Green Buildings Opening a Short-lived Window of Opportunity

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1 Green Buildings Opening a Short-lived Window of Opportunity Autif Sayyed Green Building Specialist- IFC World Bank Group Nhan Nguyen Vietnam Green Building Project Lead- IFC World Bank Group

2 Green Buildings Opening a Short-lived Window of Opportunity 50% of the buildings standing in 2050 have not been built yet

3 Once built, their inefficiencies will be locked for next years Incorporating efficiencies in new design is up to 10x cheaper than retrofitting later

4 Green Buildings Opening a Short-lived Window of Opportunity Why are Green Buildings needed? What is stopping us from building green buildings? How can we overcome these hurdles? Examples? Green Building Opportunities in Cambodia

5 Why Green Buildings? Impact of Resource Efficiency in Buildings Economic Users save money on operations Healthier buildings lead to better worker performance and attendance Government can avoid cost of building additional energy/ water infrastructure Environmental Reduced need for energy from dirty sources Reduced need for potable water Reduced air and water pollution Better indoor environment

6 CO2 emission reductions by 2030 Source: 4th Assessment Report of IPCC Building sector offers largest low-cost potential for CO2 emission reductions globally by 2030

7 Hurdles to Green Buildings Why are so few being built? It s not required Lack of Regulations I want recognition Validated certification Who pays for it? Financing of green It s costly Perception of cost It s difficult Perception of complexity Where s the demand? Lack of awareness

8 Hurdles to Green Buildings Why are so few being built? It s not required Lack of Regulations I want recognition Validated certification Who pays for it? Financing of green EDGE Voluntary Certification Mandatory Codes Investment products IFC s 3-pronged approach

9 Hurdles to Green Buildings Why are so few being built? Cost Analysis of relevant code requirements for low payback Free EDGE software to guide cost decisions Simplified certification process It s costly Perception of cost It s difficult Perception of complexity Capacity building of govt. Awareness raising among all Incentives/ penalties etc. Where s the demand? Lack of awareness

10 Mandatory Regulations Solutions to Green Building Hurdles Mandatory Requirements that are: Simple Low Cost and payback Impactful

11 Capacity Development Solutions to Green Building Hurdles User Guides Training IT platform- Checklists

12 Capacity Development Solutions to Green Building Hurdles Building up the Business Case Media Campaign Pilot Projects Academic Association Industry association Partnerships with Architects, engineers, developers associations on increasing the acceptance of GB

13 Voluntary Certification Solutions to Green Building Hurdles 20% energy reduction 20% water reduction 20% embodied energy reduction EDGE standard focused on top priorities

14 Voluntary Certification Solutions to Green Building Hurdles Informal building sector Current ratings systems focused on top-tier clients have provided leadership Emerging markets needs a simple, quick, and affordable rating system for market transformation making it accessible to a majority of the building industry

15 Voluntary Certification Solutions to Green Building Hurdles 0.00%

16 Voluntary Certification Solutions to Green Building Hurdles 4 EASY STEPS TO PRELIMINARY CERTIFICATION

17 Nam Long, E-Homes 5, Vietnam Apartments feature high-performance glazing and energy-efficient lighting and controls, thermal insulation and dual-flush water closets, autoclaved aerated concrete blocks for internal and external walls. ENERGY 20% WATER 22% MATERIALS 27% Additional cost: 1.2% over total investment

18 FPT Danang Building, Vietnam This EDGE-certified complex features solar PVs, sensible heat recovery from exhaust air, and higher thermal performance glass to save energy, while a cooling system with a dry cooling tower avoids water usage. ENERGY 21% WATER MAT 20% 32%

19 City Express Hotel, Mê-xi-cô The project untilises low-e glass and shading devices to reduce solar radiation. Moreover, upvc window frame and concrete blocks that have lower embodied energy were chosen as substitutes. ENERGY WATER 32% MATERIALS 44% 51% Additional cost $56,209 payback period 0.6 years

20 Keserwa Medical Center, Lebanon The project saves energy by using efficient cooling system together with a waste heat recovery system. The building also uses green materials such as light concrete blocks and gypsum broad for walls. ENERGY 21% WATER 25% MATERIALS 26% Additional cost $94,803 payback period 1,21 years

21 Citra Mall, Indonesia The project saves energy by investing in efficient lighting system. On the other hand, water efficient taps, toilets, urinals, showers, and an automatic control system helps the building reduce its water consumption. ENERGY 20% WATER MATERIALS 22% 65% Additional cost: $0

