Section J—Cost Benefit

No one likes more regulations. Yet no one seems to really object to the idea of regulating for energy efficiency. There are plenty of grumbles from people who have found out about the new regulations late in the approval process resulting in unexpected delay and cost. Others have complained that it has increased complexity. And in other cases complaints have come from applicants who don’t believe they can recover the increased cost from the sale price of the development. The ABCB believes there is a positive cost benefit derived from building more energy efficient buildings. This is easy to understand when the developer, owner and tenant are all the same enitity. The extra costs upfront are returned by ongoing benefits into the future. This rarely happens as a commercial building is typically developed by one entity bought by another and rented by yet another.

In this situation, the cost/benefit is not efficiently transferred through that chain leaving the developer and to a lesser extent the new owner carrying the extra cost but unable to enjoy the benefits. Gradually as better information is available to the market this may even out as tenants and owners recognise, and put a value on, energy efficiency. This is already happening at the top end of the office leasing market where the energy rating of the building is part of the decision making process in selecting suitable offices. Energy efficient buildings have a marketing edge.

So the message to developers is– get out there and sell the benefits!

There is good reading (if somewhat complex) on the cost/benefits in the Draft Regulatory Impact Statement which can be found at the ABCB web site,

First featured in our newsletter Sept 2007

 Section J Compliance Assessment

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