Towards a green economy

Box 8: Tools to promote the greening of buildings Carbon credit

White certificates

Third-party financing arrangements

As of 2005, large-scale renewable energy projects accounted for 60% of total CDM projects. While the building sector offers theoretically great potentials only around 1% of the certificates have been generated through demand-side energy- efficiency measures (Fenhann and Staun 2010)1. Therefore, the potential for green buildings to be eligible for carbon credits needs to be explored further.

Used in Australia, France and Italy, these certificates can enable building owners and even residential landlords to trade their emissions allowances (Ries et al. 2009). In principle, the various trading schemes will promote the desired effect, such as the reduction of GHG emissions, at a minimal cost (Bürger and Wiegmann 2007).

Energy Service Companies (ESCOs), by engaging in Energy Performance Contracting – sometimes referred to as Energy Savings Performance Contracting – with building owners, develop, install and monitor projects designed to improve energy efficiency. Compensation for an ESCO service and often the initial investment needed are directly linked to the energy savings associated with the project. Hence, the major barrier of upfront cost is addressed by allowing future energy savings to pay for the invest- ment (Bleyl-Androschin and Schinnerl 2008).

Rebates

These can be built into the tax system to give credits to homeowners for adopting specific energy saving measures rather than whole building performance. The Power Saver Program in Austin, Texas currently supports more than 1,000 privately-owned solar power systems as well as around 70 commercial and several dozen municipality-run systems, which in all provide more than 4 megawatts of generation capacity (Austin Energy 2010).

Feebates Green mortgages

Equity finance or external capital

Revolving Funds

This new form of credit incentive is currently being tested and is based on a carbon tax or a tax on the carbon footprint of a build- ing or sale certification fees. The feebate rewards homeowners who maintain energy efficient homes or carry out upgrades prior to sale. They pay less or their fees get waived, rebated or tax credited. In this system, tax revenue is not lost because the feebates pay for themselves as higher fees offset lower fees. The level of feebates can also adjust to higher standards of efficiency and can gear up as more building owners go above minimum requirements.

Credits based on a home’s energy efficiency are factored into the mortgage, allowing individuals to finance energy-efficient improvements in their property (Hendricks et al. 2009).

This is used for funding high-risk projects whereby project developers sell a majority of their ownership in the project to entities that have sufficient resources to finance the project. The disadvantage is giving up part of the control over the project.

Loans can be repaid with the cash-flow arising from energy savings. The repaid loans then finance new energy efficiency projects. For example, in Hungary, the PHARE Energy Efficiency Co-Financing Scheme (EEFS) provides interest-free credit from a Revolving Fund with a total budget of € 5 million for energy-efficiency purposes (EuroACE 2005).

Capacity support, information and voluntary action This category of instruments includes

public-leadership

voluntary

certification and labelling programmes, voluntary and negotiated agreements,

initiatives,

awareness raising and education, as well as detailed billing and disclosure programmes. Examples of their cost-effectiveness are the following (UNEP SBCI 2007b):

■ Voluntary labelling: US$ 0.01-0.06/kWh (USA);

■ Leadership programmes: US$ 13.5 billion savings by 2020 (EU) – US$ 125/tCO2

(Brazil); and

■ Info and awareness raising initiatives: US$ 8/tCO2 Energy Trust programmes (UK).

for

International building labels are a source of inspiration. Passivhaus and Minergie have succeeded in promoting different combination of measures to achieve national targets and policy objectives for green buildings within the developed world. When applying labels in developing countries, however, they clearly need to adapt to local geographic and cultural conditions.

Appliance efficiency standards and labels are also important in greening the building sector (Meyers,

366

McMahon and Atkinson 2008). Among the oldest and most comprehensive are the US Federal Minimum Efficiency Performance Standards (MEPS) programme, the comparative labelling programme implemented by the European Union (European Parliament and Council Directive 2010/30/EU and the US Energy Star endorsement label programme. An example of voluntary labelling programmes in developing countries is the energy efficiency standards for air conditioning and refrigerators introduced in Thailand.

The public sector, which can include both housing and institutional buildings, is unique in that it can act as an exemplar for environmental targets. Public leadership programmes can reduce costs in the public sector and provide demonstration of new technologies that can be followed by the private sector. In Germany, 25 per cent of energy was saved in the public sector over 15 years. In Brazil, where the government agency PROCEL provides funding for retrofits in Government buildings, 140 GWh are saved yearly (UNEP SBCI 2007b).

A number of developed countries are leading the

way for green public procurement to drive the green transformation in the building sector. A recent PwC survey of seven European countries concluded that