report (teri)_ siddarth iyer

8/3/2019 Report (TERI)_ Siddarth Iyer

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Exploring the Buildings sector in India for climate

change mitigation

(Report submitted in partial fulfillment of the

Post Graduate Diploma in Forestry Management)

By

Siddharth M. Iyer

(PGDFM 2007-2009)

Summer Internship

At

The Energy and Resources Institute

New Delhi

Indian Institute of Forest Management

Bhopal - 462 003

June, 2008


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The Energy and Resources Institute ii

DECLARATION

I, Siddharth M. Iyer, do hereby declare that the project entitled "Exploring the buildings

sector in India for climate change mitigation is an original work. The contents of thisreport have not been published before and reflect work done by me during Summer

Internship component of the Post Graduate Diploma in Forestry Management of the Indian

Institute of Forest Management, Bhopal from 3rd April, 2008 to 7th June, 2008 with The

Energy and Resources Institute.

Place: New Delhi (Siddharth M. Iyer)

Date: 7th June, 2008 PGDFM 2007-09


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EXECUTIVESUMMARY

Buildings are known to consume about a third to two-fifth of the global energy,

contributing about a third to the global greenhouse gas (GHG) emissions. This is true notonly for the world in general but also to individual nations with minor aberrations. In spite

of the huge potentials of energy efficiency gains in buildings by way of efficient lights and

appliances in residential buildings and efficient HVAC systems in commercial buildings,

little efforts are directed to channelize these gains in the buildings being built today in

India. Also, as green buildings per se even lead to lower emissions, there is scope for

earning through the carbon markets too, the credits being shared among the various

entities related to buildings in an agreeable way. Carbon markets too are hardly tapped

through buildings energy efficiency. The study aims to understand the dynamics of GHG

mitigation through buildings, the perception of various parties with respect to conscious

efforts to contribute to climate change mitigation through buildings and the reasons there

are not many projects either for the carbon markets or even for plain energy conservation

all with a special emphasis on the Indian scenario.

Emissions from buildings can be primarily reduced by three measures:

Reducing energy consumption & embodied energy in buildings

Controlling emissions of non-CO2 GHGs

Switching to low-carbon fuels and renewables

The share of green buildings in the total built-up space in India is minuscule. So is the

number of projects claiming carbon credits under the Clean Development Mechanism

(CDM). This, despite the fact that emission reductions through buildings hold immense

potential by way of simple and net negative lifecycle cost measures like CFL (compact

fluorescent lamp) distribution. The reasons are primarily the high transaction costs in CDM

projects, even under the programmatic mode, and the lack of experts proficient in the

integrated requirement of architecture, electrical engineering, financial engineering and

climate change.


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In India, the mitigation potential is much higher for efficient lights and cooking stoves than

the building envelope. This fact is borne true by the estimated carbon credit earnings for

the Fortis Hospital building in New Delhi. There seems to be an uncertainty with respect to

buildings exploiting the full potential of the carbon markets among the industry experts

interviewed. Though most of the interviewees seemed positive about single-project CDM

gaining prominence for buildings in the coming years, there was a palpable doubt

regarding the scope of aspects of mitigation covered within a project due to absence of a

comprehensive methodology to determine baseline emissions. Bundled and Programme of

Activities (PoA) modes in CDM met with reduced enthusiasm, majorly due to the lack of

clear cut guidance on their modalities on the part of the CDM executive board. Voluntary

markets as a source of utilizing the potentials in Indian buildings, found more takers among

the consultants than among the builders and architects community. This was partly due to

the better understanding of the consultants with respect to the functioning and credibility

of voluntary markets.

The various lacunae keeping the supply of energy efficient buildings (and also buildings in

the carbon markets) running can be enumerated as under:

High upfront costs in technology improvements and higher transaction costs with

respect to CDM

Few incidences of builders incorporating Building Energy Management Systems

Lack of experts in the field

Cost-benefit accrual divergence among the end-users and builders

The most cutting drawback observed is with respect to a lethargy on the part of entities to

buildings a lethargy wise enough to know the solution, but too slow to make it possible by

initiating work on developing methodologies suitable for integrating all aspects of

buildings mitigation potential.


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ACKNOWLEDGMENT

I express my deepest sense of gratitude to Dr. Vivek Kumar (Associate Fellow, TERI) and

Mr. Prabhat Upadhyaya (Research Associate, TERI) for providing me an opportunity towork on this project. Without their constant guidance and effusion of ease, the successful

completion of this work would not have been possible.

Thanks are also due to Ms. Hina Zia (Research Associate, TERI), Mr. Gaurav Shorey (Area

Convenor TERI GRIHA), Ms. Mili Majumdar (Associate Director Sustainable Building

Sciences, TERI) and Ms. Nitu Goel (Research Associate, TERI) for helping me set the

groundwork in a field relatively unknown to me and also assisting the development of my

project through the complex network that contacts is. Not to forget, the much required

warmth that all the members of the CGER and the SBS areas in TERI provided in making my

work an enjoyable learning experience.

I am greatly obliged to Mr. Marc Medrano (Departament dInforma`tica i Eng. Industrial,

Spain), Ms. Aditi Narain (Head of Production and Green, Neeraj Manchanda Architects), Ms.

Manjri Narain (Architect and Industrial Designer, SPA), Mr. Vinay Thomas (Landscape

Architect, SPA), Mr. Ramesh Ramachandran (Team Leader, DNV-Chennai), Mr. D. K. Sharma

(Environmental Consultant, Surmount Energy Solutions), Ms. Swapnashri Menon (Sr.

Executive-CDM, RRB Energy), Dr. Sanjay Vashishtha (DGM-Business Development, DLF

Utilities), Dr. G. C. Dutta Roy (CEO-Energy Business, DSCL ESCO), Dr. Subodh Sharma

(Advisor-NATCOM, MoEF), Mr. Saurabh Kumar (Secretary, BEE), Mr. Sanjay Seth (Energy

Economist, BEE), Ms. Shabnam Bassi (Project Engineer, BEE), Mr. Paul de Ruijter (Scenario

expert, WBCSD) and Prof. B. Sudhakara Reddy (Indira Gandhi Institute of Development

Research, Mumbai) for taking time from their busy schedules and providing extremely

valuable inputs for the project.

Of course, all the learning would have been impossible without the support provided by Dr.

D. K. Bandyopadhyaya (Director, IIFM) and Prof. H. S. Gupta (Fieldwork and Summer

Internship Coordinator, IIFM) in making the internship possible under the Course. Special


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thanks to Dr. Suprava Patnaik (Associate Professor, IIFM) for awakening the necessary

confidence in me at a critical juncture of the project.

Lastly, I express a heartfelt gratitude to my mother and sister for their unconscious

encouragement, and my dear batchmates for their enthusiastic trust in me and my abilities.


