Is it nec­es­sary to in­cen­tivise green build­ings?

Sops are an ef­fec­tive in­stru­ment only if they are backed with an im­ple­men­ta­tion ma­chin­ery and leg­is­la­tion, say ex­perts

HT Estates - - HTESTATES - Van­dana Ram­nani

Both fi­nan­cial in­sti­tutes and state au­thor­i­ties across the coun­try have taken steps to de­velop tools and in­cen­tives to in­te­grate en­ergy ef­fi­ciency in up­com­ing res­i­den­tial and com­mer­cial projects. While some ex­perts be­lieve that sops are essen­tial to en­cour­age more de­vel­op­ers to con­struct green build­ings, oth­ers are of the opin­ion that only a mix of sops and reg­u­la­tion can prove to be an ef­fec­tive tool.

Only a com­bi­na­tion of in­cen­tives and leg­is­la­tion will work, say ex­perts. Fur­ther, there has to be con­sis­tency in im­ple­men­ta­tion and the state has to evolve and set up a ma­chin­ery for the same. The cur­rent com­mit­ment for green de­vel­op­ment from de­vel­op­ers is mar­ket driven. There is de­mand for green build­ings from cor­po­rate cus­tomers be­cause they have a sus­tain­abil­ity com­po­nent built in as part of their cor­po­rate so­cial re­spon­si­bil­ity (CSR) pro­grammes.

But mar­ket forces alone can­not drive green real es­tate de­vel­op­ment. In­cen­tives are an ef­fec­tive in­stru­ment only if backed with an im­ple­men­ta­tion ma­chin­ery and leg­is­la­tion, says Ra­jat Mal­ho­tra, COO - West Asia, In­te­grated Fa­cil­i­ties Man­age­ment, Jones Lang LaSalle:

An­other is­sue is that of pref­er­en­tial en­vi­ron­men­tal clear­ance for green struc­tures. The whole ex­er­cise of en­vi­ron­men­tal clear­ance has been a step in the right di­rec­tion but has re­sulted in stalled growth be­cause the states have not set up suf­fi­cient ma­chin­ery to im­ple­ment it, which, in turn, has led to a huge back­log. There­fore, an in­cen­tive of ac­cel­er­ated clear­ance to green build­ings is not com­ing through with its ben­e­fit since there is such a huge back­log, he adds.

Even as the green move­ment has picked up in the res­i­den­tial sec­tor, it is yet to be­come an all

per­vad­ing as­pect of the sub­stan­tial res­i­den­tial de­vel­op­ment sec­tor in In­dia. Many coun­tries glob­ally pro­vide in­cen­tive mech­a­nisms to pro­mote green build­ing de­vel­op­ment and prac­tices. Such ex­pe­ri­ence points to the as­pect

that ap­pro­pri­ately cal­i­brated mech­a­nisms can be one way of en­cour­ag­ing a larger pipe­line and share of green build­ings in the over­all de­vel­op­ment can­vas. But apart from this, it is im­per­a­tive that, on the de­mand side,

aware­ness and knowl­edge of sus­tain­abil­ity prac­tices, its im­por­tance, im­pact and pro­cesses are shared on much larger scale with in­di­vid­u­als and home­buy­ers such that sus­tain­abil­ity pa­ram­e­ters be­come a norm for con­sumers, adds T Chakra­vorty, ur­ban econ­o­mist.

As far as fi­nan­cial sops are con­cerned, the Pro­mo­tional Pro­gramme for En­ergy Ef­fi­ciency in New Res­i­den­tial Con­struc­tion was ini­ti­ated by Na­tional Hous­ing Bank and KfW, the Ger­man de­vel­op­ment bank, three years ago. The prime ob­jec­tive of the pro­gramme was to en­sure a sound and healthy habi­tat by pro­mot­ing en­ergy ef­fi­cient res­i­den­tial hous­ing. NHB has made a to­tal dis­burse­ment of 232.73 crore un­der the scheme so far.

Once the tool de­vel­oped by TERI along with KfW con­firms that the project be­ing de­vel­oped by the said builder is en­ergy ef­fi­cient, the banks get the loan re­fi­nanced from NHB at a rate of in­ter­est much lower than the mar­ket rate. “But we are not aware whether the same banks are pass­ing this ben­e­fit to con­sumers who take a hous­ing loan for the same green project,” adds Mili Ma­jum­dar of TERI.

The de­vel­op­ers/projects par­tic­i­pat­ing in the pro­gramme are re­quired to demon­strate en­ergy ef­fi­ciency im­prove­ment of at least 30% over a typ­i­cal hous­ing project to NHB. NHB then is­sues a cer­tifi­cate to projects achiev­ing 30% or more en­ergy sav­ings and then re­fi­nances the loans for en­ergy ef­fi­cient hous­ing un­der the scheme.

There is also a gov­ern­ment no­ti­fi­ca­tion that states that if the de­vel­oper’s project com­plies with any of the two pre-cer­ti­fi­ca­tions, de­vel­op­ers can get an early hear­ing with re­gard to en­vi­ron­ment cer­ti­fi­ca­tion.

“We have aligned the GRIHA process with the pro­cesses of en­vi­ron­ment clear­ance. Some de­vel­op­ers do use it to get a fast track. We are work­ing on how to mon­i­tor that. In case a de­vel­oper does not ad­here to the green norms, there should be a mech­a­nism in place that could di­rectly have an im­pact on his li­cense or project him as a not re­spon­si­ble de­vel­oper,” she adds.


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