Cities in India are expanding at a fast pace to keep up with high population growth and rapid urbanization. Researches show that the floor area of the buildings that dot our skylines is expected to double by 2060. Most of this growth will occur in residential construction, particularly in middle-income segment. Meeting the demand for new buildings through green construction can spur low-carbon economic growth and create skilled jobs in the country for decades to come.
Don’t look at the green buildings just from environment point of view but also consider it from business angle too. There is a strong business case for growing the green buildings market. Emerging evidence indicates that green buildings, or buildings that use energy and water more efficiently, are a higher-value, lower-risk asset than standard structures. Studies show that while building green could range from savings of 0.5 percent to 12 percent in additional costs, green buildings can decrease operational costs by up to 37 percent. New construction offers a significant opportunity to integrate energy efficiency into building design from the outset, helping to maximize the financial benefits that come from energy savings and avoid the need for costly retrofits later.
Despite the inherent benefits, the current size of investments in green buildings is only a fraction of the investment opportunity. Global investments in green buildings accounted for $423 billion of the $5 trillion spent on building construction and renovation in 2017. However, part of the problem in investing in green buildings is due to constraints created by the authorities and regulators. There are a number of constraints that hamper the development of a robust pipeline of green properties and widespread adoption of green construction. These constraints include the perception of high construction costs, a lack of alignment of incentives and benefits among market players, and a mismatch between relatively short hold periods of real estate assets in portfolios and the long lifespans of buildings and when they might be affected by climate change and stricter regulations.
We in India, despite having ambitious targets for green buildings, still haven’t been able to put in place effective measures to mandate and incentivize large-scale adoption of green construction practices. This is partly due to low technical capacity to build, operate, and maintain green buildings, lack of knowledge, and weak enforcement regimes, as well as challenges in developing and implementing consistent standards and requirements for green construction across a highly local and decentralized industry.
Despite the challenges, realizing the full potential of green buildings is within reach, with established financing models and proven, easy-to-implement technologies that are readily available and continue to decrease in cost with their greater adoption. It’s also true that investors, developers, owners, and governments will have to work together to meet demand for buildings in a way that is economically beneficial and aligned with global climate goals.
It’s the government which has to take the lead in creating green assets in the country. Government can help to create a pipeline of green building assets and incentivize financiers and investors to channel capital to the sector. As a large owners of and investors in real estate, government can help in the cause by requiring all public buildings to be mandatorily green. The government’s help is also needed to build technical capacity and skills among designers, engineers, and workers, who then can build privately financed green buildings. Unless the government takes the lead, it would be unlikely we would reach anywhere near our goal. The government should act fast too as time bomb has already started ticking.