Why is it in the news?

• Governments are increasingly embracing high-performance buildings (HPBs) through policies and financing mechanisms that enhance energy efficiency, resource management, and carbon neutrality.

An Analysis

• HPBs tackle urban and climate challenges by significantly reducing greenhouse gas emissions, minimizing energy and water usage, and lowering operational costs with climate-adaptive designs. They also enhance occupant well-being, making them appealing to both businesses and individuals.
• Besides environmental benefits, HPBs offer financial advantages, including increased property values and reduced utility bills.
• Globally, governments are promoting HPBs through progressive policies. The European Union’s Green Deal aims for climate neutrality by 2050, mandating energy-efficient designs and retrofits. In Germany, KfW Bank provides low-interest loans for energy-efficient projects, while Denmark’s BR18 building codes incentivize sustainable construction.
• In the U.S., programs like Energy Star and LEED certification encourage energy efficiency and provide tax credits. Given that the construction industry accounts for approximately 39% of global energy-related carbon emissions, these policies illustrate that reducing energy consumption is both feasible and financially viable with the right incentives.
• India has made notable strides in promoting energy-efficient buildings through its National Action Plan on Climate Change. The Energy Conservation Building Code (ECBC), developed by the Bureau of Energy Efficiency (BEE), aims to reduce energy demands in buildings by up to 30%.
• The Green Rating for Integrated Habitat Assessment (GRIHA) includes over 3,000 registered projects focused on sustainable practices, while the Indian Green Building Council (IGBC) supports more than 14,000 certified projects covering 12.5 billion square feet.
• Cities like Hyderabad, Noida, and Pune offer incentives for buildings that meet ECBC standards, leading to increased green registrations and energy savings. The BEE targets 30% of new buildings achieving net-zero status by 2030.
• As green technologies become more affordable, the cost gap between conventional buildings and HPBs is narrowing. HPBs yield significant energy savings and reduce emissions at minimal additional costs.
• For instance, Infosys integrated energy-efficient designs into its campuses, achieving a 45% reduction in energy consumption and substantial cost savings. HPBs also enhance indoor air quality and thermal comfort, benefiting employee well-being. They command higher property values due to lower operating costs and rising demand from environmentally conscious buyers.
• In India, commercial properties with green certifications like IGBC, GRIHA, or LEED often attract premium rents and higher occupancy rates, as seen with ITC’s Green Centre and TCS Siruseri IT Park.
• Financing HPBs typically involves carbon financing, which converts carbon savings into financial value, facilitating funding for developers. Carbon credits—tradable permits that allow companies to offset emissions—play a crucial role in this process.
• In regions with carbon pricing, such as the European Union and China, HPBs that improve energy efficiency can generate carbon credits, providing significant financial incentives for sustainable investments. However, effective accounting and transparency in monitoring these credits are essential.
• Green bonds and climate-focused funds also support HPB financing. In 2020, green bonds worth $269.5 billion were issued globally, indicating a growing interest in sustainability-aligned projects.
• Organizations like the World Bank and the Green Climate Fund provide financial support for HPBs. These mechanisms help offset the higher upfront costs of constructing HPBs, promoting wider adoption.
• By engaging in carbon markets and securing green funding, developers can enhance the financial viability of HPBs while contributing to global efforts to reduce carbon emissions.