City of Melbourne Targets Building Sector Decarbonisation through 1200 Buildings Programme

Image provided by City of Melbourne. Copyright © 2014  

Summary
Through 1200 Buildings, the City of Melbourne aims to increase the energy efficiency of two thirds of the municipality’s commercial buildings by 38% by 2020. This programme helps owners assess their building’s environmental performance, and recommends energy and water efficiency improvements and provides innovative financing solutions and incentives for retrofits. It is expected to deliver reductions of 383,000 tonnes of CO2 per year, supporting the City’s Zero Net Emissions by 2020 strategy.

What is it?
The 1200 Buildings programme is a ten-year strategy to decarbonise Melbourne’s commercial building sector, which is currently responsible for half of the municipality’s greenhouse gas (GHG) emissions. Programme signatories undertake an energy and water consumption baseline assessment, develop and implement a retrofit action plan, receive improvement recommendations, as well as information on the savings potential, return on investment and finance options.

How does it work?
1200 Buildings specifically targets existing commercial buildings with office space, however other building types such as hotels, universities and recreation facilities can also sign up. A large portion of Melbourne’s commercial buildings is ‘mid-tier’, defined as B, C or D by the Property Council of Australia. This means that the majority of the buildings targeted are smaller to medium size properties and that owners are very often individual investors, families or small businesses.

The programme was designed as a ten-year initiative, with implementation in three stages:

• 2011 – 2013: Analysis of the commercial building market and its drivers for change; awareness raising and capacity building for owners; securing commitment from building owners; providing support to mid-tier owners to undertake retrofitting work; and setting targets.
• 2014 – 2017:  Implementation of initiatives to increase retrofitting activity, with a particular focus on mid-tier owners, in addition to tracking emission reductions and driving local economic development.
• 2017 – 2020:  Accelerating retrofitting action and transformative change.

Research undertaken early in the programme’s development identified two key ownership segments and influenced the development of two key engagement approaches:

1. Leadership group
A number of corporate building owners participated in an earlier programme, the Building Improvement Partnership, and have since developed sophisticated approaches to retrofitting their assets.

Services to this group include: precinct or energy grid projects, waste solutions, arts commissions that catalyse behaviour change, climate adaptation, staff training, building campaigns, finance projects and joint advocacy projects.

2. Under-performing buildings
The programme focuses mostly on this group, targeting owners with lower levels of awareness of the benefits of retrofitting and limited motivation to improve their building’s efficiency.

Services offered to these owners include: facility management training, support in accessing finance, tenant assessments, base building assessments, tools to assist interaction between building owners and tenants, precinct campaigns and awards.

Innovative financing solutions
The 1200 Buildings programme includes financing packages designed to overcome the hurdle of owners lacking credit to finance retrofitting. Environmental Upgrade Finance is a flagship product developed for the programme and administered by the Sustainable Melbourne Fund, a trust set up by the City to finance sustainability projects. This product consists of a tripartite agreement between the building owner, the City of Melbourne and a financial institution. Once a loan is negotiated, the lender transfers the funds to the owner for the financing of a retrofit. Loan repayments are then collected by the City of Melbourne through rates (i.e. municipal taxes) and passed back to the lender on behalf of the borrower.

Special features of this loan system include:

• Competitive fixed interest rates and up to 15-year repayment periods
• A charge that is fixed to the building and can be passed on to the owner
• The option of sharing retrofitting costs (i.e. the loan) between the owner and the tenant.

CO2 reduction
The programme is expected to deliver reductions of 383,000 tonnes of CO2 per year, supporting the City’s Zero Net Emissions by 2020 strategy. Citywide progress in the retrofit market is monitored through the publication of the 1200 Buildings Retrofit Survey. This survey measures the volume and type of retrofitting activity and requires qualitative information on drivers and perceived obstacles to retrofitting the 2,256 buildings with office space in Melbourne.

Application
The 1200 Buildings programme comprises a range of elements designed to engage building owners and to provide attractive and easily accessible finance for the retrofit of Melbourne’s building stock, especially small to medium sized properties.

Further information
To find out more about Melbourne’s 1200 Buildings Programme, its success factors, challenges and lessons learned please refer to the report Urban Efficiency: A Global Survey of Building Energy Efficiency Policies in Cities launched by the Tokyo Metropolitan Government and C40 in late 2014 and updated in May 2015.