The federal government’s Clean Energy Finance Corporation (CEFC) is investing up to $60 million in a green home loan program launched in partnership with Bank of Australia. The discounted home loans will be available for builders and home buyers that commit to constructing new homes with a minimum 7-star energy rating.
The Bank Australia Clean Energy Home Loan will offer a discount of 0.4% on interest rates for borrowers who can commit to investing in energy efficiency measures for their new homes. The discounted interest rate would apply for up to five years to mortgages below $1.5 million..
Borrowers will need to achieve a minimum of 7-stars under the Nationwide House Energy Rating Scheme (NatHERS), which rates the energy efficiency of a home based on its design. Homes built to this rating require less energy for heating and cooling.
“This green home loan will fill a gap in the market, giving builders and new home buyers a financial incentive to adopt sustainable design principles from the start of the project,” CEFC CEO Ian Learmonth said. “New homes built today will be in use for decades to come. We want those homes to have the strongest energy efficiency and to deliver the smallest carbon footprint possible.”
Buildings in Australia account for over 50% of electricity use and almost a quarter of the country’s carbon emissions with about half of those emissions coming from residential buildings – largely as a result of heating, ventilation and air conditioning, lighting and hot water systems. Whether residential, commercial or institutional, buildings also do not score well under the nation’s main emissions reduction program, the $3.5 billion Climate Solutions Package, which is intended to help Australia meet its commitments under the Paris Agreement.
“Australians are already leading the world in residential rooftop solar,” Learmonth said. “Our next challenge is to embrace better building design and construction methods, as well as energy efficiency, to cut our energy use and reduce our emissions.”
Over time, Bank Australia will extend the benefits of the Clean Energy Home Loan to existing homes, to finance ambitious green home improvements, such as energy monitoring and energy storage systems, solar hot water and energy efficient air conditioning.
“We’re proud to reward people who choose to make their homes more sustainable through our Clean Energy Home Loan,” Bank Australia Managing Director Damien Walsh said. “Working in partnership with the Clean Energy Finance Corporation means we can bring this innovative new product to market sooner, and help more Australians.”
Previously, the CEFC invested up to $95 million to support regional community housing provider Housing Plus develop 220 new highly energy efficient, solar-powered community housing dwellings in New South Wales.
Announcing its latest financial commitment, the CEFC cited a report from the Australian Sustainable Built Environment Council (ASBEC) and ClimateWorks Australia, which has identified potential energy savings as high as 25% through the adoption of higher clean energy standards in new residential buildings.
“Cutting energy demand is a low-cost way to decarbonise the property sector and reduce stress on the electricity network,” Learmonth said. “We encourage all those involved in residential property – from design to development to purchase – to include a stronger focus on carbon emissions when they are making these long-term decisions about building and buying new homes.”
Last year, Bank of Australia became the first bank in the country to see its entire operations running on renewable electricity, after entering into a 10-year agreement with renewable energy developer Pacific Hydro as part of the Melbourne Renewable Energy Project.