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7/31/2019 Hans Schrader - Regulatory Reform to Promote Green Building Development
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7/31/2019 Hans Schrader - Regulatory Reform to Promote Green Building Development
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Why are greener buildings important?
Climate Change
Current GHG Emissions: Buildings account for 15%. One of the fastest growing sectors. IPCC
estimates building-related GHG emissions to double by 2030 under a high-growthdevelopment scenario. This increase would take place almost entirely in the developing world.
Reducing climate change requires investments/innovation in energy efficiency, renewable
energy.
McKinsey forecasts that low cost abatement measures are in the building sector.
Urbanization
70% of the worlds population will live in urban areas by 2050 (today 50%); 1 in 3 will live in
urban areas in Africa & Asia.
The emerging middle class with rising income levels is growing by 90 million per year.
To meet this demographic change, increased employment opportunities will have to be
generated in urban areas- requiring additional commercial buildings.
Buildings of almost every type represent necessary long-term development infrastructure, yet
present a real danger of locking in inefficiencies for decades if constructed unsustainably.
Demographic Trends
World population will reach 9 billion by 2050: 34% higher than today; poor countries will
double current population levels.
Age is a significant factor; emerging market populations are creating a huge demand for homes
that need to be affordable and green.
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Buildings provide the low hanging fruits for abatementBuildings offer us the single largest global opportunity to make deep emission cuts at low, no, and even negative cost.Developing countries represent the greatest opportunity for reductions, underscoring the need for an international effort torapidly enhance sustainable building practices in such countries and to capitalize on this emission reduction potential.
Carbon Abatement Curve
Source: McKinsey Analysis
Options are costeffective with
relatively quickpaybacks
Options notcurrently cost
effective: role foradvisory,
regulation,concessional
finance
All relevant for
Green Buildings
AbatementGt CO2e/year
Cost of Abatement/t CO2e, 2030
3
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Mapping Macro drivers: Where is the biggest demand?
Economicdriver
percent
age
costofelectricity
vs.
GDP
[%]
-
Jamaica
DominicanRepublic
Syria
Nicaragua
Gambia
Jordan
BulgariaPhilippines
Zimbabwe
Cape Verde
South Africa
Eritrea
Croatia
Lebanon
Turkey
Ukraine^
Sudan
Ivory
Coast
Egypt
Mexico
Indonesia
Kenya
NigeriaAngola
Haiti
Brazil
Colombia
Argentina
Kyrgyzstan
Mozambique
Ghana
Senegal
Slovakia
Uzbekistan
Urban populaceadded each year[In millions]
1510
51
Sri Lanka
Morocco
Thailand
Bangladesh
Russ
ia^
Ethiopia
Cameroon
Caribbean
MediterraneanEast coast
Asian
Giants
Vietnam &Philippines
Pe
ru
Azerbaijan
Honduras
El SalvadorCosta Rica
Malawi
PanamaParaguay
Uruguay
Zambia
BoliviaTanzania
Ecuador
Guatemala
Trinidad
Togo
Tajikistan
ChinaIndia
VietnamPakistan
Priority
countries
HighPriorityHigh Cost but
low carbon grid
Low cost but
high carbon grid
Low Priority
IFCs approach to addressing challenges is tailored to the needs of specific market contexts,
prioritising counties with high CO2 from buildings, high cost of electricity and high urbanization
Whyelectricity?: The largest amount of energy used by buildings is in the form of electricity.
Typically 20-40% of the electricity generated in a country is used by the buildings sector.
^ Russia and Ukraine have a net decreasing urban population
Environmental driverCO2 from electricity generation [gCO2/kWh]
44
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Building Sector Emission Current & Projected
5
Source: IPCC A1 scenario, www.ipcc.ch
http://www.ipcc.ch/http://www.ipcc.ch/7/31/2019 Hans Schrader - Regulatory Reform to Promote Green Building Development
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Different markets require different solutions
Number ofbuildings
Mid-size commercial[hotels, hospitals, offices]
Approach to green buildings:Debt/ Equity; Investments inESCOs and EE tech
companies, inc, BIPVs andcooling/heating systems
Green building regulations onenergy use.
Large complexes[i.e., large retail, airports,
SEZs or housing schemesinvolving more sophisticated
building developers and
consultants]
Approach to green buildings:PPPs, Direct investments in
green building projects tocreate a demonstration
effect.
