Opportunities and obstacles on the road to electrification

January 30, 2026

The first report from the EEC’s Commercial Buildings Electrification Roadmap project offers important insights for our decarbonisation journey.

The report, delivered by the Energy Efficiency Council (EEC) in partnership with the Property Council of Australia, analyses gas use in Australia’s commercial buildings, as well as the drivers and barriers for electrifying these assets. It also puts forward various building typologies that could be used to define more detailed electrification playbooks.

Opportunity knocks

The report pulls together existing information to determine where Australia’s commercial building sector stands on the road to electrification.

Although not as big a user as residential buildings, commercial buildings still represent about 10% of domestic gas consumption, mostly for space heating. Offices are the biggest users of gas, and Victoria is the state where the most gas is consumed.

According to the research, replacing existing gas in commercial buildings with efficient, electric alternatives provides a pathway to reducing the 6 megatonnes of carbon emissions produced yearly by gas consumption in the sector. This means transitioning systems for space heating, hot water heating, cooking, and more specialised functions such as swimming pool heating and commercial laundries.

Although the report highlights several drivers towards electrification in the commercial buildings sector, the list of barriers is significantly longer. And this is reflected in the current rate of electrification.

“To reduce gas use in the commercial building sector to zero by 2050 we would need to triple the current rate of electrification,” says EEC Head of Policy Jeremy Sung.

“Market demand is starting to drive a shift towards efficient, all-electric commercial buildings. We can accelerate that growth with a clear policy focus to address the barriers to electrification that still exist for many buildings, particularly outside of the premium end of the market.”

Obstacles to overcome

Some of the barriers identified will be very familiar to those in the HVAC&R sector. They include the cost of replacing equipment, space constraints in plant rooms (especially for heat pumps), strain on electricity infrastructure, skills gaps in the workforce, limited supply for some equipment, and considerations around refrigerant selection.

The report also puts forward recommendations. Top of the list is ending gas connections in new commercial buildings and apartment buildings. Other measures include setting electrification targets, undertaking and promoting demonstration projects, expanding energy ratings disclosure, and developing supply chains, particularly local ones.

Finally, the report puts forward a typology of buildings for further work. The classifications have been chosen to facilitate the development of more detailed guidance on accelerating electrification of each building type. Later stages of the project will work to build industry capacity and develop a comprehensive policy roadmap.

Collective energy

The project received support from the Clean Energy Finance Corporation (CEFC) and funding from the governments of Victoria and New South Wales. Experts from over 30 companies and industry organisations provided input to the research.

“As the built environment is a significant contributor to Australia’s carbon emissions, we need to work collaboratively on reducing emissions in this sector,” says CEFC Head of Property Michael Di Russo.

“The CEFC therefore welcomes the Energy Efficiency Council’s electrification roadmap report, and we’re pleased to have contributed to it. This first stage provides a promising framework for action, and we look forward to working with stakeholders on the next steps.” 