Green Buildings in China : Aspirations VS Realities

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The Chinese Government has set an ambitious target to have 30% of newly constructed building spaces that comply with the China’s Three-Star System, a local green buildings rating tool, by 2020. However, a set of issues remain unsolved as opposed to its aspiring plan.

Entitled ” China’s Green Building Goals: Aspirations and Realities”, recently hosted an exclusive breakfast meeting in Shanghai to explore the realities of China’s adoption and readiness to embrace their green building targets under the current circumstances. It is attended exclusively by the senior executives of Solidiance and the world’s leading construction materials companies, i.e. Dow Corning, FLUOR, Rockwool, Bluescope Steel, Bosch, Schindler, etc.


The dialogues being exchanged during the meeting yielded some key takeaways as follows:

How strong is the Government’s push?

China is currently the third largest LEED market globally, with more than 1,500 registered and certified LEED projects accounting for over 67 million gross square meters in China alone. This achievement is mainly driven by the strong enforcement applied by the Government through their mandates supported by various subsidy programs.

According to China’s 12th Five Year Plan, by 2015, 20% of all newly constructed building spaces must meet the Chinese “Green Building” standard. To support this, started in 2012, the Government gives an 80RMB/square meters for a Three Star rated building and a 45RMB/square meters for a 2 Star rated design from the Chinese government.

Green retrofitting demands are increasing, yet challenges remain

Heiko Bugs, the Partner Asia of Solidiance who was being the panelist of the breakfast meeting, stated that aside from the burgeoning new construction demands,  potentially in five years from now, the renovation market will kick in.

“There is a tremendous housing stock in China by now, and eventually this will have to be tackled and will have also to be addressed and converted into a more sustainable form of living,” Heiko said.

However, there’s only approximately 10% of green renovation from the total current projects, and there hasn’t been any subsidy allotted for it yet. The retrofit in the public spaces is also now facing difficulties i.e. reluctance from the occupants/tenants due to the increased rent cost incurred by the green renovation.

Multinational enterprises dominate the market

Regardless of the strong push from the Government, a lack of proper capacity and skill set for green building concept in the market still exists. This opens up an opportunity for foreign players to excel – as a result, the multinational companies currently take the biggest portion in the market, utilizing the knowledge they brought from abroad.

However, according to the world’s leading construction materials manufacturers participating in the discussion, the profit they acquire from green building demands is still humble. It therefore becomes questionable whether it’s worth the efforts to put money and resources behind the green building agenda.

Hence, in most of the cases, the foreign players are pursuing green initiatives solely as for a corporate social responsibility scenario to enhance their company branding.

Conquering the China’s green buildings market

The local government organizations may actually come handy at this point. Although they might not help provide a significant increase of the foreign companies’ margins, but the local edge they possess may help promote the business doing green to be exposed and conquer the Chinese market.

Another issue existing in the market is the misinterpretation of the green buildings cost. Many assume that the cost of building green is expensive, as opposed to the fact that there’s only approximately 5% of the total building cost being accrued when they’re actually building “green”.

This can be potentially tackled by finding a finance partner (local or not) to fund their green building efforts which may result a mutual benefit. The extra money spent to obtain green certification will be eventually paid off through improved energy savings that would be acquired within a few years.

To date, only less than 1% of construction building projects in China that have met the targeted green buildings standard. At the end, this poses a question of whether the country will achieve the compliance of their own target, additionally with the prospect of hyper-inflating a market that may not exist today or in the short term. ( – SA)

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