By 2050, it is estimated that 70% of the world’s population will live in cities. This increasingly urban lifestyle will require new and better buildings to be built globally. Sustainable building practices can help cities meet this demand in a way that
allows them to both honour their own climate change pledges and the Nationally Determined Contributions of their countries, whilst also helping to create future-proof infrastructure that may otherwise be at risk due to the effects of climate change.
Although the transition to sustainable building practices is possible and desirable, there are many challenges that hinder green building practices becoming business-as-usual, mainly because changes are required in every aspect of the building
sector value chain. What ensures that this ambition remains on the table is the fact that direct measures in buildings (e.g.
energy efficiency and renewable energy) could (by some calculations) account for potential savings in greenhouse gas
emissions of up to 84 gigatonnes of carbon dioxide by 2050 on a global level, the equivalent to planting 467 billion trees.
When considering energy efficiency alone, cost savings of up to USD 459 billion are possible with an investment of USD
16-270 billion. To set this in context, even at the highest end of this estimation, this investment is still less than a third of the
USD 850 billion expected to be spent in fossil fuel subsidies globally by 2050. It is clear that the benefits of a transition to sustainable building practices make sense. They are also widespread. Policy-makers can reap significant environmental and
socio-economic benefits by integrating sustainable building considerations in urban planning and re-thinking the subsidies
to energy and water. Financial institutions and investors can capitalise from the growing market by creating dedicated
products to finance green buildings. Developers and owners can align their business and sustainability strategies, and
engage with their stakeholders, to design, build and operate more efficient buildings. And tenants, as the ultimate drivers of the buildings market, can choose to opt for more sustainable living and working spaces.
HSBC has today published a report in collaboration with EY, looking at sustainable buildings frameworks for Saudi Arabia, Turkey and the UAE.
The report looks at the green building market in the three countries as well as the environmental, social and economic benefits of investing in green buildings. The report also offers recommendations for developers, policymakers, and tenants to harness the benefits of the transition to a more sustainable building sector.
Report highlights
Benefits of green building practices
• Green buildings achieving the LEED certification result in energy savings of 30% to 50% and water savings of 25% to 35%, compared to conventional buildings
• Energy efficiency in buildings can reduce energy consumption by up to 180,000 GWh/year in KSA and UAE, equivalent to 129 million tonnes of carbon di-oxide per year
• Deeper green building retrofits could save up to 43 GW per year of generation capacity across the GCC – potentially reducing cost of electrical generation capacity by USD 73 billion
• Turkey’s National Energy Efficiency Action Plan – potential savings of USD 30.2 billion by 2023
• Building owners state green buildings – whether new or renovated – command a 7% increase in asset value over traditional buildings
Challenges
• Lack of effective alignment of the green building strategies with urban planning
• Insufficient coverage across the value chain by the green building strategies
• Lack of specific financial instruments and incentive mechanisms
• Investment in green projects is still considered as a high-cost option
• Insufficient corporate commitment
• Significant existing building stock
Recommendations
• Integrated urban planning models and policies that incorporate elements related to green building practices across the value chain
• Gradual phase-out of existing subsidies for conventional energy and water utilities
• Introducing and promoting financial products and incentive mechanisms aimed specifically at green building-related projects
• Including different stakeholder groups across all phases of the project (design, planning, construction, operations etc.)
• Life-cycle assessments of green building projects
• Increased awareness on sustainable infrastructure among the public at large
• Resolving the ‘split incentive’ barrier between owners and occupants