1、 Energyand climate changeCurrent Issues Authors Andrew J. Nelson +1 415 262-7736 Oliver Rakau +49 69 910-31875 Philipp Drrenberg Editor Tobias Just Technical Assistant Sabine Berger, Sabine Kaiser Deutsche Bank Research Frankfurt am Main Germany Internet: E-mail: Fax: +49 69 910-31877 Managing D
2、irector Thomas Mayer The building sector has immense environmental impacts. It accounts for 42% of the EUs 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 th
3、e commercial buildings sector. 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 le
4、ss water and offer lower maintenance costs. Several compelling factors drive 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 cost
5、s 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 becoming stri
6、cter. 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 “
7、near-zero” energy buildings mandatory by 2021. Limiting factors 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 buildi
8、ng 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 la
9、st 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. Green buildings will become ubiquitous. Tenant demand and the superio
10、r environmental performance of green buildings are major driving factors in making green buildings mainstream. However, 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. The transf
11、ormation of the whole building stock will take longer but is also foreseeable. April 12, 2010 Green buildings A niche becomes mainstream Green buildings April 12, 2010 3 Introduction Global climate change has become more apparent over the last few decades. Although the pace, extent and concrete outc
12、ome is uncertain, the direction of climate change is clear: temperatures are likely to rise globally, rainfall patterns are likely to change and extreme weather conditions are likely to occur more often. Most climate experts agree that the humans, at least in part, cause this development. The expert
13、s are calling for immediate and far-reaching action to fight global warming and remedy its consequences. One of the most important tasks is to reduce greenhouse gas emissions. An increasing concentration level in the atmosphere is said to be the main reason for rising temperatures. For instance, the
14、 CO2concentration in most industrialised countries has increased by more than 20% in the last 60 years. At the same time global temperatures have been rising considerably. The ever higher degree of CO2in the atmosphere reflects rising global consumption of wood, coal, oil and natural gas. It is evid
15、ent that the high degree of utilisation of these resources will eventually lead to scarcity and therefore to increasing prices. Expanding the use of renewable energy sources and using energy more efficiently in general, is thus desirable for both ecological and economic reasons. The worlds public ha
16、s recognised the need to act . Not only climate experts have become more aware to global warming, increasing emissions and high resource prices. The general public as well as companies are focusing on this issue. They have noticed the immense cost-saving potential of enhancing energy efficiency. . a
17、nd politicians encourage addressing climate change Current market mechanisms alone do not seem likely to accomplish a sufficient degree of energy efficiency and resource savings over the coming years as they often ignore the negative externality caused by CO2emissions. Externalities lead to a discre
18、pancy between the so-called private costs a person faces and the social costs a society faces. Many countries and politicians worldwide therefore seek strategies to encourage greater energy efficiency and more efficient resource utilisation through political measures such as subsidies and tax cuts f
19、or renewable energies. Growing attention from all angles has made climate change a major policy concern. Immense environmental potential in real estate sector . Buildings over their life cycle account for a large share of global greenhouse gas emissions. The European Commission reports that building
20、s are responsible for the largest share of the EUs final energy consumption (42%) and for about 35% of all greenhouse gas emissions.1Consequently, sustainable buildings and energy refurbishments hold enormous saving potential. This is confirmed by a McKinsey study. It finds that insulation measures
21、are among the many steps with negative abatement costs. This means implementing them saves money over the life cycle of the investment. Already, a multitude of measures affecting the real estate sector has been implemented. For example, many governments in Europe subsidise the use of renewable energ
22、y sources and support actions 1European Commission (2007a). -0.8-0.6-0.4-0.200.20.40.61850 1880 1910 1940 1970 2000AnnualTrendThe Earth is getting warmerGlobal temperature deviation, relative to average from 1961-1990 in CSource: Climate Research Unit128%26%15%31%IndustryHouseholds*Commercial Buildi
23、ngs*TransportLarge green potential in Million tons of oil equivalent, 2006Source: Deutsche Energie-AgenturEU real estate sector*Heating, lighting and cooling account for large share of total energy consumed.33003203403603804001958 1968 1978 1988 1998 2008Monthly Values TrendCO2concentration has been
24、 CO2concentration in Mauna Loa (Hawaii), parts per millionSource: Mauna Loa Observatoryrising2Current Issues 4 April 12, 2010 Building green faces obstaclesCertificates make environmentalperformance transparentFeatures of green buildings Efficient use of natural resources Waste minimisation Eco-frie
25、ndly construction materials Incorporation of local climate conditions Less energy required to transport building materials Limited impact on surroundings (e.g. lower emissions, noise, smell) Consideration of life cycle costs Health Location near population centres and close to public transportation
26、facilities Efficient building management and commissioning Social capacity and building users comfort Convenient indoor environment Source: McCartney (2007) and Nelson (2008) to improve insulation. Most European countries have also tightened environmental regulation for new buildings and refurbishme
27、nts of old buildings. Buildings complying with high energy-efficiency and other environmental standards decrease CO2emissions and are often referred to as “green buildings”. . and the problems in realising the potential First and foremost, there is not one uniform real estate sector as far as the en
28、vironmental potential is concerned. The commercial, residential and public real estate sectors all face different incentives and trade-offs in implementing green goals, and there are significant variations within each sector as well. There are, among others, issues of differing investment cycles, va