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TABLE OF CONTENTS

DECLARATION .............................................................................................................................................................. .................................... ii

EXECUTIVE SUMMARY .................................................................................................................................................................... ............ iii

ACKNOWLEDGMENT......................................................................................................................................................................................v

LIST OF TABLES .............................................................................................................................................................................................. ix

LIST OF FIGURES .............................................................................................................................................................................................. x

Chapter 1: Introduction ............................................................................................................................................ .................................... 1

1.1. Preamble ............................................................................................................................................................................................. 1

1.2. About TERI ......................................................................................................................................................................................... 2

1.3. Need for the Study .......................................................................................................................................................................... 4

1.4. Objectives of the Study ................................................................................................................................................................. 4

1.5. Scope of the Study ................................................................................................................................................................ ........... 5Chapter 2: Literature Review ........................................................................................................................................................ ............. 6

2.1. The Global Outlook ................................................................................................................................................................ ......... 6

2.2. Indian Perspectives ........................................................................................................................................................................ 8

Chapter 3: Methodology ............................................................................................................................................................................. 10

3.1. Sampling Method .......................................................................................................... ................................................................ 10

3.2. Data collection tools ................................................................................................................................................................ ..... 10

3.3. Limitations of the Study .................................................................................................................................................. ........... 11

Chapter 4: Results and Discussion......................................................................................... ................................................................ 124.1. Current Status of Green and Certified Buildings in India ............................................................................................ 12

4.1.1. Resource Efficient TERI Retreat for Environmental Awareness and Training (RETREAT)................... 14

4.2. GHG mitigation options in Buildings .................................................................................................................................... 20

4.2.1. Innovative building design and materials use ............................................................................................................ 21

4.2.2. Lighting and Appliances ..................................................................................................................... .................................. 22

4.2.3. Fossil fuel alternatives......................................................................................................................... .................................. 22

4.3. Buildings and the Carbon Markets in India ....................................................................................................................... 23

4.4. Estimating probable carbon credits from Fortis Hospital Shalimarbagh, New Delhi ................................. 26

4.5. Response Analysis of Interviews.................... ........................................................................................................................ 29

4.5.1. Builders ...................................................................................................................................................... .................................. 32

4.5.2. Architects ............................................................ ........................................................................................................................ 33

4.5.3. Energy Service Companies .................................................................................. ................................................................ 34

4.5.4. Environmental Consultants, State and Corporate governing and aiding agencies .................................... 36

4.5.5. Lateral comparison of various options of Buildings and the Carbon Markets ............................................. 37


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4.6. Barriers to buildings fully utilizing the carbon markets in India .......................................... .................................. 38

Chapter 5: Recommendations and Conclusion ................................................................ ................................................................ 41

5.1. Recommendations ........................................................................................................ ................................................................ 41

5.2. Conclusion ........................................................................................................................ ................................................................ 42

Bibliography ............................................................................ ........................................................................................................................ 44Annexures ....................................................................................................................................................................... ..................................... I

1. Note on Policies, Programs and Bundles in the CDM ............................................................................................................ I

2. Indicative List of Questions to Architects .................................................................................................................................. V

3. Indicative List of Questions to Builders .................................................................................................................................... VI

4. Indicative List of Questions to ESCOs ....................................................................................................................................... VII


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LISTOFTABLES

TABLE 1: GHG EMISSIONS REDUCTION POTENTIAL FOR BUILDINGS STOCK IN 2020................................................. 7

TABLE 2: WEATHER DIFFERENTIALS IN RETREAT BUILDING BROUGHT ABOUT BY GREEN CONCEPTS ........ 19

TABLE 3: COSTS OF ADVANCED TECHNOLOGIES EMPLOYED AT RETREAT ................................................................... 20

TABLE 4: CDM PROJECTS IN THE BUILDINGS SECTOR IN INDIA ........................................................................................... 24

TABLE 5: ENERGY PERFORMANCE INDICES (EPI) OF BASE BUILDING AND FORTIS HOSPITAL BUILDING .... 27

TABLE 6: RESPONSES REGARDING CARBON MARKETS AND THE BUILDINGS SECTOR IN INDIA ........................ 31


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LISTOFFIGURES

FIGURE 1: CARBON MARKETS AND PROJECT TYPES COVERED DURING INTERVIEWS ............................................. 30


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CHAPTER 1:INTRODUCTION

1.1. PREAMBLE

Energy consumed in buildings already represents more than a third of global consumption,

and this share is increasing (IPCC 2007). The bulk of it is used in heating, air conditioning,

lighting and appliances, depending on the surrounding climate.

Energy sources vary depending on development needs. Households in developing countries

like India still rely largely on biomass. In developed countries, energy for heating largely

comes from oil and gas; in commercial buildings in India, lighting and air-conditioning

consume electricity from the local grid, which is primarily generated from coal all causing

most of todays carbon emissions from buildings.

The use of electricity sharply rises with income. Energy consumption in Indian buildings is

expected to increase substantially due to economic growth and human development. The

demand for energy to run appliances such as TVs, air conditioning and heating units,

refrigerators and mobile phone chargers increases substantially as living standards rise in

India. Significant increases in energy consumption and resultant emissions in the buildings

sector in India are caused by (WBCSD 2007):

A switch to electricity along with changing development profiles

Powering the higher number of appliances

A growing service sector requiring commercial buildings

The continued rise of the IT economy

A further shift from rural to urban living due to rise in income levels


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Energy consumption in buildings is thus, a serious threat to the sustenance of a clean

environment, also contributing in its wake significant greenhouse gas (GHG) emissions. It

has, however, been silently continuing with this catastrophic deed given the demand-side

negative motivation to sustain unsustainable practices in the name of economics, and lack

of mandatory energy ratings of appliances and building codes in India.

1.2. ABOUT TERI

TERI was formally established in 1974 with the purpose of tackling and dealing with the

immense and acute problems that mankind is likely to be faced with in the years ahead

on account of the gradual depletion of the earths finite energy resources which are

largely non-renewable, and

on account of the existing methods of their use which are polluting.

Over the years the Institute has developed a wider interpretation of this core purpose and

its application. Consequently, TERI has created an environment that is enabling, dynamic

and inspiring for the development of solutions to global problems in the fields of energy,

environment and current patterns of development, which are largely unsustainable. The

Institute has grown substantially over the years, particularly, since it launched its own

research activities and established a base in New Delhi, its registered headquarters. The

central element of TERIs philosophy has been its reliance on entrepreneurial skills to

create benefits for society through the development and dissemination of intellectual

property. The strength of the Institute lies in not only identifying and articulating

intellectual challenges straddling a number of disciplines of knowledge but also in

mounting research, training and demonstration projects leading to development of specific

problem-based advanced technologies that help carry benefits to society at large.


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The global presence and reach attained by TERI are not only substantiated by its presence

in different parts of the world, but also in terms of the wide geographical relevance of its

activities. Symbolic of this fact is the annual Delhi Sustainable Development Summit

(DSDS), a major event focusing on sustainable development, the pursuit of the Millennium

Development Goals (MDGs) and assessment of worldwide progress in these critical areas.

DSDS attracts the most prominent thinkers and practitioners in a range of fields that

impinge on development. Since development worldwide is moving towards an architecture

based on partnerships, the leaders who participate in DSDS come from government,

business and industry, multilateral and bilateral organizations, research and academia and

civil society. Encouraged by the success of DSDS, TERI has now established the World

Sustainable Development Forum (WSDF), which is guided by the patronage of a group of

select world leaders. WSDF would extend the experience of each DSDS to other parts of the

world and carry out careful evaluation and monitoring of developments worldwide,

particularly in meeting the MDGs.

TERI now has staff strength of over 700 dedicated employees, drawn from a range of

disciplines and experience, supported by infrastructure and facilities, which are world class

and distinctively state-of-the-art. Grouping of the staff into Areas and broad-based

divisions is TERI's way of encouraging exchange of ideas and information across subject

boundaries and forming interdisciplinary linkages. Each Areas activities are coordinated

by an Area Convenor, areas with similar focus and activities are grouped into divisions and

each Division is headed by a Director/Associate Director. The author worked under the

area Centre for Global Environment Research in the Energy Environment Policy Division,

but also had close interactions with areas Sustainable Building Science and GRIHA of the

Energy Environment Technology Division.

In this world of increasing globalization and buoyed by optimism generated by the successof the Indian economy TERI moves forward to meet the challenges of the future through

the pursuit of excellence embedded in its visionary charter. The current study is a step in

this direction by trying to focus attention on emissions from a sector so far ignored greatly.


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1.3. NEED FOR THE STUDY

It is widely accepted that the buildings account for significant portions of the global and

national energy use and GHG emissions. However, few researches have been conducted on

buildings as an entity and the emission reduction potential in buildings specific to India.

