In a damning report, a recent government review has concluded that mandatory energy efficiency measures in the NCC just aren’t being delivered. This poses some very uncomfortable, but long overdue questions about the industry’s approach to compliance. Darcy Wilson explains.

The National Construction Code (NCC) has seen a lot of well-intentioned additions geared towards addressing an increasingly urgent call to create more sustainable, more energy efficient, less carbon-intensive buildings.

Builders and design professionals will likely be pretty familiar with these changes, which include a raft of specifically targeted regulations and requirements designed to make buildings more efficient. Energy efficiency regulations in the NCC include stipulations relating to things like insulation, windows, doors and lighting – and broader performance-based design requirements incorporating star ratings assigned through software simulations.

However, according to the recently released National Energy Efficiency Building Project (NEEBP) review, the industry is failing dramatically across the board to ensure that these measures are making it into new houses as intended – and to ensure that building energy efficiency is broadly improved across the industry.

What the NEEBP review is all about
Before getting your head around what’s actually being reported, it’s worth putting the report itself into context first. The National Energy Efficient Building Project (NEEBP) review was commissioned by the South Australian Department of State Development on behalf of the federal government, and it was conducted by infrastructure consultancy Pitt & Sherry in conjunction with Swinburne University, Melbourne.

The purpose of the review was primarily to investigate widespread concerns around compliance with energy efficiency requirements in the NCC – and ultimately to inform the industry on ways that changes could be made to improve compliance, and to help ensure the finished product better meets the expectations written into the Code.

The review engaged over 1000 stakeholders across a broad cross-section of construction industry sectors in each Australian state and territory.

In effect, it’s a candid, industry-wide snapshot of the views of those in the industry.

The report identified a number of areas in which stakeholders offered widespread agreement about the shortcomings of current energy performance requirements in the Code, and the way they’re implemented. Or not implemented, as seems to be the case all too often…

Key findings of the NEEBP
It wasn’t all grim – the NEEBP review does note that there are plenty of positive trends in building energy efficiency in Australia, including things like promising figures in the uptake of solar and increasing affordability of high energy star rated / net zero homes. The overall sentiment, though, paints a picture clearly showing a widespread lack of confidence in the effectiveness, implementation and compliance measures associated with the current regulations.

These concerns, according to the report, point to issues that are systemic in nature, covering all aspects of the building supply chain and regulatory process – and they relate to all building types. The NEEBP report claims that there was a ‘remarkable degree of consistency in the views expressed and issues raised in all states and territories, despite widely varying building markets and conditions’.

For building owners and occupants, the implication of this finding is higher energy use, higher emissions and higher overall costs.

The findings of the report were neatly summarised in Figure 1. A quick look makes it quite clear that there’s a strong case to be made for some significant industry-wide policy shake-ups (particularly in relation to compliance assessments) and efforts to reorientate the market.

What’s not happening?
One of the main findings of the report – and one that seems to be very commonly acknowledged in most corners of the industry – is that houses just aren’t being built to meet the energy efficiency measures intended during the design stages and worryingly this also includes the widespread use of non-conforming products. In most states, design’s the only point at which any kind of energy efficiency assessment is currently happening.

Homes that are designed to achieve a 7 star rating in software simulations, for example, can end up being 4, 3 or 2 star homes by the time they’re built as a result of corners being cut in commissioning, construction and certification. These star ratings, possibly as the rule rather than the exception, end up being a bit of a formality.

Another area addressed in the report was the level to which the current energy efficiency requirements aspire. According to the report, the standards currently set for the NCC aim to ‘reduce greenhouse gas emissions to the degree necessary’. Buildings aren’t required explicitly to be energy efficient, but rather ‘capable of efficiently using energy’ – which is clearly different in terms of its purpose.

Stakeholders surveyed for the report expressed their concern that the phrasing in the Code was poorly defined and, by and large, open to interpretation. The perception across the industry was that the Code generally carried the expectation of low-to-medium performance, rather than high performance.

The processes under which performance requirements are set and reviewed under the Code, it’s also been suggested, are also non-transparent, time consuming and largely ineffective.

Consumer apathy or ignorance has a role to play too. The review suggests there are gaping holes in the general public’s understanding both of the ongoing benefits that a more energy efficient home offers and how someone moving into an energy efficient house can take full advantage of what it has to offer – we’ll go into more detail on that subject later in this report.

It’s fair to say that the criticisms in the report are a strong indictment of the entire regulatory regime and process as it relates to these efficiency measures. They highlight shortcomings across the entire construction process – in building, certification, commissioning, and design – and also in the (absence of) mechanisms intended to educate consumers on the benefits of an energy efficient house.

Challenges in the market environment
So what’s stopping builders from delivering compliant houses? According to the NEEBP review, many contributing stakeholders explained that increased commercial pressure following the Global Financial Crisis (GFC) was a contributing factor when it came to adherence to energy efficiency requirements. Narrowing profit margins and fiercer competition to win and deliver projects profitably, in particular, were offered as common reasons that builders tend to cut corners when it comes to mandated energy efficiency measures.

Likewise, as we’ve already mentioned, the perception that cutting those kinds of corners isn’t likely to have consequences is a very big factor. The view expressed across the industry is that owners and occupants are unlikely to have any inkling as to whether or not a building is performing as efficiently as it’s supposed to be. The report concludes on this point that homeowners typically just trust the system – ‘most home owners implicitly assume that building energy performance regulation will be effective in protecting their interests’.