22 Voluntary Certification Solutions to Green Building Hurdles

23 Financial Investment Solutions to Green Building Hurdles IFC s Direct Investments with developers $350M per year & growing Conditional on meeting minimum standards & efficiencies Investments through local banks Green Mortgages Green Construction Loans

24 Financial Investment Solutions to Green Building Hurdles

25 Financial Investment Solutions to Green Building Hurdles Deals without concessional finance. Deals with concessional finance. City Express IFC equity: $20m IHS IFC equity: $25m Concessional equity: $10m Value and Budget Housing IFC equity: $11m Housing Finance Bank Kenya IFC debt: $16m Concessional debt: $4m Concessional finance is not always essential but in the form of debt (with longer tenor, lower interest, or subordination), guarantee or patient equity, it can provide first movers with the commercial incentive to innovate in the face of higher perceived costs or risks. ODEA Bank IFC debt: $67m Concessional debt: $15m

26 Financial Investment Solutions to Green Building Hurdles

27 Vietnam Energy Efficiency Code Example Development of Building Energy Efficiency Code (BEEC) User Guides Awareness raising Demonstration Projects Support 3 provinces o o o Introduction of BEEC to all stakeholders Training/coaching Pilot evaluation Training BEEC compliance evaluators

28 Vietnam Energy Efficiency Code Example Trained more than 1000 officials & building practitioners in three regions DA NANG QUANG NINH HCMC

29 Vietnam Energy Efficiency Code Example Website introduction of QCVN 09:2013/BXD Completed Energy Efficiency design for three demonstration buildings and Appraisal in compliance with the code. FPT Office in Da Nang La Thanh Hotel in Ha Noi Ehome in Ho Chi Minh city 29

30 Vietnam Energy Efficiency Code Example 30

31 Financial Investment Examples Citra Towers Citra Plaza Apartment Citra Lake Suites IFC has provided loans and Partial credit guarantees for Ciputra Residence

32 Financial Investment Examples PUNJAB NATIONAL BANK HFL, INDIA $75 million non-convertible debenture for investment in green home construction EDGE benefits to the bank: Brand enhancement pre-ipo Access to new clients Increased green deal flow with opportunity to cross sell EDGE construction finance to EDGE mortgage finance What IFC provided: helped the bank assess market potential helped the bank pitch to existing clients about going green introduced the bank to new clients, often the best, forward-thinking developers provided training to bank staff on green asset management: criteria for use of proceeds; funds management; reporting.

33 Cambodia Current Growth Patterns GDP growth of 7.3 in 2015 and forecast 7.5 in 2016 Building Stock by Building Type, Cambodia: Building Type Units CAGR ( ) Office (m 2 ) 2,793,744 2,849,274 2,905, % Retail (m 2 ) 1,727,318 1,766,943 1,807, % Education (m 2 ) 1,416,506 1,463,362 1,516, % Healthcare (m 2 ) 417, , , % Hotels & Restaurants (m 2 ) 992,107 1,021,272 1,054, % Institutional/Assembly (m 2 ) 695, , , % Warehouse (m 2 ) 85,281 84,654 83, % Commercial (m 2 ) 8,170,026 8,403,408 8,650, % Single-Family Detached (m 2 ) 2,105,442 2,141,744 2,178, % Multi-Unit Residential (m 2 ) 38,591,630 39,613,568 40,778, % Residential (m 2 ) 40,697,072 41,755,312 42,956, % Total (m 2 ) 48,867,098 50,158,720 51,606, % Source: Navigant Research

34 Cambodia Current Growth Patterns Phnom Penh Condominium Supply by Grade Phnom Penh is experiencing a significant increase in supply, Overall supply in Phnom Penh is due to increase by % by the end of Rose by 22.4% in 2015 (total of 440 units) with forecasted increase to 21,414 units in 2018.

35 Source: CBRE Source: Knight Frank Cambodia Current Growth Patterns Cambodia office stock will see an increase of 64 per cent by 2018, with 60 per cent of the incoming supply classified as Grade A and 40 per cent classified as Grade B. Current Cambodia per capita retail space of sqm points to an undersupply, especially when compared to Thailand and the Philippines. 60 per cent of future supply will locate in central areas. 35

36 Cambodia Factors Cambodia office stock will see an increase of 64% by 2018, with 60 per cent of the incoming supply classified as Grade A and 40 per cent classified as Grade B. Current Cambodia per capita retail space of sqm points to an undersupply, especially when compared to Thailand and the Philippines. 60% of future supply will locate in central areas. At about USD 0.20/kwh electricity tariff, Cambodia has one of the highest tariffs in the region, which results in very good paybacks for efficiency improvements.

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