Also, the opportunities that the various carbon markets throw open to energy efficient

buildings is considerable given that they are accountable for a third of the global emissions.

Though the opportunities exist, there is neither a rush for green buildings on the part of

builders, architects, energy consultants or even the end-users, nor considerable projects

tapping the carbon markets through buildings.

TERI has been approached by Fortis Healthcare Ltd. to generate carbon credits in the CDM

market for its hospital building at Shalimarbagh, New Delhi. In addition to efficient lighting

and HVAC (Heating, Ventilation and Air Conditioning) systems, Fortis Hospitals would also

be incorporating waste management techniques and cogeneration system. It is more than

five years since projects started registering under the CDM, but there still is no

comprehensive methodology including significant parts of emission reduction options in

buildings to determine the baseline emissions and monitoring mechanism for energy-

efficient building projects in CDM. Nor is any precedence seen in the voluntary markets.

The study would try to fill in this gap in the Indian buildings sector, to understand the

perception of the various entities involved in the making of buildings both regular and

energy-efficient with respect to climate change mitigation through buildings and their

role in the carbon markets.

1.4. OBJECTIVES OF THE STUDY

The study aims at:

1. Gauging the preparedness of the Indian buildings sector (with its various

stakeholders) in reducing emissions

2. Exploring the carbon markets (regulated and voluntary) in India for GHG mitigation

potential through buildings


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3. Estimating the probable carbon credit earnings from Fortis Hospital building

4. Identifying the barriers to buildings exploiting the full potential of carbon markets

in India

5. Serving as a basis for making the industry and the government better prepared with

respect to key loopholes to be improved upon, in order to unplug the latent

potential of energy efficiency in buildings

1.5. SCOPE OF THE STUDY

The study covers stakeholders from the supply side of the buildings sector in India,

primarily the builders, architects and energy consultants having a national presence;

ministries and government bodies aiding the CDM and energy efficiency in buildings,

environmental consultants with national and international presence; and corporate

agencies aimed at promoting energy efficiency in world buildings. The end-users of

buildings are purposely excluded from the scope as there is enough evidence for now, that

behavioural changes and education are key inputs required to ensure energy-efficiency on

that front (Paul and Bhattacharya 2004).

CDM in the regulated carbon markets and the over-the-counter (OTC) markets in the

voluntary carbon markets were selected as the carbon markets for which responses were

to be elicited.


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CHAPTER 2:LITERATURE REVIEW

2.1. THE GLOBAL OUTLOOK

The construction, use and demolition of buildings contribute significantly to the social and

economic prosperity of a nation, but may also have serious negative impacts, especially on

the environment. Areas of key concern with respect to the concomitant greenhouse gas

(GHG) emissions are energy use in buildings (primary, secondary and embodied) and the

construction materials used. Though still ignored by many, a significant number of studies

have been conducted globally in the recent years associating energy wastage and emissions

to the buildings sector.

Various estimates have shown that buildings residential and commercial guzzle almost

two-fifth of the global energy, and are responsible for about a third of global GHG

emissions. The Intergovernmental Panel on Climate Change (IPCC) puts this emissions

figure at 33% (IPCC 2007), while the United Nations Development Programme (UNDP)

ascribes 35-40% of average national CO2 emissions to the residential sector alone (UNDP

2007). The United Nations Environment Programme (UNEP) on its front associates the

buildings with consuming about 30-40% of global primary energy (UNEP 2007) astatement with serious implications considering that the figure excludes secondary energy.

Perez-Lombard, et al. (2008), Hacker, et al. (2008), Medrano, et al. (2008), Pinkse and

Dommisse (2008), Urge-Vorsatz and Novikova (2008), Holmes (2007), Hinostroza, et al.

(2007), all in their individual capacities in various researches, echo similar views as made

by the global institutional set-up. It can be safely taken as a fact that buildings contribute

significantly to the global GHG emissions.

These emissions can be reduced in primarily three ways, with various sub-categories of

actual measures (IPCC 2007):

reducing energy consumption and embodied energy in buildings

switching to low-carbon fuels and renewables


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controlling emissions of non-CO2 GHGs

In its Fourth Assessment Report, the IPCC even lists the most cost-effective and realistic

emission reduction measures in the world buildings, categorizing countries under various

heads:

TABLE 1: GHG EMISSIONS REDUCTION POTENTIAL FOR BUILDINGS STOCK IN 2020

(Source: Climate Change 2007: Mitigation. Contribution of Working Group III to the Fourth Assessment Report

of the IPCC, 2007)

As is very clear from the table above, in developed as well as developing nations, efficient

lighting systems play a key role in reducing building-related emissions, though building

envelope insulation and efficient heating are higher up in the hierarchy in developed

nations. It is also predicted that without any net cost, emissions from buildings can be

reduced by up to a fourth in developed countries and by up to more than half (52%) in

developing nations by employing just these measures. Of course, for developing countries

like India, the most immediate and cost-effective mitigation options, considering a

business-as-usual (BAU) case, would be efficient lights and improved cooking stoves, a fact

seconded by the Human Development Report published by UNDP (2007).

There is also increasing agreement (UNDP 2007; WBCSD 2007; Georgopoulou, et al. 2005;

Michaelowa 2004; Chedid and Ghajar 2002; others) that existing options are insufficient,


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and in many cases impractical, in reducing the emissions effectively. What also play very

crucial roles in making current options effective and making way for innovation are:

behavioural changes, not only on the part of end-users of buildings, but also

all other parties to the building the builders, contractors, architects,

consultants, etc.

more effective implementation of regulations (could be in the form of

government policies or even private/voluntary standards)

These necessities if fulfilled have the potential of reducing by 30% the expected GHG

emissions of 2020 atno additional cost(IPCC 2007).

2.2. INDIAN PERSPECTIVES

Studies on the Indian front have definitely not kept pace with worldwide evidences on

buildings and emissions. There is a good deal of research done on energy consumption in

buildings, but few on energy consumption of them. Studies conducted by Reddy (2003),

Alam, et al. (1998) and others focus on fuel use within urban and rural households. One

interesting study, conducted by Bhattacharya and Paul (2003), uses a decomposition

analysis to determine the carbon emissions from energy use in the agriculture, industry,

transport and other sectors in India. Though the methodology used is effective in

attributing emissions to specific economy structures and sources, the exclusion of buildings

in the face of the inclusion of transport (transport emissions being less reliable when

estimated, given that fuel use is not the only significant source of emissions) seems an

anomaly. Debnath, et al. (1995), in a report listing the energy requirements for different

types of residential buildings in India, had concluded that the embodied energy for a

residential building in India is 3-5 GJ/m2 as opposed to the figure of 8-10 GJ/m2 for office

buildings in Japan. Though the comparison looks impressive and seems to bode well foremissions from Indian buildings on a global perspective, the dated figures and absence of a

comparison with commercial buildings in India limit the validity of the implications.

If literature on emissions of buildings in India is dear, that on carbon markets potential

from buildings is dearer still. Buildings, energy use, emissions and carbon markets all


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have rarely managed to excite researchers simultaneously. Reddy and Balachandra (2004)

focused their attention on fuel use within households for cooking and lighting. In their

opinion, shifting from inefficient to efficient technology at this level provides more effective

GHG mitigation than does switch from non-renewable to renewable fuels. This technology

shift is not only economically viable, but also socially required because of significant health

improvements. They hint at the government using this potential to tap the carbon

securitization market, where though carbon credits might have to be shared by the

government, it would still prove to be attractive given the various local benefits such

projects would garner in their wake, and the resultant goodwill for the government.