Informal homes
Approach to green buildings:Access to low cost materials,better planning, awareness
raising, investments in power,water and sewageinfrastructure, andmicrofinance for low-costbuilding materials
Urban housing[apartments, social housing]
Approach to green buildings:Corporate Finance; Incentivesthrough FI using products such as
green mortgages, Market for greenmaterials, appliances labeling andordinance for solar heating and
lighting products
Potential for IFC to make directly investments
Size of buildings
7
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The Big Picture
Data Collection Stage: Existing BuildingStock, Availability of technology and costs.
Creating typical building models based onbuilding stock data.
Subjecting the building models toparametric sensitivity analysis.
Implementation list collating costs oftechnologies with the energy savingpotential
Draft technicalrecommendations
Green Buildings Regulation
Methodology
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-4%-2%
0%2%4%6%8%
10%12%14%16%
69% 53% 40% 34% 20%
PotentialEnergySaving%
Wall to Window Ratio (WWR)
Office Retail Hotel
Hospital Apartment School
Current Building RegulationsWall to Window Ratio is not mentioned in SNI, however, Table1-14 (SNI_03_6389_2000_selubung bangunan) covers theselection of roof, window glass and walls
Proposed value for GBCWWR= 40% and SHGC = 0.40 as mentioned below
Buildingtype
Base Case(WWR Ratio)
Recommendation(WWR Ratio)
PotentialEnergy
saving (%)
Office 70% 40% 8%
Retail 70% 40% 4%
Hotel 70% 40% 9%
Hospital 70% 40% 8%
Apartment 40% 33.5% 2%
School 33% 33.5% Base case
Potential EnhancementsTable 1. Recommendation for WWR Value
33%
40%
53%
69%
20%
Note:WWR: Wall to Window ratio. Netglazing area (window area minusmullions and framing, or ~80% ofrough opening) divided by grossexterior wall area (e.g., multiplywidth of the bay by floor-to-floorheight) equals window-to-wall ratio(WWR).
School and Apartment: Base caseconsidered for these is 33.5% &
40% WWR respectively comparedto 70% for other types. Therefore,the % saving are lower
Sensitivity Analysis: Example findings- WWR
%WWR
Regulating the percentage area of windows ofan office building such that it does not exceed40%will reduce energy consumption by8%compared to a typical office building in Jakarta.
Potential saving from reducing the proportional glazed area of a buildings facade
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In Sum & In addition
In EAP, GHG reduction is a core strategic target
IFC is has a complementary financing mechanism
Work on regulations is technical and require participation from abroad set of stakeholders.
11
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GB Barriers and DriversGreen Building Market Report, BCI Asia 2008
13
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Crisis reaches Asia Pacific; clients anticipating slowdown
China: Growth is slowing in response to weak
external demand and domestic policy measures
taken to stem the surge in credit India: Elevated inflation, exchange rate
volatility, high interest rates, weak investment
activity & sluggish reforms
Vietnam: Material external exposure: trade with
the EU (11% of GDP), remittances (7% of GDP)
14
Significant linkages with external sector heightens vulnerability inAsia, esp in smaller economies
High inflation a concern in most economies; further escalation in commodityprices could hurt external and fiscal balances
IMPACT ON CLIENTS
Syndications market drying up, risk ofinadequate funding for major projects (eginfrastructure)
As in 2008, projects are getting deferred
Increased costs of borrowing, shortenedtenors and limited availability of USD
Increased demand for IFC
Smaller businesses hit harder
7/31/2019 Hans Schrader - Regulatory Reform to Promote Green Building Development
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9.5 M tons GHG /yr
71% of Global
Poor at $2 per dayin Asia
66% of IDApopulation in Asia
40% of GlobalCO2Emissions
China &India majorsource ofEmergingMkts FDI
0
2,000
4,000
6,000
8,000
China USA EU Brazil Indonesia RussianFed
India [1] Japan [1]
Total GHG Emissions (million tpa)WRI 2005 data Incl. land use change
A2F Micro: 23.4M
A2FSME: 1.13MA2 Infra: 17.8MFarmers: 1.25MH&E: 2.49M
Cost savings: $340M
10 S-S deals
% of keysectorswith improvedES&G standards
