SUSTAINABILITY & CLIMATE CHANGE

Gaining an EDGE in Financing Green Buildings

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2 years ago

November 17, 2021

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The IFC’s EDGE program is at the forefront of developing green building certification and adapting to local construction needs from Colombia to Singapore and beyond.

Colombia is leading the way in Latin America on sustainable green building finance. International Finance Corporation’s (IFC) EDGE green building certification programme is fully aligned with Colombia’s sustainable construction policy. At an IFC event during COP26, the United Nations climate conference held this month in Glasgow, speakers including Colombian President Iván Duque Márquez and IFC Managing Director Makhtar Diop cited Colombia’s leadership in proving the viability of green building finance. With the use of EDGE certification, the country’s green building sector has grown from 0 to 20% market penetration in just the last four years.

“Colombia truly shows what is possible when committed public sector leadership, robust private sector investment and IFC expertise work together to pursue green solutions,” said Makhtar Diop, managing director of the IFC. “Perhaps no market has seen more market transformation than Colombia.”

That transformation has seen the Latin American country certify 6.1 million square metres of certified green space, having built almost 73,000 green homes, two thirds of which are affordable housing. The IFC estimates that over 20% of new buildings in the year to June 2021 in Colombia were EDGE certified, making it one of the highest rates of green building certification in an emerging country.

“Our country has the first green building code in Latin America and leads in EDGE certification of sustainable projects in the region for the number of projects and the number of floor space square metres certified,” said Iván Duque Márquez, President of Colombia.

The IFC was key to helping the Colombian government create the first green building code in Latin America. Later, the government encouraged green building through tax incentives. President Duque emphasises the role of different institutions coming together to achieve change. Indeed, following the IFC COP26 event, attendees including financiers, policymakers, and developers rated government procurement standards and tax breaks as the most effective policy tools for a zero carbon transition.

“Achieving the transition to a low-carbon economy is impossible if there’s no teamwork between the national government, developers, civil society and the financial sector,” explained President Duque on the role of Colombia’s Ministries of Environment, Finance, and Housing, City and Territory, the Chamber of Construction (CAMACOL), Colombian bank Bancolombia and the country’s Green Building Council all coming together with the EDGE certification to develop the green building industry in the country.

As a key part of that team in the financial sector, Bancolombia issued a green bond in late 2016, which the IFC invested in, as reported by Environmental Finance at the time. The proceeds then launched an aggressive green mortgages programme in 2017.

“With the support of the IFC we launched the first issuance. It was a big challenge as it was the first sustainable bond from a Colombian bank, but we wanted to reaffirm our responsibility of promoting well-being for all,” said Juan Carlos Mora Uribe, CEO of Bancolombia.

He affirms that not only has the bond been a financial and societal success for the bank, its clients and the environment, in having greener buildings, but that it has achieved its more important role in catalysing the market.

“We have seen others start to follow. We welcome our banking colleagues, not only in Colombia but in the world, to implement this strategy as a model of how to move towards the future with better performing buildings through green bonds,” added Mora Uribe.

Elsewhere on the continent, IFC has also helped several Peruvian municipalities incentivise green building by passing ordinances that offer incentives to developers like height bonuses if a residential property is certified green.

Latin America is far from the only part of the world to embrace green and sustainable building policy, with EDGE playing a prominent role. In the US, the government sponsored mortgage-backed securities provider Fannie Mae announced that EDGE will be the newest green building certification that it accepts for multifamily properties. Fannie Mae offers preferential pricing on loans secured by a multifamily property with a recognised green building certification.

Although a new adopter of EDGE, Fannie Mae isn’t a newcomer to green building finance, having launched its Multifamily Green Financing Business back in 2010.

This was followed with its first Multifamily Green Bond, issued in 2012. “Fannie was in front of the green bond market when we started issuing them,” explained Dan Brown, vice President of Fannie Mae about why it took two years to issue its first green bond after launching its Green Bond Business. “It took a while to reach critical mass of interest,” he added.

The size of Fannie Mae in the real estate sector makes it a real mover in the market, particularly when it comes to green finance. It finances approximately 20% of the multi-family housing market and 30% of the single-family housing market in the US. In addition, Fannie Mae has issued $88 billion in green mortgage-backed securities since its first in 2012. The annual issuance of Fannie Mae’s green bond issues are estimated to save 9.5 billion kilo British Thermal Units (kBtu) of energy, 8.5 billion gallons of water and 634,000 tonnes of greenhouse gas emissions being emitted.

Not only do these figures speak for themselves but the sheer size of Fannie Mae means it is able to have a wider impact on green building certification.

