While green buildings speak for themselves in terms of economic benefits, the up front costs of implementing green elements can often be quite off-putting.
Providing a boon to the Melbourne industry, however, a finance model and partnership between government and private sectors developed by Low Carbon Australia and the City of Melbourne will allow industry groups to retrofit ‘brown’ buildings by offering up front monetary support.
According to Lord Mayor Robert Doyle, finding the capital for green investment has been an issue for building owners. This new levy-style financial system is aimed at overcoming this struggle.
”Everyone knows about sustainability. Everyone knows about the economic return,” says Doyle. “The difficulty has been access to capital for building owners, and that’s the thing this solves.”
The financial model will fall under the city’s environmental upgrade agreement program, which has dedicated $2 billion in order to retrofit 1,200 buildings, or 70 per cent of the city’s built environment.
Up front capital will be paid back through a levy on the property, in which the building owner pays back the loan over time, similar to paying rates. Not only does this payment structure mean the up front costs of retrofits are dramatically defrayed, the loan repayments remain with the building even if it is sold.
Low Carbon Australia will deliver loans in the range of $2 million, with chairman Mike Rann suggesting that there is no longer any logical reason to not run buildings efficiently.
“Many companies are now saying this makes sense because it’s cutting their energy costs in ways they previously hadn’t thought about,” he says.
The Green Building Council of Australia has long recommended the implementation of a financial support system in order to promote the retrofitting of ‘brown’ buildings.
Not only does the financial model make sense economically, but also environmentally, offering further support for positive green technology implementation.
By Tim Moore