Policy Analysis for Green Development in the Building Industry: The Case of a Developed Region

Abstract

This research presents a comprehensive analysis of green development policies in the building industry in New South Wales (NSW), Australia, examining their evolution and development over the past two decades. The research adopts a structured methodology comprising a policy review to identify relevant policy documents, content analysis to trace the policy framework, and SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis to evaluate the policy development, and then generate evidence-based recommendations. As the first comprehensive assessment of green development policy in the Australian building industry, the study proposes targeted policy recommendations based on analyzing the SWOT factors, including policy for the non-residential sectors and construction phase, education and training, financial support and incentives, and innovation and technology adoption. The insights offer guidance for policymakers to strengthen policy integration and accelerate the transition toward a low-carbon building industry.

1. Introduction

Due to the urgent need to address climate change and reduce carbon emissions, the importance of green development is increasingly recognized worldwide, especially in the building sector. The building industry is one of the largest contributors to greenhouse gas emissions, such that buildings account for approximately 37% of global CO₂ emissions in 2021, if including estimated CO₂ emissions from producing building materials [1]. Consequently, it is critical for promoting green development in the building industry. The development is expected to create a sustainable built environment, such as green buildings and all related construction activities. For instance, green construction activities involve managing the environmental responsibilities of contractors and promoting resource-efficient construction.

In order to promote green development in the building industry, previous studies and practices have explored various pathways through innovative technology, management, methods, and techniques. Particularly, policymakers have developed laws and policies in this context, with regulations playing a central role in shaping sustainable practices and driving systemic change. Green building, like other sustainability initiatives, relies heavily on public policy support, including either positive or negative incentives (i.e., penalties and compensations) [2]. Green building policies have played important and irreplaceable roles in promoting green buildings, which can affect the entire life of buildings [3]. More importantly, at the early development stage of green buildings, the government, as the policymaker, is one of the vital stakeholders through developing strategies of both rewards and penalties to promote the growth of green buildings. However, the effectiveness of these incentives depends on the coherence, enforcement, and adaptability of the governance framework.

To investigate the effectiveness of these policies, previous studies and stakeholders typically undertake systematic policy analysis to identify potential gaps, overlaps, and inconsistencies that may impede implementation or generate compliance uncertainty. Ai et al. [4] revealed how combined policy portfolios for different development stages outperform single tools and enhance both cost-effectiveness and adoption through policy analysis of subsidies and penalties in green building policies. By using cross-national studies, OECD (2024) [5] demonstrated that policy analysis reduces fragmentation across governance levels and creates regulatory certainty for stakeholders. Furthermore, policy analysis can explore the reasons for using subsidy mechanisms and the drivers for promoting green building practices [6]. More broadly, in the literature review analyses of green building policies, Ye et al. [7] confirmed that policy analysis not only identifies the policy development process but also supports the development of regulatory measures, financial incentives, and tailored regional approaches to promote green building and achieve long-term sustainable goals. Therefore, policy analysis in green building development provides a structured basis for aligning policies with sustainability goals such as the UN Sustainable Development Goals (SDGs), while proposing targeted green improvements.

As a developed country, Australia has committed to achieving net zero emissions by 2050 and has implemented various green development policies to support this goal, such as the Green Star rating system for buildings. It is worth noting that New South Wales (NSW), which has the largest and mature building market in Australia, has been introducing many important policies to promote green development, such as building codes, energy-efficiency standards, and sustainability certification systems. For example, the Building Sustainability Index (BASIX) sets mandatory energy and water efficiency targets for new residential buildings. The Net Zero Emissions Plan outlines NSW’s strategy for achieving net zero emissions, including measures to enhance sustainability in the building sector. Despite these efforts, no researchers have focused on assessing the effectiveness of these policies and their actual impact on promoting green development in the Australian building industry. Without such analysis, policymakers risk continuing with measures that may be only partially effective, overlapping, or inconsistent. Particularly, a lack of government policy support has been considered one of the primary barriers hindering the implementation and achievements of net-zero energy buildings in Australia [8]. Therefore, it is essential to examine these policies, critically assess their strengths and weaknesses, and explore ways to more effectively advance green development within the Australian building industry.

This study aims to address the gap by providing a detailed analysis of the policy framework on green development in the building industry, evaluating its current strengths and weaknesses, and its development opportunities and threats. As a developed region, NSW in Australia is selected as the case. Section 2 is the literature review focusing on previous studies on green development in the building industry. Section 3 is research methodology, including policy review, content analysis, and SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis. Section 4 presents a detailed policy analysis based on timelines and content evaluation of NSW’s green development policies. Section 5 discusses the SWOT analysis results and provides targeted recommendations for improving the policy framework of green development. Section 6 is the Conclusions. Overall, this research identifies best practices for implementing green development policies in the building sector and proposes specific recommendations to enhance the policy framework in NSW. The findings also offer broader relevance, providing valuable reference strategies for other regions pursuing the transition toward a low-carbon building industry.

