Summary

Retrofitting buildings to improve environmental performance benefits owners by supporting greater attraction and retention of tenants and by future proofing assets against rising energy costs. It also benefits society by lessening the sector’s contribution to global greenhouse gas emissions.

The City of Melbourne’s 1200 Buildings Program was launched in 2010 and aims to catalyse the retrofit of commercial, non-residential buildings in the municipality of Melbourne. The program encourages and supports building owners, managers and facility managers to improve the energy and water efficiency of commercial buildings by providing information, tools, educational seminars and events. Access to finance can prove a barrier to retrofitting and the City has worked closely with industry to develop an innovative finance mechanism called Environmental Upgrade Finance.

The 1200 Buildings program is a key component of the City’s Zero Net Emissions (Update 2008) stategy which aims for a carbon neutral municipality by 2020. If commercial buildings improve their energy efficiency by approximately 38 percent, 383,000 tonnes of greenhouse gas emissions (CO2-e) will be eliminated each year.. This will contribute significantly to the Melbourne becoming a carbon neutral city.

The 1200 Buildings program aims to:

  • Eliminate 383,000 tonnes of CO2-e per annum
  • Drive $2 billion of private sector reinvestment
  • Create 8,000 ‘green collar’ jobs – engineers, environmental and sustainability consultants, builders, surveyors and many other industry professionals;
  • Stimulate Melbourne’s economy during global recession
  • Lead the way and demonstrate to the world that large-scale transformation can be achieved

How does the program work?

Owners of commercial, non-residential buildings located within the municipality of Melbourne are eligible to join the 1200 Buildings program. A proforma commitment letter is sent to the Lord Mayor outlining the owner’s commitment to achieving a 38 percent improvement in energy efficiency and a reduction in potable water use within their building/s. Program signatories have exclusive use of the 1200 Buildings logo to promote retrofit projects to prospective tenants, shareholders and the community.

Environmental Upgrade Finance

To overcome the key barrier of access to finance for environmental retrofits, the City of Melbourne developed a world first finance mechanism. This required an amendment to the City of Melbourne Act 2001 by the state Government of Victoria enabling Melbourne City Council to levy a new form of statutory charge, called the environmental upgrade charge.

The environmental upgrade finance allows the City, in partnership with Australian financial institutions, to enter into voluntary environmental upgrade agreements with building owners to finance environmental upgrades for non-residential buildings.

Under an environmental upgrade agreement, funds advanced by the financier to a building owner for retrofitting are recovered by Council through a charge linked to rates collection – the environmental upgrade charge. Money received by Council is then forwarded to the financier.

The reduced risk associated with the mechanism incentivises financiers to advance capital for environmental improvement works. This overcomes the main barrier to financiers funding efficiency projects, which is the issue of obtaining security as collateral for funds advanced.

Environmental upgrade finance is available through the 1200 Buildings Program and is administered by the Sustainable Melbourne Fund on behalf of the City of Melbourne. The availability of environmental upgrade finance presents the commercial building sector with an unprecedented opportunity to become more energy and water efficient.

Successes to date:

  • The 1200 Buildings Program developed a world-first financial mechanism, environmental upgrade finance which is underpinned by a legislative amendment to the City of Melbourne Act 2001. 
  • Three environmental upgrade agreements have been signed in Melbourne for projects with a total value of $4.9 million. The retrofits aim to realise a total CO2e- emission saving of 5350 tonnes per year. The projects include installation of a trigeneration system, high efficiency chillers, cooling towers, lighting system upgrades, heating and air conditioning units and controls, occupancy sensors and double glazing.
  • 53 public signatories to date including ; GPT Group, ING, Stockland, and Asia Pacific Group. 
  • A further 150 buildings are considering or in the process of retroffitting.
  • Support materials have been produced in the form of advice sheets, video/written case studies and seminars held to provide valuable information to building owners and managers considering retrofitting and environmental upgrade finance, which is designed to increase access to finance. 
  • The program has been recognised through two awards – Global Energy Efficiency Forum Award for leadership in Energy Efficiency, and the United Nations Association of Australia World Environment Day Sustainability Award.

For further information about the program please visit the 1200 Buildings website: http://www.melbourne.vic.gov.au/1200buildings/Pages/About1200Buildings.aspx

Detailed building case studies are also available at:
http://www.melbourne.vic.gov.au/1200buildings/CaseStudies/Pages/CaseStudies.aspx

For further information in the Sustainable Melbourne Fund:
 http://www.sustainablemelbournefund.com.au/