The scope of green growth and green building in the RE-Green

Project

By: Ryan Weber – Nordregio

Feb. 28, 2012 Museu do Fado, Lisboa, Portugal

Contents

1. Conceptual Perspectives on Green Growth

2. Green growth in EU policy

– Europe 2020 Strategy

– Energy policy

– Cohesion Policy

3. Green building in EU policy

4. Towards a RE-Green concept of green building

– A planning perspective

– The growth of resource efficient investment through behavioral change

Conceptualising Green Growth

“Green growth means fostering economic growth and development while ensuring that natural assets continue to provide the resources and environmental services on which our well-being relies. To do this it must catalyse investment and innovation which will underpin sustained growth and give rise to new economic opportunities." (Towards Green Growth, OECD, 2011, pp. 9)

• Green growth doesn’t replace sustainable development

• The creation of a competitive green market in Europe

• The ‘mobilization’, the awareness of natural resources as more than inputs into the production of goods and services

• Highly politicized – ‘That our prevailing economic system is antiquated and in the face of such difficult challenges now is the time to pursue new development trajectories’ (Towards Green Growth, OECD, 2011)

Green Growth in EU Policy

• The Europe 2020 Strategy: ”Smart, Sustainable and Inclusive Growth” – Sustainable growth: promoting a more resource efficient, green

and more competitive economy

– Five headline targets include:

• 3% of EU’s GDP in R&D: Focused on core areas of climate change, energy, resource efficiency, health and demographic change

• The 20/20/20 emissions target: particlarly through investment in renewables and modernizing the transport, energy and building sectors

Green Growth in EU Policy - Energy

March 3, 2010

May 19, 2010

November 10, 2010

January 26, 2011

March 8, 2011

December 15, 2011

• The built environment has the most potential for low cost and short term emissions reductions

• 90% reduction by 2050 if all new buildings constructed after 2021 are ”nearly zero energy”

Green Building Potential: Energy

A Roadmap for moving to a low carbon economy in 2050

Energy Efficiency Plan 2011

http://www.eea.europa.eu/legal/copyright

• 40% of final energy consumption takes place in buildings, with 27% in households alone

• Renovation process is critical • Public procurement is emphasized

for its exemplary role (displaying technologies, transition to green jobs, making green building tangible in reality, and therefore triggering behavioral change)

• Public procurement is emphasized for it’s real energy savings potential

Green Growth in EU Cohesion Policy

• Cohesion policy: – The 5th Cohesion Report highlights the contribution that regions

can make to meet the objectives of Europe 2020 – including green growth

– The First Cohesion Report to include ”territorial cohesion” alongside social and economic cohesion

– Maintains that EU targets require regional and local solutions for overcoming territorial specificities:

• The importance of context enabled by a place-and-people-based policy approach

• Engagement with society

• Comprehensiveness and complimatarity of green growth policy

• Natural resource endowments and potentials

• Functional and flexible governance

...So if green building has so much potential then we ought to know what it is and how to achieve it...

Heating/ Cooling Systems

Building Envelopes

Liquidity Constraints

Behavioral Economics

Rebound Effect

Site and Situation

Principle of Subsidiarity

Mixed-use Communities

Transport-Oriented-

Development

Walking and Cycling

Renewable Energy

Reduced Land Consumption

Building Regulations

Renter’s Dilemma

Information and Education

Building Turnover

Retrofitting vs new builds

Brownfield Development Household

Appliances/ Electronics

Public Procurement

Waste Mgmt.

Water & Wastewater Efficiency

GREEN BUILDINGS

Land Use & Transport Planning

Bounded Rationality

Mobilizing Opportunities

Leading By Example

Passive Houses

Resource- Efficient Behavior

Market & Behavioral

Perspectives

Insulation, Windows and

Doors

Plus Energy Buildings

Zero Energy Buildings

Green Roofs Building Density

Community CHP

Shared Knowledge

Coordinating Action Functional/

Territorial Governace

Heuristic Decision-making

Efficiency Gap

Market Failures

Prospect Theory

Quality of Life

Overcoming

Co-ordinating Enables private investment in...

Local and Regional (multilevel)Governance EU Policy as a

conditioner and enabler

GREEN BUILDING

Competitive Regions

Underpriced Externalities

So how do we approach green building in Re-Green?

– European and national green building goals are set from above – government funding is distributed mainly at the regional and local level

– Regional and local institutions are mobilizers - they engage with the relevant people, firms and partnerships ‘on the ground’. Stakeholders who who are in need of inspiration and motivation

– Underlying territorial conditions are extremely important and therefore need a place-and-people based approach

– The conditions of green building imply that regional and local administrations are the crucial link for a transition to a green built environment

1. Urban and regional planning

2. Resource efficient investment via resource efficient behavior in the private sector

1. Green building as an expression of urban and regional planning

• The city, the built environment represents the interface between society, economy and the environment

• Resource efficiency is highly embedded in planning systems. Through planning, green building is development that is socially, economically and environmentally more attractive

– Landuse planning (mixed use, higher densities, reuse, etc.)

– Transport planning

1. Green building as an expression of urban and regional planning

http://www.bosadevpm.ca

www.evergreenline.gov.bc.ca

• Mixed use • Mixed density • Mixed demography • Brownfield • Suburban • Built to code • Green?

• Transit-oriented-development or development oriented toward transit?