2. Green Development Policies in the Building Industry

Green development in the building industry is increasingly conceptualized as a comprehensive, lifecycle-based approach that integrates sustainability considerations from planning through to demolition. This approach encompasses energy-efficient design, low-impact materials, resource conservation, and minimal waste generation. Previous research has predominantly focused on discrete components such as green building technologies, energy-saving systems, and certification tools like LEED in the US, BREEAM in the UK, Green Star in Australia, and NABERS in NSW [9]. However, these studies often treat sustainability as a technical issue, overlooking the need for systemic integration across policy, operations, and governance. A comparative analysis of national contexts reveals that while China positions green buildings as instruments of sustainable urbanization [10], the U.S. market has embraced green building largely through commercial and consumer demand [11]. This suggests divergent policy orientations and market dynamics that shape green development trajectories differently across regions.

Historically, scholarly work on green development in the building industry focused on technical and managerial efficiencies, often disconnected from environmental policies. A pivotal shift occurred with the work of Kibert and Coble [12], who argued that integrating environmental and safety regulations could enhance overall construction efficiency. Since the early 2000s, research has expanded to include policy interventions, governance mechanisms, and innovation systems that facilitate or hinder green development in the building industry [13]. Recent studies have explored targeted policy challenges, including emissions from construction equipment [14], circular economy adoption [15], low-carbon machinery [16], and construction waste management [17]. Despite substantial policy advancements, the literature consistently highlights significant barriers to effective green development implementation. These include fragmented governance, uneven enforcement, financial disincentives, and cultural resistance within the building industry [18].

Regulatory and policy frameworks play a central role in shaping green development practices in the building industry, emerging as a prominent conclusion in previous studies. Building codes, environmental standards, and zoning regulations are often supported by voluntary rating systems and economic incentives such as tax credits and subsidies. These instruments are not only tools for compliance but also strategic levers for market transformation [19]. In countries like China, mandatory policies have accelerated shifts toward low-carbon construction through waste recycling and material reuse [20], while the U.S. and EU have adopted legislative packages promoting energy efficiency, renewable integration, and green procurement [21,22]. Moreover, while many policies aim to achieve ambitious goals—such as net-zero emissions or circular material use—the actual performance and behavioral impacts of these regulations are seldom rigorously assessed. Particularly, critical questions remain about the long-term effectiveness of these policies in delivering meaningful environmental outcomes beyond compliance metrics. There still lacks a unified analytical framework to understand how such interventions function collectively within broader regulatory systems.

A critical barrier to green development advancement in the Australian building industry lies in its fragmented governance and inconsistent regulatory landscape. While building-level certification tools such as NABERS and Green Star are widely used, they operate in isolation from a coherent national framework. The absence of a unified strategy has resulted in uneven adoption of sustainability standards, variable enforcement across jurisdictions, and a lack of harmonized incentives to support market transformation [20]. This disjointed policy environment reflects deeper structural issues in Australia’s multilevel governance system, where sustainability responsibilities are distributed across federal, state, and local bodies with limited coordination. As a result, efforts to implement green development are frequently piecemeal, reactive, and industry-led, raising fundamental concerns about the effectiveness and accountability of the current policy apparatus in achieving long-term environmental goals.

3. Research Methodology

The policy review method, as a systematic process, is utilized in this study. The method benefits policymakers in decision-making and in allocating resources strategically [23], and for evaluating existing policies, identifying gaps, and proposing improvements [24]. The method has been applied to assess comprehensive school safety in Vietnam [25] and to develop the strategies of the ethical use and development of artificial intelligence (AI) [26]. In this study, the policy review method, rooted in the NSW context, mainly includes three research steps of policy identification, content analysis, and SWOT analysis, as indicated in Figure 1.

3.1. Policy Identification

A systematic policy identification process was undertaken to examine legislation and policies within the NSW building industry. The review of legal documents adopted a three-tier screening protocol. At the first stage, official government databases were systematically accessed and screened electronically to identify potentially relevant documents, including the Federal Register of Legislation (https://www.legislation.gov.au/ (accessed on 18 March 2025)), the NSW Legislation website (https://legislation.nsw.gov.au/ (accessed on 18 March 2025)), and other NSW government portals. Within the federal database, the search parameters were set to “All Type”, “In Force”, and “Effective Latest” with the search applied to “Name and Text” using “Contains all the words”. The targeted portfolios included “Climate Change, Energy, the Environment and Water”, “Industry, Science and Resources”, and “Infrastructure, Transport, Regional Development, Communications, Sport and the Arts”. For the NSW legislation databases, the search focused on “In force Acts”, “In force statutory instruments”, and “In force EPIs” with the scope restricted to “All Content”. The documents were retrieved using Boolean keyword combinations, whereby one term from the sustainability group (green, sustainable) was paired with one term from the industry group (construction, building). This approach ensured that the search captured policies explicitly linking sustainability concepts with the building and construction sectors. This process yielded 2104 documents for secondary screening.

In the second stage, a filtration process was applied. Only documents with titles containing keywords such as “construction,” “building,” “green,” “sustainable,” “environment,” “water,” “energy,” “biosecurity,” or “nature,” and which were not confined to project- or community-specific contexts, were shortlisted for further review. The third stage involved a detailed examination of the shortlisted documents to identify those with complete or substantial objectives aligned with promoting green development in the NSW building industry. Ultimately, ten policies were identified. In addition, Green Star Certification—a voluntary sustainability rating system that has been widely promoted across Australia—was included as an influential non-statutory policy instrument.

