The cost of creating a greener future

Twenty-eight-year-old banker Wang Ning bought an apartment for his parents in Shanghai a year ago. Unlike regular apartments in China, this one boasted "organic" credentials and constant temperature and humidity levels all year round thanks to a "ground source heating pump system".

"This apartment was a little more expensive than others in the same neighborhood but, for elderly people, the right temperature and humidity and also fresh air mean a lot," said Wang.

The couple did not need to install air conditioners in their new home, saving a lot in electricity bills. In a city where temperatures rise as high as 40 degrees Celsius in summer and fall below zero in winter, Shanghai is often short of electricity.

Landsea Group Holding Ltd, the company that built the apartment, is a leading real estate developer in China, specializing in building energy-saving and environmentally friendly communities.

Reliant on its ground source heating pump system, fresh air replacement and ceiling radiation, as well as the use of solar power, the apartment provides a comfortable living environment, with lower use of traditional resources such as mains electricity.

"The idea of green construction is still pretty new to most Chinese people, but most of our clients are well-educated people with high incomes. Some have experienced living abroad," said Xie Man, the sales manager at Landsea Enjoy Green, a cluster of residential buildings located in northwestern Shanghai's Nanxiang county.

The buildings have been on sale since the beginning of last year at a price of about 21,000 yuan ($3,300) a square meter. Seventy-five percent have been sold, leaving more than 100 apartments available.

"The scientific system in our buildings will push up the price by 2,000 to 3,000 yuan a square meter," Xie said. Some people are happy with that because they want a comfortable temperature and humidity and are concerned about air pollution.

Under the current Five-Year Plan (2011-15), China explicitly stated that constructing green buildings is one way of meeting the target of reducing energy consumption by 16 percent and carbon emissions by 17 percent for every unit of gross domestic production by 2015.

China set an ambitious target to make 30 percent of the country's new construction green by 2020, according to a document jointly released by the Ministry of Finance and the Ministry of Housing and Urban-Rural Development in early May.

It was the country's first announced goal for the development of green buildings.

The document said authorities will adopt measures including increasing policy incentives and improving industry standards, as well as promoting technological progress and the development of related industries, in order to attain the goal.

The document also specifies a goal of bringing China's building energy consumption ratio closer to that of developed countries by 2020.

According to an evaluation standard for green buildings released by the ministries, green buildings require construction projects to save as much energy, land, water and materials as possible throughout their life cycle to protect the environment and reduce pollution.

Analysts said the move indicates that the green construction sector will be an economic breakthrough in terms of spurring growth and play a large role in the country's energy-saving efforts.

Green buildings will receive subsidies of 45 yuan to 80 yuan a sq m, according to the new policy.

"The subsidy means so much to the industry. It will be a boost, with the central government, local governments and property developers all shouldering part of the cost of green buildings. And green buildings will repay their cost during their life cycles," said Wang Wei, vice-chairman of Shanghai Green Building Council.

Zhang Shaochun, deputy minister at the Ministry of Finance, said the new policy will leverage a green market with trillions of yuan because developing green buildings will effectively drive the growth of new building materials, new energy and related service sectors, Xinhua News Agency reported.

"It is a great opportunity for Landsea because we are committed to building green homes, which we believe is the direction for real estate development in the future. We have been a leader in concepts and technology in this respect," said Du Zijian, senior planning manager at sLandsea.

It is not only Chinese companies that are targeting this market.

Bayer MaterialScience, a leading global material manufacturer, is constructing a zero-emission building in East China's Qingdao city in Shandong province.

Buildings are responsible for 40 percent of energy use and almost one third of greenhouse gas emissions worldwide. China has an ambitious target to meet in terms of reducing carbon dioxide emissions and energy consumption. "We want to demonstrate sustainable buildings can help the country reach the target being set by the 12th Five-Year Plan and that solutions are locally available," said Michael Voigt, head of the eco-commercial building program for China at Bayer.

"China is a really important market for Bayer MaterialScience. We are expecting more and more demand for high-performance materials and solutions in the construction industry," Voigt added. His company is joining China's real estate company China Vanke Co in developing a green building park in Fangshan district, Beiijing.

However, Voigt pointed out that the construction cost is comparatively higher for building eco-commercial buildings and the Chinese real estate industry "currently realizes its business value primarily from sales rather than from the quality achievements of buildings".

In the value chain of construction, especially in China, there is a situation that the occupier, the party that has to face the high operational costs borne by the structure, is mostly disconnected from building layout decisions, he added.

In order to recognize a sustainable building's full economic potential, its complete life cycle needs to be assessed, in which the saved energy and resources should be calculated, Voigt said.

The actual operation of green buildings is crucial. Energy efficiency cannot only be achieved through design but should be calculated and assessed during the life of the building, said Wang.

"Problems of operation exist widely in China's green buildings. In fact, only few of them reach the official standards after a year's operation," he added.