Carrots and sticks
The bombshell from the US wasn’t the only thing that happened last week (believe it or not).
It also saw the Turnbull Government formally adopt the Paris Climate Change Agreement. This commits Australia (and the world) to taking action on climate change so that its impact can be kept below a 2 degree increase.
By 2030 this means reducing Australia's emissions by 26 to 28 per cent below 2005 levels. By the back-end of the century, it means net zero emissions.
Will Australia and the world actually achieve these outcomes? Who knows. But the trajectory of public policy in the near term is pretty clear: Australia will be looking for the cheapest ways to make a difference. And all the research points to the built environment – mainly via energy efficiency – as being among the most affordable options.
Fortunately our industry has demonstrated that it can play a vital role in helping Australia achieve these targets. Many of our new developments feature cutting edge sustainability solutions, energy efficiency is a key focus for asset managers, and Australian property companies top international sustainability benchmarking indices.
The public policy framework needed to accelerate these outcomes was set out in the Low Carbon, High Performance report produced by ASBEC (a coalition that includes the Property Council). This showed that the implementation of cost-effective energy efficient measures in buildings could contribute one tenth of Australia’s current emissions target.
Inevitably this will mean a mix of sticks and carrots for the industry. Both have to be well designed and reasonable.
In particular there is a strong business case for incentives targeting residential and non-residential property. Every tonne of carbon abated through this sector is likely to be a cheaper deal for the economy as a whole.
That's the message we were delivering to Environment and Energy Minister Josh Frydenberg in Canberra last week (before Donald Trump stole the show/amazed the world).