National Carbon Offset Standard
Public Consultation on Buildings
1 July 2017
Public Consultation on the Draft National Carbon Offset Standard for Buildings
Summary of outcomes
The National Carbon Offset Standard for Buildings (Building Standard) is a voluntary toolfor buildings seeking to better manage their carbon emissions. The BuildingStandard providesguidance for measuring, reducing, offsetting and reporting of emissions that occur as a result of the operations of a building, and a framework for buildingsto claim carbon neutrality.
The draft BuildingStandard, alongside the separate draft National Carbon Offset Standard for Precincts, was developed by the Department of the Environment and Energy (The Department) in partnership with the property sector. This involved establishing an expert committee comprising property sector representatives, carbon accounting experts, local council representatives, the national administrator for the National Australian Built Environment Rating System (the NABERS administrator) and the Green Building Council of Australia (GBCA). The BuildingStandard complements the broader family of National Carbon Offset Standards available fororganisations, products, services and events.
From 30 November 2016 to 10 February 2017, the Department invited comments on the draft Building Standard and received 26submissions. Overall, respondents were highly supportive and recognised its alignment with the growing momentum of a lower emissions property sector. This document sets out the key points raised by these submissions and outlines the Department’s position in response to these points.
The Department is in the process of finalising the administrative arrangements forcertification against the Building Standard and expects torelease itaround September/October 2017.
1.Review Process
In developing the draft Building Standard, property sector stakeholders requested that the Building Standard be launched with a built-in review process. Such a process was explained as being common practice across the sector for the introduction of new tools and programs. The Department agreed to this suggestion.The treatment of many of the issues and topics discussed in this paper will be considered in the review, and as part of continuous improvement and evolution with changing market practices.
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Some respondents sought more clarity on the details of the review process. Others suggested establishing an industry advisory group to contribute to the ongoing review of the Building Standard.
The review process is scheduled to begin 18 months after the launch of the Building Standard and will provide an opportunity to consider what has worked well and identify any potential improvements to implementation. The review will involve direct consultation with property sector representatives including the NABERS administrator and GBCA, users of the Building Standard, and other stakeholders. This process will inform on-going implementation arrangements for the Building Standard. To ensure the timely release of the Buildings Standard, the specifics of this review process will be finalised in consultation with stakeholders after the launch.
2.Certification Pathways
The draft Building Standard sets out three pathways for a building to be certified as carbon neutral. These pathways are: as an extension of the NABERS Energy rating; as an extension of the Green Star – Performance rating (administered by GBCA); and as a stand-alone certification through the Department.A number of submissions acknowledged the advantages of offering certification pathways that leverage the existing NABERS and Green Star – Performance rating schemes. Respondents also emphasised the importance of consistency and comparability between the three different certification pathways.
The Department recognises both the NABERS and Green Star – Performance rating schemes have a highly-regarded process of checks and balances to ensure their integrity and robustness. Carbon neutral certification through these pathways will streamline as much as possible with existing processes to limit duplication and to minimise cost.
The Department, in partnership with the administrators of NABERS and Green Star, are prioritising the further development of the certification pathways through NABERS and Green Star – Performanceand will defer theDepartment’s own pathway until after the review process. This will allow for sufficient time and resources to ensure consistency between the NABERS and Green Star pathways, and to gauge the level of interest and demand for Departmental certification.
3.Minimum Performance Requirements
The draft Building Standard outlines how buildings seeking certification must meet minimum performance rating requirements. These are set at achieving a 4 star NABERS Energy (without GreenPower) rating and 4 star Green Star - Performance rating. Where the minimum requirements cannot be met, a commitment to achieve the rating within three years can be entered into. If the commitment is not met at the end of three years, the carbon neutral status of the building will no longer be certified.
Eight submissions commented in depth on this requirement. A majority of these submissions supported minimum requirements in principle, but differed on where the rating level should be set. One submission disagreed with the approach to allow buildings to achieve certification on the basis of commitment agreements. Another submission proposed a portfolio approach that would allow for the averaging of star or points ratings across a portfolio of buildings.
