The green rating system for buildings, originally, conceived as a market based voluntary system, is now becoming a proxy for regulations. This demands serious evaluation of intended benefits and unintended consequences. There is growing obsession among the state governments across the country to offer sops of extra and free built up area and fiscal incentives to push the developers to opt for green rating of buildings. State governments are doing this without setting up independent, transparent and accountable oversight system for monitoring of the actual resource savings and environmental performance of the green rated buildings. At the same time the rating is confined to very small numbers of buildings and not capable of influencing the 60 per cent of India yet to be built.

In itself green rating of buildings is an important market based instrument expected to stimulate market demand for resource savings and efficiency. Private voluntary rating systems are based on established criteria for energy and water savings, waste minimization, green areas and site planning. This helps to disseminate green building practices. Developers also see a ‘reputational advantage’ in marketing improved environmental performance of buildings. Aware consumers can also accelerate the change.

However, questions arise when regulators begin to look at rating systems as a regulatory tool to promote sustainable building practices. As rating system include wide range of sustainability criteria related to water, waste, energy, material, green spaces and site, that are often difficult to package as a single regulatory instrument for enforcement, policy makers find it attractive to provide policy backing to voluntary private rating systems. But as a policy tool, it raises crucial questions related to scale of application, effectiveness of implementation and compliance strategy to ensure real resource savings from rated buildings when in use. If this is not addressed, it will only stoke business interest in rating without commensurate environmental benefits.

Several state governments are providing support for adoption of rating. Noida in Uttar Pradesh allows 5 per cent extra floor area ratio (FAR) to projects which sign up for green rating. 60 per cent of all projects in Noida are availing of this incentive. West Bengal has notified 10 per cent extra FAR as incentive for GRIHA an IGBC rating. Bhubaneswar grants extra 0.25 floor area ratio as an incentive to developers for ECBC compliance. Rajasthan allows 5 per cent extra FAR for 4-5 star rated buildings etc. Maharashtra cities of Pune and Pimpri Chinchwad instead of giving incentive in the form of extra built up area it has opted only for fiscal incentives that can be withdrawn if needed. This is a better practice than giving the extra built up area as once constructed it cannot be undone if found underperforming.

On the other hand, the Union Environment Ministry and several state governments allow fast track environmental clearance to buildings that are pre-certified for GRIHA and LEED. But there is no legal system in place to hold developers accountable for actually undergoing and completing the rating to get the final environmental clearance. These schemes suffer from weak penalty for non-compliance. Only Mumbai instead of giving incentives it is working on green code for all buildings. The Maharashtra system can be further improved to be more explicitly linked with the actual performance.

Reality Check

This trend towards regulatory support for green rating of buildings has made it necessary to review the impact of green rated buildings on actual resource savings during building operations. But this system is opaque.There is very little information in the public domain on the green measures, costs and paybacks. As a result, public understanding of green rated buildings and their benefits remains poor. Responding to this public concern, the Indian Green Building Council (IGBC) volunteered to share the energy and audit data of the buildings rated by them under the LEED rating programme a few years ago. GRIHA shares limited data on the grounds that that they are contractually bound not to share the audit reports of projects.

Sometime ago the Centre for Science and Environment reviewed the data put out by the IGBC on energy consumption of large commercial buildings that were rated and awarded silver, gold and platinum rating, under the LEED green rating programme. It found several of these buildings to be grossly underperforming. Several of them – one third – could not qualify even for the one star label under the energy star labelling programme of the Bureau of Energy Efficiency (BEE) that ranks buildings based on their operational energy efficiency. The purpose of this analysis was to find out if the rated buildings, once they are operational, can meet the requirement of the energy star labelling programme of BEE.

This has serious implications. State governments are giving extra free built up area without independent official monitoring and oversight of actual energy and resource savings in green rated buildings. As mentioned earlier, several state governments including West Bengal, Noida in Uttar Pradesh, Rajasthan, Punjab among others have promised extra built up area to the developers and put the entire onus of monitoring and certification on rating agencies. Currently, both Pune and Pimpri Chinchwad offer discount on premium paid by the builders to municipality and rebate on property tax paid by the owner of the green rated buildings. The quantum of incentive is variable according to the number of stars under GRIHA rating. Even one and two star rating gets some incentive. There is no provision for penalty for underperforming. After the final rating is awarded based on the one year audit there is no further requirement of periodic audit after the building becomes operational.
In response to a RTI from CSE the Noida authority responded saying that they have no official record of how many buildings have availed of green buildings incentives. There is no official oversight. State governments that have given incentives do not maintain record of green credentials and resources and energy savings of these buildings enjoying the official incentives. Thus, governments are giving incentive for green building without keeping any record on their actual performance.

