Air Conditioning, Refrigeration, Building Services Exhibition
The Hon. Matt Kean
Chair - Climate Change Authority
Check against delivery.
May I acknowledge the Traditional Owners of Narrm, the Wurundjeri Woi-wurrung people of the Kulin Nation where we meet today, and pay my respects to elders, past and present. And of course, I extend that respect to any First Nations people here with us today.
I want to thank the Air Conditioning, Refrigeration and Building Services Industry Alliance for the opportunity to speak with you today.
The daily shocks of the war in Iran may seem a long way from the day-to-day challenges you face as consultants, manufacturers, engineers and businesses trying to meet the needs of your customers.
But the systems designed, specified and installed by the people in this room are part of what determines whether Australia is exposed to that volatility - or shielded from it.
The market shocks engendered by events in the Middle East serve to remind us that energy security and costs pulse through every part of the economy.
It's about our capacity to deliver reliable and affordable energy.
We can either keep designing buildings that need energy provided through increasingly volatile global markets, or make different choices now to double down on electrification and embrace home-grown energy that harnesses Australia's abundance of clean, natural resources.
In our pursuit of decarbonisation, we have the resources, the capital, the capability and increasingly the technology needed to make that leap.
And the built environment - the homes and buildings we rely on every day - are already central to that story.
After all, buildings account for approximately one quarter of Australia's final energy use. That makes this sector not just part of the transition - but one of its control points.
And the benefits go beyond energy security.
Moving from gas to efficient electric technologies improves indoor air quality and reduces exposure to harmful pollutants in homes and workplaces.
So, it improves the health of the people inside our buildings - and the health of the planet.
Electrification and energy efficiency reduce greenhouse gas emissions by enabling buildings to run on an increasingly clean electricity grid.
In other words, these choices help tackle global warming while reducing costs and improving everyday life for Australians.
Heating, ventilation and air conditioning (HVAC) systems are a major driver of peak demand, with energy-intensive cooling in summer and heating during winter. That means decisions made in HVAC design and specification now shape not just individual buildings, but how resilient and affordable the whole energy system becomes.
But let me take a step back, and unpack the underlying case for action.
The built environment directly accounted for around 5% of Australia's national emissions in 2024. More significantly, the built environment indirectly accounted for a further 16% of Australia's emissions from the generation of electricity used to heat, cool and power buildings.
Here, the focus needs to be squarely on decarbonisation - reducing the emissions associated with how buildings are powered, heated and cooled, and relying increasingly on renewable electricity.
These actions would make a significant and cost-effective contribution to reducing emissions across the economy, and meeting our national targets.
Many of the solutions are already available and being deployed - from efficient equipment and better design to electrification.
We need to accelerate the uptake of solutions that already stack up.
We can already see what good looks like…
All-electric homes without gas connections are cheaper to run and ready for a renewable grid. Commercial buildings are upgrading to efficient electric systems, cutting costs while meeting tenant demand.
These are not future concepts - they are happening now.
The Climateworks Centre found that quick-fix thermal upgrades packaged with fully electrified appliances deliver net benefits for most Australian households. These upgrades, combined with rooftop solar, provide average annual net savings of between $900 and $1,600 from the first year.
Through tools developed by the National Australian Building Energy Rating System program, commercial building participants have achieved an average of 30 - 40% less energy use over a 10-year period.
Many of these opportunities sit within building services - particularly in heating and cooling - where decisions made today can shape energy use and emissions for decades.
When the Authority released its advice on Australia's 2035 emission reduction targets, we made clear that the solutions for reducing emissions in the built environment are already available and cost-effective.
By 2030, through energy efficiency alone, existing commercial buildings could cost-effectively reduce their total energy consumption by an average of a third, saving 340 megajoules per square metre per building - and save Australia 40 petajoules of energy in aggregate.
But we need to go further and faster.
For buildings that currently rely on a mix of electricity and gas, moving to electric systems is becoming the logical next step.
Electrification, combined with energy efficiency, reduces energy use, lowers running costs over time, and creates healthier indoor environments.
Treasury's research shows that electrification of household heating can reduce a typical household's running costs by $860 per year, after accounting for upfront and financing costs. In addition, also reduces the household's emissions by 18%.
Electrification is also good for our health. Pollutants from gas cooking and heating appliances are linked to higher rates of childhood asthma. Exposure to gas stove emissions is associated with over 12% of the total asthma burden in children aged 14 years or under.
And the opportunities are not limited to electrification of household appliances. More than 4 million Australians households now have rooftop solar - not as a statement of ideology, but because it reduces bills and increases control over energy use.
So, our job is to continue to identify the policy solutions and settings that emphasise there is real value for investing in decarbonisation of the built environment.
Energy efficiency is consistently one of the lowest-cost ways to reduce emissions and should be seen as a compelling proposition for commercial property owners, homebuyers and tenants.
The Authority explored those opportunities in a series of reports in recent years.
In our 2035 emission reduction targets advice, for example, we made the point that the nation's commercial building stock could make a meaningful contribution to progress if a significant number were electrified - and almost all new commercial buildings designed as all-electric from 2030.
Buildings that are efficient and all-electric are not only lower-emissions - they are cheaper to run and healthier for the people who live and work in them.
This recommendation would require changes to the National Construction Code and other broader reforms - ultimately decisions for elected leaders.
But whether standards rise isn't really the question anymore. The question is whether industry gets ahead of them - or waits and absorbs the disruption later. The government is expanding the Commercial Buildings Disclosure program and modernising the Greenhouse and Energy Minimum Standards (GEMS) scheme to help Australian businesses, industry and households make more informed choices when choosing their buildings and appliances.
And some states and territories are incentivising retrofits by requiring the disclosure of energy performance ratings of residential buildings at the point of sale or lease. Energy efficiency disclosure has been operating in the ACT since 1997, and research has shown a 3% increase in home value for every additional star rating.
Mandating minimum energy performance standards for rental properties is another option.
Our 2025 Annual Progress Report also referenced the potential benefits of incentives to increase the use of electric appliances for space heating, water heating, and cooking.
The Authority has also had refrigerant gases on our radar for several years, because they have typically been a source of extremely potent greenhouse gases.
In fact, we estimated that they accounted for almost one-third of the built environment's Scope 1 emissions in 2022.
However, our 2023 Annual Progress Report identified the emerging shift towards refrigerants that make a far lower contribution to global warming.
At that time the cleaner alternatives made up less than 10% of the market, demonstrating that viable alternatives exist - so we recommended governments do more to drive take up at scale.
It's a point the Authority reinforced in our 2035 Targets advice, where we emphasised that most appliances using refrigerant gases can be replaced with systems with a substantially lower impact.
We raised the prospect of the Government placing further limits on the global warming potential of refrigerant gases and appliances.
It's an approach already in place in markets like the European Union and Japan, where they have zeroed in on commercial refrigeration and stationary air-conditioning.
So, where it's practical and feasible to embed the benefits of clean energy technology and solutions today, we should grab the opportunity.
It will deliver dividends in the form of better energy efficiency and lower costs and add to the momentum of economy-wide decarbonisation that helps us meet the nation's emission-reduction goals.
The case for faster action in buildings is no longer theoretical.
The technologies exist.
The economics are improving.
And Australians are already moving.
It means scaling what works, removing barriers to electrification, and ensuring new buildings are fit for the future from day one.
Because the decisions made in this sector don't just shape buildings - they shape the energy system, the economy, and the everyday lives of Australians.
That's the challenge - and the opportunity - in front of us.
And I'm pleased to be joined by a panel of experts who are already helping to turn that ambition into reality.
Thank you for listening.
