Why are Australian houses so cold in winter and hot in summer? Our policy mapping research conducted a deep dive into government policy at all three levels—federal, state and local—to find the answers.
Australian homes have poor energy efficiency compared to similar wealthy countries. A significant reason is that most houses were built before mandatory energy efficiency standards were introduced into the National Construction Code (NCC) in 2010. Research indicates that the average house built before this time has an energy rating of 1.8 stars out of 10 under the NatHERS system of rating[1]. Poor energy efficiency across Australia's eight climate zones and different types of housing stock leads to adverse health outcomes, high energy bills and increased emissions[2]. Our policy mapping analysis identifies the gaps and opportunities for policy reform aimed at federal, state and territory policy makers.
Our policy gap analysis provides a level of critical detail that can inform policy development across federal, state and territory governments. It reveals that:
Australia's three layers of government have different roles in policy formation for home energy upgrades. The federal government plays a key role in setting national emissions targets and policy coordination.[3] One example is the National Construction Code, which must be adopted by states and territories. The federal government also plays a critical role in incentivising home energy upgrades under the Small-Scale Renewable Energy Scheme. This has been critical to reducing the costs of solar PV and now batteries.[4] Under the Home Energy Upgrade Fund, the Commonwealth has also allocated $1 billion through the Clean Energy Finance Corporation to partner with lending institutions to provide interest-free loans for home energy upgrades.[5]
Australian states and territories have their own (and varying) emissions targets and hold primary responsibility for making laws and policies around energy generation, building construction and home energy efficiency. This has led to vastly different policy approaches across Australia's states and territories, impacting household access to home energy efficiency upgrades.[6]
Local governments are creatures of statute under state laws and have a more limited capacity to influence policy.[7] Some local councils have banned gas in new residential buildings (starting in Victoria before the state ban and now in NSW) on the basis of both emissions reduction and adverse health effects associated with gas. Local councils are also playing an active role in program development and are often best attuned to their local conditions and trusted by their local communities.
In mid-September, the federal government released its Built Environment Sector Plan alongside its 2035 emissions target of 62-70% reduction on 2005 levels.[8] This recognises the need for greater access to electrification, more policy attention to the thermal envelope of buildings, and greater equitable access for energy upgrades for First Nations people, low-income households, social housing and renters.
Policy momentum is also shifting at the state and territory level, with a number of important policies under review. Positive policy development is occurring in the development of a national framework for energy efficiency disclosure at the point of sale or lease, which will need to be adopted across the states and territories. ACT and Victoria have minimum standards for rentals, with a Bill also before the SA Parliament.[9] Progress is not all positive, however, with the federal government announcing a freeze on updates to the NatHERS star rating in September 2025[10], and the Queensland Productivity Commission also reviewing their commitments[11].
Significantly, our policy mapping also identifies the critical role of local councils and community organisations in place-based approaches to encouraging home energy efficiency upgrades.
At 30 June 2025, at least 129 of Australia's 537 local councils have active programs to encourage home energy efficiency. These programs range from linking people to existing federal and state schemes, through to complex programs offering support and rebates for upgrades in collaboration with other councils and community organisations.
Our research reveals that the support of state government policy is a driver of local council programs, which are most developed in Victoria. Across Australia, many local councils would like to offer more programs, but there is no dedicated federal or state funding to enable this.
We identify the need to expand on current efforts with coordinated Commonwealth and state/territory funding to local councils, which includes administrative support to avoid taking resources from other important sustainability and climate initiatives.
In addition, community groups such as Geelong Sustainability, Rewiring Australia and the Gippsland Climate Change Network are playing a critical role in accelerating place-based solutions to home energy upgrades. The recent announcement by the Australian Renewable Energy Agency (ARENA) to fund a pilot project by Rewiring Australia (in partnership with Endeavour Energy and Brighte) in the Northern Illawarra[12] and the Victorian government's newly established fund for community upgrade programs[13]are much welcomed starting points. These opportunities should be extended to community organisations across the country.