Two submissions disagreed with the principle of having minimum performance requirements, suggesting this would be an unnecessary barrier to participation and cautioned that minimum performance requirements could result in the exclusion of significant sections of the property market.
The Department acknowledges the range of views on this issue and will assess this requirement during the review process.Until then, the Department will maintain the existing approach to minimum performance requirements as detailed in the draft Building Standard.
4.Base Building Certification
The draft Building Standard provides the flexibility for buildings to become certified either on a Base Building or Whole Building basis.
The majority of submissions supported having certification for both Base Building and Whole Building categories. One submission raised the point that NABERS and Green Star - Performance only provide base building ratings for office, retail and data centre building types and that this will limit the use of the Base Building category under the Building Standard.
The Department consulted with the NABERS administrators and GBCA (as the Green Star administrator) on this potential issue of limitation. GBCA have explained that there are no limitations to specific sectors and that other buildings types can use Green Star – Performance for base building certification as long as conditions of applicability are met.
The Department will continue to work with the NABERS administrator, GBCAand stakeholders during the implementation of the Building Standard to review any limitations to the various certification pathways.
5.Embodied Emissions
The draft Building Standard proposes embodied emissions associated with the construction of a building may be considered in the future, however the initial focus will be on a building’s operational emissions (i.e. emissions resulting from the day-to-day running of a building).
A majority of submissions supported this approach.Three submissions emphasised the importance of the Building Standard clearly communicating that embodied emissions are not included within a building’s emissions boundary. One submission called for only excluding embodied emissions from the construction phase, but suggested including the embodied emissions of goods used during the maintenance of a building, as these could be considered a part of a building’s operations.
The Department will ensure the Building Standard clearly states that it excludes embodied emissions and any marketing against the Building Standard must be consistent with this. The Department will also consider the strategy and timing for the future incorporation of embodied emissions, including the suggestion that embodied emissions related to the maintenance of a building should be included within the emissions boundary.
In the meantime, embodied emissions are currently covered by the National Carbon Offset Standard as it applies to products and services. Carbon neutral certified bricks and plasterboard are already available for use in building construction. The Department is working to further streamline the National Carbon Offset Standard for product certification, making it easier for more construction products to measure and manage their emissions, and become certified. For example, the Department is seeking to improve alignment with the Australasian Environmental Product Declaration Programme, which already assesses the embodied emissions of a large number of construction products.
6.Renewable Energy Certificates
A central feature of the Building Standard is to provide rules on best-practice carbon accounting, including the accounting of renewable energy systems and any associated Renewable Energy Certificates (RECs). RECs are made up of Large-scale Generation Certificates (LGCs), from large-scale energy generation systems typically greater than 100 kilowatt capacity, and Small Technology Certificates (STCs) issued for small-scale systems typically generating less than 100 kilowatt capacity.
For buildings with small-scale onsite generation systems, behind-the-meter energy usage can be treated as zero-emissions energy under the draft Building Standard, regardless of whether any STCs have been created, sold or transferred to any other party. This position received widespread support and will be implementedacross all National Carbon Offset Standard categories.
For buildings with large-scale onsite generation systems, behind-the-meter energy usage can be treated as zero-emissions energy only if the equivalent amount of LGCs that are created as a result of that energy generation are voluntarily retired by the user.Behind-the-meter energy usage that is not matched by an equivalent amount of voluntarily retired LGCs must be accounted for in the same way as grid based energy, and offset accordingly.A number of stakeholders expressed strong support for this approach while others were concerned this position could affect investment decisions regarding the installation of renewable energy systems. After extensive consultation, the above treatment to LGCs will apply to the Building Standard, however may be reconsidered in the review.
For further information about the reasoning behind this position on STCs and LGCs, refer to the separate document titled ‘Treatment of Renewable Energy Certificates under the National Carbon Offset Standard’ on the National Carbon Offset Standard webpage.
7.Materiality Threshold
An emissions source that constitutes one per cent or more of the total carbon account isconsidered to be ‘material’ under the draft Building Standard and must be included in a building’s total emissions estimate. This is consistent with the approach across all other National Carbon Offset Standard categories.
