By Kenneth Langer & Robert Watson
On Nov. 10, 2005, U.S. Green Building Council (USGBC) President Rick Fedrizzi presented leadership awards to 10 Chinese real estate developers and government leaders for their “pioneering work in transforming the world’s largest building industry.” The developers, who represent some of China’s largest developers, have one thing in common: they are the first to pursue USGBC’s Leadership in Energy and Environmental Design (LEED) certification. The awards were announced during the Greenbuild Conference and Expo in Atlanta, representing an important milestone in China’s acceptance of green buildings, in general, and USGBC’s LEED rating system, in particular.
The World Bank estimates that between now and 2015 roughly half of the world’s new building construction will take place in China. The majority of these projects are large, commercial office buildings between 1 and 1.5 million square feet and mixed-use developments that may have 10 million square feet in total construction area. China’s entry into the World Trade Organization, its successful bid for the 2008 Olympic Games, and the country’s general integration into the world economy have all resulted in an investment boom. China’s Ministry of Construction (MoC) estimates that China will add 2 billion m2 (21.5 billion square feet) in new construction in 2005 and will double its current building stock by 2020.
To most real estate developers caught in this gold rush, the game is about constructing mediocre buildings as quickly and profitably as possible. But the group of progressive developers receiving USGBC awards are designing and building China’s best green building projects without compromising the bottom line.
For most of the last 20 years, the government’s top priority has been economic development. But in the last few years, environmental degradation has become so severe that it threatens to undermine economic growth. China’s State Environmental Protection Administration (SEPA) estimates that damages from pollution total nearly 10 percent of annual GDP. Much of this pollution is the result of increased manufacturing, largely based on coal fired power plants, that has sustained China’s near double-digit growth over the past 20 years. Water, too, is in short supply in two-thirds of China’s cities, and less than half of the available water is fit for human contact.
Environmental problems have prompted national, state, and local governments to emphasize environmental protection. China budgeted $84 billion for environmental projects in the current five-year plan (2001-2005). Shanghai’s annual budget for environmental protection is a healthy three percent, and Beijing has allocated roughly $12 billion for environmental projects in preparation for the 2008 Olympic Games.
The building industry accounts for approximately one-third of China’s electric power, and the demolition of old buildings and construction of new ones contributes to a host of environmental problems. As a result, certain progressive cities are beginning to offer financial incentives to developers that use energy-efficient building technologies. For example, the Shenzhen municipal government offers interest-free mortgages for hotels that install thermal ice storage systems – a technology that shifts energy consumption to off-peak hours. These measures send a strong signal to real estate developers that the government is beginning to throw its weight behind environmental protection.
Changing Codes and Standards
Market transformation involves the development and implementation of a regulatory “push” through the establishment of mandatory minimum performance standards and a complementary “pull” from market-based mechanisms. The first stage of market transformation is the establishment of a regulatory framework of mandatory codes and standards.
In 1986, China’s MoC issued an energy-saving code for cold and severe cold climates, beginning a two-decade effort to develop codes and standards for different building types in China’s four main climates. The commercial code, expected in 2005, will set new rules for each of China’s climatic regions. The code will require greater insulation in the walls and roof, as well as double-glazing and insulated window frames in certain climates. Lighting energy limits will be between 8 and 15 watts per m2 depending on the type of building. Heating, ventilation, and air conditioning (HVAC) systems will have to be more efficient.
China’s codes, which are prescriptive and performance based, aim to improve indoor air quality and reduce energy consumption by 50 percent compared to buildings constructed in the 1980s. Despite great progress, China’s building standards still fall short of international standards. For example, Chinese ventilation requirements are less than half as stringent as U.S. ASHRAE standards.
Though regulations establish minimum thresholds and remove the worst performers from the market, they do not stimulate major technological innovation, nor do they give real estate developers economic reason to leapfrog to high performance buildings. Recognizing this, MoC, and the Ministry of Science and Technology (MoST) have become increasingly interested in LEED and other international green building certification systems. For example, MoST, with technical support from Beijing’s Qinghua University, has introduced The Green Olympic Building Assessment System (GOBAS) for the 2008 Olympics. The system is modeled primarily on Japan’s Comprehensive Assessment System for Building Environmental Efficiency (CASBEE) and, to a lesser extent, LEED.
In the private sector, the story is a one-liner: LEED. There are currently 10 projects pursuing green building certification and all are either LEED registered or (pre-)certified. The USGBC certification is increasingly seen as the international standard, as well as the rating system that can bring Chinese projects the most international recognition.
