Could your building become both a carbon and financial asset?

• The Australian Government provides incentives called Australian carbon credit units (ACCUs) to encourage carbon / emission abatement activities such as energy efficiency
• ACCUs are a tradable financial product, an additional income source for businesses.
• Building owners can earn Australian carbon credit units (ACCUs) by reducing emissions at industrial and commercial assets
• Geronimo Advisory Principal Nalin Nanayakkara explains.

Until the entire Australian national grid is supplied from 100 percent zero carbon energy, any initiative that reduces energy demand has a carbon emissions reduction benefit. In recognition of this, the Australian Government offers incentives in the form of Australian Carbon Credit Units (ACCUs) for a range of energy efficiency activities in industrial and commercial buildings.

For property owners, this represents a potential additional benefit for investing in equipment upgrades, electrification, on-site renewables, smart building retrofits and other projects. The Energy Efficiency method via the Clean Energy Regulator stipulates that activities are only eligible for ACCUs if it is likely they would not otherwise have happened.

 In other words, if a building owner had no plans to improve energy efficiency, and regulatory requirement to do so, then the method may be available to them.

It is not only commercial office buildings are eligible, potentially owners of hotels, retail centres, industrial facilities and data centres could access this method.

Keep in mind that while mandatory disclosure of climate impacts and emissions under the Australian Sustainability Reporting Standard will come to affect almost all but the very smallest of enterprises, requirements to disclose emissions are not the same thing as reducing them! So, building owners reporting under the ASRS are not necessarily disqualified from CER schemes.

Of course, because disclosing emissions makes a public statement about an organisation’s ESG approach, showing progress on reducing emissions through energy efficiency activities, and reporting the creation of ACCUs will be a positive reputational benefit.

What is an ACCU and what are they useful for?

An Australian Carbon Credit Unit represents one tonne of CO₂-e abatement. The abatement can be the result of avoidance via emissions reductions such as energy efficiency, eliminating an emissions-producing activity such as exchanging gas-fired equipment for efficient electrical equipment, or active removal, for example, vegetation projects.

ACCUs are issued by the Clean Energy Regulator and are a financial instrument that can be retained, traded or exchanged, similar to a stock market share or a bond certificate.

The dollar value of ACCUs fluctuates, depending on supply and demand. One of the significant customers is government, which purchases ACCUs from private projects to utilise as offsets. The largest private sectors emitters are also required by law to obtain ACCUs as offsets for a proportion of their annual emissions. Any organisation seeking Carbon Neutral certification under Climate Active is also required to purchase a proportion of any required offsets in the form of ACCUs.

In 2024, the ACCU spot price averaged $35/unit, reaching the highest price of $42/unit in November 2024 as a significant number of entities made purchases to meet their compliance obligations under the Safeguard Mechanism.

At the start of 2025, the ACCU price was trending at over $30 per unit, and it is expected the price will continue to rise as more businesses and organisations seek carbon neutrality as part of their ESG strategy.

How do activities translate into ACCUs

A qualifying activity under the energy efficiency method needs to use credible, engineering-based methods to establish the current emissions baseline, and quantify the emissions reduction achieved by the activity.

One of the more straightforward ways to do this is obtain a NABERS energy rating, as it will also incorporate an assessment of emissions intensity for the building, facility or tenancy. Then, you target upgrade and performance improvement activities which are eligible under the method AND will improve the NABERS rating.

This then quantifies both emissions before, and the emissions after. It also has the benefit that obtaining a NABERS rating is a clear signal to investors and other stakeholders that you are serious about ESG and corporate social responsibility.

The emissions savings delivered can be significant. For example, NABERS data shows that for a retail store, progressing from 3 Stars to 4 Stars can result in an emissions reduction of 27%.

We also find that as we work with clients to obtain an initial NABERS rating for their asset, we identify low-cost or rapid payback opportunities for improving energy efficiency. While not all of these will be classed as eligible activities for earning ACCUs, if they are low cost, save on operational energy use and reduce carbon liabilities, it makes sense to incorporate these measures in your ongoing asset maintenance program.

Any project targeting ACCUs via the CER methods will also need to meet requirements around reporting and auditing.

The payoff, however, is ACCUs being issued equating to the emissions reduction for seven years after completion of the project. So, you don’t just receive one issuance of ACCUs equivalent to the project carbon savings, you receive an issuance equivalent to the savings each year for seven years.

In terms of rewarding project proponents and assisting with payback on project costs, it’s a clear winner.

You might also want to consider whether there are other programs, such as the Victorian Energy Efficiency Certificates or Building Upgrade Finance that can also support you planning and undertaking energy efficiency and emissions reduction projects. You can access a comprehensive register of federal, state and territory grants and incentive programs here.

Ideas for activities

 Some of the activities you may want to consider that would potentially qualify under the CER method and deliver improvements to asset value and performance might include:

• Base building HVAC upgrades
• Building Management System (BMS) optimisation
• Lighting system improvements
• Electrification of gas appliances
• Façade or envelope upgrades
• Sub-metering and analytics platforms

Start with a pilot

“Because there are some complexities involved, including the fine print of the regulatory requirements, costs for auditing and the need for consulting expertise to develop, deliver and verify projects, it is often best to identify one building or tenancy or facility that can be used for a pilot,” explains Geronimo Principal Nalin Nanayakkara.

“This reduces risk and will also build capability and understanding in your organisation which can be applied if or when you choose to scale your approach more broadly.”