29.10.2009
Green agenda for Russian developers / Сonference

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Green agenda for Russian developers

Report of First Green and Sustainable conference at 29th of October by Ksenia Agapova

The conference, organized by IM Events, took place in Holliday Inn Suschevskiy. The event gathered more than 60 attendees (architects Aedas, NBBJ, VLI Vostok, Murray O`Laoire Architects, engineers Ramboll, WSP, ASP, Buro Tachniki, Spectrum Holding, TSN Group, investors and banks Ayona, Deutche Bank,TransCreditBank, Sponda, asset management West Bridge, project management PM Group Vostok, Sawatzky, developers Clearlink, Stern Estate, UDC Holding, contractors Egida and many others), press representatives (arendator.ru, CRE, Real Estate Quartely, ec-a.ru) and 15 speakers (Lighthouse Group, Ernst&Young, Deloitte, RPSi, AIG Linkoln, BRE Global, EC Harris, MEP Engineering, Arup, Ramboll, Buro Happold, ERM, Drees&Sommer, Heman Miller, IKEA). The event could be addressed as a first serious framework on shaping green trend development in Russia. 

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The conference culminated in The Green Perspective Award ceremony, organized by IM Events. The nominated companies included Hines, Country Park, Espro and ClearLink. The award went to Hines. Aaron Smith, Associate Development Manager at Hines, announced that their global policy includes certification of all their new buildings (98 buildings at the moment) and they already have 130 buildings with energy efficiency certificates worldwide.

In Russia for certification of local projects BREEAM International has been selected. Currently Hines is looking forward to receiving their first BREEAM certificate with one of their projects. This project would become the first BREEAM certified building in Moscow and Russia. Aaron stressed that they will continue their efforts to green the portfolio and that their next step would be becoming a member of Russian Green Building Council (RuGBC).

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The first part of the conference was devoted to Russian legislation on green building and a disclosure of the real price for electricity in Russia. These two questions are the main drivers for energy efficient incentives. Jeroen Ketting, the founder of the Lighthouse Group introduced the topic.

“The green building topic develops on Russian market as ever,”- said Jeroen – ” The Kremlim has started to mention energy saving issues in every second speech. Energy efficiency thinking becomes more and more defined, as it was estimated that 1% of energy saving can result in 0,35% GPD growth. Energy efficiency is a direct way to stimulate the economy of the country”. Jeroen described the vast potential for savings: current facility management system utilizes 3-4 times more heat than needed, through wasted energy reduction and efficiency the country could achieve 25-60% of energy savings, 25% of water savings. Russia could double its export of gas if sufficient energy saving measures were taken.

Natalia Aristova (Ernst & Young) introduced the new bill, which passed its second reading on the 23rd of October 2009. This law would become a legislative stimulus for an increase in energy efficiency through renewable sources of power generation, green building and a reduction of energy use through low energy consuming devices. The law gives a clear definition of energy saving and energy efficiency. From January 2010 all legal entities would be required to have a energy efficiency strategy and would be obliged to reduce their costs.

The law outlines application of energy efficiency grades which would be developed in the future. The grades and energy efficient metrics are still an open question to be developed further. The Law also mentions that by the year 2030 ALL building in Russia should be brought to European standards. The standards are still an open question and represent a good opportunity for industry to influence legislation. A best practice list could be created and implemented.

REE (rates of energy efficiency) would be applied to all new buildings, including residential. For existing stock REE would be applied in case if reconstruction is started. Since January 2010 all buildings would have to implement energy saving equipment (heating units, elevators selected by top 2 energy saving classes, regulators of heating, energy efficient light bulbs, motion sensors, double doors and window stoppers). Building sites would also be obliged to comply with energy saving requirements during the construction process. Penalties would be applied to those builders and facility management companies which do not apply energy efficient schemes. For those who undertake energy saving incentives various economic incentives would be provided – state funding, tax easing).

“The law will come in power in January 2010 and a large amount of supplementary documents is still on its way to be developed,”- said Natalia – “We see the situation optimisticly. First of all, the fact that the law is being adopted is a giant step for Russia. But its implementation would depend hugely on government regulations. Unless they are in place, we won’t see the results when the law comes into power”.