Green Sells
Realizing that green sells, real estate developers have begun to market their projects with names that convey a healthier environment. Anyone driving through Shanghai cannot help but notice the scores of massive billboards advertising high-end residential properties with names such as New Forest Eco-Town and Oasis Island Garden Villa. Environmental living has become synonymous with high-end living.
Since most of Chinese projects rarely incorporate significant environmental improvements, a small number of progressive real estate developers are beginning to redefine the Chinese concept of green and feed the growing demand among middle-class Chinese and foreigners for truly healthy and comfortable living and working environments. According to experience from EMSI, a sustainable design consulting firm, product differentiation – rather than environmental concern or even long-term energy and operating cost savings – is what’s driving some developers to seek LEED.
To date, few LEED projects have been completed, so it is too early to tell whether these developments will command an actual price premium. In EMSI’s view, the primary goal of real estate developers is to attract the highest paying tenants and to fill the building quickly, which is important in a highly competitive real estate market. This increases building value and hence sales price. It also justifies the cost premium of the green building project, which is generally 2 to 5 percent of the original design cost.
From Demo Projects to Large-Scale Developments
Beginning in 2000, the Natural Resources Defense Council (NRDC) and U.S. Department of Energy have worked closely with China’s MoST to develop a 13,000 m2 demonstration green
building that will house the MoST Agenda 21 – an international environmental program to address global climate change. This was the first project in China to receive LEED certification (April 2005).
The Shanghai Research Institute for Building Sciences (SRIBS) has also built a project to showcase and evaluate 12 different green products. (For example, a single exterior wall may incorporate different low-e window products.) Green building demo projects have also been built at Qinghua University in Beijing and in the southern city of Kunming, Yunnan by the UK-based INTEGER.
In 2003, the Century Prosper Center, a 1.6-million-square-foot twin office tower in Beijing’s central business district, became the first large commercial project in China to be registered for LEED (LEED CS pilot program). Other developers followed quickly, and by 2005 10 large projects – with a total construction area of 5 million square feet – were registered for LEED. Another milestone was reached in early 2005 when the Coastal Greenland Group made a decision to pursue LEED for Neighborhood Development (LEED ND) for a large mixed-use developing in Beijing. This project, which consists of more than 800,000 m2 of construction, will be submitted for the LEED ND pilot project in the near future. Last summer, the Chinese Modern Group also decided to pursue LEED ND for another large mixed-use development designed by Steven Holl Architects.
A Growing and Practical Appreciation of Green
China’s green building industry is still in its infancy. Nevertheless, the trend toward sustainable buildings is clear and irreversible. As China continues to integrate further into the world economy, momentum is building through the emergence of governmental programs, municipal green building councils, demonstration projects and, more recently, large commercial projects. China’s staging of a Green Olympic Games of 2008 in Beijing and a Green World Expo 2010 in Shanghai have deepened China’s commitment to a more sustainable building sector.
For the time, the main driver is product differentiation. The Century Prosper Center strove to become the first LEED CS project in China; the second project undertaken by EMSI, the Tiger Apartments, boasted that it was the first commercial LEED NC project in China. The Skyway Oasis Hotel was motivated by the prospect of becoming the first LEED certified five-star hotel project in Shanghai; and the Silo City project was driven, in part, by the prospect of becoming the first LEED ND project in China.
As these firsts become harder to achieve, we believe that Chinese developers will increasingly appreciate the fact that green buildings have returns-on-investment (ROI) that are highly competitive with other projects. At that time, the favorable economics of high performance buildings will sustain this trend. And, as more green buildings and developments take root, we believe that developers will increasingly realize that green projects are truly all that buildings and developments should be. In fact, they will realize that, in a way, they have made a full circle to traditional Chinese architecture, where their buildings exist in, and not apart, from nature.
++++
Kenneth Langer, Ph.D., is founder and president of EMSI, a Washington, D.C.-based consulting firm with branch offices in Springfield, Mo., Beijing and Shanghai. EMSI) focuses on the built environment, offering sustainable design services, innovative financing, and risk management strategies to real estate developers of buildings and whole communities. EMSI also provides technology transfer and investment services to manufacturers of green building products. www.emsi-green.com
Robert Watson is a senior scientist with Natural Resources Defense Council (NRDC). He joined NRDC in 1985 and directs and co-directs their green building and China programs, respectively. Watson is also a founder of U.S. Green Building Counci’s LEED Green Building Rating System, and chair of the LEED Steering Committee. In China, he is helping the China?s Ministry of Construction (MoC) develop green building and energy efficiency standards for residential and commercial buildings. In 2005, MoC recognized Rob with one of its first Green Innovation awards, the only foreigner to be honored for his work on green buildings in China.
FROM Environmental Design + Construction, a SustainableBusiness.com Content Partner.
Loading...