3.2. Content Analysis

To analyze the identified policy documents, a qualitative content analysis approach was employed to systematically interpret and categorize relevant information. Content analysis has been employed to evaluate policy instruments aimed at facilitating the development of prefabricated construction in China [27], as well as to identify policy-level barriers that impede innovation and facilitators that enhance access to care, supporting aging in place [28]. In this study, key elements were extracted from each policy, including policy name, year of implementation, responsible authority, key objectives, application sectors, green development aspects, and sample requirements. These categories enabled consistent comparison across policies and supported the analysis of patterns, strengths, and gaps within the policy landscape. Furthermore, the policies were examined in-depth according to their specific categories, major initiatives, and their associated impacts and benefits. This approach provided a structured and comprehensive understanding of how green development was contented, regulated, and implemented in NSW, and how different sectors and stakeholders were engaged through policy mechanisms.

3.3. SWOT Analysis

SWOT analysis in policy analysis is important as it provides organizations with a structured framework for sustainable development to evaluate their strengths, weaknesses, external opportunities, and threats [29]. The SWOT analysis for policy has been developed for business and market analysis of the hydrothermal carbonization process [30] and for constructing a sustainable development legislation model for universities [31]. In this study, SWOT analysis was further employed as a strategic tool to systematically evaluate the strengths, weaknesses, opportunities, and threats related to green development policies in the NSW building industry. After identifying key policy documents and implementing content analysis, the information was synthesized to highlight internal factors in strengths and weaknesses, such as policy effectiveness, enforcement mechanisms, and application values, as well as external factors in opportunities and threats, including emerging technologies, sector trends, stakeholder engagement, and potential regulatory challenges. This method facilitated a balanced assessment by integrating both positive and negative aspects of the policy environment, providing comprehensive insights into areas where policies perform well and where improvements or strategic interventions are necessary. More importantly, the SWOT framework supported the formulation of actionable recommendations aimed at enhancing the effectiveness and implementation of green development practices.

4. Results

4.1. Policy Analysis Based on Timelines and Milestones

The identified policies and regulations of green development in the NSW building industry are collected and summarized in

Table 1. Identified policies and regulations of green development in the NSW building industry.

Policy Name	Year of Implementation	Responsible Authority	Key Objectives	Application Sectors	Green Development Aspects	Sample Requirements
Environmental Planning and Assessment Act 1979 [33]	1979 (Updated 2017)	NSW Department of Planning, Industry, and Environment	Ensure all new developments adhere to environmental sustainability principles, integrating energy, water, and waste targets.	Residential, commercial, and public developments	Energy Efficiency, Water Conservation, Sustainable Materials.	Requires development applications to address environmental impacts, including energy and water use in buildings.
BASIX (Building Sustainability Index)	2004	NSW Department of Planning, Industry, and Environment	Reduce water consumption, improve thermal comfort, and cut greenhouse gas emissions in new residential developments.	Residential (new buildings and renovations)	Energy Efficiency, Water Conservation, Waste Management.	Mandatory sustainability targets for water consumption, thermal performance, and greenhouse gas emissions.
Energy Savings Scheme (ESS)	2009	NSW Independent Pricing and Regulatory Tribunal (IPART)	Provide financial incentives to businesses and households to adopt energy-saving technologies in construction and renovation.	Residential, commercial, and industrial sectors	Energy Efficiency, Renewable Energy.	Offers incentives for energy-efficient lighting, insulation, and heating/cooling systems in both new builds and retrofits.
National Construction Code (Energy Efficiency Provisions)	2011	Australian Building Codes Board (ABCB)	Set minimum energy performance standards for buildings across Australia, focusing on energy efficiency, insulation, and heating/cooling systems.	Residential, commercial, and public buildings	Energy Efficiency, Sustainable Materials.	Minimum insulation, glazing, and energy performance standards for all new buildings.
NSW Government Resource Efficiency Policy (GREP)	2014	NSW Office of Environment and Heritage (OEH)	Improve the environmental performance of government operations, including energy use, water consumption, and waste reduction.	Public sector buildings and operations	Energy Efficiency, Water Conservation, Waste Management.	Mandatory requirements for government buildings to reduce energy use, minimize water consumption, and promote waste reduction.
NSW Climate Change Policy Framework	2016	NSW Office of Environment and Heritage (OEH)	Achieve net-zero emissions by 2050 and improve resilience to climate change impacts across sectors, including building.	Public and private sector buildings	Renewable Energy, Energy Efficiency.	Encourages the adoption of climate-resilient building designs and energy-efficient technologies.
NSW Climate Change Adaptation Strategy	2020	NSW Office of Environment and Heritage (OEH)	Enhance the resilience of buildings to climate change through design, materials, and technologies that minimize environmental impacts.	All building sectors	Climate Resilience, Energy Efficiency, Sustainable Materials.	Incorporates climate change risk assessments into building planning and design, encouraging resilient infrastructure.
Net Zero Plan Stage 1: 2020–2030	2020	NSW Department of Planning, Industry and Environment	Achieve net-zero emissions in the building sector by 2050 by encouraging renewable energy integration and green building practices.	All sectors, residential, commercial, and government buildings	Renewable Energy, Energy Efficiency, Sustainable Materials.	Encourages the use of solar panels, battery storage, and other renewable energy technologies.
NSW Waste and Sustainable Materials Strategy 2041	2021	NSW Department of Planning, Industry, and Environment	Reduce waste generation, increase recycling rates, and promote the use of sustainable materials in building projects.	Commercial and residential sectors	Waste Management, Sustainable Materials.	Encourage the use of recycled materials in construction, increase recycling rates, and reduce landfill usage.
State Environmental Planning Policy (SEPP)	2021	NSW Department of Planning and Environment	Promote environmentally sustainable development through land-use planning and the integration of green infrastructure.	Urban and regional development	Environmental protection, Sustainable planning.	Provides guidelines for the incorporation of sustainable design principles in urban planning, including energy efficiency.
Green Star Certification	2003	Green Building Council of Australia (GBCA)	Promote best practices in sustainability by recognizing high-performing, energy-efficient, and environmentally friendly buildings.	Residential, commercial, and public buildings (voluntary)	Energy Efficiency, Renewable Energy, Sustainable Materials.	Voluntary certification for green building projects based on criteria like energy efficiency, water management, and waste reduction.

