Thursday, 29 December 2016
Tuesday, 27 December 2016
Decision-makers therefore face complex policy choices as the conflict between nature and human development finds its battleground. Can we make urban living work better in future?
Friday, 21 October 2016
River or a rock?A few weeks ago, a senior manager of one of the largest South African banks commented “we banks are like timber logs floating in the river--we go with the flow to where the business is”. The evidence suggests that the flow of the river is changing toward green construction finance. Governments are attempting to make conducive policies. At the first-ever at the Paris COP21, both the public and the private sector made ambitious commitments. Over 90 countries have included the need to focus on buildings in their Nationally Determined Contributions (NDCs). It is clear that not only will the public sector have to take a leading role to act on this, but so will the private sector solution providers. [also see my earlier blog Green Buildings in Emerging Markets: Where are they likely to Succeed?]
Big challenge, huge opportunityIEA estimates that the building sector alone needs an additional investment of up to US$296 billion each year if average global temperatures are to be capped at two degrees. This is in addition to the $358billion that already goes into the sector annually.
|Global impact of buildings|
From a business perspective, it also makes a lot of sense, as it allows banks to present a new offer for current clients and reaching out to new clients. It offers possibilities for cross-selling i.e. green construction finance to developers and green mortgages to home buyers. And finally, energy efficient assets create a stronger portfolio – as data shows owners of green homes have lower delinquency rates.
|Value proposition for banks to offer green building finance|
What's hindering the market from responding to demand?
What comes first- demand or innovation?In the real estate sector, commercial banks already play a crucial role by providing financing to developers, mortgages to homeowners, or providing insurance solutions. The exciting thing about green buildings is that the investment and financing for the construction industry already exists. The challenge is to incorporate the additional upfront costs for resource efficiency into the financing.
There is evidence that these can be paid for by the increased savings as a result of operational cost reductions, better credit ratings, and higher resale value of the green buildings. Banks need support to create new products such as green construction finance, Green Mortgages, Risk Share Facilities and secularization of green building loans as collateralized bonds i.e., Green Bonds. Banks are concerned about the required added resources to develop new products, train staff, and convince their management to take perceived risks if there is no reliable availability of green buildings stock. This is why it is important that both supply and demand aspects must be looked at simultaneously – building green stock while securing financing.
|The market for green building financing can take off quickly with the right incentives|
Case Study 1: INFONAVIT Green Mortgage ProgramA green mortgage program was developed in 2007 by the Institute for the National Workers’ Housing Fund (INFONAVIT) in Mexico to encourage the use of energy efficient systems and technologies for low-income households. Families purchasing homes through the bank received an extra credit of up to US$1,250 to cover the cost of green-technologies (these are quality assessed and controlled by third-party auditing agency).
Infonavit has more than 70% of market share in the Mexican mortgage market, it is the largest player in terms of assets (with a loan portfolio of almost $70bn).
Over time, the product became extremely popular and mainstream especially for low income housing finance. By 2011, 75% of all originated home mortgages were green. In 2014, Infonavit decided to issue only green mortgages. Their market share has also increased significantly (~12%) during the period. The bank has granted over 1,000,000 Green Mortgages, benefiting over 3 million people.
|Green Mortgage system used by ODEA and PNB using EDGE certification|
Case Study 2: INDIA: KfW NHB-EE credit line for housing developersIn 2010, KFW extended a re-financing line to National Housing Bank (NHB) of €50 m. Almost no green stock was present in the market at the time of launch, yet within 1.5 years (ahead of the planned 3 yrs) the mortgages were distributed and the line exhausted. 21,000 housing units were developed through the program.
Case Study 3: INDIA: PNB Green Construction Bond
Lead or play catch up time for banks
However, there is little excuse for inaction. Especially now, with platforms like EDGE, the existing capital flows into new buildings can be reworked to fund green designs. A CEO of one of the largest banks in India recently said “fundamentally, it boils down to whether we really want to fund these developments which will ruin our built environment- that we and our families live in?-we banks have to show leadership by setting higher expectations”.
Wednesday, 8 June 2016
What is our Responsibility Towards India’s Future?
Buildings are an inspirational mix of art and science. But past the point of inception, what happens when acts of creativity are no longer exquisitely rendered models but become inhabited and real? What happens at the moment when architects lose control?
We know that glass buildings consume more energy, as the solar heat gain is greater and must somehow be abated. Yet the ideal percentage of glass is far below that of most of today’s mostly glass-coveredstructures. Like SUVs, “transparent” buildings have become sought-after cultural icons for clients. But do they fit into a world that has devoured most of its resources? And are we ready to acknowledge that what we have so carefully crafted has contributed to climate change?