“We have helped make green building certification space even greener,” claimed Brown. “There’s been three green building certifications that have raised their own standards so they can be part of our programme.”

“We structured the programme so almost any building can get the benefits of green financing, whether it’s a building that’s already green or making efficiency improvements at an existing property to turn a property green – that’s a large part of our success.”

Fannie Mae is not the only real estate company establishing themselves as a leader in green buildings. Ivanhoe Cambridge has set the target of achieving carbon neutrality in its operations by 2040, as it looks to advance meaningful environmental, social and governance (ESG) impacts in the real estate sector, which is responsible for approximately 30% of the world’s greenhouse gas emissions as well as 40% of the total global energy use.

The firm has an interim target of reducing operational emissions by 35% by 2025, compared with its 2017 baseline.

“We don’t have every answer to get us to 2040 yet, but we’re finding those answers,” said Rob Simpson, director of sustainability at Ivanhoe Cambridge, acknowledging again the journey that the industry is on in terms of green buildings and that the path to carbon neutrality is not yet fully laid down, though the effort must be made.

“We have a significant programme related to green buildings certification and the requirements to achieve certain levels,” he added about the importance of policy to achieve these aims.

In Singapore, Beh Siew Kim, CEO of real estate investor Ascott Residence Trust (ART), argued that the government, private investors, and regulatory authorities are working together to “transform Singapore into a global city of sustainability and working towards net zero emissions as much as we can.”

This is centred on the Green Plan 2030, which has an 80-80-80 policy for green buildings. This means by 2030 80% of all the city’s existing buildings, by gross floor area, need to be green, 80% of new developments need to be super low energy buildings and have an 80% improvement in energy efficiency for best in class green buildings. Currently best in class buildings are only 65% more efficient than 2005 levels.

“We are governed by the Stock Exchange and the Monetary Authority of Singapore, and they have both stepped up in terms of their regulatory efforts in sustainability of listed companies and from next year asset managers must assess the recent financial implications of climate change and make relevant disclosure in our portfolio,” said Beh.

As a business ART is certainly growing exponentially in the green building space, having increased its green certified buildings by close to four times in the last year. It is also part of the CapitaLand Group, the largest developer in Asia, which has set a group target to secure $6 billion in green finance by 2030.

Bancolombia’s Mora Uribe emphasized the importance of recognising regional differences when implementing standards for green building policy. “There are different ways to approaching the certification of projects and we need to be aware, particularly in developing countries, which we need to evolve to introduce new practices in a manner that makes economic sense. It’s important to standardise, we need participation of private entities to introduce best practices regarding construction,” he said.

From Colombia, to the US, Singapore and everywhere in between, it is clear that a partnership between all relevant bodies is needed to achieve the greening of the real estate sector. As the journey continues to 2030, 2040, and beyond, standardised policies that accommodate local differences will drive the biggest successes.

What is EDGE?

Excellence in Design for Greater Efficiencies (EDGE) “is a green building standard that can be tailored to local climates and customs,” explained Makhtar Diop, managing director of the IFC. “EDGE was designed by the IFC for banks. It focuses on quantified energy and water savings, embodied energy in materials, and greenhouse gas emission reductions. From large commercial complexes to small social housing units, EDGE is democratising certification by showing that a small upfront investment can pay off in a big way. EDGE now certifies well over $1 billion every month in green floor space. It helps capital flow to green projects and is changing markets around the world.”

EDGE’s aim was to prove the business case for building green and unlock financial investment by providing market leaders the opportunity to gain a competitive advantage by differentiating their products and adding value to the lives of their customers.

EDGE streamlines green building certification by having an achievable set of standards and focusing on energy, water consumption and embodied energy in materials. It is simple and affordable. It is being adopted for entire building portfolios to demonstrate the resource efficiency of buildings for those just beginning their efforts as much as for those who are already building to net zero carbon standards.

Three levels of certification support distinct levels of ambition:

EDGE – New, existing or refurbished buildings must exceed business as usual efficiency by 20% in energy, water and embodied energy in materials for new construction.
EDGE Advanced – An EDGE building which attains 40% energy efficiency.
EDGE Zero Carbon – An EDGE Advanced building which uses 100% renewable energy or purchases carbon offsets.

Launched commercially in 2015, EDGE is now available everywhere by pulling together the biggest network of certifiers in the world with the collective ambition to mainstream green buildings and help fight climate change.

