Embodied carbon Australia 2026: NCC 2025 compliance guide

Embodied carbon in Australian construction: what the NCC 2025 changes mean for your 2026 report

Australia’s construction industry is at an inflection point. As the electricity grid decarbonises and buildings become more energy-efficient, the emissions locked into building materials are fast becoming the dominant climate challenge for the sector. Embodied carbon, once a niche concern for sustainability consultants, is now firmly on the agenda for operations directors and sustainability managers across the country.

Two regulatory developments have sharpened that conversation: the publication of NCC 2025 in 2026, and the arrival of mandatory climate reporting under AASB S2, which brings construction companies’ supply chain emissions into scope in ways that NGER never did.

This guide explains what changed, what is already mandatory, and what data construction teams need to start capturing now.

What is embodied carbon and why does it matter?

Embodied carbon refers to the greenhouse gas emissions generated across the lifecycle of building materials: from raw material extraction and manufacturing, through transport to site, construction, and end-of-life disposal. It is distinct from operational carbon, which covers the emissions from running a building once it is occupied.

As Australian buildings become more energy-efficient and the grid continues to decarbonise, embodied carbon’s share of a building’s lifetime emissions is rising. The Green Building Council of Australia has modelled that for a new all-electric home today, upfront embodied emissions are already more than seven times the operational emissions over a sixty-year life.

At a national scale, Infrastructure Australia’s Embodied Carbon Projections report found that construction activity will produce between 37 and 64 million tonnes of CO2e in upfront embodied carbon annually through to 2026-27, with upfront carbon alone accounting for 7% and total embodied carbon around 10% of national emissions. Close to a quarter of that can be abated using strategies already available.

For individual projects, the scale is significant. Embodied carbon typically accounts for between 20 and 50% of a building’s whole life carbon emissions, and that share is growing. As grids decarbonise and operational efficiency improves, embodied carbon will increasingly dominate the picture. Three materials account for more than 70% of a building’s embodied carbon footprint: concrete, steel, and aluminium.

Source: https://cms.law/en/gbr/legal-updates/uk-government-publishes-final-sustainability-reporting-standards

What NCC 2025 requires

NCC 2025 was finalised and released officially on 1 May 2026. States and territories can adopt it from that date, subject to individual jurisdictional arrangements.

Source: ABCB and jurisdiction announcements as at July 2026. Confirm with your certifier for project-specific advice.

On embodied carbon specifically: The voluntary embodied carbon provisions were not incorporated into the NCC 2025 code text itself. They were published separately as ABCB guidance, alongside the Code. This is an important distinction: there is no pass-fail compliance requirement in the NCC for embodied carbon at this stage. The ABCB has published guidance recommending the NABERS Embodied Carbon framework as the preferred methodology for commercial buildings. The ABCB has also been asked to investigate incorporating a minimum embodied carbon standard into NCC 2028.

What this means in plain English: NCC 2025 establishes the methodology and sets a national direction. It does not yet impose a compliance obligation on embodied carbon. But the voluntary period is the preparation window. Organisations that treat it as optional are the ones that will face the steepest learning curve when NCC 2028 lands.

Where embodied carbon is already mandatory

While the national code remains voluntary, several existing obligations already apply.

NSW is ahead of the NCC. Under the Sustainable Buildings SEPP 2022, development consent cannot be granted for non-residential buildings unless the embodied carbon emissions attributable to the development have been quantified. For residential development, the BASIX Materials Index requires embodied carbon measurement for all new DAs. If your pipeline includes NSW projects, this requirement applies now.

NSW Government infrastructure projects must quantify embodied carbon under Infrastructure NSW’s Decarbonising Infrastructure Delivery Policy for projects over $50 million (building sector) initiated after 4 April 2025.

Green Star Buildings v1.1, mandatory for all new registrations from 1 May 2026, requires projects to demonstrate upfront carbon reduction through a formal life cycle assessment, with a minimum 10% reduction relative to a reference building.

The NABERS Embodied Carbon rating tool is now live. Australia’s first NABERS Embodied Carbon rating was awarded to an industrial warehouse in Kemps Creek, NSW, demonstrating what is possible when construction teams plan material selection around verified carbon data from the start.

The AASB S2 connection

The NCC is not the only regulatory development making embodied carbon data important. Mandatory climate reporting under AASB S2 is the other, and it operates on a different timeline and scope entirely.

AASB S2 Group 2 entities commence mandatory reporting from their first financial year beginning on or after 1 July 2026, covering Scope 1 and 2 emissions. Your organisation is in Group 2 if it meets at least two of these three criteria: consolidated revenue of AUD$200 million or more, gross assets of AUD$500 million or more, or 250 or more employees.

