BusinessDay
NigeriaDecides2023

How building green makes economic sense, saves environment

… as IFC commits about $300bn in green building investments

As the devastating impact of climate change spreads with differing degrees according to climatic regions, building green does not only make economic sense, but also saves the environment, experts have said, noting however that responses to climatic conditions also differ from one region to another.

In the Western world, both the incidence and impact of climate change are grave unlike developing countries including Nigeria where the impact is relatively minimal. This, perhaps, explains why the Western countries are more proactive in their response.

Experts advise that countries like Nigeria that have not been heavily impacted should come out of their comfort zone and go for preventive measures, insisting that building green is a must-take approach.

“Given the economic, social and environmental impacts of climate change which manifests through rising temperatures, altered hydrological (water) cycles and extreme weather events, with corresponding risks to the integrity of energy, food and water systems, the common saying that prevention is better than cure needs to prevail,” advises Shaninomi Eribo, Founder of GreenSquareMetre.

Eribo, whose company provides green building advisory and fundraising services, explains that this has become necessary because, as a country, Nigeria lacks capacity to respond to challenges such as the California fires of late 2018 and Hurricane Dorian that practically levelled the Bahamas recently.

For reasons of this inadequacy, the next best thing for the country is to go for preventive action that can limit C02 emissions which drive climate change by making slight changes in the existing building and construction practices, leading to the adoption of ‘green building’.

The International Finance Corporation (IFC) defines green building as incorporating design techniques, technologies, and materials that reduce dependence on fossil fuels and negative environmental impact.

Besides the investment opportunities expected to come with green building, its adoption has become increasingly necessary given the discovery from the Paris Climate Conference of 2015 that the built environment accounts for about 40 percent of energy consumption and over a third of anthropogenic emissions globally.

The sector was identified as having the greatest potential of contributing to the achievement of the agreed limits of a global rise in temperature of no more than two degrees centigrade above pre-industrial levels. It has also contributed significant financial resources in the form of Green Bonds and Green Mortgages which have been committed to undertaking climate friendly investments such as green building projects.

According to the Climate Bonds Initiative, green bond issuance grew steadily at 4 percent year-on-year to $162 billion in 2018. Green Mortgages which offer finance to both developers and potential homeowners at about 0.5 to 2 percent less than the conventional rates have been used in countries such as Mexico to move the construction market towards a more sustainable future.

IFC’s analysis of 21 emerging markets in its Climate Investment Opportunities in Emerging Markets report found that there is a $24.7 trillion investment potential for green buildings between now and 2030, representing a whopping 84 percent of total global climate smart investments.

With specific regard to Sub-Saharan Africa, the report estimates the commercial investment potential in the construction of low-carbon buildings at nearly $153 billion, with Nigeria’s climate smart investment potential at over $104 billion from 2016–2030 in selected sectors. Over the same period, IFC has committed about $300 billion in green building investments.

IFC posits that the value of green buildings is particularly important in emerging markets such as Nigeria, where utility bills can consume up to 20 percent of a moderate-income family’s disposable income, and resources such as clean energy and water are scarce.

To address these issues, the IFC created the Green Building Market Transformation Programme which addresses the gap in the market by introducing a clear green building standard and low-cost rating system called EDGE which outlines the benefits to developers, owners and banks, in order to unlock the potential for an era of green construction and development.

Nigeria should do well by adopting this new practice. But, unfortunately, one of the main inhibiting factors to the full scale adoption of green building practices in Nigeria is the ‘perception’ by developers that they cost considerably more to design and build. This could not be further from the reality, particularly given falling technology costs.

The World Green Building Council’s The Business Case for Green Building Report shows that while the actual cost ranges from -.5 percent to 12 percent higher, the perception is that it is from 1 percent to 30 percent higher.

Moreover, the marginal cost increases of incorporating resource efficient measures such as energy efficient lighting and low flow faucets and toilets when factored into the final sales values of completed developments, can easily be justified to home buyers in terms of the value of their annual utility cost savings which can then be calculated over the lifespan of the building to arrive at lifetime savings.

Get real time updates directly on you device, subscribe now.