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Governments

  • In addition to incentivizing the market, governments can endorse a green building certification system such as EDGE.

What popular incentives can governments put into place that encourage green development?

Governments can adopt from a wide variety of incentives – some of which are cost-free – to stimulate green building growth. Depending on the level of ambition, the development of an entire green building value chain can be triggered with benefits that trickle down to residents, as exemplified by Singapore. Property tax incentives, height bonuses and expedited permitting are among the most effective ways to make green design economically viable for developers. But there are other options as well.

In addition to incentivizing the market, governments can endorse a green building certification system such as EDGE, embedding it in the building permitting process. The EDGE software can be used to achieve a minimum standard of 20 percent less energy, water and embodied energy in materials, with certification guaranteeing an independently validated approach.

10 Ways to Encourage Green Building Growth

  1. Property Tax Incentive – Offer a lower property tax rate to developers for one or more years to offset the extra costs of building green.
  2. Height Bonus – Allow developers to increase the height of their buildings, either as extra floors or a percentage of total floor area.
  3. Expedited Permitting – Limit the permitting process to a minimum number of days for green construction.
  4. Reduced Permitting – Waive or partially reimburse permit fees for developers who certify their projects green.
  5. Grants – Incentivize solutions such as solar power by providing block grants to cities and states. Or grants can go directly to developers to subsidize the cost of certification.
  6. Loan Programs – Set up a loan fund at the central bank level so developers who build green can receive reduced interest rates.
  7. Technical Assistance – Train planners, building inspectors and other government staff how to qualify green building design with a software solution such as EDGE. The EDGE technical team can help.
  8. Net Metering – Work with utility companies to enable building owners to generate renewable energy to the grid, resulting in carbon positive buildings which can be certified with EDGE.
  9. Public Campaigns – Generate public support through advocacy efforts. Work with utility companies to build evidence of results and communicate successes to the public.
  10. Green Building Legislation – Bundle a certification standard such as EDGE directly into a new set of green building codes.

Case Study: A municipality in Lima incentivizes resource-efficient residences with green roofs and visibly prominent gardens.

San Borja, a residential district in the capital of Peru, has passed an ordinance (610-MSB) that allows property developers to build three or four stories higher depending on the zone. The taller apartment buildings must be set back from the curb, planted with green roofs and gardens that are at least 50 percent visible by pedestrians, and certified green. The ordinance was socialized extensively with property developers prior to passing to ensure a collaborative approach.

The result is an entirely new style of architecture without incessant glass, where dozens of EDGE-certified buildings are coming onto the market advertised as green to showcase their value. The initiative, which has been widely supported by the Peruvian Green Building Council and EDGE Experts, won the Creatividad Empresarial award from Mayor Marco Álvarez in recognition for the district’s entrepreneurial approach to encouraging green buildings. The strategy demonstrates the powerful interaction when the public and private sectors work together to incentivize green buildings for the benefit of citizens and the environment.

Governments are starting to pass progressive legislation to spur green building growth in emerging markets.

Select an area that interests you to discover what incentives the government is offering to make a difference in shaping their future built environment. You can also download the Government Incentives for EDGE chart.

Bangladesh – Discounted Financing Rate

City:
All

Building Typology:
Light Industry

Government Entity:
Bank of Bangladesh

Incentive:
Discounted financing rate for the extra cost of green measures at 9%. All commercial banks in Bangladesh must offer the 9% rate for green measures (comprising at least 5% of portfolios).

Available Certification Systems:
BREEAM, CASBEE, EDGE, GRIHA, LEED, SREDA

Link:
Refinance Scheme for Green Products/Initiatives

Contact:
manoj.biswas@bb.org.bd

Colombia – Exclusion of VAT and Income Tax Deduction

City:
All

Building Typology:
Residential & Commercial

Government Entity:
National Mining and Energy Planning Unit

Incentive:
Exclusion of VAT (19%) and income tax deduction (25%) for project design services and technical solutions such as insulation and energy-efficient air conditioning systems

Available Certification Systems:
CASA, EDGE, LEED

Link:
Resolution No. 463

Contact:
info@upme.gov.co

Peru – Height Bonus Incentive

City:
Lima (San Borja)

Building Typology:
Residential

Government Entity:
District of San Borja

Incentive:
Zone-based height bonus for two, three or four extra floors.

Available Certification Systems:
EDGE, LEED

Link:
Ordinance 610-MSB

Contact:
alcaldia@msb.gob.pe

Brazil – Discounted Property Tax

City:
Salvador

Building Typology:
Residential

Government Entity:
City of Salvador

Incentive:
Point-based system for a 5%, 7% or 10% discount on property taxes with re-application each year; certification guarantees a 7% discount.

Available Certification Systems:
ACQUA, CASA AZUL, EDGE, GBC BRASIL, LEED

Link:
IPTU VERDE

Contact:
andrefraga_ssa@hotmail.com

India – Extra Floor Area Ratio

City:
Pune

Building Typology:
Residential & Commercial

Government Entity:
Pune Municipal Corporation

Incentive:
3% extra floor area ratio (FAR) for a 30% improvement in energy, water and materials; 5% for a 40% improvement; and 7% for a 50% improvement.

Available Certification Systems:
EDGE, GRIHA, IGBC, LEED

Link:
Incentive for EDGE-Certified Green Buildings by Pune Municipal Corporation

Contact:
info@punecorporation.org

“If I were to give advice to other governments pursuing this, I would encourage them to think about future generations,” says Guillermo Valverde, the Manager of Urban Development for the District of San Borja. “Politicians must understand the future may be far different than the present, so actions must be taken now. It’s our responsibility to adopt a sustainable perspective and acknowledge people’s desire to have a better quality of life through green buildings.”