. NSW has implemented a range of initiatives aimed at improving energy performance, reducing greenhouse gas emissions, promoting water conservation, and fostering innovation in green development. The progression of green development policies over the past two decades illustrates a growing institutional commitment to sustainability within the built environment. This evolution has been shaped by both domestic environmental imperatives and international climate obligations, resulting in a robust regulatory and voluntary framework to advance environmentally responsible construction practices. Notably, recent strategic instruments, such as the Net Zero Plan, underscore this long-term commitment by setting a trajectory toward net-zero emissions by 2050 [32]. These developments demonstrate NSW’s alignment with global sustainability agendas and its emerging leadership in green development policy in Australia.

4.1.1. Foundational Initiatives (2000–2010)

The early 2000s represented a foundational phase in the institutionalization of green development in the NSW building industry, marked by the implementation of pioneering regulatory and voluntary schemes. Among the most significant was the introduction of BASIX in 2004—a mandatory planning tool developed to curtail residential water and energy consumption and mitigate greenhouse gas emissions [34]. Administered by the NSW Department of Planning and Environment, BASIX established quantitative sustainability targets, requiring new residential developments, as well as significant alterations and additions, to achieve at least a 40% reduction in water usage and emissions relative to pre-2004 baselines [35]. This initiative responded directly to urban expansion and resource scarcity concerns and signaled the state’s first major regulatory effort to embed sustainability into planning processes.

Concurrently, voluntary initiatives emerged as complementary mechanisms to foster innovation and industry participation. The Green Star rating system, launched by GBCA in 2003, served as a non-compulsory certification framework for assessing the environmental performance of buildings across a range of criteria [36]. Early Green Star projects in NSW played a critical role in demonstrating the viability of green design principles and technologies, such as passive solar design, advanced glazing, and renewable energy integration [37]. Although initially voluntary, the growing recognition of Green Star as an industry benchmark during this period laid the groundwork for more widespread adoption and regulatory convergence in subsequent years.

4.1.2. Policy Consolidation and Expansion (2010–2015)

Between 2010 and 2015, green development policy in NSW experienced a period of consolidation and strategic expansion. A key development was the extension of the BASIX scheme to encompass more complex building types, including multi-unit residential and mixed-use developments [38]. This expansion ensured that sustainability requirements were uniformly applied across a broader spectrum of construction activities, thereby amplifying the cumulative environmental benefits.

At the national level, revisions to the National Construction Code (NCC) introduced enhanced energy efficiency provisions, which NSW adopted to align local regulations with evolving national standards. From 2011 onwards, mandatory minimum performance standards for building envelope insulation, glazing, and HVAC systems were enforced, significantly raising the baseline for energy performance in new buildings. This alignment reinforced NSW’s regulatory coherence and contributed to the reduction in operational energy demand across the building stock.

In 2014, the state launched the NSW GREP, which mandated sustainability targets for government-owned assets, including reductions in energy and water consumption, improved waste management, and reporting requirements. GREP not only set a benchmark for public sector leadership but also created indirect market incentives for private sector alignment, as government procurement policies increasingly favored environmentally responsible contractors and suppliers [39].

4.1.3. Strategic Realignment and Innovation (2016–Present)

Since 2016, NSW has undertaken a strategic realignment of its green development policies, driven by a need to meet more ambitious climate targets and to incorporate new technologies and practices into the built environment. A significant milestone was the 2017 update to the BASIX scheme, which introduced stricter performance thresholds for energy and water efficiency in new residential developments. These revisions incentivized the adoption of advanced building technologies, such as photovoltaic systems, high-performance thermal envelopes, and water-sensitive urban design (WSUD) features, thereby enhancing the resilience and environmental performance of new housing stock.

The launch of the Net Zero Plan Stage 1: 2020–2030 further demonstrated the government’s commitment to decarbonizing the building sector [40]. This strategic framework positions the built environment as a central component in achieving statewide net-zero emissions by 2050. Under this plan, a combination of regulatory mandates, financial incentives, and technical support mechanisms has been mobilized to encourage low-emission design, construction, and operation of buildings. The NSW Department of Planning, Industry and Environment (now part of the Department of Climate Change, Energy, the Environment and Water) has played a key role in operationalizing this agenda through planning reforms, carbon accounting tools, and funding schemes.

