Financing Sustainable Green Housing

Context: As per the latest Emission Gap Report, we are far from the Paris Agreement goal of limiting global warming to well below 2°C, preferably 1.5°C. So here, Green Housing can play a decisive role to achieve the goal.

• Housing is a major greenhouse gas emitting sector, consuming about 24 percent of the country’s electricity and emitting over 20 percent of total GHG.
• In India, Households’ electricity consumption has trebled from 2000 to 2017 and this is projected to surge eight times over 2018-50.

About Green Housing:

• It refers to a house where there is a natural environment, which saves electricity and water costs as well as causes less damage to the environment.
• Advantages and Key Features:
  • They are designed in such a way that they reduce the emission of harmful gasses during and after construction and reduce soil pollution in nature.
  • Green homes not only save money on higher bills but also provide many health benefits.
  • Less power and water.

SUNREF Green Housing programme:

• National Housing Bank (NHB) launched the SUNREF Green Housing India programme in 2017, in partnership with the AFD and with the support of the European Union (EU).
• This programme aims at:
  • Reducing the negative impacts of the housing industry on the environment.
  • Scaling up green and affordable housing projects in India.
  • Providing low and middle income groups with green affordable housing.
  • Increasing savings in energy and water bills by encouraging the development of green residential houses with efficient building material use.

Need of Green Housing:

• Country’s electricity consumption and greenhouse gas emission percentages are expected to increase as housing demand accelerates. It will make it difficult to achieve green transition targets.
• In the big cities, the land for construction is exhausted, the gardens and parks are few, and people do not get fresh air in the urban areas.
• Conventional housing materials such as concrete and steel are made with energy-intensive processes.

Challenges before Green Housing:

• Builders have no economic incentives to implement sustainability, as ‘green’ homes do not command premium pricing.
• Buyers not be motivated to pay more, especially if it is rented out.
• Commercial banks are unlikely to provide debt as they wish to avoid an increase in the ‘loan-value to house-value’
• Banks rarely provide capital for retrofitting as the borrowers are reluctant to provide their houses as collateral.

Way Forward:

• The use of low-carbon materials, following sustainable construction processes, and recycling building materials can lower the GHG footprint.
• An appropriate blend of active and passive design elements when constructing, should be promoted.
• Retrofitting roofs, windows, and doors that have higher energy performance.
  • It can reduce heating and cooling demands by up to 40 per cent.
• Replacing incandescent lights with LEDs.
  • It can reduce energy consumption by about 80 per cent.
• Manufacturer guarantees and warranties can be augmented with standardized performance certifications from government agencies.
• The Government and Multilateral Development Banks (MDBs), and Domestic Development Banks (DDBs) can support the green housing sector through a credit enhancement mechanism.
• Offering of Subordinate loan and partial credit guarantees on energy-efficient homes can be useful.
• Public institutions can nudge the private players with innovative financing models and policies to fund the much-needed low-carbon housing sector.

Given the advantages it offers, the incentives that the government is providing to this construction and the growing demand by the environment-conscious consumers, the future for green housing seems very bright.

Source: The Hindu