Beef, Bricks and Coal

Irrespective of where we live, the majority of us could give up certain things that would have a sizable impact on climate change mitigation. It's not unimaginable to take the next step beyond incandescent bulbs or 'standby mode' on appliances and make greater behavioral changes that would significantly benefit the planet. 

Here are three 'silver bullets' in the areas of food, housing, and energy.

 

Our prevailing consumer choices that heavily impact GHG contributions vary according to where we live in the world. 

• Could we convince Indians and Chinese to opt for concrete blocks as an alternative to burnt clay bricks for new homes and offices?
• Could Americans (both North and South) be persuaded to favour chicken over beef?
• Can the Europeans model of rejecting coal-fired power plants set an example for the world? 

 

References

Total GHG:

http://www.unep.org/pdf/2012gapreport.pdf

http://www.epa.gov/climatechange/science/indicators/ghg/global-ghg-emissions.html

Coal:

http://www.iea.org/ciab/papers/power_generation_from_coal.pdf

Bricks:

http://www.catf.us/resources/presentations/files/Black_Carbon_from_Brick_Kilns.pdf

http://www.inecc.gob.mx/descargas/dgcenica/2012_ladrilleras_pon_s1_ebaum_eng.pdf

Beef:

http://www.ncbi.nlm.nih.gov/pmc/articles/PMC2535638/

http://www.fas.usda.gov/psdonline/circulars/livestock_poultry.pdf

Casey, J.W. and Holden, N.M. (2006) Quantification of greenhouse gas emissions from suckler-beef production in Ireland, Agricultural Systems 90, 79–98.

 

Value of green homes for home builders, banks and home buyers

Mapping of current 'evidence' needed to build a case for energy efficient and green residential buildings for home builders, banks and home buyers. Please do send me more.

For commercial buildings "The Business Case for Green Buildings" from the WGBC is a great place to start http://www.worldgbc.org/activities/business-case/

 



 Reference

1, 2, 4,5 http://www.prnewswire.com/news-releases/certified-homes-outperform-non-certified-homes-for-fourth-year-in-portland-metro-region-123477939.html
3 http://urbanpolicy.berkeley.edu/pdf/DLQ_economic_returns_Singapore_May_2012.pdf
6 http://www.energystar.gov/index.cfm?c=bldrs_lenders_raters.pt_bldr
7 http://www.grihaindia.org and http://www.igbc.in/site/igbc/testigbc.jsp?desc=115708&event=115679
8 http://www.imt.org/uploads/resources/files/IMT_UNC_HomeEEMortgageRisksfinal.pdf
9 https://www.gov.uk/government/publications/an-investigation-of-the-effect-of-epc-ratings-on-house-prices
10, 11 http://www.fhfa.gov/webfiles/24371/25_Professors_Kahn_of_UCLA_Law_School_and_Kok_of_UC_Berkeley.pdf
12 http://www.qualite-logement.org/fileadmin/user_upload/documents/documentation/Etude_valeurverteEN.pdf

Transforming the housing market through green mortgages

New Affordable Housing in Medellin, Colombia

What are the three most significant factors that contribute to home property values?  The response is accompanied with a wink:  “location, location, location.” But while a home close to public transportation, good schools, and medical care should be valued higher than a relatively isolated home, its value does not reflect energy efficienciesand their resulting lower costs and environmental benefits. Sustainable homes currently do not attract favourable lending terms or result in higher property values, but the green mortgage industry has the potential to change this – as long as there is buy-in from governments, developers, banks, and home owners. 

 A green or “energy-efficient” mortgage allows the homebuyer to borrow extra money to pay for energy-efficient upgrades to an existing home or to purchase a new green home with efficiencies already in place. The home’s lower energy and water bills increase a borrower’s available net income, allowing for either a larger loan than would be otherwise possible or a discounted interest rate. Since owners of energy-efficient homes spend less per month on utility costs, they theoretically have more to spend on monthly mortgage payments.

Home buyers who are naturally motivated to purchase a green home care about the environment and/or view their newly acquired property as a status symbol. More households would be likely to invest in energy-efficient housing if there were a clear financial benefit to them, in terms of lower energy bills, higher property re-sale values, or tariff income.

Developers, on the other hand, see green homes as a way to improve their corporate image and achieve market place distinction, although the current low demand makes quicker sales elusive. Developers typically find it difficult to capitalize investments in green measures, as they are unable to transfer additional costs to the total price of the energy-efficient homes.

On the banking side, most mortgage providers have not acknowledged green homes as an ‘asset class’ and don’t provide a green mortgage product to the mass market. One of the main reasons is consumer demand is not high enough to make the product offering attractive. 

