The Australian city of about 4 million people aims to reduce carbon emissions by 70 per cent by 2030 from its 2006 energy use.

"Because it's a relatively new business for us, we want to just offer 10 to start with and learn from how we inter-operate with the business community and finance providers," Tom Belsham, the City of Sydney's sustainability programs manager, said.

Under the Environmental Upgrade Agreements, a local council will collects loan repayments on behalf of a financial provider from an owner. Since the repayments will be collected as a council charge on the property, landlords can pass this on to tenants once they are actually enjoying the benefits of lower energy or water costs.

The country's biggest lender National Australia Bank was ready to participate in the scheme, while a number of other financiers have also expressed interest, Belsham said.

The city is also offering AU$40,000 in grants to help Sydney-located businesses cut their power bills and carbon emissions by improving the energy efficiency of their offices.

Australian landlords are now required to disclose an energy efficiency rating from the National Australian Built Environment Rating Scheme (NABERS) on their buildings.

The current market average for office buildings in Australia is around a 2.5 stars on the NABERS scale.

Energy efficient buildings attract more tenants, save energy costs and boost returns for investors.

Annualised two year returns to June for the office buildings with a NABERS rating of 4 to 5 stars were 9.2 per cent compared with 8 percent for all prime office, according to property research firm IPD. 

- Reuters