This model of delivering on an aspiration that has little relevance to reality has created a world where buildings consume 33 percent of its energy and produce 25 percent of its carbon footprint. Most of the emissions associated with buildings come from the combustion of fossil fuels to provide heating, cooling and lighting, and to power appliances and electrical equipment.
In India, the sale of air conditioning units is growing at 20 percentannually, with Mumbai estimated to have the same potential cooling demand as a quarter of the United States. If India were to use as much air conditioning as the West then we will be destined for a six degree warmer world. We are already witness to extreme weather events such as the recent floods in Chennai. Our nation’s architects have a pivotalrole in preventing such catastrophes.
India is 80 percent not yet built, and we will see this growth happen in our lifetimes. The intensity of our country’s resource usage will increase with affluence, urbanization and population growth. By 2050, India will be home to 1.6 billion people, overtaking China as the world’s most populous nation. Most of this growth will flow to the cities, where the building stock will double.
This rapid expansion in construction creates a window of opportunity for a new kind of urban dwelling and workplace – one that is less resource intensive yet meets the ambitions of today’s growing middle class. Is the architecture profession ready to change course and deliver visionary buildings that no longer lead to climate change?
The Need for a New Design Vocabulary
The quintessential Indian building had high ceilings with punkahs(fans), open windows with chajjas (overhangs) and long external corridors. While this worked in the past, we need a new vision for tomorrow’s more cosmopolitan future that doesn’t lose sight of how well the buildings of the past conserved resources and protected human comfort. This vision must be cognizant of the desire to emulate the West yet deliver on new technologies and building materials that are readily available and respond well to a denser urban space. We need a new idealthat is mindful of the limits on energy and resources that exist in India today.
For decades, the concept of green buildings has been all the buzz in the building industry, applied mainly by clients on high-end, speculative commercial developments with the result that there are only random flagship projects. There has been little effort shown in terms of tangible energy reductions demonstrating the economic case beyond the brand value. Scale proves a significant challenge, as the few green-labelled buildings that exist cannot make even a small dent in the onslaught of global carbon emissions caused by the majority of badly designed buildings.
Most importantly, green buildings is a concept that has not struck a chord with the architectural design community. Such early pioneers asGerard da Cunha, Ashok Lall, Sanjay Prakash and Chitra Vishwanath are cynical about the current narrative which is less about bioclimatic design and more about the profit associated with green-washing.
Clearly, there is a need for a scalable solution that can allow architects the freedom to maintain their artistic integrity while creating buildings that respond well to their environment. A down-to-earth design approachthat focuses on the practicality of how a building will be used by its inhabitants and keeps their best interests in mind. The solution must be able to turn an ordinary building at the concept stage into a high performing one at very little cost, without sacrificing aesthetics.Architects can shape such a solution into a persuasive and compelling phenomenon, if they agree that they have a critical role to play.
Lack of an Effective Method for Bioclimatic Design
In order for architects to become the protagonists of design that our world needs, they must find a way to quickly figure out which passive design features and building-integrated technologies work well in a given context, what difference they will make, and how much money they will cost the client. Until now it has been onerous to determinethese numbers early in the design stage. For example in Bangalore, double glazing may take years to pay back the initial investment whilereducing the depth of floorplans can have a much greater positiveimpact with zero cost. In Chennai, this relationship may be quite different. How can an architect easily know this?
The design tools that architects have available today are either too simplistic or too demanding. On the one hand, there are referencetextbooks with high level concepts and equations (Otto Königsberger’s “Manual of Tropical Housing and Building” comes to mind). These provide a framework but are not detailed enough to make contextual design decisions.
On the other hand, there are dynamic thermal simulation softwareapplications that are complex enough that they need specialists to operate with considerable building information required upfront. These software packages rarely provide conceptual design direction andrequire a large number of iterations resulting in extended effort and budget outlays.
Neither textbooks nor advanced software integrate information on investment costs or the impact from the manufacturing of materials. This lack of a practical design aid may explain why most architects are left paying lip service toward bio-climatic design.
A Free Online Instrument for Design Professionals
The need to solve this conundrum is what led IFC, a member of the World Bank Group focused on the private sector, to create a powerful online web platform called EDGE (www.edgebuildings.com ) for every country that is on a prolific building path. As tackling climate change is part of the World Bank Group’s core mandate, IFC aspired to democratize green building design by offering a solution that is free and available to all, in order to unlock the potential for greater efficiencies. EDGE shares the most cost-effective ways to build green in a given location and shows how long it will take before the investment is covered through reduced operating costs.
