Estimating the Increasing Cost of Commercial Buildings in Australia Because of Greenhouse Emissions Trading

Abstract

The ratification of the Kyoto Protocol by most industrial nations will result in an international greenhouse emissions trading market by or before 2008. Calculating the quantity of embodied energy in commercial buildings has therefore taken on added significance because it is in the creation of energy that most greenhouse gas that causes global warming is released. For energy efficient commercial buildings in Australia, the embodied energy can typically represent between 10 and 20 years of operational energy. When greenhouse emissions trading is introduced in Australia the cost of energy will rise significantly, particularly electricity which relies primarily on burning fossil fuels for generation. This will affect not only the operating energy costs of buildings (light, power & heating/cooling) but also the cost of building materials and construction. Early estimates of the potential cost of future greenhouse emission permits in Australia vary between $IO/tonne to $180Itonne. This cost would be imposed primarily on the producers of energy and passed on by them to consumers via higher energy costs. For a typical commercial building this could lead to an increase in the total procurement cost of buildings of up to 20% due to the energy embodied during the construction or refurbishment of the building. To assist in evaluating these potential cost increases McKean & Park, Sinclair Knight Merz and Deakin University have developed a web-based Carbon Cost Calculator for commercial buildings.