Mr S Raghupathy, Executive Director of CII-Godrej GBC, Hyderabad shared his views on the transformation of the green building market and its future.
What do you feel about the status of the construction sector in India in terms of awareness regarding green practices and green buildings? Is the industry feeling the need for undertaking green oriented construction practices and understanding the returns from these or is it just some of the first movers who are taking the lead?
There has been a significant growth of Green Buildings over the last ten years.The interest in constructing environment -friendly buildings started in 2003, when CII-Sohrabji Godrej Green Business Centre building in Hyderabad was awarded with the first and the prestigious Platinum rated green building rating outside of US by the US Green Building Council.
Since then, Green Building movement in India has gained tremendous impetus over the years.
With a modest beginning of 20,000 sq.ft. green built-up area in the country in the year 2003, today more than 1,400 registered green buildings projects with a built-up area of 1 Billion sq. ft are being constructed all over India. Initially, we thought that we will be able to touch 1 Billion sq.ft of green building footprint by the end of 2012, but we have reached this goal by the end of 2011 itself. India ranks no. 2 with one Billion sq. ft. of green building footprint. U.S. is on the top of the list with about 6 Billion sq.ft.
The way market is responding to green buildings is indeed encouraging. Currently, the Green Building market is doing pretty well and growing at a rate of 30-35% per year. Indian Green Building Council (IGBC), in its efforts to further facilitate the spread of Green Building concepts across the country has launched local chapters in Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Kochi, Mumbai, Pune, Goa, Vadodara and Coimbatore.
What has the Green Building market transformation been like over the course of the last few years in the green building industry?
When we look at the transformation, the initial phase was in 2004-2005. The first 5 Certified Green Buildings- CII-Shorabji Godrej Green Business Centre, Hyderabad; ITC Green Centre, Gurgaon; Wipro Technologies, Gurgaon; NEG Micon India Pvt Limited (Vestas India), Chennai and Grundfos Pumps, Chennai became demonstration buildings, and attracted architects, consultants, developers and other visitors.
CII-Sohrabji Godrej Green Business Centre, Hyderabad ITC Green Centre, Gurgaon
Wipro Technologies, Gurgaon NEG Micon India Pvt Limited (Vestas India), Chennai
Grundfos Pumps, Chennai
These buildings provided the stakeholders with the education and awareness that they were looking for. Initially it was thought that these buildings would get about 5,000 visitors a year, but instead there were more than 50,000 visitors a year.
This prompted many other corporates to join in. The challenge which we faced at that time was to determine the appropriate business side – supply side or demand side.
We had discovered that although many architects were able to design Green Buildings, their clients were not showing much interest, which in-turn led the architects to stop persuading corporates to invest in eco-friendly buildings. Hence, we decided to focus first on the demand side of the business and then target the supply side like architects and construction companies, once the demand for Green Buildings picked up.
The first step IGBC took up was to persuade corporates to invest in Green Buildings. The focus for the years 2003-2007 was to present business cases to the corporates to invest in green buildings. As more corporates jumped onto the bandwagon of constructing Green Buildings, market opened up and gradually the cost of materials to build these green structures came down as well.
In 2004-2005, a Platinum rated Green Building used to cost 15% more to build versus a regular commercial building. This difference decreased to less than 8% in 2010 and has further reduced to 5% this year. Currently, one can build a Certified Green Building almost at the same price as a regular commercial building. Also, the occupancy rate of Green commercial buildings is about 95-100%, compared to an 80% occupancy rate for regular commercial buildings. Hence, in a competitive construction market, Green Buildings have become a key differentiator.
The second major transformation happened in the year 2007. We recognized that the developers were showing keen interest in green buildings. Prior to 2007, even upon strong persuasion, we were unable to get a commitment from the developer’s side.This surge in interest enhanced our curiosity, and upon enquiry we realized that their major corporate clients were asking the developers to invest in Green Buildings. Today, the construction market is completely dominated with developers who want to build Green Buildings. Developers are noticing the branding value of being associated with Green Buildings. They are even able to charge a certain premium for such environmental conscious construction.
Then we started the Green Home market in 2009. This triggered the next phase of the green building revolution. Today the green homes account for about 40% of the Green Building market. Out of the one Billion Sq.ft of green building footprint in India, Green Homes occupy about over 400 Million Sq. ft. When we talk about Green Homes, we consider very simple features like harvesting natural day-light, ventilation, better envelope and of course water efficiency.
Do you think that India should set rigid standards to ensure energy efficiency in the construction industry?
The best strategy is to be in a market -driven voluntary adoption mode. Government should definitely engage in fixing baseline standards, like Energy Conservation Building Code (ECBC). But, setting rigid standards for building efficiency is not a viable option in India. Instead, it will only create further complications, as India is only at the initial stages of the green building movement, and has not achieved the level of maturity that some of the developed Green Building markets have.
As per the Mission on Sustainable Growth 2008, the target was to seek voluntary commitments from 1000 CEOs by Dec 2011. Where do you stand on that?
Currently, captains of 450 companies have signed the CII-Code for Ecologically Sustainable Business Growth and many other companies have evinced their interest to be part of this initiative. We anticipate reaching 1,000 voluntary commitments by 2012.The 450 companies that have expressed their commitment to the CII-Code have shown significant results in terms of CO₂ reduction, water savings, and electrical & thermal energy savings.
What are the future plans for Greening Indian Industry?
To make a significant impact on climate change mitigation and substantially reduce carbon emissions, one has to reflect on various aspects. We looked at the issues and initiatives that existed in India and globally, and then launched a very unique initiative – Greenco Rating for Companies, the first of its kind in the world in February of 2011. The uniqueness of this Rating System is that it is applicable to both manufacturing and service based companies.
The 10 parameters that this rating takes into consideration include: energy efficiency, water conservation, renewable energy, GHG emission reduction, material conservation, recycling & recyclables, waste management, green supply chain, product stewardship, life cycle assessment, others (ventilation, site selection & innovation). If the company’s internal practices focuses on the above 10 parameters, they get a higher score – 1000 points, being the total score awarded. We take into account the ‘Green’ practices under the company’s supply chain, product stewardship, and lifecycle assessment, etc. We have tried to account for everything that should be considered for environmental sustainable practices.
Over 45 companies have already expressed their interest for the Greenco Rating for Companies. Some of the companies that have already applied for Greenco Rating include: ITC, Godrej, Dr. Reddy’s Lab, JCB, Hindustan Unilever, etc.
We don’t expect any major problems, but there would be challenges to adopt and analyze on a sectoral basis. The rating is valid for 3 years, and after the third year, the firms need to re-apply and provide updated information on various parameters. We are diligently evaluating the submissions before we rate the applicants. As things stand, we hope to release the Final Rating in March of 2012.
This interview was conducted by Pramita Sen, a member of the India Carbon Outlook editorial team.