The compliance is based entirely on self reporting by builders and rating agencies without independent official oversight. Even penalty for underperformance is linked to self reporting. Thus, green rating is becoming a proxy for green building regulations without any official system of monitoring of the green credential and actual resource savings. This can lock in enormous inefficiencies and resource guzzling and negate the benefits of green rating at an enormous cost to the government. The incentive of 5 per cent extra free FAR in Noida is costing the civic body anywhere between Rs 16 crore to Rs 60 crore based on the current circle rates and the area that qualifies for incentives.

This trend in underperformance is quite consistent with the global trend. Even in the US, where LEED rating has originated, the LEED rated buildings were found to be underperforming. But this has led US LEED to reform its system and demand annual audits of all rated buildings. The US Green Building Council -New Buildings Institute study of 2008 showed wide variability in LEED energy performance which was a cause for concern. Of 121 buildings rated 53 per cent did not qualify for star label. A good number did not track energy consumption. In Canada study by the National Research Council Canada, in 2009 shows that on average, LEED buildings used 18-39 per cent less energy per floor area than their conventional counterparts. But, 28-35 per cent of LEED buildings used more energy than their conventional counterparts. This is the challenge of relating predicted performance and actual performance. But the US LEED has further reformed the rating system in 2013 and now mandates disclosure and sharing of water and energy use every year and for at least five years. Otherwise label is withdrawn. India needs to take this up seriously now.

The fundamental question in India, however, is bigger. Why should only a few buildings enjoy incentives for meeting the established green norms for buildings and habitat when law requires all buildings to comply with regulations? An assessment of the requirements and criteria of the green rating system shows that several requirements of rating are also integral part of the legal requirement for buildings clearance and approval process. For example, under GRIHA version 3 rating of buildings get points for meeting rules under the eco-sensitive zone regulations, coastal zone regulations, heritage areas, water body zones rules, and various hazard prone area regulations among others. But these rules are already the minimum legal requirements that all buildings must meet as applicable, irrespective of whether they are rated or not. In fact, any standard building that meets the legal requirement under various provisions of existing laws in India can qualify for two star of GRIHA rating. It is also strange that government’s own energy rating system developed under star labeling of BEE has not been considered for incentive by any state government. In fact, such a practice was initially considered in Punjab, Delhi, Noida but it was eventually dropped.

This, therefore, underscores the fact that incentives should be used only to push the top line of performance and not to promote and create business stake in minimum green measures that should be obligatory for all buildings in any case.

Green buildings will deliver only if there is transparent monitoring system with performance data in the public domain. Disclosure of data on annual energy and other resource usage in buildings are made obligatory by all state governments. The rating agencies are reluctant to share performance data. But any project enjoying support from the government – fiscal or otherwise – should have the obligation to be under scrutiny for performance and be transparent and accountable. Without stringent measure for performance private green rating systems are becoming proxy for environmental regulations and the incentives are becoming a privilege for the few whereas these requirements should be an obligation for all.

The Way Forward

Instead of incentivizing only a few buildings to go for rating, without proper official oversight and monitoring, adopt legally binding green building code for all buildings, link incentives only with top performance and super efficiency. India is locked in a frenzy of construction to meet the demand for homes, offices, and shops. A staggering two-third of buildings that will stand in India in 2030 are yet to be built. Unless policies minimize resource guzzling and wastes with appropriate architectural design, building material, and operational management for the entire building stock, there can be massive environmental debacle in the building sector.

Such a policy opportunity has emerged in India after the recent amendment of the requirements of environmental clearance for building sector by the Ministry of Environment and Forests and Climate Change in 2016. Now all buildings with more than 5000 square meters will need to obtain environmental clearance for building approval and certification from the urban local bodies. This is an important opportunity to reform building byelaws to introduce a range of sustainability criteria that becomes part of building approval and certification system. This can scale up application of green norms across building stock. Andhra Pradesh has already taken to lead to reform its building byelaws for such a clearance process.

Message is clear. Only a few green rated buildings will not make a green movement. Comprehensive regulatory framework is needed to ensure that all resource intensive buildings remain resource and energy efficient when in operation. This requires a legal framework for post-construction performance, accountability and transparency to ensure that the buildings remain high performing. All cities must have regulations and oversight system for monitoring of actual performance of buildings; link incentives and penalties not only with the design of buildings but also with operations and performance. Make it obligatory for all buildings to disclose publicly the data on annual energy and water usage along with the built up area. Set quantifiable performance targets for different building typologies to reduce overall energy intensity and resource consumption over time. Introduce mandatory energy and water audit and consumption based energy and water billing to improve operational efficiency of all buildings.

Unlike the developed world, the challenge in India is not to retrofit the already built to make it green; but to build new, which is efficient, sustainable, affordable and comfortable for all. This will have enormous impact on the quality of urban space; water and energy resources in cities; and waste generation.

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