Are Green Projects Really Expensive?

Are Green Projects Really Expensive?

green buildings
Ashok Naidu Director, Kumari Builders and Developers

India is among the few nations on the list which are going green in a big way. It already has crossed over 2 billion square feet of green buildings, covering commercial, residential and industrial spaces.

However, for the target of 25 billion square feet of green buildings by 2025 set by the Indian Green Buildings Council, a boost will be required. An aggregate increase of 400 per cent in the floor area of buildings by 2030 (USAID), with energy consumption from residential buildings alone rising by more than eight times by 2050, will apply tremendous pressure on available resources. Water is yet another scarce resource that will see rise in demand.

Green buildings offer a way to cut down on water and energy while also reducing waste.

But the dice is loaded against developers in terms of takers. The initial investment is higher than for traditional buildings and not everyone is willing to look at the long-term gains. The premium amount can easily be recovered in a couple of years. But first, we need to understand what exactly a ‘green’ building is.

A certified green building has to meet certain criteria which includes energy use, water, resources and waste management. It is left to the developer how innovatively he conserves water and energy while using locally available resources that do not degrade the environment. Some go an extra mile to avoid use of sand (that destroys rivers), granite (that decimates mountains), steel (from iron mined from forests) and so on.

Whether it is the use of solar panels to power the whole house, or ‘passive’ designs that reduce electricity consumed by the HVAC systems, rainwater harvesting which reduces dependence on water supply, it all adds up to some initial capital cost. For solar unit, the batteries and equipment can cost up to a lakh while a biogas digester for the waste could add up another couple or more. Elaborate water systems with interconnected percolation wells and osmosis unit can also add up to initial and be running costs too. Thermally efficient windows with special glasses, fans fitted with efficient motors and sensors, water efficient fixtures, all this will add up to building costs. The construction cost may go up to 15 percent more than that for traditional construction materials.

For developers, the costs can be as high as 15 percent while most buyers are willing to pay not more than a maximum of 3-5 percent.

However, in the long-term, all measures used in green buildings will help the resident save up on energy and water bills. It has been calculated that a green building can lower energy consumption by 30-50 percent and water by 30-70 percent. Merely using water conserving-taps can cut down water use by 30,000 liters every month. All this will reflect in the bills. Big green homes have reported a drop in electricity bill by around Rs 600 a month.

Naturally, it is difficult to woo first time home buyers who are looking for lower prices in a price sensitive market. Very few are environment conscious and willing to pay more. A basic shelter is what they are aiming for. It is only second-time buyers and a small section of clientele that is environmentally aware who is willing to shell out more. This group understands that the building will pay them back in years to come.

Then there are the corporate clients who seek green credentials and hence are willing to pay the extra costs. These are a small group of people.

As a result, developers do find it difficult to sell green buildings. Considering the benefits from these constructions, to the environment and the consumers, the government should provide subsidy on construction loans to developers. So also for homeowners, the government should give subsidy on home loans, based on the lead rating. The government should introduce norms to incorporate green buildings in its housing schemes, such as the Pradhan Mantri Awaas Yojna and Credit Link Subsidy scheme for affordable housing.

This will go a long way in encouraging more people to opt for greenhouses and offices.

The Earth Overshoot Day this year, August 2, has been the earliest date since overshoot first happened in the 70s, a date when humanity’s demand on resources goes beyond what the planet can renew in a year. We collectively now need 1.7 Earths to sustain our requirements.

Consumption has to be reduced but with increasing population, this is a tough job. However, green buildings are one option that can help reduce exploitation of resources and provide shelter for all.