RESIDENTIAL SPECIAL REPORT: The residential market has been slow to move the needle on sustainability, particularly on energy performance. Now things are changing.
There’s a long list of reasons why the home builder market has been slow to move on sustainability, including how it’s marketed to consumers. However, there’s promising signs that we’re on the verge of change, such as the overwhelmingly positive reception to the Green Building Council of Australia’s draft Green Star for Homes standard.
It’s already got the thumbs up from Australia’s biggest volume builder Metricon (among others) that’s not only committed to a demonstration project but a new product line that aligns with the Green Star standard for healthy, resilient, net zero homes.
According to GBCA head of market transformation Jorge Chapa, his organisation is really excited about the standard (currently in draft form and due to be released for public consultation in July/August) and says that it’s been well-received by all stakeholders. He says it’s even attracting international attention.
“Other countries are saying ‘you may have something really interesting here’,” he told The Fifth Estate.
Part of its appeal is the simplified ways that it provides the Green Star stamp-of-approval, through a standard rather than a rating tool with multiple stars.
Chapa says this system, which clearly verifies that a house is healthy, resilient to climate change and net zero, provides clarity for the industry, and most importantly, consumers.
New research has shown just how confusing existing sustainability benchmarking systems can be. A paper by University of Melbourne and Queensland University of Technology researchers was released this week that revealed systemic misuse of rating tools, particularly the Nationwide House Energy Rating Scheme (NaTHERS).
Houses are ranked out of 10 on energy efficiency, with six stars the regulatory minimum required of most new homes in Australia. This might seem like a fairly straightforward system, but the waters are muddied by a host of other rating tools for building energy that rate buildings out of six.
To complicate matters further, many people work off the assumption that most rating schemes are out of five, like the scheme used to distinguish a luxury five-star hotel from a budget one.
This has led to what’s probably an unintentional misuse of energy rating schemes by volume builders in their marketing material, with most stamping their products with an unofficial label that in some cases, implies that 6-star NaTHERS is market leading energy performance rather than the legal minimum.
UniMelb PhD candidate Erika Bartak, who co-authored the new research alongside UniMelb senior law lecturer Georgia Warren-Myers and QUT senior law lecturer Lucy Cradduck, says the existing set up for home energy ratings is a breeding ground for confusion.
She says not even really educated people in the industry realise that six stars NaTHERS is the minimum standard. In fact, many of the builders she spoke to believe that existing regulation is pretty stringent given that the minimum has increased from 3 to 6 stars over time.
GBCA’s Jorge Chapa agrees that the confusion around rating schemes in the residential market is understandable given the minimum NaTHERS standard has increased incrementally over time from 3 stars to 6. That’s one reason his organisation has opted for a standard rather than a rating tool at this stage.
Metricon design director Adrian Popple, who is leading the Green Star for Homes pilot program for his company, likes the idea of a simplified standard that signals clearly to customers that a home is sustainable, healthy and resilient, or not.
“You’ve got to make it as easy as possible for the end user, for sure. In the past we’ve made it too scientific and that’s been the challenge.”
The researchers from UniMelb and QUT recommended that both NatHERS and the Australian Competition and Consumer Commission look into the matter of misused energy performance labelling.
The NatHERS administrator, which is part of the Department of Industry, Science, Energy and Resources, told The Fifth Estate via email it is “aware of some poor behaviour and is taking action.”
Responsibility for addressing these issues is shared between the Commonwealth and state and territory governments.
This shared responsibility comes down to the way compliance with the National Construction Code (which recognises NatHERS-accredited software as one of four pathways for compliance with the technical requirements for energy efficiency) is the responsibility of each state and territory.
Raising consumer awareness is also on the agenda for NatHERS through programs like Your Home, as it is clamping down on the use of clear and verifiable ratings by companies. However, most of the legislative powers to address deceptive advertising behaviours are covered by Australian Consumer Law.
According to the researchers, there are other ways sustainability and energy efficiency is marketed to customers that inadvertently turns them off. Many volume builders, for example, offer high energy performing homes as a package or add-on that sits alongside other “sexier” offerings, such as lavish home entertainment setups.
Getting Green Star for Homes right
Chapa says getting the Green Star for Homes standard right will be crucial to its long-term success.
“If all we get that out of this is 10 demonstration homes, then that’s not enough.”
The GBCA is pushing forward with a series of early access pilot projects to put the standard through its paces. Metricon, Chatham Homes, Delos, Development Victoria, HEZ Development, Ingenia Communities, New South Homes, Rawson Homes and Stockland are all taking part.
From there, the voluntary standard will be refined and verified for release into the real world.
While Chapa admits that the standard still represents “a leap” in construction methods and will initially cost more, the standard has been designed with the “boundaries of how volume builders work” in mind.
There will be the option of delivering Green Star verified homes according to a formula, Chapa explains, but the standard will also be flexible enough so that a Passive House Certified home, for example, will likely fulfil net zero and health criteria (but will still need to tick the resiliency box).
Green Star for Homes has also nailed the messaging
While volume home builders are no doubt essential, they weren’t the only stakeholders the GBCA had to get on board, with the support of banks, insurance companies also important, as well as customers.
Chapa says the messaging around the standard was important, with different components attractive for different stakeholders.
“Insurance companies care about resilience, banks care about energy efficiency, and people care about health and wellbeing.”
Metricon’s Adrian Popple also says that the modern interpretation and subsequent messaging around sustainability to be more comprehensive and include things like health and resiliency make them more attractive to the volume home market.
“I think it makes more sense to the consumer. You know, if you talk energy efficiency, it means different things to different people, but when you talk about health and wellbeing, everyone understands what that means.”
Popple says it also helps that consumers are becoming more concerned about climate change and sustainability.
“What’s happened with the devastating bushfires and COVID-19, people are changing their attitudes a bit.”
He says interest in his company’s “sustainability pack” – which includes solar, energy efficient appliances and other features – is gaining traction.
Unfortunately, these features still come at a price, with packages starting at around $1500 and going all the way up to $30,000.
While cost is still a barrier for some consumers that’s why the volume builder is jumping on programs such as Green Star for Homes early.
“Getting guys like us with massive buying power to work with the supply chain will drive the cost down for everyone.”
There’s other reasons the resi market is shifting
While the Green Star collaboration is in no way the volume builders first foray into sustainability, the company has indeed ramped things up in the last 12 to 18 months.
It’s already working with Sustainability Victoria on the state government’s pilot Zero Net Carbon Homes program to develop and market carbon-neutral homes in Victoria.
Chapa strongly believes builders want to deliver more sustainable homes, and not just because they know it’s the right thing to do.
The major players have “read the tea leaves” and know the market is moving in this direction in line with the national plan decided by energy ministers in February 2019 that sets a trajectory towards zero energy (and carbon) ready buildings.
On top of that, in the wake of the summer bushfires especially, the finance and insurance sectors are pushing for more resilient homes that are protected from the future impacts of climate change.
New builds for now, but existing homes won’t be ignored
The new Green Star standard will focus on new homes initially but there’s talk already of what the tool would look like for existing homes.
Chapa says that while most of the emissions in residential come from existing homes, a voluntary standard is limited to transform what already exists.
With new builds, the organisation is targeting a few thousand builders but for existing homes, the participation of millions of individuals is necessary. Chapa says that government regulation, such as mandatory disclosure of energy ratings, is a viable first step.