Australia’s Net Zero in Government Operations Strategy – one year on

When it was announced in November 2023, the Department of Finance’s Net Zero in Government Operations Strategy was a very clear signal that the government intends to walk the talk on net zero.

With a goal to achieving net zero greenhouse gas emissions across Commonwealth operations by 2030, the strategy was considered the most significant update to the APS property sustainability targets since the publication of the 2006 Energy Efficiency in Government Operations Policy.

An accompanying roadmap presented at COP28 in Dubai in December 2023 was a plan of action for delivering on the strategy.

A year on, the property industry is reporting a step change in the way government departments are prioritising sustainability in their real estate activities. This includes everything from scrutinising and negotiating leases for supportive measures to reporting emissions, procuring green energy, mandating electrification and installing electric vehicle chargers.

“The APS occupies a large portion of office space across the country, where it often acts as an anchor tenant with long-term leases. The government’s net zero target demonstrates a strong commitment to lead by example. While there’s still a lot to do, there has been significant momentum already,” says Matt Fitzgerald, senior sustainability director at JLL.

With 2030 drawing ever closer, the wheels are in motion to fulfil the requirements of the strategy. Below are measures government departments are undertaking to curb their environmental impact as observed by JLL, which is a property advisor to the Whole of Australian Government.

Many government departments have put emissions reduction plans in place outlining their current emissions footprints and intended actions towards the strategy’s requirements. One agency is doubling down on net zero requirements in its leasing processes by including solar photovoltaic (PV) panels (to convert the sun’s energy into electricity), electric vehicle charging and energy efficiency targets in its negotiations.

Work in this space is not limited to larger agencies. The Fair Work Commission has also appointed a chief sustainability officer and in its emissions reduction plan has stipulated requirements to deliver targeted training to staff and incorporate sustainable procurement into future fit-outs.

The rapid conversion of Australian Public Service fleets to electric vehicles (EVs) has prompted a significant focus on charging infrastructure. Considerations include charging needs, landlord requirements, insurance implications and electrical supply, all of which government departments and landlords have had to work through.

One agency, after completing detailed feasibility investigations at many of its sites, has installed 14 chargers so far with plans for another 300.

The requirement for emissions reporting has seen departments step up their data collection, with reporting requirements set to expand over time. Emissions are now recorded in annual reports, which enabled the department of Finance to issue the Australian government’s first annual progress report for the 2022/23 financial year. Scope 1 and 2 carbon emissions (that is, direct emissions from a company’s activities, and emissions as a result of the energy a company uses) were approximately 2.6 million tonnes, which makes the government one of the top 30 emitters in Australia, according to JLL.

While many government departments had already been collecting utility data for their own energy use, some have also started establishing processes to collect landlord energy data. Landlords are increasingly seeking the data of their government tenants to meet their own Scope 3 emissions reporting obligations. This need for data sharing has created the need for new agreements, processes and tools.

Agencies are putting increasing emphasis on the energy efficiency of buildings they lease and identifying where gas is used for heating. New leases of 1,000 square metres or more and terms over four years are now being negotiated to include ‘green lease’ features, including 5.5-star NABERS Energy targets.

Many landlords are leaning into these new requirements, offering net-zero related incentives to attract and retain tenants. This frequently includes solar PV, upgraded lighting, electric vehicle chargers and building electrification. Government entities and landlords that have planned ahead are already benefitting from early mover advantages. For example, Commonwealth government tenants are securing net-zero oriented lease incentives as well as properties that meet the new targets. Landlords are retaining or attracting government tenants.

One entity, which has embedded net zero and sustainability requirements into its leasing processes has negotiated rooftop solar PV arrays with one landlord which, combined with other measures, has increased the NABERS performance of a property from 2 stars to a potential 5.5 stars.

The Net Zero in Government Operations Strategy is prompting departments to consider energy efficiency measures beyond the purpose of reducing energy bills. The push to lower emissions is providing even greater focus on energy efficiency and renewable energy.

Entities managed by JLL have installed almost 2,000 kilowatts of solar panels in 2024 through a combination of lease incentives arrangements with landlords, capital funding, and power purchase agreements (a contract to purchase energy at an agreed price and term).

The Department of Finance has been progressing plans for centralised procurement of renewable electricity, and at the same time some entities are procuring renewable electricity via accredited renewable energy providers through the GreenPower scheme. This off-site renewable electricity procurement will have the most significant and immediate impact to Australian public sector emissions.

The strategy calls for the electrification of fossil fuel-consuming services over time in existing buildings. Many entities have started considering electrification as part of their site selection processes and factoring this into the management of their properties. One example, the Australian Federal Police, has completed feasibility studies for the replacement of gas-fired plant and equipment and will be developing net zero strategies to reduce carbon emissions at selected sites in 2025. Many of its electrification studies have identified cost savings alongside reduced emissions.

Although security agencies are given some leeway on the strategy’s obligations based on operational and capability requirements, this hasn’t stopped them from pursuing net zero initiatives. Defence recently released its own net zero strategy for its entire operations.

The Net Zero for Government Operations Strategy is due to be reviewed over 2026 and 2027 to consider the progress of implementation, the evolving domestic and international expectations on climate action in government operations and any recommended changes to policy or strategy to ensure the government is still meeting its commitment to leadership.

“Practically speaking, this could potentially include setting minimum standards for warehouse and hotel NABERS ratings, electrification of backup generation and further consideration of the approach to Scope 3 emissions,” Fitzgerald says.