Last Updated: Jun 16, 2021
With the COVID-19 pandemic continuing to spread at an ever-increasing rate, many people continue to be solely focused on staying healthy and taking care of the most vulnerable members of their family and community. Despite the widespread economic turmoil, many progressive minds also see the COVID disruption as an opportunity to transition into healthier and more sustainable livelihoods. On November 25th, a virtual roundtable brought together leading advocates for a transition towards green and sustainable building methods. Part of the "Building Back Better Together" Canada and Europe Roundtable Series, the roundtable discussion explored critical insights into how the international community can build back together post-COVID.
The roundtable discussion, titled "Financing the Green Building Wave," offered a wealth of experience from leaders in the sustainable building industry. Specifically, the discussion centered on how net-zero new builds and deep retrofits for commercial and residential builders are financed in Germany and the EU and what Canada can learn to launch a green building wave on this side of the Atlantic. The roundtable discussion was moderated by Diana Fox Carney, Director of Strategy and Engagement at the Institute for Public Policy Research (IPPR), and brought together a panel including:
Rise joined as an observer of this fascinating look at practical steps toward green and sustainable buildings becoming the new status quo.
The first part of the roundtable discussion focused on identifying the primary challenges of transitioning to a green building wave. Julia Langer, CEO of The Atmospheric Fund, summarized these four challenges as:
Recent studies have found that up to 88 percent of Canadians report they have been adversely impacted by climate change. Although an enormous percentage of people worldwide understand and feel the effects of global climate change, many people continue to make their decisions based on economic factors. Low fossil fuel energy prices globally and around Canada are thus one of the main limiting factors in the transition to low carbon buildings. Cheap natural gas is the main culprit, at least currently. Affordable energy prices essentially mean that many homeowners don't see deep retrofits and energy efficiency retrofits as a high priority - due to the slow or nonexistent payback periods. Langer says that it is "not easy to make a business case for energy efficiency retrofits given the current energy prices."
Another critical challenge is associated with the segregation of the building industry. The financers, policymakers, builders/contractors, and homeowners or building owners often have competing interests. This reality makes the necessary scaling up of energy-efficient and "green" buildings complex. "How we aggregate this disaggregated sector is a pending challenge," Langer believes.
Some homeowners or building owners might willingly invest money into a deep retrofit of their home or business based on their environmental concerns or ecological ethics. But, others will want to see tangible benefits. "We need to find a way to bring together the social, environmental, and monetary benefits of this transition (to green building)," Langer says.
Langer believes that we already have the necessary technologies and systems to revolutionize the building sector and drastically reduce building-related emissions. Even though we do not lack the technology, she acknowledges that it can be a complicated process to put together deep retrofits or new green builds on a building-to-building basis. Instead of "reinventing the wheel" with each new build or retrofit, we need to streamline the pathways and processes to make new builds and deep retrofits efficient and cost-effective.
All of the roundtable participants agreed that making an economic case for the green building wave was the main priority. In large, multi-family residences such as condos or apartment buildings, building owners had a stake and responsibility in this transition. They needed to be engaged in solutions and challenges.
For instance, some building owners might be reluctant to place a solar PV system on their rooftop where prime penthouse suites could generate extra income. But, showing these builders that they could also place that PV panels on the sides of buildings to overcome certain logistical restraints would be a worthwhile effort.
In single-family residences, keeping renovations and green technologies affordable for the average family was another major challenge. Different financing instruments related to green building are becoming increasingly available to other sectors of society. However, for most homeowners to willingly take on these loans' costs, they have to be shown the long-term advantages, both economic, environmental, and health-related.
The panel also agreed that many individuals automatically assume that green and sustainable buildings will be expensive. Helping people see this transition from a more extended timeframe is thus essential to get people on board. "Obviously, energy savings do add up," the moderator Diana Fox Carney stated. "In the very short term, households by insulating better and changing to electric can save $1,000 to $2,000 per year in most states. While this is good, we need to get the payback period shorter."
The panel also discussed the need for a financing mechanism directed towards low-income households struggling to pay their bills (including their energy bills). "While it can be a win-win if we help them retrofit (older and energy inefficient homes, low-income families are the least likely to be able to finance those issues. How do we help those people?" Carney asked.
Governments worldwide also have an essential role in financing and implementing a green building wave in the post-COVID world.
Many panelists commended the Netherlands government and lauded them as an example of how effective policy can hasten the adoption of low carbon building standards. The Dutch government recently adopted a new regulation that does not allow new homes or buildings to be connected to the existing gas grid. This policy essentially obligates the creation of market conditions for net-zero construction, including financing instruments.
Stefanie Kerlein, the Project Manager at IBA27 (International Building Exhibition 2027), also stated that international building exhibitions could further push for a change in the status quo without forceful, top-down legislation.
"Our exhibitions can help by challenging social and ecological questions related to the building sector," she said. "We like to test and implement new techniques, materials, and technologies. We want to go beyond the status quo...We want to analyze the issues and change the status quo through creative measures. This means less regulation is needed if people see the creative new ideas and how functional they are," she added.
A combination of effective government regulation, visible and creative projects that show the functionality of green building technologies and methods, and accessible financing instruments can help push the widespread adoption of green building techniques and change homeowner's expectations for how our buildings and homes should look and function.
The transition to a green building future will necessarily be multifaceted. But, the lack of specialized financial instruments for deep retrofits and new construction is one of the most significant roadblocks.
The panel mentioned that homeowners are aware of the performance and payback for specific sustainable home retrofits (such as updating insulation or switching to a heat pump). However, there is a need to create financing schemes for a deeper, multilayer retrofit that truly drives down emissions. Ideally, homeowners should be able to access 100 percent financing for these types of net-zero emission building projects.
Besides traditional financing channels, layering in government grants can help all parties see the types of return on investments they need to make a project feasible. Though affordability is an issue for lower-income classes, for others, the main challenge is helping them to see and understand the broader value proposition.
Frederic Bettez of the Canada Infrastructure Bank (CIB) offered his experience from a financial institution with a mandate to finance green retrofits. Bettez stated that one of the main challenges wasn't necessarily a lack of capital, but educating all parties involved in the benefits of the transition to a green building future. "We know that there are different needs (for different stakeholders)," he said, "and we are working in developing an aggregation market."
The CIB is currently searching for longer-term and cheaper financing options to allow people from all income brackets to go for deeper retrofits. This project involves a bit more risk for the bank. Still, Bettez stated that the bank was willingly taking on this risk to promote building projects that guarantee energy savings. "Ultimately, if we can go deeper and create a market (for a green building future), and if the market eventually adopts these standards...that is the goal," Bettez stated.
The post-pandemic world will undoubtedly bring many changes to how society is structured. With the right financing alternatives, homeowners, building owners, banks, contractors, developers, and other parties involved can all help. They can come together to create the market conditions that will allow the green building wave to transform our built environment into a carbon-neutral space.
Tobias runs an agroecology farm and a natural building collective in the mountains of El Salvador. He specializes in earthen construction methods and uses permaculture design methods to integrate structures into the sustainability of the landscape.