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[1] CSIRO (2021) It’s in the stars how Scientists Figure Out Your Home Energy Rating, https://www.csiro.au/en/news/all/articles/2021/september/its-in-the-stars-how-scientists-figure-out-your-homes-energy-rating
[2] Energy Consumers Australia, https://energyconsumersaustralia.com.au/our-work/submissions; Jayalath, A., Vaz-Serra, P., Hui, F. K. P., & Aye, L. (2024). Thermally comfortable energy efficient affordable houses: A review. Building and Environment, 111495; Armstrong, G., Danahay, J. & Dewar, M. (2024) Enabling Australia’s Home Renovation Wave, Climateworks Centre, August 2024, https://www.climateworkscentre.org/wp-content/uploads/2024/08/Enabling-Australias-home-renovation-wave-Report-Climateworks-Centre-August-2024.pdf; Justice and Equity Centre (2025) Roadmap for Efficient and Electric Homes, https://jec.org.au/wp-content/uploads/2025/05/JEC-Roadmap-for-Efficient-and-Electric-Homes.pdf
[3] Kallies, A. (2021). The Australian energy transition as a federalism challenge:(un) cooperative energy federalism?. Transnational Environmental Law, 10(2), 211-235; Godden, L. (2023). Energy law and regulation in Australia. Handbook of Energy Law in the Low-carbon Transition, 369-386.
[4] Clean Energy Regulator. (2025, June 30). Small-scale Renewable Energy Scheme. Retrieved October 2, 2025, https://cer.gov.au/schemes/renewable-energy-target/small-scale-renewable-energy-scheme
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[5] Initial household mapping from work package 3 EUAH identifies the different financial situations across Australian households. These include: high equity/high income; high equity/no income; low equity/high income; low equity/low income; landlord/tenant.
[6] Kallies, A. (2021). The Australian energy transition as a federalism challenge:(un) cooperative energy federalism?. Transnational Environmental Law, 10(2), 211-235; Godden, L. (2023). Energy law and regulation in Australia. Handbook of Energy Law in the Low-carbon Transition, 369-386.
[7] Kallies (2021).
[8] DCCEEW (2025) Setting our 2035 Target on Path to Net Zero, https://www.dcceew.gov.au/about/news/setting-2035-target-path-net-zero (cited 18/9/2025)
[9] Department of Climate Change, Energy, the Environment and Water. (2024, July 29–August 23). Consultation on the Home Energy Ratings Disclosure Framework – Version 2,https://consult.dcceew.gov.au/home-energy-ratings-disclosure-framework-version-2; Parliament of South Australia (2024) (cited 2/10/2025); Residential Tenancies (Minimum Standards) Amendment Bill 2024 (SA) https://www.legislation.sa.gov.au/lz?path=/b/current/residential%20tenancies%20(minimum%20standards)%20amendment%20bill%202024_hon%20robert%20simms%20mlc (cited 28/6/2025).
[10] DCCEEW (2025) Joint Media Release: Action on red tape and approvals to build more homes, more quickly, the Hon. Murray Watt MP (24 August 2025) https://minister.dcceew.gov.au/watt/media-releases/joint-media-release-action-red-tape-and-approvals-build-more-homes-more-quickly
[11] Queensland Productivity Commission (2025) Opportunities to Improve Productivity of the Construction Industry: Interim report, https://qpc.qld.gov.au/docs/construction-productivity/Interim%20Report%20-%20Opportunities%20to%20improve%20productivity%20of%20the%20construction%20industry.pdf
[12] ARENA (2024) https://arena.gov.au/blog/energy-australia-arenawire-electrify/
[13] Sustainability Victoria (2025) Community Electrification Engagement Program Fund, https://www.sustainability.vic.gov.au/grants-funding-and-investment/grants-and-funding/community-electrification-engagement-program-fund
Led by Centre for Sustainable Development Reform (CSDR), this research is part of the Energy Upgrades for Australian Homes (EUAH), this project co-funded by UNSW & RACE for 2030.
EUAH is a national collaboration across five universities and CSIRO. The overall objective of EUAH is to develop the tools, evidence, and guidance necessary to enable councils and community organisations to deliver tailored, scalable, and effective energy upgrades for Australian homes.