In the same year (2004), Singh and Michaelowa came out with a discussion paper on CDM

potential through electricity efficiency in urban buildings of India. Though limited to CDM(and not the other carbon markets) and electricity efficiency (against other options of

design and building material), the paper is quite comprehensive as far as general

comparisons of Indian buildings with the world status goes. They declare that electricity

use within Indian buildings residential and commercial is three to four times the

German average per square metre. Studying cases of a few energy efficient buildings in

India, they show the potential of emission reductions in individual projects in the range of

500 to 10,000 tCO2e a figure too low to jump the CDM transaction cost barrier. However,

programmatic CDM is hinted as an alternative to avoid this pitfall, though implementation

issues are untouched.


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CHAPTER 3:METHODOLOGY

Primary and secondary sources were used to garner information with respect to the study,

keeping the objectives and scope of the study in mind, as also the time in hand. The

sampling method, data collection tools and limitations of the study are presented below:

3.1. SAMPLING METHOD

The population covered the entire supply-side of energy efficient buildings and carbon

markets in India the architects, builders, energy consultants, environmental consultants,

government and corporate agencies and ministries related to CDM and energy efficiency in

buildings. Purposive sampling was used to demarcate the population into groups the

author wanted to survey. Therein, snowball sampling through development of contacts

within TERI and through further contacts from the sample itself helped develop a fairly

representative sample.

3.2. DATA COLLECTION TOOLS

Secondary published and unpublished literatures, information from websites as well as

primary data through unstructured interviews were used to gather inputs for the study.

Unstructured interviews were ideal in this case as the author could not expect the

interviewees at their level in the organizational hierarchy to take out time to fill

questionnaires. However, indicative lists of questions to be addressed to various entities

were prepared by the author, which ensured that the time of the industry expert is not

wasted. These questions were, however, strictly indicative, with the interview taking its

own course if the author felt the need based on the response from the interviewee. Some ofthe questions earmarked for specific groups can be accessed in Annexures 2-4.


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3.3. LIMITATIONS OF THE STUDY

Though utmost care was taken to ensure that the study would be free from shortcomings, a

few inevitably crop up. These limitations, if removed, could have aided in providing more

helpful information to the national energy-efficient building and CDM markets.

1. The sample does not cover a statistically significant number of market participants in

the groups demarcated, in many cases. This limitation is, however, partially attenuated

by the fact that carbon credits through buildings is a relatively new concept in buildings

worldwide, and opinions tend to replicate.

2. TERI-bias was observed by the author in few of the interviews where the interviewees

knowledge about the background of the author and his relation to TERI made the

response tilted in favour of TERI.

3. The calculations of probable carbon credit earnings from the Fortis Hospitals does not

account for all the design, energy efficient and resource saving measures therein the

actual credits could be higher.

4. The baseline building is as indicated by the Bureau of Energy Efficiency (BEE) for any

hospital in India. The baseline for Fortis would be better represented by similar-sized

hospitals in the same climatic zone of India. This might lead to the actual credits being

lower, as recent trends show more energy efficient hospitals being built, thus reducing

the baseline.


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CHAPTER 4:RESULTS AND DISCUSSION

4.1. CURRENT STATUS OF GREEN AND CERTIFIED BUILDINGS IN

INDIA

The most impressive progress in residential green building development and construction

is the result of individuals, architects and developers wanting to distinguish themselves as

leaders in efficient use of resources and reducing waste in response to local issues of land-

use planning, energy supply, air quality, landfill constraints, and water resources.

Developers who have a business purpose in considering the life-cycle cost and resource

aspects of their new projects are providing the green building leadership in the commercialsector. State and local governments are also demonstrating and requiring green building

practices in their new buildings. Several whole-building standards have been developed or

adopted to promote green buildings in India. These include international standards like

Leadership in Energy and Environmental Design (LEED), modified versions of the same

(LEED India), and the indigenous Green Rating for Integrated Habitat Assessment (GRIHA)

developed by TERI. While there is disagreement about some of the specifics of these rating

systems, they have proven to be effective in declaring the user as a cut above the rest, in the

absence of the Energy Conservation Building Code (ECBC) of the Bureau of Energy

Efficiency (BEE) being mandatory. Real market transformation, however, will require buy-

in also from the supply side of the industry due to the complex supply chain structure of

the industry, and from the end-users who create a viable market.

As far as numbers go, green and certified buildings are still a minuscule part of the built-up

scene in India. As one of the responders cited, there are hardly 500 green buildings in India

today, of which only 30-35 are certified. This certification is limited to the commercial

buildings due to reasons like:


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Absence of certification suitable for residential buildings in India, until very recently

(the Indian Green Building Council announced LEED-India certification for the

residential sector on 2nd May, 2008).

The higher cost of energy-efficient materials and eco-friendly practices

(requirements mandated by the ratings), in the price-conscious residential sector,

cannot be passed on to customers.

Green buildings are not just about design and building, the green features have to be

maintained. Ensuring this in apartment complexes with multiple users is not a

simple task.

Commercial buildings, if certified, earn brownie points for the developers, architects

and consultants alike, by way of brand equity. No such incentive is presented to an

individual.

The certification costs themselves are approximately Rs. 15 lakh. In the absence of

mandatory regulation, there is no incentive to invest heavily as far as the individual

housings go.

Even for commercial spaces, builders apart from a few in the metros are not very keen

in certifying their spaces. This lack of enthusiasm is more attributable to lack of knowledge

about certification and the concomitant benefits in the living environment and operating

cost savings, than to indifference.

In spite of this historical lethargy, activity in the green buildings scene is accelerating now.

The immense opportunities that are presented by green and certified buildings can be

gauged by studying the case of RETREAT (Resource Efficient TERI Retreat for

Environmental Awareness and Training), the research and convention centre of TERI at

Gurgaon, India.


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4.1.1.RESOURCE EFFICIENT TERIRETREAT FOR ENVIRONMENTAL AWARENESS

AND TRAINING (RETREAT)

RETREAT, TERIs vision of building a sustainable habitat, is not just the first of its kind in this

part of the world, but also one that inspires many such habitats to be created in the future. What

was once a swampy, degraded wasteland, the 36-hectare TERI campus at Gual Pahari, Gurgaon,

today is a lush green habitat. Built as a model training complex, RETREAT demonstrates

efficient utilization of energy, sustainable, and integrated use of both natural resources and clean

and renewable energy technologies, and efficient waste management.

With a built-up area of 3000 square metres, this 30-room training hostel includes conference

facilities for 100 people, dining space and kitchen, recreational area, computer room, and a

library. What makes RETREAT unique is its total independence of the citys grid system and the

near-complete freedom from city services and infrastructure. Interestingly, energy planning in

the building has led to a reduced load of 96 kW (peak) from a conventional 280 kW (peak),

showing a saving of 184 kW (peak).

Basically, three important things were considered in the creation of the complex. Firstly, the

functionality of the building was assessed, trying to see how energy is used in it. Secondly, the

design of the complex minimized demands of energy in the building by architectural intervention

through passive concepts like solar orientation, lattice work for shading, insulation, and

landscaping. Thirdly, the space-conditioning and lighting demands were met through energy-

efficient systems whereas the electric energy demands were fulfilled by renewable energy

sources.

Passive designing for load reduction

Various passive design concepts have resulted in reduction of space conditioning loads by 10%

15%. Building envelope efficiency, which result in lowering of space-conditioning loads, was

achieved by adoption of various passive techniques as listed below:

The roof is insulated by using vermiculite concrete and China mosaic white finish. Walls

are insulated by using Styrofoam insulation.


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Part of the building is partially sunken into ground in order to take advantage of ground

storage and thus stabilize internal temperature.

Shading devices and fenestration have been adequately designed to cut off summer sun

and to let in winter sun.

Glare-free daylight has been adequately provided in the conference hall, library, and

recreation hall through use of specially designed skylights.

Landscaping has been adequately designed so that wind directions are favourably altered.

Deciduous trees are used in the southern side of the building to shade the building during

summer. During winter, the trees would shed their leaves thus letting in winter sun.

