Cutting energy waste through efficiency – NSW takes the lead

In particular, NSW is biting the bullet on improving building efficiency standards – proposing to introduce minimum standards for rental properties, efficiency ratings for homes at the point of sale (so buyers get an idea of running costs) and higher efficiency standards for new homes.

These are all things Environment Victoria and our One Million Homes partners have been calling for over a number of years, so we’re pleased to see the Baird Coalition government taking the lead.  These important reforms will deliver significant state-wide economic benefits, help households reduce their bills, cut climate pollution and reduce health costs ─ particularly for vulnerable households.

The NSW draft plan recognises that while improving energy efficiency in our homes and businesses makes great sense, it isn’t necessarily going to happen on its own just because it’s a good idea.

What we need is a mix of sensible regulation and targeted assistance to address the very real barriers stopping people from making efficiency improvements to their homes. These include:

• unaffordable upfront costs of efficiency improvements
• a lack of awareness and information about improvement options; and
• the split incentive facing landlords and tenants – landlords have little incentive to invest in efficiency improvements like insulation and draught-sealing because it’s the tenants who get the benefits of lower bills and more comfortable homes.

Of course, there are areas where the NSW plan could do better.

It proposes voluntary incentives and funding assistance for landlords as one option for improving rental homes. But we know from long experience that most landlords don’t take advantage of voluntary programs even when they’re free.

In Victoria, we’re calling for rental standards to be mandatory. They should be initially set at a relatively low and achievable level with sufficient time for compliance, so that landlords can plan necessary upgrades over several years.  This will keep compliance affordable and avoid upward pressure on rents.

The NSW plan also leaves the point-of-sale ratings scheme for homes as voluntary until is it demonstrated to be effective. But the idea behind disclosure is that giving purchasers better information about the long-term running costs of a home will create a market incentive for vendors to improve their homes.  That’s going to work best if all homes are rated so that purchasers can compare ‘apples with apples’ and make informed decisions.  Given the ACT has already demonstrated the market benefits of point-of-sale ratings, why not just make it mandatory from day one?

And consistent with Australian climate and energy policy generally, the NSW plan lacks the overall sense of urgency needed to tackle the climate crisis.  Cutting energy waste through efficiency is the way we get to 100 percent renewable energy faster and cheaper, and we need to be doing everything we can to achieve that goal as quickly as possible.

And given that improving efficiency also delivers enormous economic, social equity and health benefits in its own right, there’s no reason why efficiency targets at every level of government shouldn’t be much more ambitious.

Nevertheless, NSW has laid down the challenge to Victoria – not only to match it on policy commitments and create momentum for national progress on policy reform, but also to demonstrate that it gets the urgency of the climate crisis and the role ambitious efficiency programs must play in the transition to clean energy.