Low Carbon Housing

February 2012

Prepared by:

Low Carbon Housing Drivers & Opportunities

INCREASING ENERGY DEMAND OPTIONS

IEA WORLD ENERGY OUTLOOK 50% INCREASE IN PRIMARY ENERGY CONSUMPTION FROM 2005 - 2030
CREATE MORE ENERGY CONSERVE ENERGY

COST

GHG EMISSIONS

TRANSPORTATION

BUILDINGS

INDUSTRIAL CURBS GROWTH

INFRASTRUCTURE COSTS

REALLY EASY

40%

NEW CONSTRUCTION

RETROFIT EXISTING

AVAILABLE TECHNOLOGY

WELL DEMONSTRATED

DOESNT ADD TO PROBLEMS

COST FOR INFRASTRUCTURE

ENERGY SUPPLY & DEMAND

Simply increasing energy supply will not solve the current energy supply situation and associated environmental problems. There is a growing imbalance between energy supply and demand. Increases in residential energy consumption significantly contribute to the imbalance Global primary energy consumption will grow nearly 50% from 2005 to 2030 (Source: IEA / World Energy Outlook) Commercial and residential accounts for 30-40% of total global energy use (approx 2,500 Mtoe / year) Reduction of wasted primary energy In 2005 the Canadian residential sector used 13% of energy use 55% of primary energy in Canada is wasted (transmission loss, transportation of petroleum) (Source: QUEST) Low Carbon Housing use the grid strategically to optimize the energy supply system Low Carbon Housing diversifies energy supply and provides improved overall reliability and improved energy security Low Carbon Housing enables the home to be part of the energy mix

THE HOUSING-SECURITY NEXUS SECURITY ISSUES

Geopolitical STABILITY
Threats from unequal energy source distribution...
Source ownership Foreign control of supply Trade leverage inequality

Economic SECURITY
Distruptions from energy market uncertainty...
Price instability Operational & supply chain risk Civil unrest Govt bailouts

Environmental STRESS
Impacts from extraction, production and combustion of energy....
Habitat destruction Compromised ecosystem services Public Health

Infrastructure RESILIENCY
Risks from natural, operational and security shocks...
Infrastructure efficacy & efficiency Infrastructure renewal & expansion cost

Strengthen energy independence Decouple energy & diplomacy Decrease supply chain risk

Decrease operational risk to business & consumers Reduce public costs of energy subsidization

Reduce emissions in grid energy generation Minimize ecological footprint of buildings

Smarter, more efficient energy systems Reliability from distribution Power to off-grid areas

4 LOW CARBON HOUSING CONTRIBUTIONS

CARBON EMISSIONS
Energy consumption is intensive and contributes to global warming
Homes are built to last 50-100 years. Impact is long term. Low Carbon Housing are part of the solution to mitigate global warming.

GHG Emissions & Mitigation Potential

Global Emissions 2004 8.6 Gt 2020 11.1 Gt 2030 14.3 Gt Available technologies could reduce projected energy use by 41% by 2050 thereby avoiding 11.5 Gt of CO2 or roughly 40% of current fossil CO2 emissions

Residential sector accounts for 20-25% of man-made CO2 emissions globally Housing has the potential to contribute significantly to any national target for GHG abatement.
- Energy efficiency is the lowest cost and often net negative abatement cost - Investment cost is more than compensated by lower energy use costs - Reductions in GHG emissions are technically achievable
(Source McKinsey & Co., 2008)

Country Australia Canada China Japan UK USA

Total energy consumption 77,726 ktoe 201,513 ktoe 1,201,846 ktoe 351,787 ktoe 158,731 ktoe 1.5 million ktoe

(Source: NHBC Foundation, Zero Carbon Compendium, 2009)

CO2 emissions per household 5.44 t CO2 7.24 t CO2 3.80 t CO2 4.24 t CO2 5.99 t CO2 8.38 t CO2

