Investment in energy efficient buildings is set to be accelerated with the establishment of a new investment partnership to target energy saving initiatives in the commercial property sector.
The Clean Energy Finance Corporation (CEFC) has tipped in $100 million into a fund established by investment bank AMP. Through targeted acquisitions and improvements in the design of commercial properties, AMP is building a portfolio of best practise energy efficient buildings.
Flagship assets include the Australian Technology Park, home to a range of technology start ups at the retrofitted site of former Eveleigh Railway Workshops. The workshops, which were completed in the 1880s, have to date been converted to a 4 Green star rating.
The AMP Capital Wholesale Office Fund (AWOF) manages property assets totalling $4.7 billion, and sees proactive energy efficiency improvements as a sound investment.
“Responsible investors are increasingly looking for demonstrably green assets that deliver
investment returns while minimising risk. Our customers also demand high sustainability standards that support their wellbeing, align with their values and minimise operating costs.” AMP’s Head of Sustainability, Real Estate Chris Nunn said.
“We pride ourselves on having a holistic sustainability strategy with ambitious long-term emissions reduction targets for our real estate assets, which in turn will influence our supply chain and benefit the broader community.”
“There is enormous opportunity to reduce emissions from buildings and to really push the boundaries of energy efficiency in the property sector,” CEFC Investment Funds lead Rory Lonergan said.
“With this investment, the CEFC is pleased to support AMP Capital in its objective to deliver net zero emissions across the commercial property portfolio. This really sets a new benchmark for the commercial property sector in Australia.”
Energy Efficiency has long been touted as a low-cost, and even revenue positive, method of reducing greenhouse gas emissions through energy use.
Efficiency measures can deliver savings for businesses through reduced energy consumption, however it is often the case that the significant upfront investment required to implement energy saving measures has posed a barrier to their adoption.
In its Pathways to Deep Decarbonisation in 2050 report, ClimateWorks Australia estimated that energy efficiency improvements could lead to greenhouse gas emission reductions of up to 35 million tonnes of carbon dioxide equivalent by 2030.
The bulk of energy demand in commercial buildings comes from the need from heating and cooling, including space heating, water heating and refrigeration, along with lighting. Technology improvements in these areas provides the potential for major reductions in energy use, and flow on reductions in greenhouse gas emissions.
In managing its property assets through the AMP property fund, AMP has targeted 6 Green Star energy performance in all of its buildings. Based on ClimateWorks’ analysis, 6 Green Star buildings have an emissions footprint that is about one-quarter of the average for existing buildings.
“Having achieved the 6 Green Star Performance rating for 700 Bourke Street, AMP Capital is now focusing on achieving Green Star Performance ratings for all other wholly-owned assets in 2017.” AWOF Fund Manager, Nick McGrath said.
“We are really pleased to welcome CEFC as an investor in AWOF, which attracted over $700 million in equity investment in 2016. With a portfolio of 12 premium properties, AWOF is well positioned to deliver sustainability outcomes for investors such as CEFC.” Mr McGrath added.