EDGE reveals the truth that the cost to build green is much lower than previously thought. An army of experts from around the world came together to create market-specific metrics for strong results, hiding the complexity of the data and calculations beneath an easy-to-use interface.
For the first time, architects can quantify the green of their designs for their clients, demonstrating how affordable it can be and verifying the value that clients can pass on to their customers through operational savings. Top architectural firms such as HOK and the construction firm Bouygues Bâtiment have made statements of commitment to EDGE in order to convince their clients of the rationale behind better performing buildings.
Why Progressive Firms are Opting for Resource-Efficient Design
The drive towards sustainability in the built environment represents both a challenge and a business opportunity for architects. There is a persuasive business case to be made against selling out to yet another badly behaving building with a glass façade. Here are three compelling reasons why architects should consider the integration of green building design into their practices:
The new era of “performalism”: There’s a great future for the visionary who can turn the guts of a technical guide into a sketch of genius. Design is headed in the direction where it will be judged not only for its inspiration, but for responsiveness.
You cannot improve what you cannot measure. And soon it might be expected that architects must verify the quality of their green building design in quantitative ways. It will be up to a new generation of architects to help plot the future of bioclimatic design. Architects canpull the performance out of a building without sacrificing design integrity. And they can do it at the most critical moment when a project is conceptualized.
Think Tesla: the kind of rabid fervour that devotees express is hinged on the simple truth that the car’s environmental performance beats that ofthe competition – and in today’s world, that matters to the ever-growing throng of eco-minded consumers. Tesla must create its own battery-oriented electric vehicle infrastructure, but by doing so, it reinvents our approach to automobiles and gradually puts the dinosaurs of the market on the shelf where they belong. By licensing its technology to competitors Tesla fast-tracks the car industry against itself, forcing a fresh approach while guaranteeing the success of its own innovation.
Great design is sustainable design: Rather than considering green building design as an externality, architects must think about it as a set of principles for great design. This includes better user experience and comfort, doing more with less to enable the building to easily achieve peak performance, and maximizing the effectives of durable, qualitymaterials. Rather than the well-known edict “form follows function,” it’s time to think “form follows environment.”
The strategic adoption of a portfolio approach: a small but consistent difference in all your projects is far more effective than undertaking a handful of ultra-green projects. To do the math, a 20 percent reduction of energy use of all projects is far more significant than trying for net-zero buildings one percent of the time. The Bangalore-based architectural firm Ecumen has made the decision to run each of the projects in their pipeline through the EDGE software. Ecumen informsclients about the projected performance of their projects at key stages toeffectively enable them to demonstrate value as well as to internally monitor performance and maintain quality control.
Focus on Saving Clients Money
Not only are performalism, environmental design, and a portfolio approach highly important, but a green building has a more compelling bottom line. Simply put, resource efficiency saves money for clients. Even if a client builds to sell, it will be understood that there is value being passed on to those who will occupy the buildings – and that value creates greater marketability, brand equity and customer loyalty.Architects can be appreciated for illuminating this.
It’s not about fancy, expensive technologies but about common sense, affordable solutions to lower costs. For example, the Infosys office building in Bangalore has cut energy use in half by installing ceiling fans which allow for less dependence on air conditioning to achieve temperature comfort, narrower plan depth and light shelves that provide uniform daylight throughout the work space, and better shaded, sensibly-sized windows to reduce solar heat gains.
IFC’s experience from pilot projects in India and beyond shows that the costs for greening moderate-income housing are only about 3 percent higher. Other financial benefits can mitigate higher costs, such as faster sales, lower homeowner default rates, and the marketability of resale values and operational savings. For hotel and office clients, there is no more persuasive argument that can be made than the fact that resource-efficient design will lead directly to utility savings of 20 percent or more. With EDGE, architects have the power of projections in their hands, which can be communicated directly to clients as an added value to their design offering.
India’s Architects Can Save the World
Architects can develop new skills, knowledge and instruments to embody green strategies into their practices. It is true that end users are still mostly unaware of the intrinsic worth of sustainable architecture. It is true that architects only influence a small proportion of the buildings built today. And it is true that clients may not be willing to pay even one percent more for green design costs.
But there is also increasing understanding that buildings must prove they can perform well before they are built, as beauty will soon no longer be enough to satisfy clients. Will you be part of the movement that embraces resource efficiency by integrating green concepts, solutions and materials into your designs? There is no better time to chart your own course and get ahead of the curve than right now.
In this moment of change, the opportunity to influence design and growth plans is in your hands. There is a narrow window of opportunity for you to get it right before it is too late. As an architect, you are the protagonist who will save our world. All of us are counting on you.