Under AASB S2, Scope 3 emissions become mandatory from Year 2 — for most Group 2 entities, the year beginning 1 July 2027 (FY2027–28). But the supplier engagement and data collection systems needed to report Scope 3 credibly take time to build, and that work starts now. AASB S2 requires Scope 3 to be measured using the GHG Protocol Scope 3 Standard.

For construction companies, Scope 3 typically represents 70 to 90% of the total carbon footprint, dominated by embodied carbon in materials: the concrete, steel, and timber that sit entirely within supplier operations. These are not captured by NGER. Capturing this data requires supplier engagement and a fundamentally different approach to what most teams currently have in place.

The most material Scope 3 categories for construction are Category 1 (purchased goods and services, covering embodied carbon in materials), Category 4 (upstream transportation), and Category 5 (waste generated in operations).

For a detailed breakdown, see our AASB S2 Compliance Guide for Australian Construction and AASB S2 Group 2 guide.

What data construction teams need to capture

The practical implication of both the ABCB guidance and AASB S2 is the same: construction companies need project-level data that captures the actual emissions associated with materials, not estimates derived from spend.

Major material quantities per project. Actual volumes and weights of concrete, steel, aluminium, timber, and other high-carbon inputs. This is the foundation of any credible embodied carbon assessment under the NABERS methodology and AASB S2 Category 1.

Supplier information for each major material. Who supplied it, from where, and whether they have an Environmental Product Declaration (EPD) or verified emissions factor available. Supplier-specific data significantly improves accuracy over default industry-average factors.

Transport data. Distance from each major supplier to site and primary transport mode, for Category 4 upstream transportation under AASB S2 and the NABERS transport module.

Site waste data. Volumes by type and treatment method (landfill, recycling, incineration) for Category 5 waste generated in operations.

The challenge for multi-site operators is aggregating this consistently. The data exists across projects but rarely lives in one place or in a format that is directly reportable.

The supplier data problem

The single biggest obstacle to accurate embodied carbon and Scope 3 reporting for construction companies is the supply chain data gap. Concrete, steel, and timber account for the majority of embodied carbon and they sit entirely within supplier operations.

EPD coverage in Australia is improving but remains patchy. Spend-based proxies are widely used because they are the only data available, not because anyone thinks they are accurate. Our guide to spend-based versus supplier-specific emissions data covers when each approach is appropriate and how to build toward activity-based data practically.

Solving the supplier data problem requires changing how suppliers submit information: from bespoke requests for each customer, to a system where a supplier calculates their emissions once and shares that data across multiple customers. This is where the eco-shaper Supply Chain Engagement feature is designed to help. Suppliers receive their own carbon calculator, regional emission factors are applied automatically, and the supplier allocates their footprint across all their customers in one submission.

For why applying the right regional emission factor matters as much as the methodology, see Why multi-site operations need regional emission factors.

A note on what eco-shaper covers

eco-shaper is a carbon accounting platform covering Scope 1, 2, and GHG Protocol Scope 3 categories including Category 1 (purchased goods), Category 4 (upstream transport), and Category 5 (waste). This is the Scope 3 layer relevant to AASB S2 disclosure.

eco-shaper does not replace dedicated embodied carbon LCA tools such as the NABERS Embodied Carbon tool or One Click LCA, which calculate building-level carbon intensity in kg CO2e per square metre for NCC compliance and Green Star ratings. Those are specialist design-stage tools.

The two serve different but related purposes. LCA tools answer: how much carbon is embodied in this building? Carbon accounting platforms answer: what are my organisation’s total supply chain emissions across all projects, and can I demonstrate that to an auditor? For AASB S2 compliance, you need the second. Many construction companies will need both.

What to do now

If you are a Group 2 entity, FY2027 is your first mandatory Scope 3 reporting period. Data collection must be live from 1 July 2026.

Confirm your Group 2 scope, map your material suppliers by spend, begin project-level data capture, and engage your assurance provider early. PwC’s review of Group 1 first reports found that assurance demand is high and early engagement reduces restatement risk.

Follow the ABCB embodied carbon guidance voluntarily. Even without a legal obligation, running commercial projects through the NABERS methodology builds capability and creates benchmarks ahead of NCC 2028.

The companies building supplier data infrastructure now will not just be compliant. They will be ahead.

eco-shaper is a carbon accounting and sustainability reporting platform used by organisations across Australia, the UK, EU and beyond. Our platform covers Scope 1, 2, and Scope 3 GHG Protocol categories including supply chain engagement for Categories 1, 4, and 5. For construction companies beginning their AASB S2 journey, speak to our team or explore our Supply Chain Engagement feature.