 

Barry Dyson (Deloitte) talked about the real cost of electricity in Russia. According to data of the World Bank, Russia’s potential to reduce energy consumption in Russia is 45%. The saved amounts of energy (and money) could become a good opportunity for future development of national economy. The power tariffs would be deregulated by 2011 and that means that energy prices in Russia would become comparable with European (in august 2008 power price (euro/MWh) in the UK was 88,58, Germany – 65,76, France – 69,76, Russia – 19,40). “The increased fossil fuel consumption didn’t go down in Russia even with the recession – we got accustomed with cheap energy and large consumption, and we are not changing our habits”, – stressed Barry, “Energy prices in Russia are much lower than in other countries and they are expected to rise”.

The main driver to deregulated power market and energy efficiency:

  • Costs for electricity represent now 2-3% of individual income, secured by subsidies from government
  • Soon Russia would become a part of the carbon market
  • Efficiency improvements represent significant potential. Instead of investing in new plants and fossil fuel, the same money could be invested in the improvement of energy efficiency. Behavioural change alone (eg switching off the lights) could contribute a 15% of savings from existing building stock.

Barry forecasted significant movement in price which would reduce the profitability of many businesses. The subsidies today represent 30-40% of energy cost. The lifecycle cost analysis of build assets would reveal great impact of price increase. “Design as if the energy would be short and you would win in any situation,”- recommended Barry to all participants.

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The second session was moderated by David Squire (RPSi) and was devoted to international experience in green building.

The session started with the presentation by David Lawrence, who introduced efforts of AIG Lincoln in sustainable building and thinking. David presented basic concepts of green building, revealing myths of current perception towards sustainable design. David pointed out that a major opportunity for business exists in terms of staf satisfaction and productivity. Staff costs form the bulk of most service companies and their efficiency is greatly affected by their working environment.

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Green buildings’ market value is on average 8,2% higher than similar sized buildings, occupancy rates increase by 3,5%, rent increase 8% – as revealed by the latest research from the World Green Building Council. Building industry needs a revolution to improve performance. The main obstacle on a way to revolution is a vicious cycle of development – in the development chain: developer – tenant – investor – designer each part of the chain blames the others for lack of activity. Green building councils aim to break this cycle.

David explained his company`s path to sustainability. In 2006 the New York Head Office announced that their “sustainable portfolio” (the main driver being the Dow Jones Sustainability index). The strategy development started from research on the benefits of various certification methods. For the European project BREEAM was selected as most appropriate. David described various projects of AIG Lincoln, which were certified. CAMPUS M – an iconic project of AIG was the first project to achieve BREEAM Excellent rate without any extra cost. The project way to sustainability include smart design, natural ventilation, energy control by users, water leak detection, external lightning with daylight sensors.

David commented that apart from economic and environmental benefits of certification, it helps their organization to measure and compare building performance. Certification is a tool to provide the construction process with transparency and control.

In Russia AIG BREEAM project would be built soon – White Gardens office complex. “Russia has a vast potential for energy saving and waste reduction,”- said David, – “Energy efficiency is business efficiency”. The biggest call for building green is demand from international tenants. Designers and engineers would benefit from implementing technologies they have been trying to implement for years.

Download presentation of David Lawrence

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Richard Colwell (BRE Global) introduced the BREEAM certification system. The main aim of BRE Global is international knowledge transfer. BREEAM consists of 3 major standards: BREEAM International, BREEAM UK and BREEAM In Use. BREEAM International helps to benchmark green buildings in various countries. The introduction of standards helps to improve the interior atmosphere and this results in an increase of staff productivity, sales growth in retail and better test results in schools. BREEAM certification is implemented in practice through a network of independent assessors. The certification process involves the rigorous recording of all construction and management processes (400 pages of question criteria) and that aids to improve the whole system of management. BREEAM In Use was created to assess the existing building stock and therefore has a huge potential.

BREEAM In Use is an easy to use and affordable tool, the questionnaire designed in a manner, that it takes only 3 hours to fill in on-line. Richard said that currently in Moscow 3 buildings are being BREEAM certified but they expect many more to come. BREEAM In Use would be soon adopted to Russian conditions and pilot projects to be assessed in 2010. The standard adaptation would be accomplished with the help of a Russian developers group within the framework of the Russian Green Building Council.

Dowload presentation of Richard Colwell

 

Mike Pearce (EC Harris) focused his presentation on the cost of green building. Mike stressed in his speech the importance of involving local conditions and how to make money by being green on the Russian market. “Decreased costs mean retained value” – said Mike. Recently developers in Russia used to concentrate on short term goals and therefore never looked at building lifecycle costing.

