Energy Efficiency in Buildings

Sunny Zurich in the dark

Spring came early to  Zurich last week, but the beautiful weather was not matched by the messages  from financial experts at a special EEB “hearing”. We went to find out how  energy fits in to the calculations of some of the world’s leading financiers.  But the message was not terribly encouraging.

We held in-depth discussions  with people investing in or managing buildings representing ABN AMBRO, Allianz,  COFRA, Green Building Finance Consortium, SwissRe, UBS, Zürcher KantonalBank,  and Zouk Venture. Academia was represented by professors from Karlsruhe and  Stuttgart Universities

Direct and indirect investment  in property gives good returns. It is an effective hedge against inflation and  a useful alternative to equities. Most asset managers recommend a significant real  estate element in investment portfolios. So we had plenty of questions about  the energy aspects:

 
• Are investors interested  in the energy efficiency of buildings? Not much. Direct investors look at  the total cost of running a building, and energy costs typically amount to only  5 % or so. There is more interest by companies owning and using a building (rather  than leasing it to gain financial returns) because of the longer timescale. But  even then, energy is not very significant in the investment decision. 
   
 
• Are rising energy  costs changing attitudes? Not yet – the price elasticity is low and energy  costs are small compared to other operating costs.
 
• The  relationships between investors, owners and occupiers is important. In many  countries owners cannot pass investment costs on to the tenants. So they can’t recover  investments to improve energy efficiency. On the other hand, such investments could  pay off if the value of the property rises.

It’s not hard to be Passiv

It's quite astonishing just how easy it is to save huge amounts of energy in buildings – if people are motivated to do it.

Along with colleagues on the EEB project, I met European building experts in Frankfurt last week to learn about the PassivHaus concept. It is a design approach with no active heating or cooling. As a result, it produces buildings that use as little as a 20^th the energy of traditional buildings.