Consultation RIS - Proposed NCC 2022 residential energy efficiency provisions

The CRIS fails to capture the costs to Australia of being an international outlier now and in the future, and the likely consequences in terms of trade sanctions etc. from our major markets.

Neither does it fully capture the cost to Australia of climate change, both in terms of the impact on human activities, and the impact on local fauna and flora, and therefore on the human environment in the longer term.

The CRIS therefore understates the case for greater efficiency in residential building design.

See above.

None of the 3 identified options are optimal, in that none achieve the levels of CO2 saving required to optimise outcomes for future generations. However, the policy objectives are sufficiently unambitious that technically any of these options could achieve (a relatively insignificant) improvement.

Adopting Passivhaus standards for all new residential buildings, and meeting the increased costs of such standards by a levy on the energy sector generally.

The language of 'market failure' is used by this report, but the details of that failure and the available solutions are inadequately explored. Intergenerational equity demands that the current generation more accurately capture the costs of burning fossil fuels by levying a tax on those fuels, and using the revenues generated by that tax to subsidise energy efficient build.

Australian building standards have not improved over 10 years, and lag behind standards adopted elsewhere. Significant opportunities exist to make homes better.

As outlined, the social costs of increased CO2 emissions should include the likely impact on future trade agreements, and the NPV of climate change through a lack of action internationally, facilitated by an overly cautious approach to climate change by wealthy countries like Australia.

All forms of thermal bridging are relevant to building a Passivhaus standard home. The question illustrates the primitive nature of the current NatHERS thermal simulation tools. Thermal bridging is relevant whatever the construction method used.

Whilst reasonable, the lowest cost alternative in current prices may not equate to the lowest cost to society over the longer term. This is 'market failure'.
The question illustrates that the authors continue to frame questions in ways that fail to recognise the importance of what is considered: which is the long term impact of residential construction methods on Australians' future wellbeing. NPV does not capture this issue because future costs are both discounted, and almost certainly measured in current prices, and therefore derived from markets framed within today's context. That context will change. Almost certainly future generations will view our extensive use of carbon as a fuel as incomprehensible at any price.

Whilst there will be a lag due to market friction, and within a dynamic market such frictions are themselves likely to be dynamic, inefficient producers will face competitive pressure to adopt the cheapest combination.

Reducing window sizes will be one of the cheapest ways of meeting these moderate changes in building standards, so (following Q13) will be the preferred solution.

The market solution would be the assess how the sale price of equivalent homes with different window sizes would be impacted. But market failure / frictions mean such an approach is not recommended. Better to use psychological studies to measure the impact on amenity for adults and children of different approaches to such issues.

Clearly leaving the occupant to install heating / cooling solutions could lead to the installation of either a high or a low efficiency solution. E.g. the use of unflued gas heating in WA. As such the net impact on efficiency is not measurable in advance.

Regulations should either prohibit the use of low efficiency solutions for heating / cooling (and so allow residents to choose either high efficiency or no provision), or should mandate the use of high efficiency solutions in the build, when it is easiest and cheapest to install to high standards.

Retrofitting energy efficiency measures is well established in other countries, and are necessary if a 'whole of country' approach is to be adopted to meeting our obligations to future generations.

Requiring an energy efficiency audit and star rating on ownership transfer.

Requiring a minimum energy efficiency rating for any extension to the building footprint.

Many of the options to meet higher standards in a new build will not be available in a refurb (e.g. better wall insulation) or will come at a high cost (e.g. double glazing), or will simply not be an option (e.g. slab insulation). So higher cost options will be needed.

While costs m2 to achieve the desired standards will be higher, the benefits will also be higher, including the savings from non-demolition. The net benefit is therefore likely higher but will depend on the attributes of the property being constructed. For policy purposes the target should be to maximise the likelihood of refurbishment by implementing a mix of taxes on fuel, a star rating on property transfer, regulation of refurbishment standards, and a tax on demolition to capture the societal costs of demolition.

The cost/benefit of solar has changed dramatically recently, and is likely to continue to do so. Awareness of global warming issues among first time buyers is increasing. Lending institutions are likely to incorporate running cost savings into affordability metrics, both to reflect affordability and to meet their own ESG targets.
Solar will therefore become a very desirable attribute of any property, and will be incorporated into new builds more often as a result.

The possibility of residential batteries, pumped storage schemes, or of more rational energy use (e.g. large energy uses such as desalination plant capacity increased to enable plant use to match peak solar energy production) is ignored.

Cost to Australia of trade barriers as a result of a failure to implement adequate carbon reduction targets.

Cost to future generations of a failure to curtain carbon usage quickly enough.

The US Government price of $74.89 is a gross underestimate of the cost of carbon. The Australian Carbon Credit Unit is an international joke not to be taken seriously.

It is time for Australia to recognise the likely impact of our actions on ourselves and others.

The NPV (using undiscounted likely future benefits, as would be recommended if the utility of future generations is valued as highly as the current generation) of higher residential build standards is highly positive.

These findings ignore intergenerational equity, and focus only on intragenerational equity. Intragenerational equity issues should be addressed by progressive taxation.

I have assumed this question is option A versus option B. If the question is option A versus the status quo, and option B versus the status quo, then both answers would be the same.

Impact on the electricity grid assumes no compensatory action on behalf of the grid, large industrial electricity users, domestic users or government, so is uncertain. If anything, it favours mandating minimum building envelope standards, rather than a WoH approach.

McNamara fallacy in operation here?

You fail to discuss mechanical ventilation systems - likely to be essential / beneficial to achieving good environmental standards / high energy efficiency.

This report was big on detail but lacked lateral thinking / contextualisation / international research. The focus on the status quo, rather than an attempt to move Australia forward to address key issues with current residential build standards was disappointing.