In parallel, there has been a significant increase in the industry uptake of Green Star certifications, with both public and private sector projects seeking to achieve higher sustainability ratings [41]. The proliferation of Green Star-accredited buildings reflects a broader cultural shift within the building sector, wherein sustainability is increasingly perceived not only as a regulatory obligation but also as a value proposition in competitive real estate markets. The synergistic effect of regulatory and voluntary mechanisms has contributed to the normalization of green development practices across NSW, positioning the state as a national leader in advancing environmentally responsive urban development.

4.2. Content Analysis of the Green Development Policy Framework in the NSW Building Industry

The policies in Table 1 outline the comprehensive progress of initiatives to promote sustainability and minimize environmental footprint for the building sectors in NSW. Beginning with the Environmental Planning and Assessment Act (EP&A) of 1979, these published policies are listed in chronological order, demonstrating the state’s commitment to addressing key sustainability challenges. The Act laid the foundation for incorporating environmental considerations into urban planning and provided the principle that was continually expanded in subsequent policies. Recent policies, such as the Net Zero Plan Phase 1: 2020–2030 and the NSW Waste and Sustainable Materials Strategy 2041, reflect a shift towards more ambitious sustainable development goals, in line with national and global climate commitments such as the Paris Agreement. All of the policy generally highlights key details, including authorities, target sectors, and specific requirements, providing a clear framework for their implementation. By categorizing the key contents of these policies,

Table 2. Content analysis of green development policies.

Green Development Aspects	Reference Policies	Primary Initials and Impact
Energy Efficiency	BASIX; ESS; NCC	Incentivized adoption of energy-efficient designs and practices. Improved insulation, double-glazed windows, and efficient heating/cooling systems. 30% reduction in energy consumption for buildings post-2010. Integration of renewable energy systems like solar panels and battery storage.
Water Conservation and Resource Management	BASIX GREP	Water-saving systems such as rainwater collection and recycled water technologies. Improving water and resource consumption efficiency by reducing water and resource usage. Encouraging resource-efficient construction practices.
Waste Minimization and the Use of Sustainable Materials	NSW Waste and Sustainable Materials Strategy 2041; Green star	Reduction in material waste and improved resource efficiency in buildings. Circular economy approach and green material supply. Increased use of recycled and sustainable materials, reducing landfill waste.
Environmental, Social, and Economic Impacts	Green Star Certification, Net Zero Plan Stage 1: 2020–2030; BASIX	Lower operational costs for building owners. Job creation in renewable energy, green design, and construction material sectors. Improved indoor air quality and public health benefits.
Innovation and Industry Transformation	BASIX, Green Star Certification	Increased use of low-carbon concrete and recycled steel. Development of smart energy management systems and water recycling technologies. Recognition for sustainable projects (e.g., Barangaroo South).

provides a structured view of what aspects, initiatives, and impacts of these green development policies have on the NSW building industry.

First, energy efficiency forms the cornerstone of NSW’s green development strategy, with a suite of policy measures designed to improve building thermal performance and reduce greenhouse gas emissions. The BASIX, introduced in 2004, mandates that all new residential developments meet defined energy performance targets. It encourages the adoption of passive design principles, thermal insulation, energy-efficient glazing, and renewable energy technologies such as solar photovoltaic systems. For non-residential sectors, NCC provides a consistent regulatory framework, outlining minimum standards for energy use across commercial, industrial, and public buildings. Complementary programs like ESS offer financial incentives to encourage retrofitting and upgrading lighting, heating, and cooling systems. Collectively, these measures have led to measurable reductions in energy consumption and emissions, demonstrating NSW’s leadership in operationalizing energy policy through enforceable building standards.

Second, water efficiency is another critical focus within NSW’s green development agenda in the building industry, implemented through both mandatory regulations and policy-based incentives. The BASIX tool requires developers to integrate water-saving features such as rainwater harvesting systems, efficient fixtures, and recycled water technologies in residential designs. These strategies help reduce the demand on potable water supplies and enhance the sustainability of urban development. At the institutional level, the NSW GREP extends similar principles to government-owned buildings by embedding water conservation into operational practices. Furthermore, the BASIX frameworks promote integrated stormwater management and encourage the use of drought-tolerant landscaping. These layered approaches indicate a systemic commitment to reducing water-related environmental impacts and improving the built environment’s resilience to water stress under changing climate conditions.

Third, NSW has implemented comprehensive measures to manage construction waste and promote the use of sustainable building materials. The NSW Waste and Sustainable Materials Strategy 2041 sets ambitious targets for reducing landfill dependency and encourages a circular economy approach within the building sector. Under this framework, developers are incentivized to incorporate recycled and low-carbon materials. These efforts are further supported by procurement guidelines and rating systems such as Green Star, which assess the environmental impact of materials used throughout the building lifecycle. By reducing material waste, improving resource efficiency, and supporting the local recycling industry, these initiatives contribute to the decarbonization of the construction supply chain while enhancing environmental performance at both project and industry levels.