Current systems, practices, and regulatory frameworks for valuing properties and advancing loan finance do not enable consumers to place a priority on owning a sustainable home. Each of these factors influences the others, so without change of some kind, they could be self-perpetuating.[1] Ensuring that the market fully reflects the benefits of green housing is therefore vital in encouraging households to take up the measures needed to achieve emission reduction and lower fuel poverty.

There are examples of innovative thinking leading to rapid scale up. Since Mexico’s housing development agency, the Institute for the National Workers’ Housing Fund (INFONAVIT), launched its green mortgage program for low income housing in 2007, more than 600,000 green mortgages have been granted, benefiting approximately 2.4 million people. While a subsidy was provided to more than one-third of the home-buyers, once the value of green homes is better known and understood, subsidies such as that offered by INFONAVIT will no longer be needed[2]. 

Case Study: INFONAVIT Green Mortgage Program

•    A green mortgage program was developed in 2007 by the Institute for the National Workers’ Housing Fund (INFONAVIT) in Mexico to encourage the use of energy efficient systems and technologies for low-income households.

•      Families purchasing homes through INFONAVIT receive a credit of up to US$1,250 to cover the cost of eco-technologies (such as solar hot-water, low-energy lighting, water saving faucets, and thermal insulation).

•      Developers are encouraged to build homes with energy-saving materials and technologies, and the low-rate mortgage enables families to save on their utility bills while paying for an increase in their monthly mortgage payment.

•      INVONAVIT established that the environmental technologies installed per home should generate a minimum savings of $215.00 pesos.

•      Between 2007 and 2011, more than 600,000 green mortgage credits have been granted, benefiting approximately 2.4 million people. A subsidy was provided to 38% of the homes.

•      The success of this program and the continued demand for green mortgages has led to INFONAVIT to declare all their mortgages to be green.

While banks are instrumental to driving growth in the green mortgages industry, they also stand to benefit from enhancing their suite of products. Banks offering green mortgages reduce their risk by ensuring homebuyers have lower monthly bills. Green mortgages result in improved loan performance since socially-responsible homeowners tend to have better on-time payment records. Banks can also target existing customers with a good track record for retrofitted properties. Finally, banks providing green products benefit from better image branding.

In order for lenders to recognize the value of a property’s green measures, large-scale adoption of a universal green performance standard for homes is required. The standard needs to be defined by a labeling system that is inexpensive and simple, with a sharp focus on areas of cost savings. The standard needs to be supported by a well-understood calculator that can benchmark and measure energy and water savings. Both the labelling system and standard need to dovetail with a certification program that brands the property green while verifying the technical measures that have been implemented. Energy Performance Certificates in the UK are a good example of an effective labelling system but very few countries have anything close to this. 

Existing Green building rating systems are too lengthy and expensive to be adopted as a mass market system, especially for clients in developing countries. This limits the number of prospective builders/owners adopting Green Building strategies.

EDGE certified Affordable Housing in the Philippines

On the regulatory front, financial incentives must be made available to improve the energy-efficiency of homes. Central banks that refinance Housing Finance Companies (HFC) need to be persuaded, and regulatory barriers must be adjusted to allow leverage on existing subsidy thresholds (such as on the value of affordable homes).

Green homes can become a significant proportion of the housing market if supported by banks that offer green mortgages as a new asset class, with trained loan officers advising homebuyers of the merits. As awareness is raised and success stories are publicized, green mortgages will generate increased response from developers, so that more sustainable homes are offered. In this way, a circle of demand will be created that leads to greater home value, more affordability for the homeowner, and a reduced impact on the environment.

Also read Banking on Green Buildings, which discusses the value proposition for financial institutions

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[1] Homes that don't cost the earth: a consultation on Scotland's Sustainable Housing Strategy, Pg. 6,

The Scottish Government, UK 2012

[2] http://www.ecpamericas.org/data/files/Initiatives/energy_efficiency_working_group/eewg_mexico_workshop/infonavit.pdf 

Green Buildings in Emerging Markets: Where are they likely to succeed?

In parts of the world with high energy tariffs, like the Caribbean, West Africa, and the Philippines, Green Buildings are a no-brainer because they pay their own way. Similarly, in countries where carbon emissions from electricity generation is high – South Africa, Turkey, Indonesia, India, China, and states in the Middle East and North Africa region – it’s easy to track fast results. Overall, countries with the highest energy costs are likely to have the biggest demand for energy efficiency in buildings.

Note: Why “electricity”?: 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. The graph currently does not adequately reflect fossil fuel used for heating.