The building is oriented along the eastwest axis so as to have maximum exposure along

north and south. Architecturally, the building is consciously freed from the confines of a

strict orientation in order to demonstrate that though energy-conscious architecture needs

to be somewhat oriented, the orientation need not be rigid and interesting patterns can be

formulated for architectural purposes. In RETREAT, the north block is made slightly

concave towards the front, while the south block forms a hybrid convex surface facing

the winter sun. The points of the south block broadly fall on the surface of large

imaginary cones that generated the slightly free geometry and this allows the architecture

to break away from the grid iron approach that is associated with solar architecture

normally.

Ensuring a sustainable supply of energy

RETREAT makes full use of the most abundant source of energy, namely the sun, by tapping

the suns energy in different ways, both directly and indirectly. Some of the innovative

ways of tapping solar energy and using energy more efficiently at RETREAT are (1) solar

water heater, (2) PV (photovoltaic) panels, (3) gasifier, (4) underground earth tunnels, and

(5) waste water recycling.


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1) Solar water heaterAn array of 24 solar water heaters forms a part of the parapet wall of the living quarters.

The system can deliver up to 2000 litres of hot water (at 65 C) every day. In winter, when

the days are short and the sun less intense, gas derived from burning twigs, dry leaves, etc.

serves as a back-up source to heat the water. The heat given off when the standby

generator is running is also collected and utilized in the solar water heater, as a back-up

source.

2) Photovoltaic-gasifier hybrid power plantThe building is powered by a PV-gasifier hybrid system. Firewood, dried leaves, twigs, crop

residues after the harvest and such other forms of biomass, fuel the 50 kW gasifier. The

10.7-kW (peak) roof-integrated PV system generates power from solar energy. The power

available from both the gasifier and the systems is managed and controlled with the help of

a building management system. The gasifier meets the daytime loads, when the solar PV

plant charges the batteries. The excess power generated from the gasifier also goes to

charge the battery bank. During the night, the gasifier is switched off and loads are met by

the 240 V battery bank. The external lights and water pumps are powered by independent

stand-alone PV systems. Most of the external lights located outside the building are

powered by independent panels.

3) Earth Air Tunnels (EATs)The living quarters (the south block) are maintained at comfortable temperatures

(approximately between 20 C and 30 C) round the year not by conventional air-

conditioners but by circulating naturally cooled air, supplemented, whenever required,

with a system of absorption chillers powered by LPG (liquefied petroleum gas). The

concept is based on the observation that underground cellars are usually cooler in summerand warmer in winter. Underground structures are not exposed to the sun and thus do not

heat up as much. Secondly, the surrounding earth insulates them, which helps in

maintaining a more or less constant temperature. Temperatures recorded at roughly 4

metres below the surface show that they are stable and reflect the average annual

temperature of a place. However, the cooler air underground needs to be circulated in the


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living space. Each room in the south block has a solar chimney; warm air rises and escapes

through the chimney, which creates an air current: the cooler air from the underground

tunnels rushes in to replace the warm air. Two blowers installed in the tunnels speed up

the process. The same mechanism supplies warm air from the tunnel, during winter. So

efficient is the system that in winter, when outside temperature at night is 10 C, it is a

comfortable 22 C inside.

4)Absorption chillersA set of eco-friendly chillers, which run on LPG and require minimum electricity, provide

extra cooling when needed. LPG being a non-renewable source of energy, efforts are under

way to run the chillers on producer gas generated by the wood-based gasifiers. The

conference centre, which accommodates up to 100 participants, is conditioned by means of

the ammonia-based absorption chilling.

5) Energy-efficient lightingSustainable systems do not stop at using such renewable sources of energy as the sun and

firewood the energy so produced must be used efficiently. RETREAT uses the energy-

efficient compact fluorescent lamps (CFLs), which give the same quality and amount of

light as normal incandescent bulbs but require only one-fourth as much energy. Energy-

efficient tubelights with electronic chokes are used for conference halls, recreation room,

computer room, dining hall and in administration areas. The conference rooms enjoy glare-

free daylight through strategically placed skylights. In the living rooms, strategically placed

light points and specially designed swivels make it possible to use the light at a study table

as well as for bedside reading. Time based controls switch off lights at pre-set time. Key tag

system is installed in the rooms for energy conservation.

6) Waste water recycling by root zone systemRecycling is essential for sustainability. Waste water is recycled using the root zone

technique. It is a natural waste water treatment process based on aerobic and anaerobic

decomposition of the contents in the roots of the reeds (phragmytes) and microbial


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organisms. The process is natural, economical, and efficient and gives quality treated water.

This water is used for irrigation.

Monitoring the system

The elaborate, extensive, and sensitive network of sensors, linked to a central station,

monitors every heartbeat of the system 24 hours a day, 365 days a year. The data-loggers

keep tabs on virtually every relevant part of the entire system. At any given instant, one can

find out what it is like outside how warm, how sunny, how humid and how these

conditions have affected the same parameters inside; one can know how much power is

being consumed in different parts of the building and how much is being generated; one

can check the temperature of the water being delivered through the hot water system.

Thus, the facility is also a first-rate source of immense quantities of scientific data that can

power many more experiments and indeed influence the design of other such facilities the

world over.


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Performance

Superior performance has been recorded by the RETREAT system in the past, in part

attested by the author during his visit to the centre. A table summarizing the various

climatic performances is given below:

TABLE 2: WEATHER DIFFERENTIALS IN RETREAT BUILDING BROUGHT ABOUT BY GREEN CONCEPTS

HEAD Average

recorded

temperature

Ambient

temperature

Recorded

relative

humidity

Ambient

relative

humidity

Rooms conditioned

by solar gains and

EAT (winter, night)

22 C 10 C - -

Rooms conditioned

by evaporative

cooling and EAT (dry

summer, day)

28 C 40 C 45-50% 30%

Rooms conditioned

by evaporative

cooling and EAT

(humid summer,

day)

30 C 38 C 65% 70%

Conference rooms

conditioned by

absorption chillers

25 C - 55% -

(Source: Internal secondary data, TERI)

As can be seen above, the temperature differentials recorded above are significantly within

the comfort levels of most people, and the system thus proves its point in not only saving

on energy and resources, but also on the emissions which would otherwise have been


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generated by excessive reliance on the regional grid with insignificant renewable

contribution.

Of course, the advanced technology comes with a cost a barrier many small-scale entities

might be hard-pressed to overcome. The cost break-up can be seen in the table below:

TABLE 3: COSTS OF ADVANCED TECHNOLOGIES EMPLOYED AT RETREAT

TECHNOLOGY COST (Rs. Million)

EAT 1.68

Solar chimney 0.28

10.7 kW solar photovoltaic system 7.40

Stand-alone PV streelighting system 0.28

Root zone system 0.85

Solar water heating system 0.25

Building management system 2.30

Ammonia absorption cooling system along with gas bank 3.10

HVAC 2.40

TOTAL COST OF TECHNOLOGY 18.54

(Source: Internal secondary data, TERI)

The building being only partially loaded as yet now consumes a maximum of 40 units of

electricity per hour. The PV system generates on an average 55 units per day on a sunny

day. The total cost of technology, Rs. 1.85 crore, was recovered by RETREAT in the very

first year of operation by way of cost savings in the local grid and resource savings.

