The following is the NZ Green Building Council's Submission to consultation launched by the Centre for Sustainable Finance. More about the consultation here
The New Zealand Green Building Council welcomes the work done by the Centre for Sustainable Finance and various expert groups in their efforts to develop a taxonomy for sustainable finance in Aotearoa.
A taxonomy is a system for defining, classifying and organising things into categories. Driving positive change and lower emission buildings is closely aligned with the mission of the NZGBC, so the creation of a common language to classify buildings for the purpose of sustainable finance is a useful tool.
While there is strong support for the overall goal of the taxonomy, we cannot support the taxonomy until some key issues are addressed. We believe that in its current form it falls short on several key aspects when considered against its listed objectives: namely credibility, usability and interoperability. These concerns were raised by the Technical Advisory Group during its development phase.
An overly-complex set of criteria will hinder adoption and so reduce the impact of the taxonomy. Setting criteria that are not aligned with existing industry frameworks will also add additional assurance barriers, increasing costs and reducing accessibility.
Several aspects have not been provided with sufficient evidence to justify their appropriateness in the New Zealand context. In relation to interoperability, there are also significant lessons that can be learned from international taxonomies, which are generally moving towards lower complexity.
The taxonomy is broken into three main sections:
- Climate change mitigation
- Adaptation and resilience whitelist
- Do no significant harm
The mitigation section is the main section, resulting in the classification of green assets in line with the taxonomy’s stated purpose of: “building a low emissions, Paris-aligned future”. It defines criteria that must be met to achieve the taxonomy- aligned classification.
Mitigation
- Energy Targets
- Transition for Acquisition and Ownership
- Refrigerants
- Proxies
- Data Centres
- Embodied carbon thresholds
Do you prefer approach Option #1 (relative reductions) or Option #2 (climate adjusted Australian benchmarks) and why? OR do you have a different proposed approach for how the NZ Taxonomy sets performance targets for energy intensity criteria? Please provide justification and any supporting evidence for your preferred approach.
This data is based on a small set of relatively high performing buildings whose owners voluntarily choose to rate. We believe that relative reduction targets are therefore more suitable for assessing energy reduction. Projects targeting Green Star assess energy use relative to a commonly defined reference building. Adopting the climate aligned targets for new builds, which were developed for Green Star would provide consistency to the industry.
This aligns with the direction the revised Australian Taxonomy intends to take.
This could be seen as a transition pathway, as over time, with more data becoming available, the use of fixed energy targets could be phased in.
The requirement for a 5.5 Star NABERSNZ rating for existing buildings is a very high bar that will only be met by a very small number of buildings. We believe that 5 Star, with a transition timeline to improve beyond this benchmark (when market data supports this) is more appropriate.
Do you support the inclusion of a Transition pathway to support existing energy efficient buildings with legacy fossil fuel systems to be eligible for a limited time period, provided they plan to decommission fossil fuel systems in line with Green criteria by a set date?
The decarbonisation of existing buildings is a key aspect of reducing building-related emissions. Directing funding towards those buildings, allowing them to make efficiency upgrades is critical. We support the inclusion of a pathway for existing buildings that are actively committed to decarbonising.
Do you prefer approach Option #1 (GWP thresholds) or Option #2 (no GWP thresholds), OR, do you have a different proposed approach for how the NZ Taxonomy considers the issue of refrigerant GWPs? Please provide any details and supporting evidence for your choice.
The importance of managing refrigerants due to their high Global Warming Potential (GWP) is noted and supported. An ambitious phase out of high GWP products must be part of the emissions reduction strategy. Inclusion of refrigerants in the taxonomy is therefore supported.
However, due to New Zealand’s reliance on mostly imported products, consideration of availability in the supply chain must also be considered when setting targets.
Noting that some buildings that will be completed in 2029 are in design, or even construction now, requires a pathway for an available alternate. [ There are further technical and regulatory restrictions to adopting very low GWP refrigerants which must be addressed before the industry can be given assurance that this transition is possible. This approach is therefore not supported until the wider HVAC industry is consulted to provide a feasible timeline to achieving these targets.
Alternatively, instead of a threshold based only on GWP, other factors such as quantity and likely leakage rates could be taken into account. This approach is already used by projects targeting Green Star and Homestar. A formula taking these factors into account is used to calculate the overall impact of the refrigerants. This approach should be accepted as a proxy for compliance.
Please identify any proxies that should be added, removed, or applied differently. Please provide supporting explanations and evidence for your recommendations.
Unlike other sectors, the building and construction industry has an established set of standards that are widely adopted for green building certification and are based on extensive consultation with the sector. These are well understood by industry to set a measurable benchmark of what a sustainable building encompasses in Aotearoa. Creating a complex set of misaligned metrics, which can be perceived as a new rating tool, will not be beneficial to the industry.
