The buildings challenge – entering the climate change agenda

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Niclas Svenningsen, Manager, UNEP Sustainable Buildings and Construction Initiative and Thierry Braine-Bonnaire, Director for Construction R&D, Arcelormittal Global R&D

The building industry is responsible for about a third of a country’s energy consumption; this is approximately the same across all countries. This puts a special emphasis on the sector’s potential to improve efficiency and reduce greenhouse gas (GHG) emissions. In fact, if the building sector potential to reduce GHG emissions could be realised, it would, on its own, hit the GHG reduction goal of Kyoto. So how can such a reduction be realised?

INTRODUCTION

Buildings constitute an essential part of society, providing core functions such as housing, work places, trade centres and leisure. The built environment also forms the character and culture of the local society and has considerable economic impact on private and public economies, typically contributing on average 10 per cent of GDP.

At the same time buildings are responsible for large shares of resource use and waste generation: approximately 40 per cent of materials use, 30 per cent of solid waste generation, and 20 per cent of water use. The materials and technologies used in buildings also have a significant impact on their users health and wellbeing.

Over several years, more attention and effort has been directed at how to improve environmental and health aspects of existing and new buildings. This is a complex issue which has expanded from engineering and architecture to encompass a much wider range of issues, including economics, government policies, standardisation, and links to other development priorities such as social housing, labour markets, and large scale infrastructure coordination. Among all issues, energy use in buildings has climbed to the very top of the agenda in the past five years. Buildings are responsible for about 35 per cent of total energy consumption in society. This not only makes the building sector a prime target for GHG emissions reduction efforts, but makes it highly relevant for national energy security and economic savings through efficiency improvements.

THE CLIMATE CHANGE IMPACT

skyscraper In 2006, UNEP’s Sustainable Buildings and Construction Initiative (SBCI) released Buildings and Climate Change – Status, Challenges and Opportunities (www.unepsbci.org/Ressources/ReportsStudies/) – a report confirming that the high energy use in buildings is common to all countries, regardless of climate and level of economic development. Energy is used for different purposes in different countries, such as heating, cooling, water heating, lighting, ventilation, appliances, and aggregated energy use still constitutes about a third of national energy consumption. The good news is that energy use in buildings can typically be reduced by 50 per cent or more using proven and commercialised technologies and approaches. IPCC’s fourth assessment report (2007) also identifies the building sector as having the best potential for achieving drastic cuts in energy use and GHG emissions across all countries. If this full potential was realised, the buildings sector could on its own achieve the full GHG emission reduction goal of the Kyoto Protocol.

A LACK OF PROGRESS

In spite of the significant potential for reducing energy use, it remains untapped in most buildings. There are a range of reasons why this is so:
Achieving energy efficiency in buildings requires a coordinated life cycle approach to design, construction, operation and maintenance. In most cases, however, the building sector is very fragmented both horizontally, between different groups of players, eg engineering, architecture, investors, energy suppliers, and vertically, between different stages of the buildings lifespan, eg from preliminary design to end of life. In most cases, there is neither a tradition nor an incentive for groups to work together to optimise building performance over its lifetime.
There is an economic disconnect between building investors and building users. While opportunities for energy savings can best be realised by the parties responsible for construction and renovation, it is the users who benefit from reduced energy costs. The incentives for building ‘energy lean’ are therefore very weak, even if stakeholders throughout the building’s lifespan would clearly benefit.
While technologies and approaches for energy efficiency are available, the building sector is by tradition risk averse and generally unwilling to try new approaches. In many countries the majority of relatively small builders also lack know how about how to apply energy saving technologies.
Governmental policies and support tools for energy efficiency improvements in buildings are often lacking or are not harmonised with other policy instruments affecting the building sector. A common example of obstructive policies is high taxation of renovation works aimed at energy savings.
In the past year, several international organisations, eg UNEP, World Business Council on Sustainable Development, IPCC, have arrived at the same conclusion: the building sector alone is not able to realise the significant energy saving potential in buildings, but requires government intervention in the form of appropriate policy tools.

A RECIPE FOR SUCCESS

The question facing governments is what policy tools are effective and suitable in a local context? According to the UNEP SBCI policy tool database, prepared by the central European University in 2007, Governments have well over 30 types of instruments to chose between (www.unepsbci.org/Ressources/ReportsStudies/). These can broadly be divided into regulatory tools, economic tools, fiscal tools and informative & capacity building tools. The database is based on more than 80 policy tool evaluations from across the world and clearly indicates the most effective policy tools are typically regulatory instruments. Somewhat surprising is that these instruments are normally also the most cost effective, while economic instruments have a more scattered performance.

