Finance corporation

Clean Energy Finance Corporation offers $300 million to encourage wood construction

Recent adoption of cross-laminated timber has been modest. Industrial group Forest & Wood Products Australia says local industry has only used 12,000 cubic meters of CLT in the past 12 months – partly due to COVID-related lockdowns and slower project rollouts – but planned projects such as TrueGreen Positive Impact’s 49-storey Sydney Tower and Hines’ Collingwood office Melbourne tower would sharply increase the figure as work resumes.

A tool in a range of measures

Reducing embodied carbon – the emissions produced by the resource extraction, manufacturing and on-site transportation – of building materials is a growing concern. CEFC research last year showed that up to 10% of national greenhouse gas emissions came from embodied carbon, with 28% of all global emissions coming from the building and construction sector.

“Timber has a very important role to play in this approach to reducing embodied carbon and helping to decarbonise supply chains across the economy,” Rathborne said.

What we’re trying to do is work with groups to effectively lock down that wooden design.

— CEFC’s Ryan Rathbone

It’s just one tool in a range of measures, but like any concerted effort to reduce embodied carbon, it means more money.

A 5-10% reduction in embodied carbon could be achieved at minimal additional cost, but anything above 10% would cost more and a reduction of more than 20% would “become quite expensive”, the company said. Slattery quantitative studies. year.

Atlassian’s plan to build its new Sydney headquarters with only half the embodied carbon of a conventional equivalent is possible because it’s not trying to get a commercial return from the development.

The CEFC said it could offer concessional financing to projects “under certain circumstances”, but did not specify what that might be.

Purchasing wood as a structural material is more expensive than conventional equivalents – raising the total cost of development by “low single digit” percentage points – but CEFC was keen to work with developers, builders and contractors. customers to overcome concerns that went just beyond cost, Rathborne says.

Developers would often design both a conventional and a wooden version of a proposed plan and frequently drop the idea of ​​wood, he said.

“A decision is made to go with conventional construction because of risk or cost or certain factors,” he said.

“What we’re trying to do is work with groups to effectively lock in that design in wood and have the belief to pursue that as a primary design outcome, and we can help provide the funding to lock in that design solution. .”

CEFC’s wood construction program targets projects ranging from commercial apartments to multi-residential apartments, seniors’ residences and student housing.

The financing structures available range from secured real estate financing to secured debt at the portfolio level, from fixed and floating interest rates to CEFC loans alongside co-financiers in syndicates. Pricing and duration of financing will reflect the risk profile of the projects.