2-3 innovativebusiness models
replicated
15
IFC Asia Strategy Remains RelevantStrategic Themes 3 Year targetsDevelopment challenges
ClimateChange
Inclusion
GlobalIntegration
East Asia & Pacific(ex-China)
South Asia
(ex-India)
China
Rest ofthe world
India
Share ofWorld's Poor
$2/day
Share Directed toEmerging Economies
* Data for China does notinclude Hong Kong
China and India 6% of global OFDI (2010)
Outward Foreign DirectInvestment
7/31/2019 Hans Schrader - Regulatory Reform to Promote Green Building Development
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16
Disruption area
Renewable powergeneration
1
Energy & cybersecurity & microgrids
8
CleanTech disruptions will create and destroy multi-billion dollar marketsDisruption scenarios Growth business Declining business
20% of power from renewables by2020
Wind Solar Grid energy storage technologies
Coal, oil burning power plant building, andoperation
Energy efficiency2
30% reduction in energy use Mandated replacement of
incandescent bulbs
Insulation LEDs and lighting controls Energy service companies Advanced HVAC
Traditional light bulb Power/energy company
Innovation in fossilfuel
3
2-10x increases in US natural gascapacity from shale discoveries
CHP/micro CHP Biomass fuel Advanced CCS
Oil refinery Petrochemical
Overhauling power
infra-structure4
SmartMeters in all homes by 2020 Grid energy storage proliferates
SmartMeters High voltage DC technology
In home energy management Grid IT
Traditional meters Meter reading services
ElectricVehicles
5
15% of new car sales to be xEV in2015
Battery Electric motors Power electronics Charging infrastructure and comms
Gasoline stand Traditional power train companies
Material/ dematerial-ization
6
>10x energy efficient building material Heat reflective windows/coating films Carbon negative cement Gel based insulation
Traditional single and double pane glasses High emission cement Fiber glass insulation
All US utilities mandated to adhere tocyber and energy security standards
Microgrids/islanding of military bases Cyber security for smart grid Storage Biofuels, coal to liquids
Oil refinery Utility sales to bases
90% of world population withwater shortage
Advanced pipes, pumps, and valves Civil engineering Desalination plants Efficient irrigation systems
Existing agricultural region Manufacturing plants (textile, chemical,
semiconductors, etc)Water7
Source:
Mckinsey & Co.
IFC ResponseContext
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We must combine financial products, mobilizationand metrics/KM to scale our impact,
Financial
Products
Mobilization
InnovationTransfer Fund
Debt/Mezz Facility
CP3 Fund
New tech and businessmodels - venture capital
AS-IS Integration
GEF, CTF
TradeFinance
Cleaner Production Facilities
Wholesalingthrough FIs
Strategy, Metrics
and KnowledgeManagement
Carbon Delivery Guarantees
Green Bond
Post 2012 Carbon Facility
150m
Enabling
environment
Resource efficiency:TA and benchmarks
Standards
KfW
Risk assessment
IFC ResponseContext
17
IFC ResponseContext
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The Climate Business mix willevolve.
-
500
1,000
1,500
2,000
2,500
3,000
3,500
FY10 FY13
Transport / Logistics
Recycling / Waste
Agriculture / Forestry
Green Buildings
RE/EE Eqpt
Other EE
EE in Metals & Cement
Credit Lines, Trade,FundsRenewables generation
$millions
$3.2bn
$1.6bn
IFC ResponseContext
26%22%
?
36%
31%
18
IFC ResponseContext
7/31/2019 Hans Schrader - Regulatory Reform to Promote Green Building Development
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0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
06 07 08 09 10 11 12 13
$million
Infra. + Nat. Res.
MAS
FM
Cleantech VC
Clim. Fin. Prod. & Funds
Syndication
Special Facilities and Donor Funds FY
IFC ResponseContext
Plus
Mobilizationof 1.5BNUSD
19
At least 20% of commitments by FY13and more with mobilization.
7/31/2019 Hans Schrader - Regulatory Reform to Promote Green Building Development
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20
EAP: Energy Efficiency Financing:Existing Clients Scale Up
$1.5 bn loans
57mn tons
CO2 reductionper year byFY10.
131 mn tonsby FY16.
17 25
39
53
67
2
5
7
10
13
10
15
27
39
51
0
20
40
60
80
100
120
140
FY12 FY13 FY14 FY15 FY16
SPDB
BOB
IB
CO2emission
(inmillionstons)
Emission Reduction Potentials of existing banks