Green buildings vs. the crisis
Stimulus programmes for green buildings – best practice examples
Green building stimulus programmes can boost a Green Recovery after Covid-19.
Please find the recording of our webinar here.
The construction sector is essential for an economic recovery after the COVID-19 crisis. It can rapidly create large amounts of jobs and involves far-reaching value chains of small and large businesses. At the same time, the building sector presents a massive – and largely unused – opportunity to respond to the climate crisis. The building sector holds the potential for a double win: For small extra investments, green buildings can achieve massive long-term savings of cost and greenhouse gas (GHG) emissions. Governments successfully used green building programmes to help recover from the 2008 financial crisis.
In 2020, governments are looking for ways to respond to the economic crisis that followed the Covid-19 pandemic, with economic stimulus packages worth trillions of dollars. To “build back better”, we need green recovery programmes. Stimulus programmes for the building sector can boost a Green Recovery, with massive benefits for jobs, the economy, and the climate.
The GlobalABC’s Work Area on Finance group has collected examples of green building programmes that can serve as an inspiration for stimulus programmes for the building sector. These case studies show key features of programmes and their benefits. These examples are aimed at governments and investors, including development banks, other public and private banks, and real-estate financing.
The response to the crisis as an investment in the future
Green building programmes are excellent value-for-money. For some of the programmes collected, extensive evaluations have been conducted and published, and benefits are provided with the example. Benefits include:
- High energy and CO2 savings
- Job creation
- High private sector leverage
- Health benefits through better homes
- Socio-economic benefits through savings on energy bills
- Macro-economic benefits through savings on energy subsidies
Many programmes help to introduce more ambitious standards for national building codes, by demonstrating the technical and financial feasibility of green buildings.
Successful Blueprints for Green Building Programmes Exist
Green building programmes stimulate investments into green buildings, through financial incentives that compensate for the extra cost involved in reaching higher standards, either through renovation or for new construction. The programmes collected all use financial incentives to stimulate investments, that is loans or grants. They use financial incentives to make up for the slightly higher investment cost of green housing equal that leads to cost savings at a later stage. Programmes that provide non-monetary incentives, for example height bonuses or property tax incentives, have not been included.
Successful green building programmes are tailored to the local context. The programmes use various instruments, or a mix of them, targeting different groups, for example:
- green mortgages to households
- bridging loans to developers
- grants to homeowners or housing associations
- concessional loans to developers or housing associations
Some of these programmes were supported by development finance institutions. Technical support was sometimes included to support private sector and public institutions in the introduction of higher technical standard
Green buildings programmes
A GlobalABC webinar on 23 September 2020 discussed how to use successful green building programmes as a blueprint for green recovery programmes, as well as possibilities for financing them.
Presentations (click on name to download):
- Rusmir Music, International Finance Corporation (IFC)
- Vyacheslav Koval, Energy Efficiency Fund, Ukraine
- José Lopez, Agence Francaise de Développement (AFD)
- Michael Oppermann, International Energy Agency (IEA)