• Extensive cycling and walking infrastructure

• Proactive restrictions on car use

2. Activating green building through private investment

• Development of green buildings (and the products and services in them) via private investment

• Overcoming specific constraints:

1. Building constraints

2. Market and behavioral constraints

Building Constraints

Building turnover rates are too low

• We must promote renovations and retrofitting in addition to a focus on new buildings

– Green Public Procurement is imperative for leading by example, initiating economies of scale for green jobs and knowledge of technical potential

– It has a real resource savings potential

– EU legal instrument for public authorities to double their refurbishing rate (1.5%-3%/year) (Energy Efficiency Plan 2011, European Comission, 2011)

Market and behavioral constraints

The efficiency gap

• The difference between observed resource efficiency and some optimal level of resource use (often dictated via policy targets)

• We are constrained rational investors!

Market Constraints

• Liquidity Constraints

• Renter’s Dilemma

• Underpriced energy (externatlities)

Behavioral Constraints

• Principles of behavioral economics

• Resource efficiency is largely unobserved

• Pay-off horizons are perceived as too long

• People don’t think about future resource prices

Solving Constraints

• Understanding that a genuine lack of information and awareness persists all levels of society and government

• Information needs to be combined with subsidies and other incentives

• Green building will rely on ’complementarity’ from other policies from the local to the EU level

• Awareness is co-dependent on planning and especially public procurement

• ’Green’ as an economic opportunity

• Information, awareness and education empowers resources as vital inputs for the production of services

...Activating resources in society

Environmental Awareness by activating resources in society

http://edition.cnn.com/2012/02/08/tech/innovation/green-nudge-environment-persuasion/index.html?hpt=hp_bn7

Environmental Awareness by activating resources in society

http://edition.cnn.com/2012/02/08/tech/innovation/green-nudge-environment-persuasion/index.html?hpt=hp_bn7

http://edition.cnn.com/2012/02/08/tech/innovation/green-nudge-environment-persuasion/index.html?hpt=hp_bn7

Environmental Awareness by activating resources in society

Environmental Awareness by activating resources in society

http://edition.cnn.com/2011/12/09/world/europe/eiffel-tower-tree-ginger/index.html

http://edition.cnn.com/2012/02/08/tech/innovation/green-nudge-environment-persuasion/index.html?hpt=hp_bn7

Thank You!

References

Information on market and behavioral constraints based on:

Gillingham, K., Newell, R., & Palmer, K. (2009) Energy Efficiency Economics and Policy Resources for the Future [Available at: http://www.rff.org/documents/rff-dp-09-13.pdf]

EC – European Commission (2010) Communication from the Commission: Europe 2020: A strategy for smart, sustainable and inclusive growth. COM (2010) 2020 final.

EC - European Commission (2010) Investing in Europe’s future: Fifth report on economic, social and territorial cohesion, European Union, Luxembourg.

EC – European Commission (2011) A resource-efficient Europe – Flagship initiative under the Europe 2020 Strategy. COM(2011)21.

EC – European Commission (2011) A Roadmap for moving to a competitive low carbon economy in 2050. COM (2011) 112 final. Brussels.

EC - European Commission (2011) Cohesion Policy 2014-2020: Investing in growth and jobs. Publications office of the European Union, Luxembourg.

EC – European Commission (2011) Energy Efficiency Plan 2011. COM (2011) 109 final. Brussels

OECD - Organisation for Economic Co-operation and Development (2011a) Towards Green Growth. www.oecd.org/greengrowth.

Jaeger, C., Paroussos, L., Mangalagiu, D., Kupers, R., Mandel, A., Tabara, J.D., Meißner, F. & Lass, W. (2011) A New Growth Path for Europe: Generating Prosperity and Jobs in the Low-Carbon Economy. Commissioned by the German Federal Ministry for the Environment, Nature Conservation and Nuclear Safety. Potsdam.

UNEP - United Nations Environmental Programme (2011a) Towards a Green Economy: Pathways to Sustainable Development and Poverty Eradication. www.unep.org/greeneconomy.

Waciega, K (2011) EU Cohesion Policy and Energy – where do we go from here? http://www.sciencespo.fr

Green Growth, Cohesion Policy and the 2014-2020 Program Period

• The EU Energy 2020 Strategy: total EU investment in electricity and gas will have to be approximately €1 trillion between 2010 and 2020

– Includes private sector funding, but the reality is that energy policy in itself does not really provide funding for low carbon investments – this funding comes through regional policy (Waciega, 2011)

• 30% of Cohesion Policy Funding (€347bn) is invested directly or indirectly towards sustainble growth during the 2006-2013 period

• Budget increases to €376bn for 2014-2020 period (Cohesion Policy 2014-2020, DG Regio, 2011)

– The ERDF will ”increase” its focus on climate change, a low-carbon economy, on energy infrastructures and sustainable urban development

– The Cohesion Fund will include a specific focus on the environment where energy investment is included as long as it has a positive impact on the environment

Green Building Potential: Jobs

Clear policies associated with a move to a 30% emissions reduction target would initiate a new growth path for Europe and all broad economic sectors would increase production, with the largest increase in construction.”

Policy interventions would include:

• Green public procurement

• Enhanced building codes using part of the ETS auctioning revenue to foster energy efficiency and renewable energy

• Increased and improved learning networks of public and private actors

Governance constraints

Intra-regional Competitiveness:

• Municipalities are involved in a zero-sum game

– The example of Newcastle and regional planning in the U.K.

• Functional and flexible governance

– Adapting to the scale of the issue (urbanity is a single functioning territory)

– An integrated approach

– A place-based approach