Friday 12th April 2019
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New Zealanders are largely unaware that having an energy efficient, sustainable home could have a significant impact on our emissions targets. They just think green equals too expensive.
That’s one finding from a survey commissioned by ANZ Bank and released today.
The survey, conducted by researcher TRA, showed the biggest barrier to people choosing a sustainably-built home was cost. However lack of knowledge and understanding played a big role.
Asked what actions could have the biggest impact on reducing climate change, 62 percent of respondents talked about reducing packaging and other waste. Driving or flying less was cited by 36 percent and 32 percent of participants respectively, while 24 percent pointed to eating less meat.
They didn’t talk about having an environmentally friendly home.
Speaking at the Green Property Summit in Auckland yesterday, Climate Change Minister James Shaw estimated buildings contributed to about 20 percent of the country’s emissions, when you include emissions from construction, and the waste to landfill.
“Better buildings means less carbon, less waste, less water use, less toxic materials, more resilience to climate change and the effects of climate change, more sustainable building materials, and more healthy people,” Shaw said.
ANZ has today launched a discounted home loan package for houses with a Homestar rating of 6 or more. Homestar is the residential building standards tool run by the not-for-profit Green Building Council. It measures the health, warmth and efficiency of New Zealand houses on a scale from 6 to 10.
If the scale was to continue downwards, many existing New Zealand homes would score 2 or 3. Even new, building code-compliant houses are often only rated 3 or 4, the council says.
The ANZ loan package includes a 0.7 percent discount off its standard fixed home loan rate, 1 percent off its floating and flexible home loan rates, and fee waivers across a range of accounts.
However, the bank is calling its deal a “healthy home loan package” rather than a "sustainable" loan. TRA research showed many New Zealanders were interested in getting a “healthy” home, but not a “sustainable” one, and people didn’t realise the criteria for the two were often the same.
Antonia Watson, ANZ’s managing director of retail and business banking, says it’s not widely understood that when it comes to homes what’s good for our health is also good for the environment.
"If we want people to build higher quality homes, we need to be talking up the health benefits of those homes – rather than just the sustainability ones.”
The idea of building sustainably is not mainstream here yet, Watson says.
“It’s viewed as an expensive luxury, rather than the basic standard it should be. Our housing market will gradually catch up with international standards, but we don’t want to wait for that – we want to create better homes now.”
Other presentations at the Green Property Summit suggested the focus on the additional cost and the payback time for sustainable homes was hampering green building.
The Green Building Council has calculated that it costs about 1.5 percent more to build a three-bedroom house meeting the 6 Homestar rating, compared to a similar house built to New Zealand’s slack building code. Once built, a 6-star home costs about $500 less a year to run.
That suggests it could take 30 years for a homeowner to recoup the additional cost for a $1 million home, for example.
In addition, quite a few New Zealanders think sustainable features will make it more, not less expensive to run their home. The TRA survey found 20 percent of respondents think that in the long run solar panels will add cost to the future running of their home; 30 percent think using eco-friendly building materials will do the same.
Even with the right numbers, Watson says talking purely about payback is a short-sighted view.
“Overseas we see sustainable houses selling more quickly and tenanted more quickly. They also sell for a premium,” she says.
Davina Rooney, general manager of sustainability for Australian property developer Stockland, agrees.
She says people like living and working in sustainable buildings - and that should be factored into an investment decision.
She gives the example of two similar Australian commercial buildings recently put up next to each other. One was a Stockland building with a high Green Star rating. The other had a low rating.
The sustainable building was fully-tenanted almost immediately after being completed; the other one stayed partially empty for some time.
Watson gets that - from a personal as well as a commercial perspective. She and her partner have just completed a Homestar-rated house north of Auckland.
"I can tell you that a north-facing, solar-powered house with thermally broken insulation and central radiator-powered heating is a lot more pleasant to live in than a cold east-
facing villa in Mt Eden."
Meanwhile, Watson says there are increasingly more funding options for companies interested in sustainable construction - although New Zealand is still catching up with other countries.
Watson says a number of investors are now looking at environmental criteria when they make decisions about where to put their money. This will act in favour of construction companies and property developers choosing green buildings.
She pointed to five funding models for green buildings:
Green bonds are the most common method of raising money in the green finance world, Watson says. The proceeds of the bond are used to finance or refinance the green assets of the issuer. Since the first bond was issued in 2007, the market has grown to more than US$160 billion of issuance in 2018, and is expected to hit US$250 billion this year.
Green loans follow the same principles as green bonds but are potentially open to a bigger market because they are more flexible, don’t require an investment-grade credit rating and have a lower establishment cost.
Sustainability bonds or loans raise money for a combination of green and social projects, businesses or assets. For example, Housing NZ last week announced a $500 million sustainability bond to help fund investment in social housing. ANZ is the lead manager of the bond issue.
A ‘green borrowing programme’ covers a company’s entire funding needs – rather than just one project. Contact Energy has developed a $1.8 billion green borrowing programme for its renewable generation and green assets.
Sustainability linked loans, which have yet to arrive in New Zealand, see the loan proceeds used for general corporate purposes. However, how much is paid for the loan is determined by the company achieving certain environmental, social and governance targets.
Watson says ANZ recently signed a sustainability-linked loan with Adelaide Airport - the first of its kind in Australasia. Under the terms of the loan, the airport is incentivised to improve its sustainability performance against a set of environmental, social and governance criteria, Watson says.
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