hans schrader - regulatory reform to promote green building development

7/31/2019 Hans Schrader - Regulatory Reform to Promote Green Building Development

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Why are greener buildings important?

Climate Change

Current GHG Emissions: Buildings account for 15%. One of the fastest growing sectors. IPCC

estimates building-related GHG emissions to double by 2030 under a high-growthdevelopment scenario. This increase would take place almost entirely in the developing world.

Reducing climate change requires investments/innovation in energy efficiency, renewable

energy.

McKinsey forecasts that low cost abatement measures are in the building sector.

Urbanization

70% of the worlds population will live in urban areas by 2050 (today 50%); 1 in 3 will live in

urban areas in Africa & Asia.

The emerging middle class with rising income levels is growing by 90 million per year.

To meet this demographic change, increased employment opportunities will have to be

generated in urban areas- requiring additional commercial buildings.

Buildings of almost every type represent necessary long-term development infrastructure, yet

present a real danger of locking in inefficiencies for decades if constructed unsustainably.

Demographic Trends

World population will reach 9 billion by 2050: 34% higher than today; poor countries will

double current population levels.

Age is a significant factor; emerging market populations are creating a huge demand for homes

that need to be affordable and green.

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Buildings provide the low hanging fruits for abatementBuildings offer us the single largest global opportunity to make deep emission cuts at low, no, and even negative cost.Developing countries represent the greatest opportunity for reductions, underscoring the need for an international effort torapidly enhance sustainable building practices in such countries and to capitalize on this emission reduction potential.

Carbon Abatement Curve

Source: McKinsey Analysis

Options are costeffective with

relatively quickpaybacks

Options notcurrently cost

effective: role foradvisory,

regulation,concessional

finance

All relevant for

Green Buildings

AbatementGt CO2e/year

Cost of Abatement/t CO2e, 2030

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Mapping Macro drivers: Where is the biggest demand?

Economicdriver

percent

age

costofelectricity

vs.

GDP

[%]

-

Jamaica

DominicanRepublic

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 populaceadded each year[In millions]

1510

51

Sri Lanka

Morocco

Thailand

Bangladesh

Russ

ia^

Ethiopia

Cameroon

Caribbean

MediterraneanEast coast

Asian

Giants

Vietnam &Philippines

Pe

ru

Azerbaijan

Honduras

El SalvadorCosta Rica

Malawi

PanamaParaguay

Uruguay

Zambia

BoliviaTanzania

Ecuador

Guatemala

Trinidad

Togo

Tajikistan

ChinaIndia

VietnamPakistan

Priority

countries

HighPriorityHigh 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

Whyelectricity?: 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]

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Building Sector Emission Current & Projected

5

Source: IPCC A1 scenario, www.ipcc.ch
http://www.ipcc.ch/http://www.ipcc.ch/


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Different markets require different solutions

Number ofbuildings

Mid-size commercial[hotels, hospitals, offices]

Approach to green buildings:Debt/ Equity; Investments inESCOs and EE tech

companies, inc, BIPVs andcooling/heating systems

Green building regulations onenergy use.

Large complexes[i.e., large retail, airports,

SEZs or housing schemesinvolving more sophisticated

building developers and

consultants]

Approach to green buildings:PPPs, Direct investments in

green building projects tocreate a demonstration

effect.

Informal homes

Approach to green buildings:Access to low cost materials,better planning, awareness

raising, investments in power,water and sewageinfrastructure, andmicrofinance for low-costbuilding materials

Urban housing[apartments, social housing]

Approach to green buildings:Corporate Finance; Incentivesthrough FI using products such as

green mortgages, Market for greenmaterials, appliances labeling andordinance for solar heating and

lighting products

Potential for IFC to make directly investments

Size of buildings

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The Big Picture

Data Collection Stage: Existing BuildingStock, Availability of technology and costs.

Creating typical building models based onbuilding stock data.