Courtesy: Environmental Finance

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SUSTAINABILITY & CLIMATE CHANGE

EARTH DAY 2024: Packaging Is the Biggest Driver of Global Plastics Use

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2 weeks ago

April 23, 2024

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By Felix Richter,

The theme of this year’s Earth Day is “Planet vs. Plastics” – a theme chosen to raise awareness of the damage done by plastic to humans, animals and the planet and to promote policies aiming to reduce global plastic production by 60 percent by 2040.

As our chart shows, global plastics use has increased rapidly over the past few decades, growing 250 percent since 1990 to reach 460 million tonnes in 2019, according to the OECD’s Global Plastics Outlook, which projects another 67-percent increase in global plastics use by 2040 and for the world’s annual plastic use to exceed one billion tonnes by 2052. As our chart shows, packaging is the largest driver of global plastics use, which is why a rapid phasing out of all single use plastics by 2030 is one of the policy measures proposed under EARTHDAY.ORG’s 60X40 framework.

Other major applications of plastics include building and construction, transportation as well as textiles, with the fast fashion industry particularly guilty of adding to the world’s plastic footprint. “The fast fashion industry annually produces over 100 billion garments,” the Earth Day organizers write. “Overproduction and overconsumption have transformed the industry, leading to the disposability of fashion. People now buy 60 percent more clothing than 15 years ago, but each item is kept for only half as long.” Most importantly, the organization points out that 85 percent of disposed garments end up in landfills or incinerators, while just 1 percent are being recycled.

Felix Richter is a Data Journalist

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SUSTAINABILITY & CLIMATE CHANGE

The Sahara Desert used to be a Green Savannah – New Research Explains Why

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5 months ago

December 24, 2023

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By Edward Armstrong

Algeria’s Tassili N’Ajjer plateau is Africa’s largest national park. Among its vast sandstone formations is perhaps the world’s largest art museum. Over 15,000 etchings and paintings are exhibited there, some as much as 11,000 years old according to scientific dating techniques, representing a unique ethnological and climatological record of the region.

Curiously, however, these images do not depict the arid, barren landscape that is present in the Tassili N’Ajjer today. Instead, they portray a vibrant savannah inhabited by elephants, giraffes, rhinos and hippos. This rock art is an important record of the past environmental conditions that prevailed in the Sahara, the world’s largest hot desert.

These images depict a period approximately 6,000-11,000 years ago called the Green Sahara or North African Humid Period. There is widespread climatological evidence that during this period the Sahara supported wooded savannah ecosystems and numerous rivers and lakes in what are now Libya, Niger, Chad and Mali.

This greening of the Sahara didn’t happen once. Using marine and lake sediments, scientists have identified over 230 of these greenings occurring about every 21,000 years over the past eight million years. These greening events provided vegetated corridors which influenced species’ distribution and evolution, including the out-of-Africa migrations of ancient humans.

These dramatic greenings would have required a large-scale reorganisation of the atmospheric system to bring rains to this hyper arid region. But most climate models haven’t been able to simulate how dramatic these events were.

As a team of climate modellers and anthropologists, we have overcome this obstacle. We developed a climate model that more accurately simulates atmospheric circulation over the Sahara and the impacts of vegetation on rainfall.

We identified why north Africa greened approximately every 21,000 years over the past eight million years. It was caused by changes in the Earth’s orbital precession – the slight wobbling of the planet while rotating. This moves the Northern Hemisphere closer to the sun during the summer months.

This caused warmer summers in the Northern Hemisphere, and warmer air is able to hold more moisture. This intensified the strength of the West African Monsoon system and shifted the African rainbelt northwards. This increased Saharan rainfall, resulting in the spread of savannah and wooded grassland across the desert from the tropics to the Mediterranean, providing a vast habitat for plants and animals.

Our results demonstrate the sensitivity of the Sahara Desert to changes in past climate. They explain how this sensitivity affects rainfall across north Africa. This is important for understanding the implications of present-day climate change (driven by human activities). Warmer temperatures in the future may also enhance monsoon strength, with both local and global impacts.

Earth’s changing orbit

The fact that the wetter periods in north Africa have recurred every 21,000 years or so is a big clue about what causes them: variations in Earth’s orbit. Due to gravitational influences from the moon and other planets in our solar system, the orbit of the Earth around the sun is not constant. It has cyclic variations on multi-thousand year timescales. These orbital cycles are termed Milankovitch cycles; they influence the amount of energy the Earth receives from the sun.

On 100,000-year cycles, the shape of Earth’s orbit (or eccentricity) shifts between circular and oval, and on 41,000 year cycles the tilt of Earth’s axis varies (termed obliquity). Eccentricity and obliquity cycles are responsible for driving the ice ages of the past 2.4 million years.