CHP based district heating: a discussion

Photo by Julian Elsworth

Max Fordham Consulting Engineers have presented a case in their report- ‘A case against the widespread use of district heating and CHP in the UK’, Issue 2 / May 2010. The report provides analysis to demonstrate that CHP/district heating is not an effective low carbon solution for the UK. The report has been written in order to ascertain the best use of UK's resources and to be fair seems to be open to debate. Such transparent research and evaluation from one of UK’s leading engineering firms is not only greatly beneficial but also highly commendable in terms of the effort that has gone into it.

After many years of being in this field, I am keen to express my view on the assumptions that have been made in the report and also the broader hypothesis.

1. In the section about the carbon intensity of the grid, it is suggested that CHP/district heating should essentially be compared to CCGT rather than average fuel mix. Not sure if it is really logical when in reality 33% of UK electricity supply still uses coal [0.85kgCO2/kWh] and that is what clearly needs to be addressed when mitigating carbon emissions in this context. This argument has been made clearer by Jarek Kurnitski of Helsinki University of Technology [1].

2. The sample calculations have sized the hypothetical CHP unit to meet the monthly average electrical demand and to meet a proportion of the heating in the winter and have a surplus of heating in the summer, which is wasted. The heat deficit in winter is made up by a central gas-fired backup boiler (40% of the heat). This assumption may have substantial repercussions on the final carbon emissions. There is however, the other possibility where the CHP is sized based on heating demand. Rather than plan for one large gas turbine CHP [which is of course very efficient at generating electricity] a set of smaller modulating CHPs would be able to provide a larger proportion of the annual heating demand rather than back-up boilers. For example, a CHP unit which provides for DHW could run throughout the year and smaller machines of different sizes could be installed depending on the demand for space heating. It is doubtful that all of the electricity requirement will be met by doing this but as more of the ‘waste’ heat is used for heating the system, it becomes more efficient on the whole. The economics of having CHPs working for shorter hours [<5000hr] would however, need to be investigated.

The main aim of using CHPs is to reduce carbon emissions arising from heating rather than providing for all of the electricity demand. By sizing the CHP to meet all of the electricity demand, the proposed system within the report, under utilises the ‘waste heat’ from the CHP [even in peak winters!] therefore making it less effective.

3. The focus should also not be on homes alone as there are plenty of commercial and mixed use developments in the UK that could benefit from using CHPs. E.g., Woking Town Centre [2].

4. Heat loss of 32% has been assumed as distribution heat loss in the report. Whilst these high percentages are not unheard of, secondary research suggests that the district heating systems in Norway[3]  and Finland [4] are operating with 10% distribution losses.

Sensitivity check

The report suggests that the CHP/boiler will have an emission of 8,500tCO2 compared to 7.500tCO2 for CCGT i.e., CCGT will be 12% better.

Very quick, back of the envelope reworking suggests that:

• If the heat distribution losses are assumed as 10% rather than 32% [see issue 4], CCGT is 6% better than CHP/boiler

• If the proportion of district heat from gas back-up boilers is reduced to 20% [point 2], rather than 40% which is what the report assumes, the CHP/boiler is 4% better than CCGT.

• The above two put together will make the CHP/boiler 6% better than CCGT.

• And finally, if the district heating system is designed based on heat demand rather than electricity [issue 2- i.e., smaller capacity and with modulating units], the CHP/boiler is 13% better than CCGT. This scenario will generate 4GWh of electricity rather than 9GWh, so not all of the electricity demand of the neighbourhood would be met but the mains supply can always meet the shortfall.

• If all of the above measures are implemented then the CHP/boiler is 36% better than CCGT.

The calculations for the above discussion have been done quickly and so might be off by a few percentages. Also there is need to consider the economic implications of the proposed modulating system, added pipe insulation etc. However, 36% of lower carbon emissions instead of 12% higher, as suggested in Max Fordham’s report ‘A case against the widespread use of district heating and CHP in the UK Issue 2 / May 2010’ is a significant difference. This suggests that a more detailed sensitivity assessment (based on the right assumptions) including a cost analysis is needed and would be really useful to logically conclude this discussion.

Reference
[1] Jarek Kurnitski, Accounting CO2 emissions from electricity and district heat used in buildings www.ehpcongress.org/fileadmin/2009/presentations/tuesday/B/JKurnitski.pdf

[1] Jarek Kurnitski, Accounting CO2 emissions from electricity and district heat used in buildings www.ehpcongress.org/fileadmin/2009/presentations/tuesday/B/JKurnitski.pdf
Helsinki University of Technology.

[2] Woking Town Centre www.woking.gov.uk/planning/service/publications/energy.pdf

[3] Norwegian Water Resources and Energy Directorate
www.nve.no/global/energi/analyser/energi%20i%20norge%20folder/energy%20in%20norway%202009%20edition.pdf 

[4 ] www.energia.fi/en/districtheating/districtheating/distribution