Australia has hit a long-anticipated national milestone of significance and has secured near term policy certainty for emissions reduction targets.
The much-anticipated Climate Change Bill 2022 (the Climate Bill) – a mere 16 pages – has passed the House of Representatives and will go before the Senate in September.
It is then expected to pass with the support of both the Greens and some members of the cross bench in the Senate.
What does the Bill make into law?
The Climate Bill’s main purpose is to legally commit to a 43% emissions reduction from 2005 levels by 2030 and net zero emissions by 2050 – as widely previewed in the election campaign.
It also contains provisions for increased transparency and reporting that includes measures like:
- Annual progress report to Parliament by the Minister for Climate Change
- Improve the reporting and advice function of the Climate Change Authority
- Regularly review the legislation
How will it affect Australian real estate?
The real estate sector has an important role to play in assisting government reach their targets as there are various facets of our business that can contribute to emissions reduction. These are:
- Agencies as business – such as our energy use, cars and even paper
- Agents as transaction brokers – the entirety of property transactions like finance and legal
- Real Estate Institutes as leadership bodies – our businesses and advocacy work
- The energy efficiency of Australia’s residential housing inventory
- All classes of commercial real estate
REIA breaks down what these economy-wide measures with the Climate Bill means for Australia’s $9.95 trillion residential and $1.2 trillion commercial real estate assets may look like in five ways:
- Green regulation to focus on government business and disclosures
Wrapped into the Climate Bill was the inclusion of an extra 30-page Climate Change (Consequential Amendments) Bill 2022, tying 14 pieces of legislation into the 43% reduction target.
Importantly, this incorporates the Building Energy Efficiency Disclosure Act 2010 (the BEED) and amends the Objectives of the Act to include:
The object of this Act is:
29 (a) to promote the disclosure of information about the energy efficiency of buildings; and
31 (b) to contribute to the achievement of Australia’s greenhouse 32 gas emissions reduction targets.
The BEED requires energy efficiency information to be provided in most cases when commercial office space of 1000 square metres or more is offered for sale or lease.
Whether the wording of the legislation seeks to move beyond disclosure to target setting remains to be seen.
REIA will monitor this area for implications for our commercial practitioners and work with many, including NABERS to provide the latest advice direct to you.
Outside of the BEED, the Climate Change (Consequential Amendments) Bill 2022 amends a range of existing Acts for government bodies like Australian Renewable Energy Agency (ARENA) and Infrastructure Australia. This is to ensure their government business falls in line with the anticipated new 2030 and 2050 targets.
Expect more to come on the wide-ranging implications of this for both the public and private sector as they become understood.
- Consumer preferences for sustainability will naturally consolidate
Whilst the Climate Bill does not specifically regulate residential real estate, it will likely bring forward increased emissions reductions pushes for local State and Territory regulators and the big businesses they partner with.
This is likely to manifest in the energy space and an enhanced focus on residential disclosures.
And with that, the Government hopes, so too will consumer preference and markets. Already, there is an emerging body of research that shows that homes demonstrating sustainable features currently command a premium.
The Domain Sustainability in Property Report 2022 showed that ‘sustainable’ homes sell faster and for a premium – around $125,000 more for a house.
CSIRO research also shows that two thirds of homebuyers prefer energy efficient home where that choice is available.
Whilst this may over time ameliorate as sustainability features become the new norm (think of how cars phased in seat belts!).
JLLs “green premiums” versus “brown discounts” are an important concept to remember as markets decide the value of the new climate regulation.
- Extreme weather events will still impact on housing supply
This Climate Bill has been specifically designed and targeted at government agencies and the bigger end of town as opposed to suburban and regional real estate agents, tenants and homeowners.