4.2. GHG MITIGATION OPTIONS IN BUILDINGS

Energy consumption in buildings is expected to increase substantially due to economic

growth and human development. The demand for energy to run appliances such as TVs,

air-conditioning and heating units, refrigerators and mobile phone chargers increases

substantially as living standards rise in India. This puts additional pressure on the


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emissions balance, which needs to be countered by achieving energy efficiency

improvements. The three basic mitigation options mentioned earlier can be actually

implemented in a number of ways, many of which were effectively deployed in RETREAT:

Thermal envelope building shell as insulation

Heating & cooling load reduction

HVAC system efficiency

Building Energy Management System

Active collection & transformation of solar energy

Solar hot water

Efficient lighting systems & daylighting

Efficient appliances & equipments

Retrofits

Specifics of some of the various measures are detailed below:

4.2.1.INNOVATIVE BUILDING DESIGN AND MATERIALS USE

Innovation in new building design, building form and alignment, heating, cooling and

ventilation systems, lighting, and choice of materials have a substantial impact on a

buildings energy demand and carbon footprint over its lifetime. Significant energy-

efficiency gains and GHG emissions reductions can be achieved in buildings by addressing

the basic requirements of cooling and heating at the design stage itself:

The shape, form and orientation of a building and shading devices affect heating and

cooling requirements.

Improved insulation coupled with adequate ventilation using a heat recovery

system reduces the demand for heating.

Cooling and heating needs can be supported by heat pumps (similar to the earth

tunnels at RETREAT), which use stable temperatures in the ground, air and water to

support cooling requirements in the summer and heating in the winter.


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Low-E glass coating reduces the amount of solar radiation that is absorbed

without significantly affecting the light allowed, which helps keep buildings cool and

naturally lit. Glass with the reverse effect and double-glazing reduces heating

requirements.

Combined Heat and Power (CHP) or cogeneration technology increases energy

efficiency by using waste heat.

Energy-efficient boilers and solar thermal panels reduce water heating

requirements.

4.2.2.LIGHTING AND APPLIANCES

Lighting is one of the major energy consuming factors in commercial and residential

buildings. Energy consumption can be reduced cost-effectively by introducing intelligent

lighting systems (motion detectors) in buildings and by switching to energy-efficient

fluorescent light bulbs, which consume up to 80% less energy (WBCSD 2007). Although

initial costs are higher, life-cycle savings in energy bills can far outweigh the initial

investment.

Another significant contributor to energy demand and emissions in the buildings sector in

India are appliances. In many countries, appliances have to display an energy efficiency

label and are grouped into different categories, providing the consumer with an indication

of the energy consumption of the appliance. This is, however, not mandatory in India.

4.2.3.FOSSIL FUEL ALTERNATIVES

By encouraging alternative sources of power with low- or zero-GHG technologies installed

locally, total energy demand can be supplemented. The use of renewable energy sources

lowers GHG emissions by reducing demand for fossil-based grid electricity.


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4.3. BUILDINGS AND THE CARBON MARKETS IN INDIA

In spite of substantial emission reduction potential from buildings, the carbon markets

have rarely been tapped as a source of earnings; what little projects exist (either registered

or in the pipeline), are through the CDM market, in the form of small-scale individual

projects. Though the voluntary markets are gaining importance in India through the

efficiency of organizations like GTZ, SKG Sangha and EnerGHG India, little attention is paid

to the buildings as a viable investment. This, despite the fact that energy efficiency in

buildings accounts for nearly two-third of the potential emission reductions through

energy efficiency (Cherail 2007).

Credence to this condition of carbon markets in India with respect to buildings is borne by

the fact that of the 333 registered Indian CDM projects till date, only one (0.3%) relates to a

building claiming carbon credits, and of the 528 Indian projects at the validation stage of

CDM only seven (1.33%) pertain to buildings (UNEP Riso Centre 2008). Though the figures

depict an impressive growth rate of 343% over two-and-a-half years (the first CDM project

through buildings was registered in 2005, with a crediting period starting 2006), it is still

small considering the immense technical potential and the fact that four of the projects in

the pipeline deal with CFL distribution in households alone, not the entire gamut of

emission reductions from buildings. The projects registered and in the validation stage are

tabulated below:


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The table clearly shows the trend of things, as far as potential for carbon credits from

buildings in India goes. Though all but one of the projects listed above are still under the

validation stage, the ground is set for the emission reduction potential the table

corroborates the findings of the IPCC in its Fourth Assessment Report, as described in

Table 1. Diffusion of efficient lighting systems has a greater potential in India for reducing

the GHG emissions as compared with other measures in buildings. These other measures,

though consequential enough and necessary given the current upsurge in realty

development, do not offer as drastic a difference as offered by efficient lights. As seen in the

table, the difference between the highest emission savings in non-CFL buildings CDM

projects (15,000 tCO2/yr.) and the lowest emission savings in CFL buildings CDM projects

(48,000 tCO2/yr.) is more than double (33,000 tCO2/yr.) of the former. While drawing

these conclusions, it is to be noted that the projects are still in the validation stage, the

latter category includes only a few households in the residential buildings sector of India

and all the projects are in the form of single-projects. Actual emission reduction potential

will increase with more aspects of the building being covered in future projects, and proper

methodologies emerging to integrate the same.

The above discussion forms the basis for the next sections of the chapter, which deal with:

Probable emission reductions from Fortis Hospital building in New Delhi

The responses from various stakeholders in the supply side of buildings the

builders, architects, energy and environmental consultants, and state and corporate

governing bodies and aiding agencies during interviews and interactions aimed at

eliciting the perception, hopes and difficulties faced by their respective sectors in

exploiting the full potential of GHG mitigation in buildings and earnings from the

carbon markets in India


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4.4. ESTIMATING PROBABLE CARBON CREDITS FROM FORTIS

HOSPITAL SHALIMARBAGH,NEW DELHI

Fortis Healthcare Ltd. has approached TERI to generate Certified Emission Reductions

(CERs) for its 500-bed hospital building at Shalimarbagh, New Delhi. The building is being

designed with a vision to provide an environment-friendly health care facility. Energy

efficiency and resource conservation measures will be incorporated in various aspects of

the design, construction and operation of the proposed green building. The hospital is

being designed as an energy-efficient building that complies with the Energy Conservation

Building Code (ECBC) and is undergoing TERI-GRIHA rating certification, poising to

become the first hospital building in India to be registered for the building rating system.

Energy efficiency and green features in the building include:

Sustainable site planning is practised on site to conserve resources, minimize

disruption of the natural ecosystem, and maintain the microclimate of the site.

The building design has been optimized to reduce the external solar gains and avoid

over design of lighting and air-conditioning systems.

Low embodied energy material options are being explored by the management.

CFC- and HCFC-free equipment will be installed for the refrigeration and air-

conditioning systems.

Specific measures taken in this regard include:

1. External wall with lower U-value

2. Roof with better insulation

3. Low emissivity glass

4. Efficient lighting

5. Efficient HVAC (Heating, Ventilation and Air Conditioning) equipments and controls

6. Cogeneration (CHP)


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7. Waste management

With an aim to gauging the potential CERs for Fortis Shalimarbagh hospital building and

thus conclude or gainsay the findings in the previous section of this chapter, the author

used the baseline data for buildings as indicated by the Bureau of Energy Efficiency (BEE).

The data for the base building and the savings at Fortis are tabulated below:

TABLE 5: ENERGY PERFORMANCE INDICES (EPI) OF BASE BUILDING AND FORTIS HOSPITAL BUILDING

Base building Fortis Hospital, New Delhi

1. Building envelopeExternal wall: 230 mm brick work plastered on both

sides (U-value = 1.98 W/m2K)

External wall: Cement plaster + 200 mm AAC blocks

(U-value = 0.69 W/m2K)

Roof: 150 mm concrete root slab + 100 mm brick coba+ roof tile finish (U-value = 2.43 W/m2K)

Roof: 150 mm RCC + 65 mm vermiculite + 100 mmbrick coba + 25 mm tiles (U-value = 0.98 W/m2K)

Glass: Single clear 6 mm glass (U-value = 5.7 W/m2K) Glass: Double glazed low-E glass (U-value = 2.8

W/m2K)

EPI = 605 kWh/m2 p.a. EPI = 593 kWh/m2 p.a. (2% reduction after building

envelope optimization)

2. LightingLighting Power Density (LPD) = 20 W/m2 LPD achieved is less than 10 W/m2 (Energy efficient

fixtures and lamps will be used)

EPI = 605 kWh/m2 p.a. EPI = 476 kWh/m2p.a. (21% reduction after building

envelope + lighting optimization)

3. HVACChiller efficiency = 1.15 KW/TR (Air cooled chiller Chiller efficiency = 0.61 KW/TR (water cooled screw

chiller)


envelope + lighting + HVAC optimization

4. Controls for HVAC systemNone Variable frequency drive (VFD) on chilled water

pumps, Air handling units (AHUs)


envelope + lighting + HVAC optimization + controls

(Source: BEE, 2007)


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Only the conditioned floor area of approximately 14,633 m2 (1,57,510 ft2) as indicated by

sources at TERI has been considered to calculate annual energy consumption instead of the

total built-up area of 64,400 m2 declared by BEE. This is because what needs to be

measured is the savings in energy consumption brought about by HVAC efficiencies.