A majority of submissions supported a materiality threshold of one percent. A respondent suggested the Building Standard could consider referencing the use of input/output tools as an initial way of determining whether an emissions source meets the threshold.
The Department supports this suggestion and will include a reference in the Building Standard to using input/output tools as an example of how users can make estimates of materiality, without needing to use more complicated and costly approaches of measuring the emission source.
8.Transport
The draft Building Standard states that once a calculation method has been established for Scope 3 emissions related to transport, these emissions must be included in a building’s carbon account.
Opinions on the inclusion of transport, and on the suitable calculation methods for it, varied broadly. Several submissions argued against its inclusion on the basis the reporting entity has very little ability to affect change to this emissions source. Other submissions supported its inclusion on the basis that the location and fitout of buildings induce and favour certain transport outcomes, which can have a material effect on emissions. One respondent requested further details on the calculation method and another respondent suggested the calculation method should align with international standards to only include 50 per cent of trips, i.e. one direction of travel.
In principle, the Department supports the inclusion of transport where the reporting entity has the ability to affect material changes to the emissions outcome, and when a calculation method endorsed by the NABERS administrator and GBCA is able to be established. The Department will consider this issue in the review. Until then,Scope 3 emissions related to transport do not have to be calculated under the Building Standard.
9.Scope 3 Emissions for Electricity, Gas and Fuel
The draft Building Standard does not explicitly refer to Scope 3 emissions from electricity, gas, and fuels.
This omission was noted by a respondent and it was suggested the coverage of these Scope3 emission sources be clarified under the Building Standard.
The Department will amend the Building Standard to explicitly refer to the mandatory inclusion of Scope 3 emissions from electricity, gas and fuels.
10.Nitrogen Trifluoride
The draft Building Standard outlines the requirement for the inclusion of the original six Kyoto Protocol gases. Nitrogen Trifluoride, an additional mandatory gas to the Kyoto Protocol for the second compliance period, is not explicitly included. Nitrogen trifluoride, however, is not produced or imported into Australia in any significant quantities.
A submission recommended including nitrogen trifluoride to ensure the Building Standard is consistent with best practice and international agreements and standards.
The Department agrees with the suggestion and will include nitrogen trifluoride as a mandatory gas for reporting in the broader family of National Carbon Offset Standards.
11.Upfront Offsetting
The draft Building Standard refers to upfront offsetting as the preferred approach for achieving carbon neutrality.
A number of respondents submitted that offsetting in arrears should have equal standing with upfront offsetting, and the Building Standard should not distinguish between the two methods, provided the carbon account is settled for each reporting year.
The Department will amend the wording across all categories of the National Carbon Offset Standard to remove any preference of one offsetting approach over another.
12.Name of the Standard
The National Carbon Offset Standard has had its current name since 2010.
The Department has received feedback suggesting the name of the National Carbon Offset Standard be amended across all carbon neutral categories to better reflect its role as a best-practice carbon accounting guide, as well as a framework for carbon neutral certification.
The Department, in partnership with the Carbon Neutral Network (certified members under the Carbon Neutral Program) and other stakeholders, will be developing a communication and marketing strategy for all certification categories of the National Carbon Offset Standard. An early element of this process will be to consider the most appropriate name thatreflects the multiple functions of the National Carbon Offset Standard across all categories.
13.Information on NCOS Certified Entities
The draft Building Standard does not mention where information about carbon neutral certified organisations and products (and soon to be precincts and buildings) can be found.
A respondent suggested the Building Standard should provide guidance on where to find that information on the Department’s website, and to create a publicly available search portal of carbon neutral certifications.
All carbon neutral entities are listed and profiled on the Department’s website. The Department will amend the broader family of National Carbon Offset Standards (including the Building Standard) so they highlight where this information can be found on the website.This will help building owners find out which tenants are carbon neutral certified before preparing a carbon account, or conversely, help tenants find out whether their building is carbon neutral certified.
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