The newly elected Labor government has been keen to show that Australia is serious about tackling global warming. One of Prime Minister Rudd's first actions was for Australia to ratify the Kyoto Protocol.

In line with Kyoto, Government policy now stipulates a Mandatory Renewable Energy Target (MRET) of 20% emissions reduction by 2020, rising to a 60% reduction by 2050. The fiscal cost of meeting greenhouse gas (GHG) emissions targets will inevitably be passed down to businesses in the form of compulsory accountability for energy usage.

Presently there is no legal requirement for property owners of existing buildingsto be held responsible for the energy output of a building; such measures as "Green Star" (Green Building Council of Australia) building ratings arevoluntary. However each State has enforced policy setting minimum energyrequirements that apply to major refurbishments of both residential and commercial buildings, using a range of green ratings systems. A Federal push for consolidation of requirements for property development seems likely. For environmentally protective legislation to be successful, the onus of responsibility will shift onto the energy-using commercial tenants and by default, the building owner.

The Australian Government is establishing an emissions trading scheme as part of an effective framework for meeting the climate change challenge. Work should progress on developing a national emissions trading scheme starting no later than 2010 with the detailed design finalised by the end of 2008.

Key features of the system are:

  • a single online entry point for reporting based on the Online System for Comprehensive Activity Reporting (OSCAR) from 1/7/2008 onwards for companies with energy production/use or GHG emissions above certain thresholds;
  • a standard data set and nationally consistent methodologies for reporting;
  • public disclosure of company level greenhouse gas emissions and energy data;
  • consistent and comparable data provided to government for policy- making;" secure data storage; and
  • reporting thresholds that avoid capturing small business.

The Australian Government has also announced that they will allow an immediate tax deduction for expenditure incurred in establishing Carbon Sink Forests until 2012. Any expenditure after 2012 will be depreciated at 7%.

The Australian property industry will need to take a leadership position when tackling global warming. It is important to plan now to future proof buildings or else face the risk of a decline in property values.

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