Ignorance of energy efficiency measures is another key contributing factor – the report details a widespread view across the industry that most house buyers are clueless of the physics behind things like thermal comfort – and also that their interpretation of what actually constitutes affordability and value is limited to how much house their budget actually buys, basic resale considerations, and unsurprisingly, whether or not it looks spiffy.

Tellingly, energy assessors also reported that consumers treat performance ratings as a compliance and cost burden, rather than the opportunity to reduce lifetime energy expenses – and that this in turn translates into valuable energy efficiency measures being ‘traded away’ during the design process.

There’s a strong argument to be made for better informing the public on the relationship between energy efficiency and long-term cost efficiency. According to David Parken, Chief Executive of the Australian Institute of Architects, things like the boom in solar PV do serve as evidence that people do genuinely care about and understand the benefits of energy efficiency in their homes.

“There’s clearly an appetite,” he told The Fifth Estate in an interview published in January. David, however, also notes that, “There is a problem if the community values a granite benchtop more than they do reduced energy bills for the next 50 years.”

Greater public awareness of the many long-term benefits to energy efficient housing would help to improve – on a basic level – both the demand for higher energy efficiency ratings in houses – and would probably also lead to people insisting more strongly on practical, ‘as built’ compliance with the current regulations.

Policy problems, compliance complications
It’ll probably come as no surprise to builders that there’s a general view, according to the report, that full compliance with the Code is a pretty rare occurrence.

It won’t come as any surprise either, that the state and territory regulators themselves reported a shortage of funding, which might otherwise be used for things like audits and other enforcement action in non-compliant buildings.

There was a general view held by regulators that when stacked up against other issues relating to matters of health, amenity, structural integrity and bushfire safety, energy efficiency often ended up taking a back seat. NSW, in fact, is the only part of Australia where a single inspection of an energy efficiency feature is required.

Others contributing to the report expressed concern about the drift away from local government-appointed building inspectors to private practitioners, and the perceived potential for a conflict of interest when these surveyors were engaged by developers and builders.

Surveyors themselves expressed concern about being perceived as ‘difficult’ by developers, and reported a fear of losing work or being replaced by counterparts who were potentially less diligent.

While the report doesn’t make any explicit mention of mandatory energy efficiency inspections, the idea does have a lot of support from various parts of the industry as a way to improve compliance. That’s very obviously a big can of worms to open though – one which has the potential to raise all kinds of pointed political questions about NCC compliance in general.

The review we had to have
It’s been suggested by a few commentators that the review and its findings are being treated as something of a Pandora’s Box. Given the complexity of the current compliance and assessment models, the murkiness surrounding who’s accountable, the potential costs and breadth of the changes required to fully achieve the desired outcomes (and the inevitable resistance from some quarters), it’s easy to see why many involved would prefer not to rock the boat.

Tristan Edis of the Climate Spectator website, cites sources close to the report claiming that while the report itself was dated November 2014, it had actually ‘been sitting with state and Australian government authorities since February’. The report itself was publicly released on 18th December 2014 which – as Tristan notes – is the cusp of the Christmas holiday period. A cynical person might speculate that it’s a damn fine time to slip out a report if you’d prefer that nobody noticed it.

Tristan details in his article that, ‘A range of stakeholders and policymakers close to energy efficiency regulatory institutions have explained that the governments have little appetite to address the issues discovered by the review.’

In the same article, Rodger Hills, the Spokesperson for the Building Verification Forum is quoted as saying that federal and state governments have demonstrated ‘at best a wavering commitment, and at worst, open hostility to policies that improve the efficiency of our residential buildings’.

What’s next?
With most builders and designers themselves ostensibly wanting change for the better, and consumers arguably only a basic explanation away from demanding compliance (if not as-built assessments), the potential’s certainly there for change. Good intentions don’t always translate to action – but there’s definitely some political impetus building for reform in compliance and assessment processes.

While there’s little indication of any real government action on compliance with the energy efficiency demands of NCC, the Building Verification Forum (which we mentioned earlier) is one initiative that seems to be committed to ensuring that building energy efficiency is taken more seriously.

The Building Verification Forum (aiming to establish itself as the ‘Building Verification Council’ by the time you read this) is comprised of representatives from well-known industry bodies including the Australian Institute of Architects (AIA), Master Builders Australia (MBA), the Insulation Council of Australia and New Zealand (ICAANZ), the Australian Window Association (AWA), the CSIRO, BlueScope, LJ Hooker and Henley Properties, among others.

The organisation’s stated mission is ‘to close the gap between the designed and as-built performance of buildings’, which it hopes to achieve without imposing extra expenses on builders or homebuyers.

How the BVC will work
The establishment of the BVC is geared towards offering a solution to the issue of as-built non-compliance without requiring any changes to the current Code, legislation or standard frameworks – through a three-pronged approach. The first is a new residential energy rating system that will operate as an ‘Alternative Solution’ under the NCC.

The second part of the equation will be a comprehensive as-built verification system, with building inspectors guided by output from the design assessment stage and reference material from product manufacturers to ensure correct installation.
The third prong involves a voluntary disclosure system to allow greater visibility into the performance of houses to help meet the needs of real estate, valuation, conveyancing and mortgage lending.

Depending on how much support and funding the BVC is able to garner, these measures have the promise and
potential to go quite a way towards addressing the many problems brought up in the NEEBP review and fulfilling the report’s vision for improvements by 2020 (listed in the table on page 13). What remains to be seen, of course, is just
how effective an industry-driven response of this nature can be in fixing what is essentially, a failure of regulatory enforcement.

For more information, please visit:
National Energy Efficient Building Project (https://www.sa.gov.au/topics/water-energy-and-environment/energy/government-energy-efficiency-initiatives/national-energy-efficient-building-project)