY institutional investor survey found almost three quarters of respondents would reconsider or move away from an investment due to climate risk alone.
Investments Trends’ ESG Investor Report revealed that a third of investors already applied environment, social and governance principles when choosing investments, while 45 per cent said they intended to in the future.
Investment Trends head of research Irene Guiamatsia said the pandemic, catastrophic bushfires and droughts had prompted Australians to examine how their decisions impacted the world around them.
“Increasingly many are realising how they allocate money plays a vital role in supporting positive initiatives or avoiding harmful outcomes,” Guiamatsia said.
Investments Trends data indicated 81 per cent of ESG investors believed their investments would provide comparable or better returns that non-ESG equivalents.
“As we march towards the 2050 target for net zero emissions, climate risk impact and ESG factors will increasingly become material in any well-considered long-term investment strategy,” Guiamatsia said.
While the Australian government is a signatory to The Paris Agreement, Scott Morrison has avoided committing to a hard 2050 deadline.
Currently there is little government policy around achieving carbon neutral buildings, but there are a number of programs that are supporting the drive for improved sustainability within the sector.
These include the Commonwealth Government’s Commercial Building Disclosure program, the joint Commonwealth-state governments National Australian Built Environment Rating System (NABERS) and the Green Building Council of Australia’s Green Star rating scheme.
World leaders will meet in Glasgow later this year for the COP26 climate change conference, where Morrison will be under pressure to commit to a 2050 deadline.
UK Minister for State and COP26 president Alok Sharma called on governments around the world to keep the target alive.
"The science is clear, the impacts of the climate crisis can be seen around the world and if we don't act now we will continue to see the worst effects impact lives, livelihoods and natural habitats," Sharma said.
"We can do this together by coming forward with ambitious 2030 emission reduction targets and long-term strategies with a pathway to net zero by the middle of the century, and taking action now to end coal power, accelerate the rollout of electric vehicles, tackle deforestation and reduce methane emissions."
The IPCC Working Group 1 report was written by hundreds of scientists and synthesised more than 14,000 pieces of research.
The final summary for policymakers was approved, after changes, by 195 countries through the United Nations.