UNEP

The Challenges for Sustainable Buildings In

Emerging Economies

Dr. DUYGU ERTEN, P.E.Founding Vice President of Turkish Green Building

CouncilCEO-TURKECO Construction and Energy Inc.

Holland - Turkey Business Forum

Amsterdam, Holland: 17.4.2012

BARRIERS in Developing Economies

IInvestment in greennvestment in green buildings is held back owing to assumed cost buildings is held back owing to assumed cost premiumspremiums that are exaggerated and a range of barriers that rangethat are exaggerated and a range of barriers that range from financial constraints to the fragmented structure offrom financial constraints to the fragmented structure of the the industry. industry.

While some barriers relate to hidden costsWhile some barriers relate to hidden costs or benefits and market or benefits and market failure, others relate to behavioralfailure, others relate to behavioral culture, lack of awareness and culture, lack of awareness and capacity.capacity.

BARRIERS…..

SSubsidised, not cost-reflective energyubsidised, not cost-reflective energy prices, prices, LLack of awareness on the importance and theack of awareness on the importance and the potential of energy potential of energy

efficiencefficiency y improvements,improvements, LLack ofack of financing, lack of qualified personnel and financing, lack of qualified personnel and IInsufficientnsufficient energy service levelsenergy service levels,, (UNEP (UNEP--SBCI 2007b).SBCI 2007b).

IN GENERAL (UNEP 2010 Report):

Several developing countries have enacted legislation on energy efficiency in buildings. Special enabling factors to support measures for green buildings in developing countries are the need for: Getting the energy price right, so that more efficiency

investments become profitable; Technical assistance and training; Demonstration projects and information to build trust;

More….

Financial assistance or funding mechanisms; Regulatory measures, such as mandatory audits,

combined with incentives such as subsidies or awards; Monitoring and evaluation (requiring baseline data); Institutionalisation (e.g. establishing energy agencies

independent of utilities); and Adaptation to local circumstances, including climate

and culture.

TURKISH CASE: LEGAL FRAMEWORK

Mandatory labelling and certification program: (BEP) 2013-“National Calculation Metodhology (NCM) is

being worked on (coordinator-Ministry of Construction and Settlements) in order to support Energy Performance Certification Project CHG-TR project (paralled to EU Energy Performance Directive)

ENVER 5627 Law Adapted: May 2007 TS 825 Standard

CHALLENGES

• Lack of Eco-Materials• Lack of know-how on Eco-Labels and EPD*s.• LEED/BREEAM/DGNB/TURKISH SYSTEM JUNGLE!• Lack of Green Building Design and Construction Expertise, i.e.

ASHRAE usage among designers• DUE to LACK OF FUNDING for NGOs

• NOTE*: The European construction products industry is going ahead with the standardisation of Environmental Product Declaration as agreed a meeting in Brussels on 23 September 2011.

1) Information asymmetry regarding green practices, codes and standards and green guidelines,2) Lack of Incentives: developers may not find it profitable to increase energy efficiency,3) Conservative nature of construction industry: voluntary adoption of new technologies is low,4) No on site audits for LEED and BREEAM projects

PRIVATE SECTOR

1) No incentives for the property owner, businesses and financial institutions for green buildings yet! (for eco materials government pays 50% incentive for the cost of getting an EPD)2) Lack of appropriate instruments (like tax rebates) 3) Lack of appropriate Policies, Legislations and Laws-aiming to far!4) Weak Monitoring Mechanisms5) Lack of institutions that oversee the market and coordinate transactions among different actors6) Lack of investment and financial support from the government

GOVERNMENT

1)Lack of ‘green skilled’ workforce2)No proper training institutes and guidelines3)Absence of certification mechanisms which distinguishes skilled from non-skilled workers4)Lack of experts on LCA and LCCA methods and energy modelling5) Lack of Commissioning Agents and energy modellers

HUMAN RESOURCES

1)Lack of incentives-low priority for energy-efficiency2)High Upfront Costs3)Lack of access to capital4)Short planning horizons but long pay-back periods5)Risk aversion: uncertainty about green property value

OWNERS

• High payback period which leads to low rate of return on investment, preference for classical investments with quick payback period. (especially for retrofitting projects)

• High perceived risks and credit risks attached to the client.• Cost-Benefit Analysis is not very easy and evaluation methods

are not clear as to the choice of discount rates.

• Difficult to evaluate energy efficiency projects due to absence of standardized measurements and verification of energy efficiency

FINANCIAL INSTITUTIONS

• Demand to built green homes is increasing.

• A green homes certification system is completed by Turkish Green Building Council

• 500 000 homes/year built by government

• Green Loans-In progress

FOR HOMES MARKET….

ALARMING RAISE IN CO2 EMISSIONS!

• Identify Barriers• Fragmented and uncoordinated municipal support for green building practices• Unevenly regulated energy efficiency standards• Inconsistent utility incentives (public purpose efficiency and demand side

management programs)• Uneven consumer awareness & lack of building industry leadership• Financing - first cost bias, split incentives, churn, securing retrofit financing• Lack of local capacity in design and construction trades, unsophisticated

owners

A STRATEGY FOR DEVELOPING ECONOMIES

Set Guiding Principles• Expand market demand through industry capacity building• Make green buildings financially easier to design & build through

incentives• Raise the bar through codes improvement

Develop Strategy • Demand and value creation (Marketing & Awareness)• Capacity of the design & build teams (Training & Skill Development)• Uncertainty over incremental first costs (Incentives)• Regulatory consistency & hurdles (Performance-based Regulations)

• Consider implementation of these four strategies along a continuum to evolve the market with purposeful intentionality, with each step priming the market for the next

A STRATEGY FOR DEVELOPING ECONOMIES

DESPITE ALL THE HURDLES GREEN TSUNAMI hit İstanbul in 2010!

• 60+ projects are registered to receive LEED and BREEAM as of April 2012

• CERTIFIED BUILDINGS: 25

• TURKISH GREEN BUILDING COUNCIL-Will launch the Turkish System for HOMES in late 2012 in coordination with Ministry of Settlements and Environment

UPDATE ON PROJECTS ON CERTIFICATON ROUTE

..Questions?

derten@turkeco.com

About the speaker:About the speaker:

City Director-İstanbul-Clinton Climate Initative-2007-2009Founding Vice President of Turkish Green Building Council-2007-2012Contributing Author of UNEP:Green Economy Report-Green Buildings-2010Founding Principal of TURKECO Construction, Energy Ltd.-2010Practice Faculty at Sabancı University-İstanbul-2008-2010