INTERNATIONAL CONFERENCE ON GROWTH WITH STABILITY IN AFFORDABLE HOUSING MARKETS
January 29st to February 1st, 2012New Delhi
WHAT DOES IFC MEAN BY ‘GREEN
BUILDINGS’?We define green building as the practice of increasing the efficiency with which buildings use resources such as energy, water and materials while also reducing the building’s impact on human health and the environment.
EXACTLY, WHAT IS A
“GREEN HOME”? Homes designed to create savings of at
least 20% from non-energy efficient homes
Homes that use 20% less water, 20% less energy or 20% less or more efficient building materials
Design techniques can be as simple changing the exposure of the home which translate into energy savings
WHY BOTHER?
Homes account for about 21 percent of our greenhouse emissions, so the potential savings and reduction in emissions is “low-hanging” fruit.
The homeowner gets a home that: is cheaper to operate over the long-term; more comfortable to live in, better indoor air quality and healthier
environment; higher property value; Can have less expensive financing; More sustainable materials mean that periodic maintenance is reduced.
Many governments provide financial incentives, including subsidies, thusspending less for energy generating capacity.
Society benefits by consuming less non-renewable energy resources and byconsuming power to live comfortably at cheaper all-in cost.
WHY ARE “GREEN” HOMES IMPORTANT
FOR INDIA?
There is a has huge housing deficit (26 million and rising) – mainly in low income bracket
Resource efficiency – resources are scarce!
Almost a third of India’s electricity is used in buildings
Weather conducive to solar power
Important for energy security
Way of the future – less expensive on new building than retrofitting existing buildings
Mapping Macro drivers: Where is the biggest demand for Green Housing?
Econ
om
ic d
river
perc
en
tag
e c
ost
of
ele
ctri
city
vs.
GD
P [
%]
-
Jamaica
Dominican Republic
Syria
Nicaragua
Gambia
Jordan
BulgariaPhilippines
Zimbabwe
Cape Verde
South Africa
Eritrea
Croatia
Lebanon
Turkey
Ukraine^
Sudan
Ivory Coast
Egypt
Mexico
Indonesia
Kenya
NigeriaAngola
Haiti
Brazil
Colombia
Argentina
Kyrgyzstan
Mozambique
Ghana
Senegal
Slovakia
Uzbekistan
Urban populace added each year[In millions]
151051
Sri Lanka
MoroccoThailand
Bangladesh
Russia^
Ethiopia
Cameroon
Peru
Azerbaijan
Honduras
El SalvadorCosta Rica
Malawi
PanamaParaguay
Uruguay
Zambia
BoliviaTanzania
Ecuador
Guatemala
Trinidad
Togo
Tajikistan
ChinaIndia
VietnamPakistan
High Priority
High Cost but low carbon grid
Low cost but high carbon grid
Low Priority
IFC’s approach to addressing challenges is tailored to the needs of specific market contexts, prioritising counties with high CO2 from buildings, high cost of electricity and high urbanization
Why “electricity”?: The largest amount of energy used by buildings is in the form of electricity. Typically 20-40% of the electricity generated in a country is used by the buildings sector. ^ Russia and Ukraine have a net decreasing urban population
Environmental driverCO2 from electricity generation [gCO2/kWh]
NATIONAL HOUSING BANK/IFC/WORLD BANK STUDY: GREEN
INTERVENTIONS FOR AFFORDABLE HOUSING
Tier I - incorporate as low or zero cost improvements
Energy efficient ceiling fans Passive solar features for thermal comfort , natural ventilation
and optimized orientation Dual-flush toilets; water-efficient fixtures and flow restrictions Natural methods of decentralized water treatment systems
and energy efficient water pumping systems
Tier II – incorporate as far as possible as short pay-backs
Efficient lighting Solar water heaters Rainwater harvesting and storage systems
WHY FINANCE GREEN BUILDINGS?
Green buildings have documented higher value because of potential utility savings, lower operating costs and more comfortable/healthier living
Product Niche / Branding - Advantage in marketing as distinguishes them in the market
Get ahead of coming government standards
Reduced risk - Improved loan performance (since socially responsible homeowners tend to have better on-time payment records)
For mortgage lenders - adds to suite of mortgage products and encourages cross-selling → leads to first mover advantage!
WHAT IS A GREEN MORTGAGE?
The Green Mortgage is an additional credit facility to the home buyer of a home that has eco-technologies that generate savings in household expenditure by the decrease in consumption of electricity, water and gas.