Many organisations have internal and external obligations to deliver to these standards, meaning that alignment of the taxonomy would mean a more streamlined approach, resulting in lower cost and effort to building owners. Proxies should be allowed for as many taxonomy requirements as possible, including energy, embodied carbon, fossil fuel use, refrigerants, waste and climate adaptation.
Green Star and Homestar assess buildings across all of these areas, so they should be recognised as comprehensive rating tools. Where the relevant optional credits have also been achieved, the rating as a whole should demonstrate alignment with the taxonomy, rather than requiring each criterion to be assessed individually.
This would also align with Homestar being recognised (and Green Star Buildings having been submitted) as a proxy by the Climate Bonds Initiative, and CBI itself being listed as a proxy for the taxonomy.
Specific criteria are detailed to provide additional protections and considerations (alongside activity criteria) in relation to electricity and water use, as well as adaptation and resilience considerations associated with data centre construction and operations.
The potential for very high energy and water use from data centres is acknowledged. However, there is limited experience in New Zealand in relation to what a sustainable data centre looks like and how it should be defined. New South Wales has developed a policy framework related to the impact of data centres which could be aligned with.
It is noted that Renewable Energy Certificates have been exclude from the widder taxonomy due to their lack of credibility in New Zealand. They are still include in this section as a means of demonstrating emissions reductions and should be removed in line with the rest of the taxonomy.
What is a GFA threshold you consider appropriate for when the embodied GHG emissions thresholds should apply? Please provide justification and any supporting evidence.
Embodied carbon makes up a significant proportion of building related emissions in Aotearoa. Over the last five years the NZGBC, with the help of various experts, has done extensive work to educate the industry on this topic and to build capacity across the supply chain to address these emissions.
An inclusion of embodied carbon reductions in the taxonomy is therefore strongly supported.
Measuring, reporting and reducing embodied carbon may be difficult for some small buildings, but we believe that the 5,000sqm limit would exempt too many buildings from having to demonstrate a reduction in this category. Allowing so many buildings to be exempt from measuring and reducing embodied carbon would also undermine the goal of a climate- aligned taxonomy. A threshold of 2,500sqm is considered to be more appropriate.
Do No Significant Harm
This is an additional set of criteria that must be met by all taxonomy-aligned assets to ensure the impact of building those assets is minimised.
Waste
Do you consider a 40% waste diversion threshold by weight appropriate as a national minimum for the NZ Taxonomy?
The waste diversion target aligns with Green Star Buildings requirements and was determined to be a threshold that can be achieved across the majority of the country. There are some rural areas where even this threshold may require transporting waste significant distances due to lack of local infrastructure.
As there is direct alignment, Green Star should be included as a proxy. The credibility of waste reporting should also be considered. The NZGBC has done extensive work with industry to develop a methodology for reporting, tracking and auditing of waste contractors and sorting facilities which may be adopted.
Biodiversity and Ecosystem Protection
Feedback is welcomed in consultation regarding the evidence and examples for/against the proposed approach and criteria related to restrictions for new construction on ‘highly productive’ land, land with recognised high biodiversity value and land classified as forest.
Construction to not be allowed on highly productive land. This is supported and in line with a Green Star minimum expectation which should therefore be recognised as a proxy.
Further clarification is required on the definition required for sustainably “sourced”. FSC certification requires chain of custody from source to the final manufacturer. There is limited capacity to maintain this chain of custody for some materials in New Zealand. This requirement should therefore include a percentage threshold that must be met, or an exclusion for the final manufacturing step in the chain of custody.
Refrigerants
Feedback is welcomed in consultation regarding the evidence for/against the proposed approach and criteria related to the recovery and disposal of refrigerants, including any proposed alternative criteria and supporting evidence.
More evidence is required that the destruction of high GWP refrigerants, and required manufacturing of lower GWP replacements, has a net benefit compared to the reuse of existing refrigerants.
Adaptation and Resilience Whitelist
The importance of adaptation and resilience is recognised and supported. However, it is noted that appropriate and useful adaptation measures are very site and building specific. Without sufficient expertise, resources may be put into activities that do not significantly benefit the building with the perception that since they are included in the whitelist they must be useful.
Conducting a site specific risk analysis, and implementing mitigation features targeted directly at those issues identified as high risk, is considered more valuable and beneficial to the building. This would align with the Green Star Climate Change Resilience approach and could be used as a proxy.
If you have feedback on these items please let us know. We would welcome hearing from you. Please send your thoughts to Joe.quad@nzgbc.org.nz by 3pm Wednesday 28th October.