Building direct action

  • An emissions reduction target identical to Labor’s—check
  • A price on ‘carbon’— check
  • A market-based solution for reducing greenhouse gases— check
  • A process for reviewing and, potentially, increasing the 2020 abatement target—check

Despite much hand-wringing, the Abbott government’s Direct Action program and its proposed Emissions Reduction Fund (ERF) offer a different track to the same destination.

To meet its emissions reduction commitment, the Abbott government proposes to abate around 440 megatonnes (MT) in total by 2020.

According to ClimateWorks, the property industry can deliver around one-fifth of this abatement budget.

The difference between Labor and the Coalition lies in their approach to mobilising changes in market behaviour.

Labor has set an abatement budget in the form of a cap. Selected enterprises that exceed their emissions allowance under the cap must purchase abatement at a set price. In the future, this price would be set via a trading scheme.

In contrast, the Coalition plans to purchase abatement via an auction system.

Auctions would identify the lowest- cost abatement activities that help meet the government’s emissions reduction target. This approach is already used for the farming sector.

Environment minister Greg Hunt has asked the community and industry to provide its views on the ERF framework. We’re working closely with the minister and his team. Here are the critical elements of our proposal:

Reverse auction

The federal government will buy GHG abatement at competitive prices. To do so, it will conduct auctions on a regular basis to identify best-value rates per tonne of abatement. This approach represents a floating market price.


Abatement needs to be independently verified. We’ve suggested NABERS, Green Star Performance and ACCURATE as ready-made verification pathways.

Abatement services

The Property Council proposes that companies, such as property owners, enter auctions by offering abatement services at a range of prices.

These services could include:

  • retrofitting buildings to higher energy efficiency standards;
  • developing new master planned communities beyond business-as-usual environmental performance levels;
  • installing T5 or LED lights across an entire portfolio;
  • switching fuel sources, or installing precinct level co/trigeneration plants across a neighbourhood.


Abatement services will need to exceed business-as-usual performance. An expert committee will decide on these benchmarks. The goal is to keep these additionality rules simple and certain.

Bid price

The auction process results in a contract where successful bidders are paid their winning bid price.

Guaranteed and standard bid offers

A guaranteed offer is an ironclad promise to deliver a certain amount of emissions abatement. A bidder, such as an investor upgrading a portfolio of buildings that doesn’t meet the contracted benchmark, must secure abatement from another source, such as other (unsuccessful) bidders, another part of their portfolio or renewable energy schemes.

We propose guaranteed bids receive priority in the auction process. We also propose successful bidders with guaranteed proposals receive a down payment from the government.

Aggregation and scale

Central to the ERF is a quest for scale. The government wants to meet its abatement budget with maximum certainty as quickly and cheaply as possible. Retrofitting 30 buildings from two stars to five stars is superior to a bunch of small-scale refurbs.

There are huge business and investment opportunities to form syndicates that will aggregate (and deliver) energy efficiency activities into large-scale abatement programs.

The Property Council is working closely with the Australian Sustainable Built Environment Council (ASBEC) to present a comprehensive model to the federal government.


A full copy of the Property Council’s detailed submission (including examples) prepared by ACIL Allen Consulting can be found at