Obstacles to cost reduction and green building implementation include:

  • It is hard to compare construction costs is Russia because the business in not transparent and the market is on its way to maturity – so no-one can really say what a “standard” building costs!
  • There is lack of price differentiation on the market – rent levels do not reflect the building quality (or the difference is insignificant), you pay similar money for varying quality.
  • Low energy costs (operational)
  • Lack of design skills and experienced in sustainable architecture designers and engineers
  • Poor quality of construction in many developments.

One of the main drivers to green building incentives could be high utility connection price (achieved by reducing the maximum “peak hour” energy use which could save millions to developers and end users). Due to EC Harris research to pass a “very good” qualification on BREEAM would require developer an extra build cost of 0-6%. Much of this in Russia could be offset by lower connection charges.

One of the main drivers to green building incentives could be high utility connection price (achieved by reducing the maximum “peak hour” energy use which could save millions to developers and end users). Due to EC Harris research to pass a “very good” qualification on BREEAM would require developer an extra build cost of 0-6%. Much of this in Russia could be offset by lower connection charges.

“The reason to build green,” – said Mike in conclusion “is to make money and differentiate yourself on the market”. 

 

After lunch the participants gathered for session 3 to discuss practical solutions for green building. The session was moderated by Adrian Salter (MEP Engineering).

 

Bora Kovacevic (Arup) defined sustainability and introduced Arup`s vision of green building and design. Developer must maximize benefit and minimize impact when approaching green projects. Arup as a leading international engineering practice had developed its own internal sustainability approach and implements it in all projects, even if the client doesn`t intend to receive green building certification. For every day routine Arup has developed its own tool to measure sustainability – SreAR. It is a piece of software which helps to create buildings which are carbon neutral, self-sufficient, use sustainable materials, able to cope with change of weather and are sustainable in operation.

 

Jorn Tredal from Ramboll introduced their sustainable projects. One of Ramboll’s current projects is Russian – the ARKUS III office center, which was registered for BREEAM certification. Hanne Trine Ring Hansen described their in-house tool, developed by Ramboll to measure sustainability. Alexey Akulov (ERM) introduced his company – ERM environmental consulting and its sustainability projects.

 

Session 4 focused on case studies and views on green building from end user`s perspective. The session was moderated by Steffen Sendler (Drees&Sommer).

 

Sam Empringham (Herman Miller) presented his company`s sustainable strategy, which was developed in 1953 (Sustainability and common sense go hand in hand). The green vision forced HM to become a founding member of the USGBC and to LEED certify 100% of their buildings. The first green factory of Herman Miller in Michigan was called the Greenhouse and represented all the state of art green technologies which were present at the day. The building cost premium was 10%, but it paid back shortly through productivity increase from 98,54% to 99,53% and quality measures increased from 98,97% to 99,23%. These figures may seem to be not large, but when calculated in monetary terms, their full scope over the lifetime of an asset creates a large saving potential.

 

The next speaker was a real practitioner of sustainability – Mattias Andreassen, head of property management IKEA. Mattias said that IKEA has at the moment 1,6 mio sqm of properties in Russia and they all are going green. IKEAs reasons to be green:

  • Better space for kids tomorrow
  • Do something for the planet
  • Marketing difference / advantage
  • Profit

This year the world`s greenest IKEA was open near Copengahgen and the green issues became the key sales point. IKEA Russia has developed internal sustainable principles, which they are going to implement to all their buildings and this principles would prepare them to receive BREEAM certification at any moment of time.  

Hans-Goran Goransson energy manager of IKEA explained how IKEA’s renewable energy strategy works.

“Energy prices rise as fossil fuel is a limited resource, as soon as we think of renewable energy, the energy price would be low, as the energy will be unlimited” – claimed Goran. Implementing renewable energy strateies provides us with the security to our business, as retail is one of the biggest energy consumers (cost of electricity is 80% of all utility costs). Lightning of shops creates 40% of energy consumption. New LED technologies are able to reduce electricity consumption by 80-90%.

IKEA aims to achieve energy saving through:

  • More efficient operation
  • Implementation of better lighting solutions
  • Alternative energy sources: biomass (already installed biofuel boiler in Nizhniy Novgorod), snow cooling (collecting snow in winter, use it for cooling in summer helps to save up to 95% of energy), heat exchange pumps, solar technologies.

Mattias also mentioned, that due to utility connection costs in Russia, 20% of energy savings provide them with 20% of expansion potential as they do not have to bear the capital cost of utility connection.

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Program of event