EUAs made simple

What is an EUA?

An Environmental Upgrade Agreement (known as an ‘EUA’) is a mechanism that provides building owners with accessible finance to carry out environmental building upgrades. Most importantly, it provides superior economic outcomes for building owners as well as tenants.

We are delighted to share with you our NEW infographic that has been designed to illustrate the simplicity of an EUA. (And we designed this infographic for sharing; so feel free to share it in your networks!)

ellis jones - smf - infographic blog
How does it work?

An EUA is a simple agreement between council, building owner and lender. In Victoria, an EUA is administered by Sustainable Melbourne Fund for the Melbourne city municipality.

Looking at the infographic above, the work required to transform the grey, energy inefficient building (pictured left) into the green and more energy efficient building (pictured right) can be paid for by those wasted dollars floating off into the sky on the left.

The wasted money is used to create a better performing asset, locking in its value, creating a building with superior returns, greater yields and greater cost effectiveness for tenants to occupy.  In other words, it pays for a building to go ‘green’.

EUAs enable 100% finance to come to projects in such a way that building owners can create new revenue from energy efficiency projects.

Why is it important?

More than half (53%) of carbon emissions in Melbourne CBD can be attributed to ageing and highly wasteful buildings in the commercial office sector alone.

Research conducted by Low Carbon Australia and ClimateWorks Australia has found that energy efficiency is the most profitable action people can take to mitigate climate change. This begs the question: why aren’t all commercial buildings performing better?

With the availability of affordable finance for building owners using an EUA, there is really no need for the people of Melbourne to work in poorly performing office buildings these days.

EUAs benefit owners and tenants alike.

The costs and benefits of an efficiency project can be shared between both owners and tenants.

An EUA provides a building owner with:

  • Access to 100% project finance for a building upgrade
  • More attractive finance terms than other finance products
  • A special condition allowing tenants to contribute to loan repayments
  • Debt that stays with the property upon sale

An EUA provides tenants of the building with:

  • No debt –it’s on the owners balance sheet
  • A significant reduction in utility costs
  • Greater tenancy space performance (greater health implications and better lighting)
  • Hedging against rising energy prices in future

To find out more about financing an environmental building upgrade view our environmental upgrade finance page or contact us.

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