Fourth, the cumulative impact of NSW’s green building policies extends beyond environmental protection, offering significant social and economic co-benefits. Energy and water efficiency measures not only reduce operational costs for building owners but also enhance indoor environmental quality, leading to better thermal comfort and health outcomes for occupants. Certified green buildings—particularly those meeting Green Star and BASIX standards—are increasingly associated with higher property values, tenant satisfaction, and investor interest. Furthermore, policy-driven demand for sustainable materials and technologies has catalyzed innovation and job creation in emerging sectors such as renewable energy, green design consulting, and green building materials manufacturing. This integrated policy approach aligns with broader national sustainability objectives, such as Australia’s commitment to the Paris Agreement and net-zero emissions by 2050, while delivering tangible socio-economic benefits at the local level.

Finally, NSW’s green development policies have played a pivotal role in fostering innovation and transforming industry practices. As regulatory requirements have become more stringent and consumer awareness of environmental issues has grown, developers have increasingly embraced green development solutions. The demand for BASIX and Green Star certifications has surged, prompting the widespread adoption of practices such as using low-carbon concrete, incorporating passive solar design, and integrating on-site renewable energy systems with battery storage. Additionally, smart technologies—such as energy management systems, advanced metering, and water recycling infrastructure—have become more common in both residential and commercial projects. Notable developments such as the Barangaroo South area in NSW serve as exemplars of how policy can drive high-performance, low-carbon urban precincts. These outcomes underscore the role of regulatory frameworks not only in setting minimum standards but also in driving continuous innovation and positioning NSW at the forefront of green development in Australia.

4.3. SWOT Analysis of Green Development Policies in NSW

A SWOT analysis is employed to evaluate the current impacts and prospective development factors associated with green development policies in NSW. This structured and integrative framework facilitates a critical examination of both internal and external elements that influence policy effectiveness. By systematically categorizing key strengths, weaknesses, opportunities, and threats, the analysis enables a comprehensive understanding of the policy landscape and supports strategic planning for enhanced future outcomes. A total of twenty primary factors have been critically summarized in

Table 3. SWOT analysis of the green development polices in NSW.

Strengths	Weaknesses
S1: Ambitious sustainability targets (e.g., net zero by 2050). S2: Comprehensive regulatory framework: BASIX, Net Zero Plan, Waste and Sustainable Materials Strategy. S3: Public sector leadership through the GREP drives industry benchmarking. S4: Incentives and recognition schemes (e.g., ESS, Green Star) promote innovation. S5: Alignment with international sustainability goals (e.g., Paris Agreement).	W1: Regulatory fragmentation and overlap (e.g., BASIX vs. NCC) create confusion and delays. W2: Weak enforcement and over-reliance on voluntary schemes (e.g., Green Star) leading to inconsistent uptake. W3: Focus on residential buildings; limited attention to commercial/industrial sectors. W4: Lack of green on-site construction guidance and requirements. W5: Complexity and inputs of compliance hinder scalability across the sector.
Opportunities	Threats
O1: Expand policy coverage to include commercial, industrial, and infrastructure projects. O2: Leverage technologies such as smart systems, low-carbon materials, and recycled waste. O3: Introduce financial incentives and grants to support green innovation. O4: Promote circular economy practices. O5: Position NSW as a global leader in sustainable construction and environmental protection.	T1: High capital costs and financial risks discourage the adoption of green technologies and materials. T2: Limited availability of affordable green technologies in rural and regional areas. T3: Inertia and resistance to change in sustainable practices. T4: Shortage of skilled labor and lack of training programs delay the implementation of sustainable practices. T5: Risk of lagging behind international benchmarks if innovation and investment are not accelerated.

.

4.3.1. Strengths

NSW has demonstrated a proactive and comprehensive commitment to environmental sustainability within its building sector. A central strength lies in its ambitious policy framework, underpinned by long-term targets such as achieving net zero emissions by 2050. Instruments such as BASIX, the Net Zero Emissions Plan, and the NSW Waste and Sustainable Materials Strategy reflect a multi-dimensional approach that integrates energy efficiency, water conservation, and waste reduction into planning and building regulations. The mandatory application of BASIX to residential developments has substantially reduced greenhouse gas emissions and potable water consumption across the state. Complementing these regulatory tools are voluntary schemes such as the Green Star certification, which incentivizes high environmental performance and fosters innovation in green building practices. Moreover, public sector leadership—exemplified by GREP—has institutionalized sustainable benchmarks in government buildings, thereby creating demonstration effects that influence the private sector. These combined mechanisms reinforce NSW’s leadership in green development governance and align its efforts with broader international environmental commitments such as the Paris Agreement.

4.3.2. Weaknesses

Despite these progressive changes, the implementation of green development policies in the NSW building industry is constrained by several systemic weaknesses. A notable limitation is the fragmented and often inconsistent regulatory environment, where overlapping jurisdictions—such as those of BASIX, NCC, and local planning authorities—create administrative confusion and compliance challenges for developers. Furthermore, enforcement remains relatively weak; much of the regulatory impact is diluted by the reliance on voluntary schemes like Green Star, which, while beneficial, lack mandatory uptake and consequently produce uneven results across different project scales and sectors. The current policy emphasis on residential buildings has also left commercial, industrial, and infrastructure sectors comparatively underregulated, despite their significant environmental footprint. Additionally, the lack of on-site green construction guidance and requirements is also identified. The complexity and inputs of compliance hinder the scalability and adaptability of green building practices across the state.