Subjecting the building models toparametric sensitivity analysis.

Implementation list collating costs oftechnologies with the energy savingpotential

Draft technicalrecommendations

Green Buildings Regulation

Methodology


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-4%-2%

0%2%4%6%8%

10%12%14%16%

69% 53% 40% 34% 20%

PotentialEnergySaving%

Wall to Window Ratio (WWR)

Office Retail Hotel

Hospital Apartment School

Current Building RegulationsWall to Window Ratio is not mentioned in SNI, however, Table1-14 (SNI_03_6389_2000_selubung bangunan) covers theselection of roof, window glass and walls

Proposed value for GBCWWR= 40% and SHGC = 0.40 as mentioned below

Buildingtype

Base Case(WWR Ratio)

Recommendation(WWR Ratio)

PotentialEnergy

saving (%)

Office 70% 40% 8%

Retail 70% 40% 4%

Hotel 70% 40% 9%

Hospital 70% 40% 8%

Apartment 40% 33.5% 2%

School 33% 33.5% Base case

Potential EnhancementsTable 1. Recommendation for WWR Value

33%

40%

53%

69%

20%

Note:WWR: Wall to Window ratio. Netglazing area (window area minusmullions and framing, or ~80% ofrough opening) divided by grossexterior wall area (e.g., multiplywidth of the bay by floor-to-floorheight) equals window-to-wall ratio(WWR).

School and Apartment: Base caseconsidered for these is 33.5% &

40% WWR respectively comparedto 70% for other types. Therefore,the % saving are lower

Sensitivity Analysis: Example findings- WWR

%WWR

Regulating the percentage area of windows ofan office building such that it does not exceed40%will reduce energy consumption by8%compared to a typical office building in Jakarta.

Potential saving from reducing the proportional glazed area of a buildings facade


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In Sum & In addition

In EAP, GHG reduction is a core strategic target

IFC is has a complementary financing mechanism

Work on regulations is technical and require participation from abroad set of stakeholders.

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GB Barriers and DriversGreen Building Market Report, BCI Asia 2008

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Crisis reaches Asia Pacific; clients anticipating slowdown

China: Growth is slowing in response to weak

external demand and domestic policy measures

taken to stem the surge in credit India: Elevated inflation, exchange rate

volatility, high interest rates, weak investment

activity & sluggish reforms

Vietnam: Material external exposure: trade with

the EU (11% of GDP), remittances (7% of GDP)

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Significant linkages with external sector heightens vulnerability inAsia, esp in smaller economies

High inflation a concern in most economies; further escalation in commodityprices could hurt external and fiscal balances

IMPACT ON CLIENTS

Syndications market drying up, risk ofinadequate funding for major projects (eginfrastructure)

As in 2008, projects are getting deferred

Increased costs of borrowing, shortenedtenors and limited availability of USD

Increased demand for IFC

Smaller businesses hit harder


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9.5 M tons GHG /yr

71% of Global

Poor at $2 per dayin Asia

66% of IDApopulation in Asia

40% of GlobalCO2Emissions

China &India majorsource ofEmergingMkts FDI

0

2,000

4,000

6,000

8,000

China USA EU Brazil Indonesia RussianFed

India [1] Japan [1]

Total GHG Emissions (million tpa)WRI 2005 data Incl. land use change

A2F Micro: 23.4M

A2FSME: 1.13MA2 Infra: 17.8MFarmers: 1.25MH&E: 2.49M

Cost savings: $340M

10 S-S deals

% of keysectorswith improvedES&G standards

2-3 innovativebusiness models

replicated

15

IFC Asia Strategy Remains RelevantStrategic Themes 3 Year targetsDevelopment challenges

ClimateChange

Inclusion

GlobalIntegration

East Asia & Pacific(ex-China)

South Asia

(ex-India)

China

Rest ofthe world

India

Share ofWorld's Poor

$2/day

Share Directed toEmerging Economies

* Data for China does notinclude Hong Kong

China and India 6% of global OFDI (2010)