Housing Stock (thousands) 7,596 13,273 374,053 40,971 25,953 117,211

LOW CARBON HOUSING AS PART OF THE SUSTAINABILITY SOLUTION

Low carbon housing offers environmental, economic and social co-benefits reduction of air pollution associated with emissions reduced energy consumption can slow the growth of power plants and infrastructure resources can be redirected Best use of existing electricity supply improves access to energy Socio-economic growth is impacted by increased costs of fossil fuel A healthier environment contributes to less frequent illness Low carbon homes are a critical component of green or sustainability goals. Low-income households with high energy prices and poor housing quality results in choice between energy services and other essential services. Align economic development and environmental goals to avoid being locked into high emissions for the life of the building

MEXICO EXAMPLE
Number of households projected to double by 2030 Goal 1,000,000 new housing units/year by 2010 Continued growth @ 1M units/year until 2030 What will be the impact on infrastructure? Is it sustainable?

HEALTH IMPACTS Insulation retrofit to existing single family homes in the USA. Results per year:
100,000 tons less NOx 190,000 tons less SO2 240 fewer deaths 6500 fewer asthma attacks 110,000 less restricted activity days
Study: Harvard School of Public Health

BENEFITS OF LOW CARBON HOUSING

Homeowner: Lower energy bill Greater comfort & quality of life Healthier environment Builder: Better quality product Society Increased energy security and improved access to energy Environmental benefits including reduced GHG emissions and improved air quality More resilient to climate change Job creation Improved productivity Benefits to Energy Providers: Load levelling

Reduced peak demand

Reduced need for transmission infrastructure Reduce capital costs associated with new infrastructure demand Demand-reduction measures with no net cost could almost reduce by the projected global growth in electricity demand
(Source: McKinsey, 2007)

USA EXAMPLE
Commercial and residential account for 40% of primary use in the USA and 70% of electricity use. USA requires 1,300-1,900 new electric power plants by 2020 to meet projected energy demands. Infrastructure costs??
(Source: APP Dialogue)

ENGAGING STAKEHOLDERS
Low Carbon Housing market adoption requires engagement with a broad network of stakeholders.
Planning & Development Construction & Marketing Sales & Closing Occupancy & Resale
Retrofit Community Development Community Buyer Community

STAKEHOLDER DYNAMICS

Developers Engineers Technology Providers Architects Planners Commercial Lenders Codes & Standards Incentives Buyer

Retail Lenders Underwriters/ Insurers Home Inspectors

Tax Authorities

Home Owners Contractors Tech. Providers

Sales & Marketing

Utilities Appraisers

Utilities

Financial Mortgage Advisors Brokers

Energy Auditor

Design Community Sales Enablers

Assurance Community

WHAT DOES LOW CARBON HOUSING LOOK LIKE?

Elements of Low Carbon Housing: Thermal insulation Solar shading Ventilation High performance windows Air tight structures

Natural daylighting Energy efficient appliances Renewable energy system Energy efficient lighting Heat / cold recovery

There is no single solution to achieve low carbon housing. Considerations include: Climate-responsive Flexible design Location-specific Holistic design consideration Consider total energy use rather than isolated systems Order of priority Energy conservation Passive and energy efficiency Appropriate Renewable energy

Santa BarbaraGarden Shanghai Daan Real Estate Co. Ltd. & Insightful Healthy Homes, Shanghai, China

COST EFFECTIVE PATH TO ACHIEVE LOW CARBON HOUSING

Passive Design Principles

Energy Consumption

High performance Envelope

Energy efficient appliances & equipment
Zero Energy Ready

Renewable Energy Generation

Near Zero Energy

Net Zero Energy

Performance

Surplus Generation

PASSIVE DESIGN STRATEGIES

Passive design recognizes local conditions and the physical properties of air, water and the sun to maximize the natural heating, cooling and lighting potential of a home.
NATURAL VENTILATION Stack and cross ventilation natural airflows through the living space provide fresh air and promote cooling without mechanical assistance.
WATER SAVING Permeable paving and rain barrels reduce use of municipal water for irrigation water treatment is one of the single largest energy costs for municipalities. SOLAR CONTROL Awnings and vegetation provide external shading to prevent heat gain from direct sunlight. Building orientation positioning building features like windows and walls relative to the sun promotes solar heat gain in cold climates or prevent it in warm ones. REFLECTANCE Light-coloured roofs and building exteriors reflect significant amounts of sunlight reducing solar heat gain.
Reflectance: AusZEH Henley, Australia 11