4.3.3. Opportunities

NSW stands at a pivotal juncture where emerging technologies, expanding policy scope, and evolving market expectations present substantial opportunities to deepen the impact of its green development policies. One promising direction involves broadening the policy focus beyond residential developments to include commercial, industrial, and infrastructure projects. Introducing sector-specific sustainability benchmarks and integrating green principles into large-scale infrastructure planning could dramatically increase the built environment’s contribution to statewide emissions reductions. Technological innovation offers another avenue for advancement. The adoption of tools such as Building Information Modeling (BIM), intelligent energy management systems, and advanced sustainable materials could significantly enhance construction efficiency and environmental performance. Governments could play a catalytic role in advancing green development by offering targeted grants and incentives that lower the financial barriers associated with technology adoption. For instance, data from the Australian Research Council (ARC) indicates that between 2023 and 2025, no projects were funded under the Building discipline. This absence of national-level investment highlights a critical innovation gap, which in turn constrains progress in developing and implementing sustainable construction practices. Additionally, fostering a circular economy through improved waste recovery, material reuse, and design-for-deconstruction principles could create systemic resource efficiencies. These strategies, if strategically implemented, have the potential to elevate the leadership of the NSW building industry in green development on both national and global stages.

4.3.4. Threats

Several external threats pose significant challenges to the sustained advancement of green development initiatives in NSW. First, a primary concern lies in economic constraints, particularly the substantial upfront capital investment required for the adoption and scaling of sustainable technologies, innovations, and green materials. Although the long-term operational and environmental benefits of such technologies are well documented, the initial financial burden remains a major deterrent—especially within a competitive building market where short-term cost minimization frequently takes precedence over long-term gains. Second, technological limitations also continue to impede progress. Many advanced sustainable technologies remain cost-prohibitive or logistically inaccessible, particularly in rural and regional contexts where infrastructure and supply chains are less developed. Third, the persistence of organizational inertia and resistance to change significantly impedes the widespread adoption and integration of sustainable practices within the building industry. In addition to financial and technological hurdles, a pronounced shortage of skilled labor trained in green construction practices further constrains industry capacity. This skills gap hampers the diffusion of best practices and impedes the broader uptake of innovative and environmentally responsible building methods. Finally, if innovation and investment in green development are not accelerated, there is a substantial risk that NSW will lag behind international benchmarks and fail to meet emissions reduction targets.

5. Recommendations for Green Development in the Building Industry

Based on the preceding SWOT analysis, coordinated and proactive policy responses are essential to advance green development in the NSW building industry. Targeted interventions should establish long-term policies that address the identified threats and weaknesses. More importantly, robust implementation strategies are required within the industry to close the green development gaps that cannot be resolved solely through the identified strengths and opportunities. Figure 2 illustrates the interrelationships among the SWOT factors and outlines the recommended implementation strategies.

5.1. Recommendations for Enhancement Based on the SWOT Analysis

• R1: Policies for the non-residential sectors

Non-residential sectors—including commercial buildings, industrial facilities, and infrastructure—are likely to face increased regulatory requirements for green construction. These sectors typically offer greater potential for energy efficiency improvements compared to residential buildings. Implementing mandatory sustainability performance standards across all major non-residential building types would significantly enhance policy effectiveness and contribute meaningfully to NSW’s emissions reduction targets.

• R2: Policies for the construction phase

Current regulatory frameworks in Australia predominantly emphasize sustainability at the building level, focusing on aspects such as design, energy efficiency, water usage, and material selection. However, there is a noticeable policy gap concerning the construction stage itself. Certification schemes like NABERS and Green Star, while well-established, provide limited direction regarding sustainable construction site practices, including the conservation of water, energy, and materials, as well as broader environmental protections during the building process. This lack of explicit regulatory requirements has resulted in inconsistent implementation of sustainable practices, uneven enforcement across projects, and the absence of coordinated market incentives to encourage green construction [14]. The fragmented nature of existing policies underscores the need for a more integrated and comprehensive governance framework to align sustainability objectives across the entire lifecycle of construction activities in Australia.

• R3: Education and training

Comprehensive education and training programs should be institutionalized across multiple levels. At the vocational and tertiary levels, curricula should be expanded to integrate modules on green building standards, sustainable materials, and digital technologies such as BIM. Equally, continuous professional development initiatives should be offered to practitioners already active in the sector, enabling them to adapt to evolving standards and technologies. Furthermore, the introduction of certification schemes for on-site green construction would provide clear, consistent guidance to industry stakeholders and strengthen compliance mechanisms. These educational measures, complemented by public sector demonstration projects and industry-led knowledge-sharing platforms, can foster cultural change and reduce organizational inertia.

• R4: Financial support and incentives

While the long-term benefits of green development are well-documented, the significant upfront capital costs associated with sustainable technologies remain a major deterrent. To alleviate this challenge, the state government could introduce targeted financial mechanisms designed to reduce the financial burden on developers and contractors. Potential measures include grants, low-interest loans, and tax rebates for projects that exceed minimum sustainability thresholds. These incentives would be particularly valuable for small and medium-sized enterprises and for projects located in regional and rural areas, where financial and logistical constraints are more pronounced. For example, the Australian Government tasked the Australian Building Codes Board (ABCB) to develop a National Voluntary Certification Scheme for Manufacturers of Modern Methods of Construction in 2025.