The third Milankovitch cycle is precession. This concerns Earth’s wobble on its axis, which varies on a 21,000 year timescale. The similarity between the precession cycle and the timing of the humid periods indicates that precession is their dominant driver. Precession influences seasonal contrasts, increasing them in one hemisphere and reducing them in another. During warmer Northern Hemisphere summers, a consequent increase in north African summer rainfall would have initiated a humid phase, resulting in the spread of vegetation across the region.

Eccentricity and the ice sheets

In our study we also identified that the humid periods did not occur during the ice ages, when large glacial ice sheets covered much of the polar regions. This is because these vast ice sheets cooled the atmosphere. The cooling countered the influence of precession and suppressed the expansion of the African monsoon system.

The ice ages are driven by the eccentricity cycle, which determines how circular Earth’s orbit is around the sun. So our findings show that eccentricity indirectly influences the magnitude of the humid periods via its influence on the ice sheets. This highlights, for the first time, a major connection between these distant high latitude and tropical regions.

The Sahara acts as a gate. It controls the dispersal of species between north and sub-Saharan Africa, and in and out of the continent. The gate was open when the Sahara was green and closed when deserts prevailed. Our results reveal the sensitivity of this gate to Earth’s orbit around the sun. They also show that high latitude ice sheets may have restricted the dispersal of species during the glacial periods of the last 800,000 years.

Trucks driving through the desert. — The Sahara desert. Getty Images

Our ability to model the African humid periods helps us understand the alternation of humid and arid phases. This had major consequences for the dispersal and evolution of species, including humans, within and out of Africa. Furthermore, it provides a tool for understanding future greening in response to climate change and its environmental impact.

Refined models may, in the future, be able to identify how climate warming will influence rainfall and vegetation in the Sahara region, and the wider implications for society.

Edward Armstrong is a postdoctoral research fellow, University of Helsinki

Courtesy: The Conversation

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SUSTAINABILITY & CLIMATE CHANGE

COP28: New Draft Text on Climate Deal Published; Calls for Transitioning away from Fossil Fuels

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5 months ago

December 14, 2023

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By Imogen Lillywhite,

A new draft text on global stocktake has been published at the UN climate summit, COP28 UAE, on Wednesday morning. While the draft text does not contain the words “phase out”, it includes reference to transitioning away from all fossil fuels to enable the world to reach net zero by 2050.

The text published by the UN’s climate body calls on parties to accelerate and substantially reduce non-carbon dioxide emissions worldwide with a focus on reducing methane emissions by 2030. “We all want to get the most ambitious outcome possible,” Majid Al Suwaidi, COP28 Director-General, said on Tuesday.

The text, published early Wednesday, does not specifically refer to oil, but mentions the need to ‘phase-down’ coal. It says that it recognises the need for ‘deep, rapid and sustained reductions in greenhouse gas emissions in line with 1.5C pathways and calls on Parties to contribute to global efforts.

Among those efforts it recognises the need to triple renewable energy capacity by 2030 and doubling the annual rate of energy efficiency improvements by the same date. It also recognises the need to accelerate the phase-down of coal and accelerate towards net zero energy systems, utilising zero or low carbon fuels by mid century.

While the document does not mention oil or combustion engines, it does recognises the need for accelerating the reduction of emissions from road transport on a range of pathways, including through development of infrastructure and rapid deployment of zero and low-emission vehicles. It also recognises the need to phase out inefficient fossil fuel subsidies that do not address energy poverty or just transitions, as soon as possible.

Finance specifics

On the subject of finance, the document said developed countries should continue to take the lead in mobilising climate finance from a wide variety of sources, instruments and channels, noting the significant role of public funds, through a variety of actions, including supporting country-driven strategies, and taking into account the needs and priorities of developing countries.

Such mobilisation of climate finance should represent a progression beyond previous efforts, the text said. It may provide small comfort to campaigners from developing countries who implored Parties to begin the phase out of fossil fuels and provide vastly improved access to funding for renewables.

The document highlights the persistent gap and challenges in technology development and transfer and the uneven pace of adoption of climate technologies around the world.

It further urges Parties to address these barriers and strengthen cooperative action, including with non-Party stakeholders, particularly with the private sector, to rapidly scale up the deployment of existing technologies, the fostering of innovation and the development and transfer of new technologies.

It also emphasizes the ongoing challenges faced by many developing country Parties in accessing climate finance and encourages further efforts, including by the operating entities of the Financial Mechanism, to simplify access to such finance, in particular for those developing country Parties that have significant capacity constraints, such as the least developed countries and small island developing States.

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