Announcement date
22 October 2025
Link to announcement
Meeting communiqué: Building Ministers’ Meeting, October 2025
Problem being addressed
The rationale for minimum energy efficiency standards is based on the proposition that industry would not make socially optimal energy efficiency decisions in commercial buildings without government intervention. The Decision Regulation Impact Statement (DRIS) also identified broader policy drivers, including legislated net zero commitments, and alignment with national decarbonisation strategies.
Proposal
The Australian Building Codes Board (ABCB) led work to assess changes for commercial buildings in the 2025 edition of the National Construction Code (NCC). As part of the NCC 2025 development process, the ABCB engaged the Centre for International Economics to prepare a DRIS, which supported decision making on the NCC 2025 changes.
This followed the preparation of a Consultation Regulatory Impact Statement, which was released for public comment from 1 May to 1 July 2024. The DRIS incorporates feedback received from a range of stakeholders.
All costs and benefits of the following policy options are compared to the status quo and expressed in net present value terms (using a discount rate of 5 per cent) over the life (assumed to be 50 years) of all commercial buildings to be constructed over the 10‑year period from 2025 to 2034.
Stringency Level 1. Cost-effective energy efficiency without mandated on-site photovoltaics (PV) — includes proposed energy efficiency provisions for better performance building envelope and equipment. Stringency Level 1 is estimated to deliver net benefits of around $6.8 billion in net present value terms.
Stringency Level 2. Cost-effective energy efficiency with mandated on-site PV —introduces additional mandated on-site PV requirements to Stringency Level 1. Stringency Level 2 is estimated to deliver the highest net benefits of all the options — around $10.0 billion in net present value terms.
Stringency Level 3. Least cost zero carbon ready buildings —covers least-cost zero carbon provisions that achieve net zero greenhouse gas emissions ready buildings (when the grid decarbonises) with respect to regulated energy. This option extends Stringency Level 2 to provide full electrification readiness and to require additional PV to offset emissions from gas appliances compared with an all-electric equivalent. The estimated benefits of Stringency Level 3 are slightly lower than Stringency Level 2 at around $9.4 billion.
Stringency Level 3 is the preferred option. While this option (net zero carbon ready buildings) does not deliver the highest forecast net benefit in the central case, it builds on Stringency Level 2 by incorporating additional requirements to future proof new buildings for a transition to all electric operation.
The lower net benefit for Stringency Level 3 reflects the inclusion of additional upfront costs associated with future proofing. Some potential longer-term benefits depend on factors outside the NCC, including the uncertainties around the timing of grid decarbonisation and future building electrification. These uncertainties were explored through sensitivity analysis. As outlined in the RIS, if the probability that dual fuel buildings constructed over the next 10 years will be required to electrify when gas heating plant reaches its end of life exceeds 63 per cent, Stringency Level 3 would deliver a higher net benefit than Stringency Level 2.
The DRIS also assessed the proposed Electric Vehicle (EV) charging facility requirements separately and estimated that they would result in a net cost of approximately $1.74 billion. Following consideration of the DRIS, Building Ministers decided in October 2025 not to include the proposed EV charging requirements in NCC 2025.
Assessment
Compliant Decision Regulation Impact Statement
Note: The OIA provided informal advice that the DRIS contains an adequate level of analysis, commensurate with the significance of the impacts for a DRIS on March 4, 2025. The DRIS was then provided to decision makers. Although an assessment letter had not been formalised at the time of the decision, the OIA is satisfied that the analysis provided to decision makers had met the applicable requirements.