The following figure shows the calculations of probable CERs from the Fortis building:

In the table above, the energy consumption (in kWh) for the base case and the Fortis

buildings have been calculated by multiplying the EPIs of the respective buildings with the

conditioned floor area, and energy use reductions are depicted in megawatt-hours. Using

the approved methodology ACM0002/Ver.7 for CDM projects the consolidated method

Base Case Fortis Reductions Reductions

Head kWh kWh kWh MWh

Building envelope,

Lighting, HVAC and

Controls for HVAC

8852965 4565496 4287469 4287.469

}annually

Simple Oper at ing Mar gin Emiss ion Fac tors fr om 20 04 -0 5 to 2 006 -0 7 (incl . imports) Bui ld Margin Emis sion Factor for 20 06-07 (unadjus ted for imports)

2004-05 2005-06 2006-07 2006-07

North 0.98 1 1 North 0.63

Simple avg. 0.993333 tCO2/MWh

0.81167 tCO2/MWh

4287.47 MWh p.a. 3479.995672

Emission

reductions

in Fortis

(tCO2 p.a.)

Emission factor for

electricity drawn fro

Northern Electricity

grid

Re uction in

electricity

consumption

compared with base

case

Emission factors for Northern grid (calculated as prescribed in approved methodology ACM0002/Ver.7)


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for grid-connected electricity generation from renewable sources the average operating

margin (OM) emission factor is calculated as 0.9933 tCO2/MWh, the build margin (BM)

emission factor as 0.63 tCO2/MWh and the combined margin (CM) emission factor as

0.8117 tCO2/MWh assuming 50% new capacity additions in the grid, and thus an equal

weight for OM and BM, a conservative estimate. This CM emission factor when multiplied

with the energy use reductions gives the probable reductions in carbon emissions from the

project as approximately 3,480 tCO2 p.a. or 3,480 CERs.

The figure is not a very impressive one when compared with other projects in the CDM

pipeline in Table 4. Individual projects in buildings thus fail to garner high CERs unless

major expenditure to import improved technology is incurred. This was not the case with

Fortis Hospital, which makes use of indigenously available materials and technology. Ofcourse, the calculations suffer from limitations as described earlier but with simultaneous

increase and decrease of emission reductions as a consequence of the respective

limitations, the final figure could more or less be as estimated here.

The ground is set to further delve into what the supply side of buildings views as the most

viable forms of building projects in the carbon markets.

4.5. RESPONSE ANALYSIS OF INTERVIEWS

During the course of the project, the author conducted unstructured interviews and

interacted with officials at the decision-making levels of organizations directly or indirectly

related with the supply of buildings in the Indian market. The aim was not only to gauge

the awareness level with respect to carbon credit earnings potential through buildings

among them, but also go a step further in assessing from discussions their views on the

most suitable form of earning through buildings in the carbon markets and the lacunae

they see in effective implementation of such projects in the near future.

It would not be off course looking into the various means of carbon credit earnings from

buildings, at this stage. The global carbon markets can very simply be divided into two

categories, based on the regulatory necessity of such a project:


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1. Regulated markets where carbon markets arise based on some global, state or

regional interventions to reduce GHG emissions. For e.g., the CDM, the European

Union Emissions Trading Scheme (EU ETS), the New South Wales Greenhouse Gas

Abatement Scheme, etc.

2. Voluntary markets representing consumer demand for action on climate change,

with projects arising primarily on the basis of individual efforts to mitigate

emissions not necessarily mandated by a global, state-level or regional agreement.

This can be in the form of the structured exchange-driven market of Chicago Climate

Exchange (CCX) or the more disaggregated over-the-counter (OTC) markets with

standards like the Voluntary Carbon Standard (VCS), the Gold Standard, VER+, etc.

As stated earlier, the author elicited responses from the industry experts for the following

forms of the carbon markets:

FIGURE 1: CARBON MARKETS AND PROJECT TYPES COVERED DURING INTERVIEWS

CarbonMarkets

CDM

Single-project Bundle

Programme

of Activities(PoA)

Voluntary

VCS, Gold

Standard,VER+, etc.


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Bundling and PoAs offer great scope for exploiting the mitigation potential in buildings in

principle. In a PoA, emission reductions are achieved by multiple verifiable activities

executed over time as a result of a government measure or private sector initiative.

Bundling, on the other hand, involves several individual and independent projects

bundled together to reduce CDM-related transaction costs. In both cases, the winning

entity is the small-scale project participant who finds the costs of going through the CDM

process too prohibitive in small projects yielding low credits, or even a big-scale

participant with similar projects in the pipeline at varying locations and varying points of

time in the future. The buildings sector in India can definitely benefit from such

arrangements and hence, the response-seeking in this regard. More details about

programmes and bundles can be looked up in Annexure 1

Based on the interviews and interactions with industry experts, the table of responses is

presented below :

TABLE 6: RESPONSES REGARDING CARBON MARKETS AND THE BUILDINGS SECTOR IN INDIA

(Source: Interviews with industry experts, May 2008)

The responses seem to be a mixed bag of sorts. Though most (93%) of the parties

interviewed seemed positive about single-project CDM gaining prominence for buildings in

the coming years, there was a palpable doubt regarding the scope of aspects of mitigation

covered within a project due to absence of a comprehensive methodology. Bundled and


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Voluntary markets met with a marked indifference among the builders interviewed, as in

their opinion CDM was the way forward as of now, with voluntary markets in India yet to

show the robustness demanded to garner credibility.

As far as the large-scale builders community goes, earnings from buildings in carbon

markets (CDM specifically) is a believable possibility. Experts paucity and vague

specifications for the non-conventional modes of CDM could however, spill water on this

positivity, more so given that projects today take a much longer time to get registered in

CDM, and thus any methodology developed to address the issues could have to wait longer

than the Kyoto period of 2012 to find credibility. Uncertainty rules the way forward.

4.5.2.ARCHITECTS

The architect community holds an interesting position in the entire spectrum of earning

carbon credits from buildings. They are the entities that hold the key in designing the

whole building in a manner that ensures emission reductions eventually, and they are also

the entities that are least informed about the potential of earnings from buildings in the

carbon markets. Architects the author interviewed were, as they admitted, among the few

in their community who were aware of the carbon markets firstly, and that too the role of

buildings in them. The fault lay in the education system itself, where the section related to

green buildings is taught as part of the 10% theoretical learningas against the 90% studio

learning that forms the crux of architectural studies. Consequently, very less is actually

implemented in real life at the initiative of the architect. Secondly, with a lack of expert

knowledge to validate the energy and resource savings, the architects are faced with the

doubt whether the building designed would indeed attain the savings as envisaged.

Though the architect community interviewed was positive about buildings earning carbon

credits in the future, they neither had any idea about various modes of CDM registration,

nor about the voluntary markets.

