COP21, Global Affordable Housing and Resilient Communities

Published: Sunday, November 29th, 2015 by Lenora

The 21st Conference of the Parties to the United Nations Framework Convention on Climate Change (COP21 for short), starts tomorrow in Paris. While this may seem far away from the daily lives of the Developing Smart Cities members and readers, I assure you it isn’t. To illustrate how close the talks are to our world, this post is about how housing – and, particularly, affordable housing – matters.

Drivers of building energy use IEA

More households and bigger floor areas are driving building sector energy use (IEA, 2015).

Why do housing developers and investors, especially those in affordable housing have to pay attention? Numbers, for a start. According to McKinsey Global Institute, by 2025, “the global affordable housing gap would affect one in three urban dwellers, about 1.6 billion people.” Formally housing all these households means cement for building, space heating, air conditioning and appliances, all of which requires direct fuel combustion or electricity.

More households and bigger floor areas are key drivers of building sector energy use (see graph above), and residential energy use is a substantial contributor to greenhouse gas emissions (graph below). Global CO2 emissions, which constitute the majority of anthropogenic greenhouse gas emissions, come from the combustion of energy – approximately 75% for developed economies and about 60% globally, according to CO2 Emissions Trends (IEA, 2015).

Governments increasingly recognize these global shifts, as do investors and developers. Developers are increasingly under dual pressure from regulators to meet building codes and standards and from investors who are asking real estate developers more often how they’re addressing energy use and emissions in new and existing developments.

The affordable housing sector – globally, not just in developed economies – is taking notice specifically because of the role of cities in mitigating and adapting to climate change. For more on this, read about Mexico’s EcoCasa program and participating developer Casas Paquime, as well as investments by Germany’s KfW in green affordable housing in South Africa.

Sometimes, the housing sector is responding for reasons having nothing to do with climate change but rather with energy crises, as in South Africa, or anti-pollution measures, as in China. Even so, increasing connections between these factors and climate change will inevitably force developers and investors to take emissions into account explicitly in a nearer future than you may be expecting.

The factors that are going to be discussed at COP21 and their relevance to housing divide up roughly into climate change mitigation and climate change adaptation.

Composition of CO2

Residential CO2 emissions make up a substantial proportion of total CO2 emissions (IEA, 2015).

Climate Change Mitigation and Affordable Housing. On the mitigation side, the main issue is emissions. Residential energy use in emerging and developing economies has grown fast, especially in emerging economies, with greater wealth, higher population, more floor area for housing, more demand for air conditioning and a wider range of appliances.

CO2 emissions from the residential sector constitute 17% of total emissions. This doesn’t take into account emissions that were generated by fabrication of building materials or construction of buildings.

CO2 emissions don’t exist in a vacuum. Energy use in housing has health and equity implications. Air pollution from use of cheaper fuels, like biomass, coal or heating oil, affects residents’ health. Poorer households are more vulnerable to housing built of cheaper materials. Residents may be colder in the winter and too hot in extreme summer temperatures as a result of building approaches.

This is where on-site renewable energy, energy-efficient building standards and retrofits enter the picture. Development finance institutions have funded projects that finance basic retrofits and energy efficiency improvements. Solar PV costs are becoming more accessible, as is geothermal in some places. Studies globally in developed and developing countries (see Health Co-Benefits of Climate Change Mitigation – Housing Sector by the WHO) illustrate that energy efficiency initiatives have positive health effects, like lower incidence of respiratory diseases, as one of many examples. Increasing green areas and other ways of diminishing the urban heat island effect are similarly important for delivering counteracting cooling effects.

Climate Change Adaptation and Affordable Housing. While governments will work to avoid more than 2 degrees of warming at COP21, adapting to increased climate risks is already a pressing topic. Developed and developing economies alike are dealing with the effects of extreme heat and weather. Droughts in California and in Sao Paulo, Brazil have made home life tough as a result of efficiency measures, which have meant water bill increases, fewer showers and more. Typhoon Haiyan (or Yolanda, in country) flattened parts of the Philippines and revealed the shortcomings of both informal and formal housing, as well as how resilience helps places like the Philippines recover faster than more vulnerable places.

Regulators and planners are starting to recognize that design, planning and project execution need to anticipate extreme climate hazards. Engineering companies involved in slum redevelopment projects have to address these issues as much as residential developers. While informal settlements and poor urban communities are generally more vulnerable to floods and landslides, this peril isn’t specific to them.

Land and siting factors, as well as infrastructure and services, figure prominently. When developers of affordable housing move to lower cost land at the peripheries of major cities, land may be flood-prone, which may suggest a need for stilts, water pumps and additional efforts on water drainage and sewer infrastructure. A low cost housing community may be in a drought-prone area, requiring water-efficient fixtures or rainwater collection.

This great ICLEI blog post talks about responses to risks of fires, landslides, drought and floods. Communities and governments have collaborated on everything from natural terracing to shore up precarious hillsides to building vegetable gardens and water basins. Smart developers will have to consider a range of measures that may include materials, design, location and planning features, as suggested in this blog post about United Architects of the Philippines’ recommendations for making housing more typhoon resilient.

Opportunities and Investments. One of the oft-heard complaints about green building in affordable housing relates to cost. Indeed, some improvements entail higher costs, but others require not much more than advance planning and integration of these goals in early design stages. As we move forward, expect to see governments favoring developments that have explicitly taken climate change and climate risks into account. This may come in the form of favorable financing terms or processes, technical assistance for greening projects, or new building codes and standards. Either way, developers’ early investments may be offset by other lower costs.

Look for investors to be more cognizant as well. Green bonds issued by municipalities are already including energy efficiency retrofits and new green construction for social housing among their planned uses for capital raised in these new debt instruments. In fairness, this second phenomenon is already happening among investors most allied to development finance institutions, environmental, social and governance integration and impact investment. It will take longer for the mainstream real estate investment world to catch up.

Let us know how your firms and projects are responding to the demands of climate change here. We would love to feature your projects and show the world how housing innovation is responding to the challenge of climate change. Get in touch here with your story.

Sources:

International Energy Agency (IEA) and the International Partnership for Energy Efficiency Cooperation (IPEEC). Building Energy Performance Metrics. 2015.

International Energy Agency (IEA). Capturing the Multiple Benefits of Energy Efficiency. 2015.

McKinsey Global Institute (MGI). Tackling the World’s Affordable Housing Challenge. October 2014.

World Health Organization (WHO). Health Co-Benefits of Climate Change Mitigation – Housing Sector. 2011.