Climate change & energy

Regulation

The past 12 months have seen a significant level of new environmental legislation introduced in the Australian and UK markets. For more information on how we are engaging with government, please go to our government relations page. The regulations that affect our business include:

National Greenhouse and Energy Reporting System (NGERS)

The National Greenhouse Emissions Reporting Act (NGERA) is a national system for reporting greenhouse gas emissions and energy consumption and production by corporations. During FY09 we have sought advice as we prepare for our first NGERS report in October 2009, accounting for our emissions in FY09. Our preparation has included:

• Improving the quality of our emissions data collection system, known as our Climate Change Action Plan (CCAP) tool,
• Preparing a gap analysis to identify/confirm that all data sets are being captured by our data system,
• Seeking legal advice on the application of the NGERA to our organisation,
• Engaging with property peers to develop an 'Industry View Document' to assist with the interpretation of the NGERA and the implementation of NGERS reporting for property organisations and those contracting to property organisations.

We have engaged our development managers and facility managers and many of our impacted contractors to make them aware of these new reporting requirements.

Energy Efficiency Opportunities (EEO) Act, 2006

The EEO Act aims to improve the identification and evaluation of energy efficiency opportunities by large energy-using businesses and encourages implementation of cost-effective opportunities. In 2007, we registered for EEO participation and set out a reporting schedule. Our reporting schedule was approved by government in 2008 and we commenced training and identification of opportunities to implement energy efficiency initiatives across our retail and office portfolios. We have continued identifying opportunities and have implemented some of the identified initiatives.

Our EEO report is available on our website, and we submitted our first formal report to government in December 2008.

Planning approvals and climate change assessment

Climate change assessments, particularly in relation to floodplain risk management, are increasingly expected as part of the planning approval process for property development in Australia. The Victorian coastal strategy now requires consideration of sea level rise as part of planning assessment, proposing a minimum 100 year sea-level rise estimate of 80cm be applied for planning purposes. The New South Wales Government has prepared a draft sea level risk policy statement, and includes reference to benchmarks of a rise of 40cm by 2050 and 90cm by 2100 relative to 1990 levels. Similar statements and policies are being developed by other local and state governments. The federal government is also exploring policy related to climate change adaptation, specifically sea level risk and storm surge.

Building Code of Australia (BCA) - draft amendments

The BCA has established minimum requirements for energy efficiency in new buildings. Some specific requirements vary from state to state. Significant draft changes to the BCA's energy efficiency provisions were announced in June 2009. Proposed changes to the code include requirements for increased energy efficiency performance and requirements for renewable energy. We are currently engaging with peers and industry groups to better understand the implications of the proposed changes.

State-based residential energy efficiency requirements

The developments of our Residential Communities, Apartments and Retirement Living businesses are subject to a range of energy efficiency requirements. These state-based requirements vary in focus, leading to different built form outcomes in different states, for example:

• Built fabric thermal performance focus:

Victoria's 5 Star standard for new houses results in design solutions concerned mostly with the performance of the built fabric.

• Energy performance focus:

New South Wales' BASIX tool results in solutions concerned with the energy performance of the house, encompassing both the thermal performance of the built form as well as the selection of technology such as energy efficient lighting, cooling/heating and water heating. The tool allows for more flexible design responses at less cost, while ensuring overall emissions are reduced.

Council of Australian Governments (COAG) strategy on energy efficiency

The Draft Strategy on Energy Efficiency was released by COAG on 30 May 2009. Aspects of the draft strategy with significant implications for us include:

• Improving consistency in energy-efficiency standard setting and performance assessment frameworks,
• Introducing mandatory disclosure of energy performance in existing commercial buildings (to be phased in from 2010),
• Introducing mandatory disclosure of eco-efficiency performance of residential buildings at point of sale (to be phased in from May 2011, commencing with energy),
• Increasing energy efficiency standards for residential buildings to 6 Stars nationally (commencing 2010).

The draft sets out the intent of proposals only. There is significant work yet to be done in setting out the detail of legislation and how it will be implemented. There is reference however to improving existing rating tools, providing a harmonised national focus, and improving metrics with a focus on greenhouse emissions and energy efficiency. We welcome the proposed improvements and will continue to engage with government, sharing our views and experiences towards the effective development of standards and simplified disclosure protocols.

UK Carbon Reduction Commitment (CRC)

The CRC is the UK's first mandatory emissions trading scheme, supporting the goals of the UK Climate Change Act. It is estimated that around 5,000 organisations will initially fall within the scope of the CRC. The scheme is compulsory for organisations using more than 6,000MWh/year of half-hourly metered electricity. The intention of the legislation is to encourage large organisations to reduce their fixed source energy consumption.

Commencing in April 2010, the CRC will require companies to purchase carbon allowances to cover their projected carbon emissions for each coming 12 month period. At the close of each period, companies will be required to disclose their actual electricity usage. Organisations will then be ranked according to energy efficiency achievement, with revenue from the scheme redistributed to participants based on this performance.

To prepare for emerging emissions regulation, our UK business commenced collating and reporting on carbon data in 2008. Under the CRC we will be required to commence energy use disclosure for those assets where we have half-hour meters in 2010. We are reviewing whether we will be fully captured by the CRC, requiring participation in the trading scheme.

UK Energy Performance Certificates (EPCs)

As of 1 October 2008, all our UK buildings require an EPC when bought, sold or leased. Larger public buildings are also required to display an energy certificate. With all commercial buildings rated against the same scale, the legislation provides a standard for potential tenants and purchasers to use to compare the 'energy efficiency' of one building against another. Though the legislation is still relatively new, it is intended to create a market for more environmentally-sustainable buildings.

We continue to be fully compliant with this legislation, with EPCs performed for 29 of our assets to date (either in whole or part).