• R5: Innovation and technology adoption

Technological innovation constitutes a central enabler of green development. NSW should prioritize policies that stimulate the uptake of digital tools and advanced materials capable of enhancing efficiency and environmental performance. BIM, intelligent energy management systems, and life-cycle assessment tools can provide critical data to support informed decision-making across the project lifecycle. Simultaneously, research and development into innovative construction techniques—such as modular and prefabricated systems, recycled and low-carbon materials, and design-for-deconstruction approaches—should be actively supported. Pilot projects that demonstrate the practical application and scalability of these innovations would accelerate industry confidence and uptake. In parallel, embedding circular economy principles into construction practices, particularly the promoted green construction technologies, will generate economic benefits, including cost reductions, green job creation, and improved public health [42].

5.2. Application to Other Regions and Contexts

While the findings from NSW are specific to the Australian context, the policy mechanisms, opportunities, and challenges identified carry significant relevance for other regions seeking to advance green development. Many of the systemic weaknesses evident in NSW—such as fragmented regulatory frameworks, inconsistent enforcement, skills shortages, and financial barriers—are not unique, but instead reflect common constraints across both developed and developing economies. Consequently, the strategies proposed in the NSW case offer valuable insights for addressing parallel challenges in other building sectors worldwide.

In developed regions such as NSW, where regulatory structures and institutional capacities are already well established, the NSW experience demonstrates the value of integrating multi-dimensional policy frameworks that link energy, water, and material efficiency under a cohesive governance strategy. Instruments such as BASIX and the Waste and Sustainable Materials Strategy could serve as templates for similar tools in jurisdictions that currently regulate sustainability in a more fragmented manner. Furthermore, the use of voluntary certification systems such as Green Star illustrates how market-based incentives can complement mandatory requirements, a model that could be adapted by other advanced economies aiming to balance regulation with industry-led innovation.

Through a policy review and analysis of green building initiatives in China, Hu et al. [3] identified a total of 254 central and 1175 local policies enacted between 2004 and 2021. This extensive policy framework illustrates the Chinese government’s sustained commitment to advancing green building practices. By comparison, the policy landscape in NSW appears relatively limited, with far fewer policies implemented to date. China has adopted a comprehensive ‘carrot-and-stick’ approach to accelerate green building development and achieve ambitious environmental targets, where the central government plays a guiding role by issuing a substantial number of direction-based policies, while local governments respond by enhancing their own policy frameworks, thereby reinforcing a ‘top-down’ governance structure. In contrast, the Australian approach is comparatively modest. At the federal level, the government has largely confined its role to articulating fundamental principles within legislative frameworks, while state governments such as NSW have relied predominantly on voluntary schemes, supplemented by a limited number of mandatory policies that generally set relatively low performance requirements for green development across the sector. Finally, NSW’s alignment of its green development policies with international agreements, such as the Paris Agreement and the United Nations’ Sustainable Development Goals (SDGs), demonstrates how sub-national initiatives can contribute meaningfully to global environmental objectives.

6. Conclusions

This research undertakes a systematic evaluation of green development policies in the NSW building sectors over two decades, employing a structured methodology to assess their effectiveness and identify areas for improvement. It begins with a comprehensive policy review to collect the policies. This is followed by a content analysis of these policies to evaluate their alignment with sustainability goals and green development aspects. A SWOT analysis is then conducted to identify internal strengths and weaknesses and external opportunities and threats, aiming to develop recommendations for making and promoting green development policies. This multi-step approach ensures a holistic understanding of NSW’s policy landscape.

The research reveals several critical outcomes about NSW’s green development policy and regulatory framework in the building industry. While the state has made notable progress through initiatives like BASIX, which mandates energy and water efficiency in residential buildings, and the Net Zero Plan, which targets carbon neutrality by 2050, these policies primarily focus on residential and public sectors, leaving commercial and industrial sectors underregulated. The policies and regulations can be categorized into five areas, including energy efficiency, water conservation and resource management, waste minimisation and the use of sustainable materials, environmental, social, and economic impacts, and innovation and industry transformation. Twenty SWOT analysis factors are identified to develop the recommendations for promoting a regulatory framework, including policies for the non-residential sectors, policies and regulations for the construction phase, education and training, financial support and incentives, and innovation and technology adoption.

The research contributes to the field in three ways. First, it provides a comprehensive assessment of NSW’s policy evolution, filling a research gap in the Australian context by systematically evaluating the policy framework for green development in the building sectors. Second, it establishes a systematic evaluation approach by reviewing regulatory policies, content analysis, and SWOT analysis, offering actionable insights for policymakers to adopt best practices in developing the framework for green development. Third, the study delivers evidence-based regulatory content and recommendations to enhance sustainability in the building industry. These contributions not only inform local policy development but also provide a replicable model for other regions seeking to advance green building practices. However, this research did not investigate the implementation effectiveness and efficiency of the regulatory system. Future studies are expected to examine this by using other research methods such as surveys and questionnaires. Moreover, this study did not explore the specific sustainability indicators and data requirements, which could be further studied in the future, such as comparative analysis among different regulatory requirements in sustainability.