Some of the recommendations that came up to improve the condition in the architect

community with regard to them voluntarily lobbying for green buildings and carbon credit

earnings from them are:


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Governments should have a proactive marketing cell for information dissemination.

Advertising in a big way would help the cause, and India has a lot to gain in the

process.

Advertisements need to be pushed by carbon credit trading companies too, to

generate curiosity.

The Council of Architects too could contribute by tying-up with builders & carbon

credit companies and aid the information dissemination process.

What the architects suggest could truly help the process of making all entities related tobuildings the supply side as well as the end users more aware with respect to the need

of having resource efficient buildings which could also earn carbon credits for the project

participants, but the suggestions presume one certainty: that the systems (legal, regulatory,

resource-based and norm-based) necessary to corroborate the surge in such projects

following greater awareness in the community, exist and are functional.

4.5.3.ENERGY SERVICE COMPANIES

As far as commercial and residential buildings are concerned, a builder can enter into long-

term installment payment contracts or lease purchase agreements of up to 10 years for the

evaluation, recommendation, purchase and installation of energy conservation measures.

An ESCO provides a package of these services and guarantees the savings. With proper

coordination between a builder and the ESCO, such projects could also be developed as

carbon projects with the credits being shared between the two entities. An ESCO could, in away, ensure that energy savings indeed materialize, with the concomitant reductions in

emissions, which would also lead to greater probability of the building project being

accepted as a carbon project, given the current rate of registrations in the CDM market

slowing significantly (Capoor and Ambrosi 2008).


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The ESCO the author interviewed is the biggest in the Indian energy service industry. The

feedback was quite contrary to what the entities directly related with buildings (builders

and architects) presented. According to them, the Indian scenario for energy efficiency in

buildings is not very strong with builders not very forthcoming in dealing with ESCOs as

yet, due to the nascent stage of the industry in India today. Experts in energy reduction

avenues having proficiency in financial engineering are hard to come by, and in spite of

regular trainings imparted by the said ESCO to its employees, it has lost many of the leading

experts to ESCOs in Singapore. Policy initiatives like the Three-Country Energy Efficiency

Project (3CEE) initiated by UNEP and World Bank do serve a purpose in developing

financial intermediation mechanisms within India, but they are also stunted by opposing

policies at the national level. Neither in their earlier projects, nor in their future ones (Batra

Hospitals and AIIMS in Delhi) have they thought to explore the carbon markets for

earnings.

Completely against buildings using the carbon markets in the near future, both in the

individual project and the PoA modes, there was a hint of uncertainty with respect to

rejecting the bundling mode outright. This was attributed to high transaction costs

associated even with PoAs (Rs. 10 lakh, as mentioned), a barrier which could not be easily

overcome unless the parties involved are large enough to bear the costs. Bundling could be

a solution here, but lack of clear guidelines with respect to such projects and also a

precedent being absent leave room for doubts. But the voluntary markets could be

effectively tapped by the buildings sector in connivance with the ESCOs due to the more

globally accepted standards increasingly reliable now. Here too, there is no precedence

with respect to buildings, but the outlook is bright given that with the share of Asia in the

global supply of Verified Emission Reductions (VERs) topped in 2007, with an increased

percentage of energy efficiency projects.

Though the points leveled against the buildings in the CDM markets are compelling, the

positive attitude attached to the voluntary markets just on the basis of a report when

similar cases can be built for buildings in the CDM market too seems to be more a biased

judgment than one built on strong objective foundations.


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4.5.4.ENVIRONMENTAL CONSULTANTS,STATE AND CORPORATE GOVERNING AND

AIDING AGENCIES

The experts interviewed under these heads offered views similar to the ones seen in the

previous sections, though more at the positive end of the spectrum. There was general

agreement among the interviewees regarding the prospects of buildings in the single-

project mode, with recent cases being quoted.

Bundled mode and the voluntary markets too found favour with the environmental

consultants given the opportunities they offered. Specially with respect to the voluntary

markets, there was increased hope on the part of the environmental consultants withmainstream CDM projects taking longer to be registered, with proportional increase in

associated costs. With the voluntary markets looking up in India with the increased

participation of organizations like the German Development Corporation (GTZ), SKG

Sangha and EnerGHG in India by supplying VERs through primary projects, there is a

widespread belief among the environmental consultants in India that voluntary markets

have only further up to go. This was taken a step further with one of the consultants

acknowledging that energy efficiency in buildings particularly commercial could be

tapped easily in this regard, and efforts were on to develop projects for particular clients.

However, the PoA mode of CDM projects seemed to find less favour with them on account

of lack of experts who could integrate the various energy efficient design, material and

equipments into one binding baseline methodology, and develop a first in the buildings

sector.

State and corporate governing/aiding agencies were, expectedly in the case of the former

and unexpectedly in the case of the latter, against the voluntary markets being ripe forcarbon projects in buildings. As the corporate-led agency put it, small-scale players who

form the bulk of the voluntary markets would not have the wherewithal to incorporate the

upfront costs associated with energy-efficient buildings without the support of entities like

ESCOs, an industry still undeveloped and little-known in India. Though the state-led

governing bodies remained uncertain about bundling of building projects in CDM (a


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misgiving not substantiated by them), PoA found relative favour with a mention of a Design

Document being under development by South Pole Carbon Asset Management Ltd.

Barring the biased judgment meted out to the voluntary markets by the state-run

governing body, the responses seem to be free of subjective influences and show the

prospects of buildings and carbon markets in relatively good light.

4.5.5.LATERAL COMPARISON OF VARIOUS OPTIONS OF BUILDINGS AND THE

CARBON MARKETS

Single-project CDM did find its share of takers, though largely in principle. Bundled projects

failed to attract the attention of a majority (87%) of the responders. PoA and the voluntary

markets found a few supporters and other dubious remarks. PoA in particular, though

offering significant opportunities to the buildings sector in India by way of claiming credits

from multiple activities in the future, spread geographically, largely stayed in the grey line.

The reasons were:

Demanding monitoring requirements of decentralized CDM Programme Activities

(CPAs)

Methodology limited to one in a PoA (as against single-projects which can use

several methodologies in the same project)

The liability for adding a CPA to the PoA being with the Designated Operational

Entity (DOE), small private players might struggle to cope with the probable

attempt on the part of the DOE to transfer the risk back to the PoA manager or to

recover risk premium.


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4.6. BARRIERS TO BUILDINGS FULLY UTILIZING THE CARBON

MARKETS IN INDIA

Despite the relatively favorable general policy framework to support energy efficiency,

there are several barriers to the actual implementation of these measures in buildings in

India. The identified barriers range from the still inadequate legal and regulatory

framework that limits the role of ESCOs to different information, capacity and financial

barriers, as enunciated by the various industry experts:

1. Higher upfront costsAll energy efficiency technologies have a higher cost of investment than the standard

technology. Builders are either too short-sighted to value the lower operational costs

during the lifetime of the equipment and material, or too cash-stripped to be able to

afford them. ESCOs can bail out the builder by providing energy savings guarantee as

well as financing schemes, but if taken up as a carbon project, they would also demand a

share in the credits. The end-users of buildings, who in most cases are not even aware

of the specific energy efficiency technologies and their costs vis--vis their cost saving

potential are often not ready to invest more for parts of such buildings.

2. Non-existing BEMSMost building managers are overloaded with daily routines and therefore do not have

the time to think about an integrated energy management system. They are hesitant to

employ a new, unknown technology that may require skills beyond their qualification.

Thus, with no proper system to ensure that the energy savings forecasted would

actually take place, carbon credits would be all the more difficult to earn.

3. Transaction cost barriersA trivial, but often overlooked barrier is the transaction cost accruing if one has to

address many different owners/operators of buildings. This essentially limits CDM

projects to large scale commercial buildings. But even here, the a

report (teri)_ siddarth iyer

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