Ladies and gentlemen,
A journalist recently asked who of the following three stakeholders has the biggest role in combating climate change: the politician, the researcher or the practitioner. This is an easy one to answer: All three of them – and many others, too!
In our panel today, we’ll have an excellent introduction to some of the most recent research results supporting our work. However, as a political decision-maker myself, I am fully aware of the great expectations and responsibilities put on my and my colleagues’ shoulders here and at home. This is the perspective from which I would like to talk to you today.
It has become quite clear that there is no government – be it in an industrialized or a developing country – that can leave buildings out of its policy toolbox, if it wants to save energy and reach serious emission reduction targets.
The fact that alarmed us some years ago is that 40% of all energy is consumed in buildings, which translates to about 30% of all greenhouse gas emissions. You have probably all seen the table in the 4th assessment report of the IPCC (Intergovernmental Panel on Climate Change) in 2007, comparing the emission reduction potential of various sectors, and the related costs. This table made it strikingly clear that buildings are like the “low-hanging fruit”, where the huge emission-savings potential is by far the cheapest to implement. – But why has this fact not yet been translated into more action?
[PARTICULAR CHARACTER OF THE REAL ESTATE AND CONSTRUCTION SECTOR]
Some time ago it was trendy to compare the construction process of buildings to the manufacturing of automobiles. Unfortunately, the similarities are quite limited. The lessons we could learn from cars are: need to measure their energy consumption, the need to maintain them in good shape, and the need to recycle the materials.
In contrast to cars, the process of financing, commissioning, designing, constructing, using, operating, maintaining and refurbishing buildings is much more complicated. It is also a very long process, anything from 20 to hundreds of years. This means not only that several different actors and professions are going to be involved, but also that the owner, the user, and the operator of a building do not always share the same priorities. In order to have an impact, we have to address several different stakeholders and have input at several stages of the process, starting from the land owner and ending up within the caretaker of the building.
Another important fact is that the construction of a building is not the most crucial phase in terms of its energy consumption. I certainly do not want to underestimate the considerable emissions from the production of construction materials. Rather, I want to remind you that the focus of our attention should be on the operational phase of the building. That is when 80% of the energy is used. Thus, any decision taken today on how buildings and cities are built will have a long-term impact. The other side of the coin is that we cannot focus on new construction only. Existing buildings also need to be refurbished so that their energy consumption is reduced radically. Old buildings are truly the “low-hanging fruit”.
[LAND USE AND MOBILITY]
When real estate agents are asked what the three most important factors are determining the price of a building, their famous reply is: Location, Location, Location. This applies in some extent also to energy consumption. Even if the building fulfilled every conceivable energy efficiency requirement, but was located in a place that can only be reached by private car, much of the “greening” efforts would be in vain.
Land use and transport solutions are crucial for climate change mitigation. Every effort to improve the energy efficiency of the built environment has to confront the challenges of urban sprawl and mobility. Building codes alone will not do the trick. I’d like to stress this point because, as we know, the level of urbanization has globally recently reached the 50 % watershed. Urbanization will continue to expand rapidly. It will touch upon the lives and energy consumption patterns of hundreds of millions of people, who are going to move to urban areas which have not yet been built. One of the crucial questions of our time is how to mainstream sustainable use of energy as a key principle of urban development.
I have now painted for you the ”bigger picture”, that is, the framework within which we’ll have to act urgently. And it is, beyond a doubt, a broad field, as it includes issues such as: new construction, building maintenance, refurbishment, land use, and mobility planning. Let me now point out some policies in Finland’s energy efficiency tool box.
Climate change mitigation can be supported by a great mix of policy measures. One way to categorize the tools is to see them as either demand-driven or supply-driven, aiming either at the consumer or the producer. As consumers’ awareness grows, they will be able to make more educated choices. As a result, the producers will have to react to consumer demand. The market can also be a good driver for those innovative companies that want to become forerunners in their fields. These are the ones who will develop their products and services based on future demand. At the same time, the public sector can push development with regulatory policies – in new construction, in particular – and with various financial and taxation tools. The policy toolbox has to include all kinds of instruments.
At the regional level, we get direction from the European Union. In Finland, the energy efficiency of new construction has improved rapidly due to the tightening of specific regulations. Energy consumption for heating of new buildings has been reduced by over 50 % during the last 30 years, and the trend will continue.
We hear a lot of talk about “green” or “sustainable” building. What we need now is a common understanding of what these concepts mean. Even if the challenges are global in many ways, national building evaluation and certification systems are necessary.
I’ve already mentioned awareness-raising. In our experience there is one tool that gets the attention of real estate owners better than anything else: an energy audit which includes recommendations on how to refurbish. In the EU, energy audits have served as a basis for developing mandatory energy certificates. In addition, my ministry is working on a comprehensive web portal to provide user-friendly information for renovation and maintenance. Since buildings have to be renovated from time to time, it makes economic and environmental sense to improve their energy performance at the same time.
When we discuss energy consumption, our main concern is fossil fuels. Increasing the share of renewable energy in heating, cooling and electricity supply is one part of the equation. Finland is going to follow suit and enact Feed-in-Tariff legislation, which, we hope, will support a quantum leap in using renewable energy sources. Our final goal is to have buildings that produce all the energy they need.
Money talks. But also financial and fiscal tools also can help even if one should not forget that better energy efficiency always results as a lower energy bill for the owner or user of the building. Increasing the energy efficiency would be wise even if the climate change would not exist. In Finland, government grants and tax credits for domestic work can be used for energy renovations. In addition, the government is tackling the present economic recession with a recovery package which, among other things, contains grants for improving the energy efficiency of buildings. Another potential tool is my initiative to link the level of real estate tax with the energy efficiency of the building – ”the better the efficiency, the lower the tax rate”.
Ladies and gentlemen,
This was just a glimpse of the vast array of policy instruments to mitigate climate change. As a Minister of Housing, I have put the climate challenge on the top of my political agenda. We are working hard to develop new policy responses. I call on everybody to work with us and to share their experiences, since construction truly counts for climate – as the title of our event suggests.