The building sector has immense environmental impacts. It accounts for 42% of the EU’s final energy consumption and for about 35% of all greenhouse gas emissions. The residential sector, with a share of 26% of overall energy consumption, has more potential for improvement than the commercial buildings sector.
Here is where the role of green buildings will be crucial in brining down the carbon footprint of the buldings sector. As the authors of the new report by Deutsche Bank highlight: “They have significantly lower energy consumption as well as lower operating and maintenance costs. Over the life cycle of a building these savings often offset higher initial costs and result in low or even negative carbon dioxide abatement costs”.
Green building techniques save resources. These techniques are especially relevant to reducing the energy consumption used for heating, lighting and cooling. Energy savings for green buildings average 30% over conventional buildings. In addition, green buildings use less water and offer lower maintenance costs.
According to Deutsche Bank, several compelling factors are driving the spread of green buildings. Growing tenant demand due to lower operating costs, higher worker productivity and reputational issues forces the real estate sector to adopt efficient building techniques. Overall, operating costs for leadership in Energy and Environmental Design (LEED) certified buildings are 8-9% lower than for regular buildings. Over the life cycle of a building these savings pay for higher initial costs. Investors also seek more socially conscious investments.
Building codes and regulation are also becoming stricter. Having recognised the advantages of green buildings, national governments and the EU have mandated higher efficiency standards for new construction and renovations with the EU Energy Performance of Buildings Directive of 2002 (EPBD 2002). EPBD 2010, the follow-up directive, is likely to make “near-zero” energy buildings mandatory by 2021.
Stricter regulation needed
Nevertheless, according to the research, limiting factors still remain. The real estate industry lacks a universal definition of what constitutes a green building as well as consistent data sources and metrics on green buildings. These deficits make an assessment of the profitability of green building investments difficult and therefore hold back stronger investor interest. Potential misalignments between landlord costs and tenant benefits also hinder faster adoption of green building standards.
Certification systems send market signals. The number of certification systems has surged in the last decade, although their usage remains limited outside the UK and the US. Nonetheless, they help facilitate the move to greener buildings by enhancing the transparency of building operating costs and other sustainability metrics.
The authors of the report are confident that “green buildings will become ubiquitous”. Tenant demand and the superior environmental performance of green buildings are major driving factors in making green buildings mainstream. They conclude that “stricter government regulation in the EU is likely to be the main reason for green buildings to become the de-facto standard for new and renovated buildings in 10 years” and that the transformation of the whole building stock “is also foreseeable although it will take longer”.
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