Press Release: BCG and NRDC Release New Report on Green Buildings and Sustainable Growth
Improving Building Energy Efficiency by 2015 Could Cut China’s Energy Use by 170 Billion kWh and Reduce CO2 Emissions by 170 Million Tonnes Annually According To A New Joint Report by The Boston Consulting Group and The Natural Resources Defense Council
BCG and NRDC Provide Suggestions On How Government, Building Developers, Commercial Building Tenants, Media and Other Organizations Can Help Improve China’s Environment by Improving Building Efficiency
Beijing, September 7, 2009—Improving the energy efficiency of China’ s buildings can help achieve sustainable urbanization and economic growth according to a new report jointly published today by The Boston Consulting Group (BCG) and The Natural Resources Defense Council (NRDC).
In From Gray to Green: How Energy-Efficient Buildings Can Help Make China’s Rapid Urbanization Sustainable (Chinese version available now, English version coming soon), the authors set out the case for improving building efficiency, including estimated potentials of benefits. They also identify the key stakeholder groups in China and suggest actions for each group.
“What is not commonly understood is that building operational use accounts for around 25% of China’s total energy consumption”, said Justin Fung, co-author of the report and a Project Leader in BCG’s Hong Kong office. “That is more energy than China’s cement, iron and steel sectors combined. And if you include energy used for manufacturing and transporting building materials and products, China’s buildings consume 30-40% of the country’s total energy.”
As China’s middle class continues to grow and the population continues to urbanize, the energy consumption of buildings will continue to increase: city residents typically use three times as much electricity as their rural cousins.
Fortunately, as Beijing’s Agenda 21 Building and many similar green buildings in different parts of China have shown, it is feasible to achieve 70% savings in energy consumption by applying existing building efficiency technologies. So the benefits from an aspirational but potentially achievable greening of buildings could be substantial. For example, if by 2015, the end of China’s 12th Five-Year Term, 5% of existing buildings and 60% of new buildings were to achieve levels of energy consumption 50% below those of comparable non-green buildings in similar climate zones, the subsequent annual energy savings would be 170 billion kWh electricity, equivalent to turning off all the lights in America for one month. CO2 emissions would be cut by 170 million tonnes.
In addition to the size of the potential savings, there is another critical benefit from improving building efficiency. “It may be surprising to some people, but most investments to improve building efficiency have a pretty short payback period”, explained Christoph Nettesheim, the report’s co-author and a Beijing-based senior partner at BCG. “To take the simplest example, installing energy-saving lights is not only cheap, but will pay for itself in under a year.” The total additional cost of greening a building in China is also not as expensive as sometimes thought – typically being around 4-5% of the cost of a new building.
And yet, even with these favourable environmental and economic benefits, lifting building efficiency remains a very significant challenge. Why? “This is a classic case of split incentives,” explained Dr. Kevin Mo, another co-author and Senior Sustainable Building Specialist in the Beijing office of NRDC. “For example, the upfront cost of applying more efficient technologies to a building must be paid for by a developer. It is usually commercial tenants who receive the benefit of reduced energy bills. Therefore, the developer is not necessarily interested in building efficiency.” For this reason, it is critical to achieve alignment among stakeholders. And building that alignment – a considerable task – is one of the primary goals of this report.
BCG and NRDC Suggest Five Priority Actions for Each Key Stakeholder Group.
Local and central government
1. Accelerate adoption of building-efficiency audits and disclosure of results
2. Fully implement an energy-efficiency labeling system for all buildings
3. Develop an integrated incentive system to encourage green buildings
4. Use status as an influential end-user to drive development of efficient buildings
5. Implement standards across lagging provinces, and strengthen enforcement
Media and other organizations
1. Generate awareness of the issue
2. Act as local monitors and use exposure to discourage negative behaviors
3. Use favorable publicity to create incentives
4. Disseminate knowledge and best practices
5. Work with government to continue efforts to improve building efficiency
Building Developers and Owners
1. Invest in green building capabilities and knowledge
2. Experiment with new business models, such as energy-management contracts
3. Develop specific tools and channels for different audiences to sell the benefits of efficient buildings and secure a price premium
4. Form an industry body to work with government to build a market for efficient buildings
5. Expand existing corporate social responsibility projects to green buildings
Commercial Building Tenants
1. Identify opportunities to save energy in lighting, office equipment, building shell, and mechanical systems
2. Invest in and install energy-efficient equipment and optimize plug loads
3. When looking for new offices, incorporate green considerations into decision
4. Educate your employees on energy-saving behaviors
5. Choose products and suppliers based on credible energy-rating standards
“Raising the energy efficiency of China’s buildings is a really critical task. It’s going to require sustained commitment and cooperation from all key stakeholders. The challenge is definitely not to be underestimated”, said Barbara Finamore, China Program Director of NRDC and report co-author. “But the rewards from getting it right—economic, social, political, and, of course, environmental—promise to be enormous and long-lasting.”
* * *
To receive a copy of the report or arrange an interview with one of the authors, please contact:
• Ms. Gu Li of BCG at +86 21 23064000 or gu.li@bcg.com.
• Ms. Li Yang of NRDC at +86 10 5879 4079 ext. 7915 or yangli@nrdc.org.
About The Boston Consulting Group
The Boston Consulting Group (BCG) is a global management consulting firm and the world’s leading advisor on business strategy. We partner with clients in all sectors and regions to identify their highest-value opportunities, address their most critical challenges, and transform their businesses. Our customized approach combines deep insight into the dynamics of companies and markets with close collaboration at all levels of the client organization. This ensures that our clients achieve sustainable competitive advantage, build more capable organizations, and secure lasting results. Founded in 1963, BCG is a private company with 66 offices in 38 countries. For more information, please visit www.bcg.com.
About our collaboration with NRDC
BCG believes passionately in making a positive difference to society. To this end, BCG offices around the world undertake numerous high-impact projects every year for the benefit of their local communities. These projects are done by BCG for local or national governments, or for recognized non-government organizations free-of-charge. In the past, BCG Greater China has also undertaken many significant pro bono projects to better the lives of children in rural China, to help contemporary artists in China, and to help improve China’s environment, to name but a few examples. This new report is the result of our latest pro bono collaboration with NRDC. Our contribution and our efforts reflect both the importance we place on improving China’s building efficiency, as well as our continued commitment to improving Chinese society.
About the Natural Resources Defense Council
NRDC (Natural Resources Defense Council) is one of the most highly respected and accomplished environmental organizations in the world, with a staff of 380 preeminent scientists, policy specialists, attorneys, and communications experts in New York, Washington, Beijing, Los Angeles, San Francisco, and Chicago. NRDC has an unmatched 30-year international record of promoting energy efficiency through a combination of voluntary private-sector initiatives, utility-funded incentives, and regulatory proceedings, and worked to create the first building codes and energy-efficiency standards in California, the United States, China and Russia
NRDC was the first international environmental organization to establish a clean energy program in China. Over the last fourteen years, its team of experts has helped China to develop clean, efficient and affordable energy and environmental policies, strategies and techniques. In recent years, NRDC has expanded its scope of work to capitalize on new opportunities in environmental governance and public participation, health, and promotion of green supply chains.
For more information: www.nrdc.org and www.greenlaw.org.cn
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