29、rying building codes and uncertain gains from more efficient building technology. The type of lease contract, net or gross, also can play a role. Ultimately, the investment must pay off for the investor or home owner through lower operating costs, higher rent or greater property values, or must be i
30、nduced by the government through taxes or regulation. So far, economic, informational as well as regulatory reasons still hold back an even stronger surge in green building investments. Certification guidelines and signals towards a more efficient building industry Certification of green buildings c
31、an play a major role in the transition to a more efficient real estate sector. New projects typically must, among other things, comply with more rigorous building codes and meet higher resource-efficiency standards in order to be certified. Certification systems provide clear market signals and guid
32、e business and household decisions. When executed well, investment decisions made on the basis of life cycle costing reduce performance risks and enhance the returns on the investment. However, there are no globally agreed-upon standards and measurements for green buildings and certification systems
33、. In part this is due to climatic as well as historical differences. This lack of comparability between certification systems and standards makes informed choices and quicker adoption of green buildings difficult. More comparability would improve transparency in the real estate sector. 1. What is a
34、green building? Green, sustainable or low-energy buildings are just some of the existing names for building concepts that are “green” in a wider sense. Therefore, a classification of the different concepts and what they entail is necessary. The greening of the real estate sector is reflected not onl
35、y by higher energy efficiency but also by better insulation and advanced design strategies. Besides aspects that directly address environmental pollution, many other facets are often taken into account, e.g. life cycle costs, health issues or socio-cultural aspects.2There are a number of different t
36、erms used for buildings that exhibit more and better sustainable features than regular buildings. They range from low energy buildings that only consider energy efficiency to sustainable buildings that consider all possible facets listed in the table below. The terms in the table below have overlapp
37、ing definitions and the differences are mostly small. From an economic point of view the 2Ltzkendorf (2009). Green buildings April 12, 2010 5 Certification standards vary fordifferent building typesGreen features are important due tomarket failureconcept of sustainable buildings is the most sensible
38、 one as it incorporates economic and environmental factors. Irrespective of the market, investments in environmental measures will only be made, if a long term profit can be achieved. Market forces, like high energy prices, positive marketing effects from “green” CSR goals or monetary incentives set
39、 by the government are all possible sources for the profitability of green investments. Those active in the real estate sector often do not differentiate carefully between such terms as “sustainable” and “green” and use them interchangeably. We will use the terms synonymously as well, but concentrat
40、e on green issues, since they are most relevant to a market failure in the real estate sector. As will be explained in section 3, the price of energy consumption does not reflect its full social costs, which results in a negative externality. This market failure is the reason for the importance of g
41、reen features to governments. Governments intervene in the real estate market by means of stricter regulation and monetary incentives in order to reduce the externality. Broad definition necessary? Considering the ambiguity of the terms above, it is clear that a single set of specific standards (e.g
42、. amount of water consumption per year) for all the different types of buildings is unrealistic. Buildings are complex constructions, designed for a range of users and purposes. They also have to be adjusted to specific local conditions. Taking this into account, it seems to be more reasonable to de
43、fine a catalogue of indicators and features with varying requirements for different kinds of buildings and conditions. For that reason certification systems have separate versions for the different building types (e.g. residential, commercial, or retail) and usually vary their standards according to
44、 local climate conditions. Green buildings contribute to both: the environment and the economy As evidenced in the discussion above, green buildings entail more than just eco-friendly measures. The work environment is enhanced by better air quality and greater access to natural light, which also rai
45、ses workers productivity. Waste minimisation and less dependency on increasingly scarce and expensive fossil resources lowers operation costs. Finally, the owner can benefit from increased occupancy rates (+8%), higher rents (+6%) and higher building values (+35%).33See Fuerst and McAllister (2009a)
46、 and (2009b). AspectConcept/Term Functi- onality Energy efficiency Resource intensity Env. compatibility Health Socio- cultural aspects Life cycle costs Value/ Earnings Technical quality Low energy building + (+) (+) (+) Low emission building (+) (+) + (+) Green building + + + + (+) High performance
47、 building + + (+) (+) Sustainable building + + + + + + + + + Source: Ltzkendorf (2009) 4 Current Issues 6 April 12, 2010 2. Driving factors After a sluggish start to adopting greener business practices, the real estate sector was finally embracing sustainable development and operations just as the b
48、ottom fell out of property markets in 2008 on the heels of the worldwide financial crisis. Clearly, the recession has slowed the greening momentum, as the dramatic reversal in property markets has undercut the viability of new construction and even property renovations. Thus, private-sector construc
49、tion ceased or at least greatly moderated in most developed markets, with developers generally only completing projects started years ago, and few new projects likely to break ground in the near term. Nonetheless, various market forces, in concert with regulatory incentives and mandates, continue to pressure real estate owners and managers to enhance the sustainability of their portfolios, though the focus has shifted to more efficient property operations in