Outward Foreign DirectInvestment


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Disruption area

Renewable powergeneration

1

Energy & cybersecurity & microgrids

8

CleanTech disruptions will create and destroy multi-billion dollar marketsDisruption scenarios Growth business Declining business

20% of power from renewables by2020

Wind Solar Grid energy storage technologies

Coal, oil burning power plant building, andoperation

Energy efficiency2

30% reduction in energy use Mandated replacement of

incandescent bulbs

Insulation LEDs and lighting controls Energy service companies Advanced HVAC

Traditional light bulb Power/energy company

Innovation in fossilfuel

3

2-10x increases in US natural gascapacity from shale discoveries

CHP/micro CHP Biomass fuel Advanced CCS

Oil refinery Petrochemical

Overhauling power

infra-structure4

SmartMeters in all homes by 2020 Grid energy storage proliferates

SmartMeters High voltage DC technology

In home energy management Grid IT

Traditional meters Meter reading services

ElectricVehicles

5

15% of new car sales to be xEV in2015

Battery Electric motors Power electronics Charging infrastructure and comms

Gasoline stand Traditional power train companies

Material/ dematerial-ization

6

>10x energy efficient building material Heat reflective windows/coating films Carbon negative cement Gel based insulation

Traditional single and double pane glasses High emission cement Fiber glass insulation

All US utilities mandated to adhere tocyber and energy security standards

Microgrids/islanding of military bases Cyber security for smart grid Storage Biofuels, coal to liquids

Oil refinery Utility sales to bases

90% of world population withwater shortage

Advanced pipes, pumps, and valves Civil engineering Desalination plants Efficient irrigation systems

Existing agricultural region Manufacturing plants (textile, chemical,

semiconductors, etc)Water7

Source:

Mckinsey & Co.

IFC ResponseContext


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We must combine financial products, mobilizationand metrics/KM to scale our impact,

Financial

Products

Mobilization

InnovationTransfer Fund

Debt/Mezz Facility

CP3 Fund

New tech and businessmodels - venture capital

AS-IS Integration

GEF, CTF

TradeFinance

Cleaner Production Facilities

Wholesalingthrough FIs

Strategy, Metrics

and KnowledgeManagement

Carbon Delivery Guarantees

Green Bond

Post 2012 Carbon Facility

150m

Enabling

environment

Resource efficiency:TA and benchmarks

Standards

KfW

Risk assessment

IFC ResponseContext

17

IFC ResponseContext


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The Climate Business mix willevolve.

-

500

1,000

1,500

2,000

2,500

3,000

3,500

FY10 FY13

Transport / Logistics

Recycling / Waste

Agriculture / Forestry

Green Buildings

RE/EE Eqpt

Other EE

EE in Metals & Cement

Credit Lines, Trade,FundsRenewables generation

$millions

$3.2bn

$1.6bn

IFC ResponseContext

26%22%

?

36%

31%

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IFC ResponseContext


19/20

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

06 07 08 09 10 11 12 13

$million

Infra. + Nat. Res.

MAS

FM

Cleantech VC

Clim. Fin. Prod. & Funds

Syndication

Special Facilities and Donor Funds FY

IFC ResponseContext

Plus

Mobilizationof 1.5BNUSD

19

At least 20% of commitments by FY13and more with mobilization.


20/20

20

EAP: Energy Efficiency Financing:Existing Clients Scale Up

$1.5 bn loans

57mn tons

CO2 reductionper year byFY10.

131 mn tonsby FY16.

17 25

39

53

67

2

5

7

10

13

10

15

27

39

51

0

20

40

60

80

100

120

140

FY12 FY13 FY14 FY15 FY16

SPDB

BOB

IB

CO2emission

(inmillionstons)

Emission Reduction Potentials of existing banks

hans schrader - regulatory reform to promote green building development

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