U.S. fails to make the grade on green building policy

The countries with the best green building markets earned that distinction largely due to strong government policies supporting sustainable construction, according to a new report by Lux Research. Nations in the report’s top tier include Singapore, South Korea, Germany, Australia, and the U.K.

The Boston-based firm that compiled the report identified six national policies — including building codes and energy efficiency targets — that play key roles in inspiring higher rates of activity in green building. The report, entitled ““Policy’s Dramatic Impact on Green Buildings: The Global Hotspots,” ranked 21 countries how successful they are at fostering an environment that supports green building.

Government motives behind these policies include an interest in energy security, and environmental and livability concerns, said Aditya Ranade, a Lux Research analyst and lead author of the report.

Wealthier countries with an ability and willingness to pay for these buildings were more likely to place higher in the rankings, he said. The 21 nations on the list represent more than 80 percent of the world’s total gross domestic product.

“For any emerging technology — and especially for green buildings — technology, financing and policy are the three legs of the stool that drive the adoption of these trends,” said Ranade.

The research firm is hosting a webinar on August 28 that will combine both the policy and financing landscape and explain how its analysts use those factors to determine global hot spots for emerging technologies in green building.

The U.S. didn’t make the cut into the top quadrant of countries in the report, despite significant pockets of cutting-edge green building activity across the nation. That’s because the catalysts for much of that construction aren’t attributed to federal policies, explained Ranade.

Green building trends in the U.S. have been driven by state and city-level government policies, corporations, and voluntary certifying organizations, such as LEED certification, he observed.

Lux researchers looked at policy measures over the last five years that support green building and highlighted six categories they believe have an impact on whether emerging technologies in green buildings are pursued. They include:

  • Building codes and standards. Countries with particularly strong energy efficiency components in their national codes include Singapore, Malaysia, India and Germany.
  • Information and awareness. Nations that mandate public disclosure of buildings’ energy performance to tenants and property buyers encourage more builders to incorporate energy-saving measures into their projects, Ranade said. Singapore, Germany and Japan scored high on this measure.
  • Tax benefits and direct financial assistance. For example, cash rebates incentivize property owners to adopt emerging technologies in their construction projects that would otherwise be too expensive or have a longer payback period. “Singapore has a scheme that if you meet their green platinum standard, you can get up to 70 percent of your capital expense reimbursed by the federal government,” said Ranade. “That’s an extreme example of cash rebates that’s not found in many larger countries.”
  • Energy efficiency improvement targets at a national level. South Korea and Australia have a price on carbon, which forces commercial building owners and energy-intensive industries to pay a tax if they exceed limits set by the government. The European Union has a tax as well, but Lux analysts consider it too low to have real impact. “We weigh these targets depending on the seriousness of each announcement,” he explained. “If there’s a price like a carbon tax or cap-and-trade economic incentive tied to it, the announcement is more meaningful in our analysis.”

Most countries analyzed in the report don’t incorporate all the policies identified, said Ranade. However, national building codes stood out as a basic requirement among most leaders on the list

“If you don’t have building codes and standards, none of the other measures would be effective,” Ranade asserted. “If a country wants to move into building energy efficiency, they have to write it into the building code. It’s not enough to say that you should have insulated windows; there needs to be an R rating associated with it.”

Some of the nations pooled near the bottom of the list in the report are oil-producing countries including Russia, Saudi Arabia, Brazil and Argentina. Cheap energy resources are impeding their governments from adopting federal policies on energy efficiency. These countries have minimal tax benefits for energy efficiency measures and their building codes regarding energy standards are still under development or aren’t even on the drawing board, added Ranade.

Surprisingly, the report’s researchers found a high number of developing and under-developed countries exploring green building technologies. For example, Peru has a government initiative to construct 200,000 eco-homes. Ranade predicts countries including Peru, Thailand, Colombia and Poland could adopt more policy measures in the future for green buildings if they see countries such as India, China and Malaysia succeed in their current efforts.

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