Many policy tools, especially regulatory tools, frequently result in substantial economic net savings to society, with savings up to US$192/t CO2 reported. The study and database also recommends that different types of tools are combined to achieve the best result. In many cases the intended market transformation requires that certain tools, eg economic incentives, are applied only in different stages of the transformation, to be effective and avoid rebound effects.

BUILDINGS AND THE KYOTO PROTOCOL

Of special interest is the extent to which international cooperation can support energy efficiency in buildings. UNEP SBCI is preparing a study of the effect of the Clean Development Mechanism (CDM) on the building sector, due to be released at the end of 2007. Until now, only a handful of CDM projects realise emission reductions through buildings modification. Preliminary results indicate a range of reasons why this is the case:

Economic benefits that can be achieved through generation of Certified Emissions Reduction Units (CER) under a CDM project are still very small compared to the overall costs for renovating/constructing a building, thereby it is a weak incentive for energy efficiency investments.
There is failure of CDM to reward other sustainable development benefits than GHG emission reductions. The objective of CDM is in fact to support both emission reductions and sustainable development, but only emission reductions are financially rewarded.
There is a problem taking into account additional and continuous improvements in energy efficiency after a project has been registered. In the building sector, energy performance is often gradually achieved as an iterative process over time.
The comparatively small project size of most building projects, makes the overhead cost for registering and developing the project under CDM too high.
There is a lack of commonly recognised tools and benchmarks which can be used for baseline development in the buildings sector.

There are difficulties in qualifying and proving the effect of non-technology energy saving options, such as behavioral change of end users.

GOOD IDEAS FOR CHANGE

Clearly CDM in its current set-up is one of the least effective policy tools for encouraging energy efficiency in buildings. There are a number of opportunities for strengthening and revising this set-up to provide better support which include:

Allowing CDM projects to be credited based on performance indicators (eg energy consumption per square metre), rather than technology based
indicators. This avoids costly and cumbersome technology performance verification and monitoring.
Establishing national policies which provide the additional push and pull for the building sector to pursue energy efficiency at the national level.
Establishing common baselines for the sector.
Strengthening the ability of CDM to reward, in economic terms, sustainable development benefits generated from projects.
Developing rules which take into account the need for low income housing to increase energy use to meet basic needs, without being punished for the associated increased GHG emissions. Finding mechanisms to offset these increased allowances.

A SHARED AGENDA

With or without CDM, there is still an overriding need for governments to support a building sector move towards more energy efficient buildings. This is a requirement that is common for all countries. But special considerations may be warranted for developing countries for two reasons:

The fastest growing, soon to be the largest, building markets are found in developing countries such as China, India and Brazil. China, for example is building two billion square metres a year which is equivalent to one-third of Japan’s existing building area. Rapid urbanisation and the need to provide housing for a growing population presents a unique opportunity and challenge to ensure new builds are efficient from the start.
The sustainable buildings agenda has often been perceived as a developed country issue and the capacity to support sustainable buildings in developing country governments is often weak. But sustainable buildings directly underpin the ability to achieve other development priorities, such as shelter, safety, health and economic development. Clearly the sustainable buildings agenda is as relevant to developing countries as it is to developed countries, but the tools and data needed may not always be readily available for the former ones.

Among key issues for developing countries when pursuing energy efficient and sustainable buildings are:

Institutionalising the responsibility for promoting energy efficiency in buildings.
Removing adverse pricing and fiscal measures.
Building capacity and know how within responsible institutions.
Providing financial support to overcome first cost barriers, especially in the poorest countries.

Developing strategies to pursue overall improved energy efficiency while allowing increased energy consumption needed to overcome energy poverty for individual households.

CONCLUSION

The governments and decision makers of today
have an important role to play in ensuring the right signals and support are given to the construction market. The needed market transformation towards energy efficient buildings will not happen without government intervention. And climate change cannot be effectively addressed without this market transformation taking place.

Authors

Niclas Svenningsen is responsible for UNEP’s work on sustainable buildings and construction and manages the Sustainable Buildings and Construction Initiative from UNEP’s offices in Paris. He has a background in civil engineering and has spent the past 10 years working on various sustainable development issues in the developing world.
Thierry Braine-Bonnaire has chaired the SBCI’s board since spring 2007. He is responsible for the Construction portfolio in the ArcelorMittal Global R&D. ArcelorMittal is the world’s number one steel company, with 320,000 employees in more than 60 countries and a leader in major global markets, including automotive, construction, household appliances and packaging.

Organisation

The Sustainable Buildings and Construction Initiative (SBCI) is a UNEP coordinated partnership among building sector stakeholders, promoting sustainable buildings in general and energy efficient buildings in particular. SBCI brings together stakeholders from the entire building lifespan, including some building sector heavyweights, such as Arcelor-Mittal, Lafarge and Skanska. SBCI is currently addressing issues related to climate change, government policies, sustainable building baseline development, and sustainable buildings in developing countries.

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