Natural ventilation: GEO, Mexico

Solar Control: GEO, Mexico

ENVELOPE STRATEGIES
Space heating/cooling is typically a homes largest energy requirement. A high-performance building envelope will greatly reduce unwanted heat-loss and heat-gain in the home.
AIR SEALING Thorough sealing around windows and doors as well as stacks, vents and other wall penetrations, maintains a tight building envelope and prevents drafts. THERMAL BREAKS Eliminate thermal bridging of building components such as wall studs and beams to avert heat loss from conduction. INSULATED FRAMES Insulating spacers and frames prevent thermal bridging and minimize gaps that form from expansion and contraction. ENERGY EFFICIENT WINDOWS Certified, double/triple pane, low-e, energy efficient windows and doors reduce heat transfer significantly. INSULATION A high level of insulation in external walls and the roof minimizes heat transfer and the need for supplementary heating and cooling.
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EQUIPMENT STRATEGIES
An airtight house requires mechanical ventilation and efficient, appropriately sized appliances to maximize performance.
ENERGY EFFICIENT APPLIANCES New, certified appliances not only consume less energy, but also have features such as variable load settings and timers to run when energy is less costly for consumers off-peak. ENERGY EFFICIENT LIGHTING New lighting technologies like CFLs & LEDs use up to 90% less energy than traditional incandescent light bulbs. ENERGY EFFICIENT WATER HEATING In addition to using efficient boilers, a low-cost drain water heat recovery pipe can significantly reduce heating requirements. ENERGY EFFICIENT HVAC Certified and appropriately sized mechanical ventilation and the use of a heat recovery ventilator can significantly reduce the energy required to move and condition air. MANAGING CONSUMPTION Building controls and intelligent user interfaces help homeowners understand and control their energy consumption.
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Consumer Feedback: VINTE, Mexico

RENEWABLE ENERGY STRATEGIES

Even in the most energy efficient homes, some amount energy will be required to operate lights and electronics, provide ventilation and allow for cooking. This load can be reduced to near zero-energy with the addition of renewables to either power the home directly, or to feed electricity back into the grid where possible. SOLAR ELECTRICITY The cost and performance of photovoltaics (PV) is continually improving, making it a staple source of clean on-site energy generation that can be gridtied or used locally. SOLAR HOT WATER Using solar thermal energy to heat water has a higher conversion efficiency than PV and can reduce the use of home heating fuels such as natural gas. GROUND SOURCE HEAT/COOLING Geo-exchange systems take advantage of constant temperatures below the surface to condition air or liquid for heating and cooling. WIND ELECTRICITY Micro wind electricity generation has the advantage of around-the-clock production potential, and can produce energy that can be fed into the grid. COMBINED HEAT AND POWER Bio-mass, fuel cells and small micro-power generators offer alternative approaches for providing both electricity and heat.
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BARRIERS
Limitations of the traditional building design process Information failures Regulatory Fragmented market structure Behavioural Economic distortions Split incentives Energy subsidies that create a disincentive for energy efficiency Perceived risk Availability and access to capital Cultural behaviour Inadequate levels of energy service Up front costs Limited availability of products

COST ISSUES
Renewable energy systems have a high initial cost Feasible for new construction but even higher costs to integrate system for retrofits Feed-in tariffs for surplus electricity Impacts cost recovery Consumer access to capital Increase flow of capital to allow for higher cost of renewable energy system Minimize perceived risk of investment by demonstrating initial cost of renewable energy system is balanced by the lower monthly bills. Consumer understanding of life cycle costs Energy efficiency and renewable energy needs to be understood and valued based on life cycle costs. Consumers tend to value cosmetic or luxury items (granite countertop, swimming pool) despite poor or no return on investment.

