Clean Energy Finance Corporation (CEFC), the Australian government-owned green bank, has launched a A$300m (€189m) timber building programme to encourage the replacement of steel and concrete with timber in commercial construction.

CEFC is to offer senior debt through the programme to finance the development of timber buildings of up to 20 storeys that are currently in planning in Australia.

Ryan Rathborne, CEFC director of property investment, told IPE Real Assets that the property sector had focussed on operational emissions over the last seven years.

“We think the time is right to start to look at embodied carbon within the materials used in construction. We know that steel and concrete each are about 8% or 9% of total global greenhouse emissions.

“Research that we have seen suggests we are able to reduce that by about 75% by replacing steel and concrete with engineered timber products, like cross-laminated timber. That is a material saving in embodied carbon.”

Rathborne said the CEFC was making available A$300m of capital from its balance sheet for senior debt.

CEFC is already financing a range of innovative projects tackling embodied carbon, including A$95m to the Hesperia Roe Highway Logistics Park in Perth and A$75m to the Frasers Rubix Connect in Horsley Park Estate, located in Western Sydney.

“We have invested A$2bn in debt and equity in real estate cumulatively, and we have decided to use debt in this strategy because we think this is the most impactful way that we can invest into the market,” Rathborne said.

“We are already seeing early adopters incorporating these new materials into their construction. Our goal is to accelerate this trend, working with the property sector to create a cleaner, more sustainable built environment.”

Several mid-rise timber office towers have already been completed in Australia. Taller buildings, including the 40-storey billion-dollar Atlassian Place in Sydney, are going down the hybrid route, using both timber and traditional materials.

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