If this new procurement policy from the Commonwealth government has anywhere near the impact of its last big strategic jump into greener buildings, it will be a game changer.
You can’t understate the potential for government procurement to drive action in climate change.
The Commonwealth, state and territory governments are among the largest employers in Australia, accounting for about 15 per cent of our country’s workforce.
Because of their size, these nine governments are some of the largest procurers of goods and services from the private sector across many sectors of the economy. In the building sector, they are among the largest renters of office space, procurers of IT services and work related hotel accommodation in Australia.
This multi billion dollar purchasing power can make a major difference in driving climate action in buildings, which research and policy reports have pointed out for years. We haven’t always been very proactive in using government procurement in this manner, but when we have, it has been transformational.
One of the best examples of this in Australia is the procurement policies most states and the Australian government put in place from around 2005.
Government jurisdictions at the time decided to jointly leverage their position as the largest renters of office space in Australia to drive energy efficiency and decarbonisation in the sector.
They did this by setting a minimum NABERS Energy rating of either 4 or 4.5 stars for all new office leases, sending a clear signal to the office sector: if you invest in becoming more sustainable, you will be rewarded with more of the government business. If you don’t, you will see this business go to more proactive competitors.
More than 15 years of NABERS data shows the impact this policy has had in the trajectory of the office sector in Australia is unequivocal.
After a few years of slow uptake in the office sector, the number of buildings annually obtaining a NABERS rating quadrupled in a single year (2005) and kept growing until NABERS ratings were mandated in the sector in 2010.
More importantly, hundreds of large office buildings in Australia began reducing energy use and emissions at a scale never seen before.
Figure 1: Office buildings conducting an annual NABERS Energy rating
Figure 2: energy intensity in office buildings that joined NABERS by or before 2006
These government policies have continued to drive change for more than 15 years now, as jurisdictions have raised the bar for their leases over time.
Examples in recent years include South Australia becoming the first state in 2017 to request 5 star NABERS Energy ratings for new leases from the private sector, which was followed by New South Wales in 2019, and Victoria and Queensland in 2021.
The Commonwealth government originally led this charge with its 2007 Energy Efficiency in Government Operations policy, which introduced a 4.5 stars NABERS requirement for new office leases. But the targets in this policy had not been updated for more than 16 years, and until last week it was lagging behind the targets of other jurisdictions.
This is why the release of the Commonwealth government’s APS Net Zero is such a game changer. It brought the Australian government back into a leading position in using its procurement to drive building decarbonisation in buildings – either matching or further raising the bar from where leading states had left it.
Why the new strategy is a game changer for the building sector
Work on the Net Zero in Government Operations Strategy was announced in 2021, culminating in its release early this month.
The strategy includes a series of great sustainability targets for buildings owned by the government, as these types of government sustainability policies typically do.
But the Australian government went beyond just looking at its owned facilities and included major provisions to also drive decarbonisation through the billions of dollars of private sector services it procures.
The result is genuinely ground breaking for buildings, with major procurement highlights from this policy including:
- Existing office buildings – from July 2025, office buildings in capital cities must have a 5.5 NABERS Energy rating to sign a lease with a Commonwealth entity, the highest energy efficiency target of any government in Australia. The policy also instructs government Departments to prefer all-electric buildings when signing new leases from July 2024
- New office buildings – from 2026, all new office buildings built by or for the Australian government must achieve and maintain a 6-star NABERS Energy rating and must be all electric. What’s more, buildings must also achieve a 4-star Green Star rating, an example of how the strengths of NABERS and Green Star can complement each other to achieve more in government environmental policy
- IT data centres – a minimum energy requirement of 5-star NABERS Energy to be included in the Commonwealth government’s Data Centre Panel
- Warehouses – in a first for any government in Australia, NABERS ratings will be considered as part of the procurement of warehouses by or for the Commonwealth government, which will aim to reach and maintain a 4-star NABERS Energy rating as a minimum
- Hotel bookings – the Australian government has become the first to use its procurement power to drive decarbonisation in the hotel sector. From July 2024, NABERS Energy ratings for hotels will be included in the system for hotel bookings by government officials, to drive a greater part of their business towards hotels taking meaningful action to decarbonise. The government will also consider introducing minimum standards for hotel procurement in 2026-27
This last requirement is a ground-breaking. The Commonwealth, states and territories combine to book millions of hotel nights of work travel, worth hundreds of millions of dollars to the sector, every year. While this policy covers travel by the Commonwealth government and not the states, this is a step that jurisdictions could follow to support the decarbonisation efforts of the accommodation industry.
Last time governments used this kind of procurement power in the building sector, it set the office market on a path to eventually become a world leader in sustainability. Could this be the beginning of a similar sustainable revolution in hotels? Many of us sincerely hope so.