CONSUMER BEHAVIOUR
Economic considerations that impact energy efficiency and renewable energy choices based on life cycle costs rather than initial costs which have a short time frame Energy performance is impacted by human behaviour operating the home

USA EXAMPLE
Boulder County, USA Local financing offered to home owners Low interest loan for incremental costs to achieve NZE $1.5M allocated in 7 minutes

Consumers need to understand their energy consumption in order to make behavioural changes We tend to know more about our television than our largest investment our home
Smart meters convey consumption information to consumers Opportunity to shift activities to off-peak periods Energy efficiency and renewable energy need to be integrated in a technically feasible and practical manner. Avoid overly complex systems with high maintenance requirements.

Inform consumers of opportunity and enable them to make an informed decision

(Source: APP Dialogue)

ENERGY EFFICIENCY & RENEWABLE ENERGY INTEGRATION

Energy efficiency is the cornerstone of low carbon housing to ensure reduced renewable energy requirements.

USA EXAMPLE
California 20% renewables target by 2010 33% renewables target by 2020
(Source: PBS, 2009)

Radical and sustained improvements in the energy performance and use of renewable energy is required. Optimize technological and economic efficiency

Renewable energy is not as cost-effective as conventional technologies Factor life cycle costs Factor environmental externalities (GHG emissions)

AUSTRALIA EXAMPLE
Mandatory Renewable Energy Target of 20% renewable energy by 2020 Currently less than 5%
(Source: APP Dialogue)

Cost issues will be lowered as economies of scale are achieved

Solar and geothermal generation systems significantly contribute to relieve the environmental load Lower life cycle CO2 emissions compared to other electric generation
Solar and geothermal less than 0.1 kg-CO2/kWh transmission end Coal (>0.8), oil (>0.6), LNG (>0.4)
(Source: Daiwa, 2009)

VALUE CHAIN OVERVIEW

The Value Chain Map is anchored in key activities of the development cycle - from project conception to product end of life. Activities and influencing factors are organized across two dimensions:

Support Factors
Issues that affect the achievement of Low Carbon Housing throughout the development process

A. MARKET FUNDAMENTALS B. MARKET DRIVERS C. EDUCATION D. FINANCIAL ENVIRONMENT E. CODES & STANDARDS F. DEVELOPMENT DRIVERS G. TECHNOLOGICAL CAPACITY

Development Activities
Key activity areas in the development cycle (primary) and ongoing activities associated with the development (secondary)

H. ASSURANCE CONDITIONS
1. PLANNING 2. DESIGN

3. CONSTRUCTION

4. SALES

5. OPERATION

6. RE-SALES

7. RETRO-FITS

8. DEMOLITION

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VALUE CHAIN OVERVIEW

SUPPORTING FACTOR
A. HOUSING PROFILE
Existing Housing Stock Residential Energy Use Energy Infrastructure & Energy Prices Energy Mix Housing Growth Housing Demand Areas

Australia

Canada

China

India

Japan

Mexico

South Korea

USA

B. CONSUMER ENVIRONMENT

Consumer Awareness Consumer Education Cultural Principles Housing Affordability

C. FINANCIAL ENVIRONMENT

Lending Instruments
Investment Opportunities Risk Valuation

Contractual Assurance

D. REGULATORY ENVIRONMENT

Political Capital Building Code By-Laws Inspection/Appraisal Rigor Labelling and Certification

Carbon Regulation

Continued

E. INDUSTRY CAPACITY

Design Approaches Available Products Skilled Labour Industry Training Best Practices Performance Assurance

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LESSONS LEARNED
Barriers tend to lead to business as usual. Change will require significant and sustained action
Need to change how we see communities and how consumers behave and contribute to the energy mix. Requires a paradigm shift. Need to achieve economies of scale. Market transformation requires community scale implementation Low Carbon Housing creates opportunities for energy providers, financial institutions, builders and consumers Energy efficiency is first step to achieve Low Carbon Housing Low Carbon Housing is part of the solution to achieve sustainability, energy security and reduce environmental impacts including GHG emissions associated with energy supply International collaboration with solutions tailored to country-specific requirements Universal metrics Low Carbon Housing must be tested and verified for performance Local solutions that respond to global trends

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