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I NTERNATIONAL C ONFERENCE ON G ROWTH WITH S TABILITY IN A FFORDABLE H OUSING M ARKETS January 29st to February 1 st, 2012 New Delhi.

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Presentation on theme: "I NTERNATIONAL C ONFERENCE ON G ROWTH WITH S TABILITY IN A FFORDABLE H OUSING M ARKETS January 29st to February 1 st, 2012 New Delhi."— Presentation transcript:

1 I NTERNATIONAL C ONFERENCE ON G ROWTH WITH S TABILITY IN A FFORDABLE H OUSING M ARKETS January 29st to February 1 st, 2012 New Delhi

2 W HAT DOES IFC MEAN BY G REEN B UILDINGS ? 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 buildings impact on human health and the environment.

3 E XACTLY, W HAT IS A G REEN H OME ? 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 Some Green Building Techniques Drainage, elevation, exposure Off-site Fab Materials Insulation Roofing materials Lower use of cement Rainwater harvesting systems Solar heating systems

4 W HY B OTHER ? 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, thus spending less for energy generating capacity. Society benefits by consuming less non-renewable energy resources and by consuming power to live comfortably at cheaper all-in cost.

5 W HY ARE G REEN H OMES I MPORTANT 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 Indias 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

6 Mapping Macro drivers: Where is the biggest demand for Green Housing? Economic driver percentage cost of electricity vs. GDP [%] - Jamaica Dominican Republic Syria Nicaragua Gambia Jordan Bulgaria Philippines Zimbabwe Cape Verde South Africa Eritrea Croatia Lebanon Turkey Ukraine^ Sudan Ivory Coast Egypt Mexico Indonesia Kenya Nigeria Angola Haiti Brazil Colombia Argentina Kyrgyzstan Mozambique Ghana Senegal Slovakia Uzbekistan Urban populace added each year [In millions] Sri Lanka Morocco Thailand Bangladesh Russia^ Ethiopia Cameroon Peru Azerbaijan Honduras El Salvador Costa Rica Malawi Panama Paraguay Uruguay Zambia BoliviaTanzania Ecuador Guatemala Trinidad Togo Tajikistan China India Vietnam Pakistan High Priority High Cost but low carbon grid Low cost but high carbon grid Low Priority IFCs 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 driver CO2 from electricity generation [gCO2/kWh]

7 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

8 W HY FINANCE G REEN 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!

9 W HAT 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, year loan term

10 Green Mortgages: Mexico Case Study 10 The Infonavits * 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 financed In 2012, all Infonavit mortgages will be Green Mortgage Site Materials Health Energy Water Community Energy Water Gas Higher loan amount + $16,000 = Green CriteriaSavings Higher capacity to pay Loan increasedGREEN MORTGAGE GREEN MORTGAGE MODEL RESULTS

11 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

12 Green Buildings Code* for Jakarta has a potential carbon reduction of 3MtCO 2 /year by An Example of IFC Advisory Services Advice on Green Building Regulation for Indonesia Indonesia is one of the worlds largest greenhouse gas emitters with its building sector accounting for more than a quarter of total energy use in 2004 – a number thats 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

13 IFC S G REEN BUILDINGS T OOL 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

14 What is the cost impact? Example Payback Assessment Green Building Measure %Saving Cost increase Payback periodAction Window to wall ratio 8.0%Negative 0Include Solar Shading Devices 17.3%7.2% 25.0Consider Reflectivity - Wall 0.5%0.0% 4.8Include Thermal Conductance (Wall U-Value) 0.3%0.5% 98.6Exclude Reflectivity – Roof 0.2%Negligible -Include Thermal Conductance – (Roof U-value) 0.1%0.0% 18.1Consider Glazing Assembly Properties (U-value, SHGC, VLT) 7.3%0.1% 0.9Include COP of air conditioning equipment 11.4%1% 5.4Include Variable Speed Drives for cooling towers 9%0% 0Include Heat recovery on extract air 2%Cost awaiting 26.2Consider Solar collectors for Hot water NA ---Exclude Photo electric control perimeter lighting 18%2% 7.4Include Exterior lighting controls NA ---Exclude Low energy lighting [CFL, T5, LEDs etc] 7%0.12% 1.0Include Electronic Ballast 2%Negligible 0.0Include Sub-metering benefits 3%NA Consider Water efficient fittings 40%0.35% 6.0Include Rainwater harvesting 15%Cost awaiting 26.2Consider Recycling onsite Sewage T plant 67%Cost awaiting 7.4Consider Water metering NANegligible NAInclude Storm water attenuation and ground water recharge NA Minimal impact NAInclude The energy saving potential of each measure has been correlated with the cost impact and therefor the simple payback.

15 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.

16 T HANK Y OU FOR YOUR ATTENTION ! For more information, please contact: Debra Perry International Finance Corporation, Climate Business and Sustainably Group


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