Options for NHB/HFCs:
• Increase loan amount to accommodate additional equipment costs
• Provide reduced interest rates to ‘neutralise’ extra cost of additional equipment
Example Calculation
Energy saving Rs.117/month
Additional EMI Rs.66/month
Net saving during Rs.50/month
the loan period
Assumptions: Homes costing Rs 10 lakh, Package of measures: Solar DHW & Duel flush WCs ,Additional capital cost Rs.15,000 . 15-year loan term
Green Mortgages: Mexico Case Study
10
•The Infonavit”s* Green Mortgage Program was initiated in 2007, to provide an extra credit to buy new houses which incorporate sustainable and energy efficient technologies, such as Solar water heaters, water saving faucets, and thermal insulation, among others.• The Program targets state-aided house buyers with low-income. The program Applies to homes that cost less than 43,000 USD and can be located in any state in the country. • The Green Mortgage beneficiaries are able to obtain a higher loan depending on the increase in their ability to pay, derived from energy and water savings that generate the installation of eco-technologies in a dwelling. The additional credit amount can cover the cost of installing clean technologies. •Impacts (energy and water saved) are measured depending on the different bioclimatic zones .
In 2010, 100,025 green houses financedIn 2012, all Infonavit mortgages will be Green Mortgage
•Site•Materials•Health•Energy•Water•Community
•Energy•Water•Gas
Higher loan amount
+$16,000
=
Green Criteria Savings Higher capacity to pay Loan increased GREEN MORTGAGE
GREEN MORTGAGE MODEL
RESULTS
HOW CAN IFC HELP?
Advisory
Audits, technical assistance (benchmarking)
Policy and regulatory support
Sector Studies (Affordable Green Housing for India)
Investment
Direct lending, guarantees, equity investments
Concessional financing available
Green Buildings Code* for Jakarta has a potential carbon reduction of 3MtCO2/year by 2020.
An Example of IFC Advisory Services
Advice on Green Building Regulation for Indonesia
Indonesia is one of the world’s largest greenhouse gas emitters with its building sector accounting for more than a quarter of total energy use in 2004 – a number that’s expected to rise to nearly 40% in the next two decades. In response, IFC is helping the government of the capital province, Jakarta, develop a green buildings code. The code sets energy and water efficiency requirements for large commercial and high-rise residential buildings, and will require climate change adaption practices to be included in building designs. IFC's main aim was to help create a code that is simple to implement, effective and easy to monitor. A key element of the analysis involved modelling a range of possible changes for each building type which met clear criteria for market preparedness and ease of implementation while maximizing the benefits of energy (CO2) and water reductions in a cost-effective manner.
The details of the code have been developed in close consultation with government as well as private sector stakeholders including, developers, landlords and professional associations.
“…with effective implementation of the green buildings code in Jakarta, the city can serve as a model for implementation in other cities in Indonesia.” Fauzi Bowo, Governor Jakarta Province
IFC’S GREEN BUILDINGS TOOL
• Marketing tool --Easy to use tool to demonstrate net savings to home buyers
• Builder tool – Vendors can select different EE products and analyze impact on costs
• Populated with current data based on averages for each country
What is the cost impact? Example Payback Assessment
Green Building Measure %SavingCost
increasePayback period Action
• Window to wall ratio 8.0% Negative 0 Include
• Solar Shading Devices 17.3% 7.2% 25.0 Consider
• Reflectivity - Wall 0.5% 0.0% 4.8 Include
• Thermal Conductance (Wall U-Value) 0.3% 0.5% 98.6 Exclude
• Reflectivity – Roof 0.2% Negligible - Include
• Thermal Conductance – (Roof U-value) 0.1% 0.0% 18.1 Consider
• Glazing Assembly Properties (U-value, SHGC, VLT) 7.3% 0.1% 0.9 Include
• COP of air conditioning equipment 11.4% 1% 5.4 Include
• Variable Speed Drives for cooling towers 9% 0% 0 Include
• Heat recovery on extract air 2% Cost awaiting 26.2 Consider
• Solar collectors for Hot water NA NA --- Exclude
• Photo electric control perimeter lighting 18% 2% 7.4 Include
• Exterior lighting controls NA NA --- Exclude
• Low energy lighting [CFL, T5, LEDs etc] 7% 0.12% 1.0 Include
• Electronic Ballast 2% Negligible 0.0 Include
• Sub-metering benefits 3% NA NA Consider
• Water efficient fittings 40% 0.35% 6.0 Include
• Rainwater harvesting 15% Cost awaiting 26.2 Consider
• Recycling onsite Sewage T plant 67% Cost awaiting 7.4 Consider
• Water metering NA Negligible NA Include
• Storm water attenuation and ground water recharge NA Minimal impact NA Include
The energy saving potential of each measure has been correlated with the cost impact and therefor the simple payback.
CONCLUSION
NOW is the time to act given:
The extreme housing deficit in India and the predicted growth of the deficit;
Retrofitting is more expensive than incorporating the measures in new buildings;
Get ahead of almost certain future regulatory requirements.
THANK YOU FOR YOUR ATTENTION!
For more information, please contact:
Debra Perry
International Finance Corporation,
Climate Business and Sustainably Group
+1 202 473 8150