Planning Commission and Key State Leaders Urge Shift to Energy Efficient Buildings to Curb India’s Soaring Energy Demand

New NRDC-ASCI Analysis Shows Incentives and Policies Are Critical to Save Energy in Expanding Buildings Market

NEW DELHI (March 3, 2014) – India’s soaring energy demand is projected to double by 2027, adding new urgency to calls to increase the energy efficiency of buildings in cities across the country. The Planning Commission held a high-level roundtable meeting today to discuss potential solutions to address the forecasted consequences of carrying on with business as usual. Organized in Delhi with the Ministry of Power and Bureau of Energy Efficiency, the meeting, entitled “State Leadership in Building Efficient Cities in India,” emphasized the primary role that state initiatives and mandates must play to meet energy demand in the coming decades. The ominous energy forecast was derived from a new, web-based statistical tool launched last week by the Planning Commission.

Complementing the theme of the roundtable meeting, the Natural Resources Defense Council (NRDC) and the Administrative Staff College of India (ASCI) released a new report today presenting solutions and incentives to overcome the most common barriers to energy efficiency. The issue brief, Greener Construction Saves Money: Incentives for Energy Efficient Buildings across India, offers tools to motivate building developers to reap the savings of energy efficiency and mitigate the rising demand for energy. NRDC and ASCI also attended the government roundtable as knowledge partners and provided expertise on international best practices in energy efficiency.

“As India’s economy and real estate market continue to grow, the buildings market needs to incorporate energy efficient measures into construction projects to ensure an energy-smart future for our cities,” said Dr. Montek Singh Ahluwalia, deputy chairman of the Planning Commission. “States play a critical role to motivate the market’s investment in energy efficiency through incentives, mandates and strong state building codes that enable stakeholders to capitalize on available energy and cost savings.”

In light of the energy security risk posed by the projected quadrupling of energy imports by 2027, the opportunity to cut energy demand domestically while developers and tenants of green buildings save money makes energy efficient construction a clear win for the country, according to the NRDC and ASCI report. With Indian real estate development rapidly expanding, the issue brief says the country could save enough electricity to power 358 million homes annually through 2030 if states adopt building codes and incentives for developers aimed at boosting energy efficiency in new construction and major retrofits.

“Energy efficiency cuts energy costs, reduces harmful air and climate pollution, and gives real estate developers a competitive advantage,” said David Goldstein, director of NRDC’s energy program. “As we have seen around the world, efficiency remains the fastest, cleanest and cheapest way to keep pace with emerging cities’ expanding energy needs. By boosting efficiency in the state’s new real estate development, we can lay a foundation for greener cities across India.”

Energy Efficiency Incentives Accelerate Greener Construction

The report, supported in part by Shakti Sustainable Energy Foundation, analyzes tools and incentives to accelerate implementation of energy efficiency measures and move the developer market toward achieving greater energy savings—a necessary next step for Indian states to sustainably support their cities’ projected growth trajectory over the coming decades. Developers often cite common barriers to energy efficient construction, such as high upfront costs, split incentives between developers and tenants and a lack of information about efficiency’s benefits.

Creative incentives for energy efficiency investments in new construction—such as property tax rebates, the creation of special economic zones, increased floor space index and expedited permit processes—can help reduce some of the biggest barriers to widespread adoption of energy efficiency. For example, many states in India have limits on the floor space index (FSI), a measure of the built-up floor area of a building relative to the size of the plot it is built on. To incentivize developers to build green, a portion of this extra FSI may be given to developers of efficient buildings for no cost, increasing the value of their properties. Energy Service Companies (ESCOs)—entities that may pay for energy efficiency investments upfront and recover the costs through surcharges on future energy savings—also offer a compelling model to potentially support the financing and scaling of efficiency upgrades.

“We know from experience that putting proper policies, incentives and capacities in place can speed up the adoption of energy efficient practices,” said Srinivas Chary Vedala, dean of the Administrative Staff College of India. “This experience cuts across state and national boundaries, and successful policies in disparate regions can be studied and tailored for states across India. We can also do more to increase awareness of these policies and incentives.”

State Building Codes Lock in Energy Savings

India’s real estate market is expanding rapidly, increasing demand for energy. To help reduce this rising energy demand, the Bureau of Energy Efficiency developed the Energy Conservation Building Code (ECBC) in 2007 to establish minimum energy efficiency requirements for the design and construction of new commercial buildings and for major retrofits.

Key states have adopted energy efficiency building codes into state law. However, implementation and compliance remain a challenge. A notable exception is Andhra Pradesh, which just announced its adoption of a comprehensive ECBC last month, locking in energy savings across the state, including the high-tech hub of Hyderabad. A prominent feature of the Andhra Pradesh approach to implementation is a compliance framework that collaborates with developers and experts.

NRDC and ASCI analysis reinforces the recent Planning Commission’s “India Energy Security Scenarios 2047.”  The NRDC-ASCI shows, if states across India adopted stronger building efficiency codes and developers participated in strong programs for rating commercial buildings, an estimated 3,453 terawatt hours of cumulative electricity could be saved by 2030. This is equivalent to powering 358 million Indian homes annually between 2014 and 2030 based on current annual consumption levels for electrified homes.  

“Indian states have an incredible opportunity to construct more efficient buildings today,” said Anjali Jaiswal, NRDC senior attorney and director of the group’s India Initiative. “By dramatically reducing energy demand through building codes and increased participation in ratings programs, cities can avoid costly retrofits down the road and lock in energy savings now for decades to come. Incorporating effective compliance mechanisms is key to ensuring codes are successfully establishing at least the minimum efficiency of buildings.”

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