Green policy makers and leaders of environmental organisations are often called out for not practising what they preach, particularly by flying to conferences or remote holiday destinations. It is a lesson city authorities can learn from. By renovating public buildings like schools, offices and hospitals to reduce energy wasted, cities can walk the talk and showcase to citizens the wider benefits of climate action
GOOD FOR THE HEAD
Renovating an office building to reduce its carbon emissions can increase productivity by 12% _
GOOD FOR THE HEART
The average length of stay in hospitals can be reduced by around a day with a societal benefit of nearly €50 billion if the building is renovated to reduce energy consumption
KEY QUOTE
“Reducing energy waste in city buildings and the associated greenhouse gas emissions improves the resilience and health of a community as a whole.”
The need to walk the talk is at the heart of the energy transition. Cities aiming to lead on carbon neutrality have the perfect opportunity to do just that by renovating their own building stock. Actions to reduce energy use in hospitals, schools and offices owned by local government authorities mean fewer greenhouse gas emissions and are a good way for cities to showcase the benefits of the energy transition for people’s wallet, health and comfort. The World Green Buildings 2018 report cites a “lack of public awareness” as one of the main barriers to energy efficient construction and retrofits worldwide. By renovating public buildings and shouting loudly to citizens about the gains, ignorance is a problem that can be overcome. Three building types — hospitals, schools and offices, many of which are owned by the public sector — account for nearly half of the total floor area of non-residential buildings in Europe. The vast majority need to be renovated to reduce their energy use in line with the goals of the Paris climate agreement and to meet city targets for carbon neutrality. Investing in building renovation also greatly improves the health, well-being and productivity of European citizens, says a study by the Buildings Performance Institute Europe (BPIE), a not-for-profit think tank. The study finds that a “holistic people-centric renovation” of an office building can increase productivity by 12%. Across the 28 EU member states, that increase could be worth up to €500 billion. Students studying in schools with optimal indoor climate conditions achieve the same results two weeks faster than their peers stuck in buildings that are too hot or too cold. Indeed, optimal temperature, lighting, noise levels and air quality can improve students’ academic performance by 2-8%. Similar gains are seen in hospitals. Patients’ recovery time can be reduced by 10% by improving indoor environmental quality and by 11% by providing optimal lighting. In short, the average length of stay in hospitals (currently over a week) can be reduced by around a day with a societal benefit of nearly €50 billion, says BPIE. All are co-benefits of renovating buildings to reduce their energy consumption. “There is a tremendous potential for greater investments in efficiency in public buildings — investments which are absolutely necessary to help solve the climate crisis — but those investments will at the same time deliver significant improvements to people’s quality of life,” says Mirella Vitale from Rockwool Group, a Denmark-headquartered company producing building insulation. 
CROSS-FERTILISATION Energy efficiency and its benefits all sounds very good in theory, but as BPIE concludes, the impact of buildings on people’s health, well-being and performance is not well-defined, measured or monetised. C40 Cities, a UK not-for-profit organisation, and Rockwool have together created a tool to help cities demonstrate the impact and benefits of renovating portfolios of public buildings in terms of cost, emissions reductions and job creation, and the kind of renovation most effective from a cost and wider benefits approach. C40’s Honorine van den Broek d’Obrenan explains one benefit of the tool: “It is useful for different city departments, such as health, energy and environment, which usually do not communicate with each other,” she says. The need for experts with different competencies to work together to ensure the best energy efficient measures for new and old buildings is vital, agrees Susanne Dyrbøl, public affairs director at Rockwool Group. “For cities to be able to plan for and maximise the multiple benefits from energy renovation they need to increase cross-department cooperation. The social or health impacts of retrofitting public buildings are rarely given much thought by technical departments focused solely on energy savings.” In the US, the City Energy Project, a joint initiative of two non-profit organisations, the Institute for Market Transformation and the Natural Resources Defense Council, partnered with 20 local governments across the US from 2013–2018 to design locally appropriate energy efficiency policies and programmes. A report published at the end of the project agrees that action aimed at reducing the energy consumed by municipal buildings benefits the city’s government, residents and businesses. “In the short term, it showcases city leadership and a city’s buy-in to the actions that are or will be requested of the private sector,” it states. And in the longer term: “Actions taken by the city in its own buildings lay the groundwork for moving the entire community towards a more energy-efficient future.”
PRIVATE INVESTMENTInfluencing the private sector is important for two reasons. First, the private sector needs to carry out the same renovations in its own buildings; seeing policy makers act first is no bad thing. Second, while some renovation in public buildings will be carried out with public sector support, in many cases there is an opportunity for the private sector to step in with investment. The City Energy Project identifies three financing options for renovating buildings in cities. First, self-funding by the cities themselves. Second, via a revolving loan fund, a pool of capital from which loans are made and to which the loan repayments are returned and lent out again. Third, through energy savings performance contracts or guaranteed energy savings contracts where the costs are paid for by the guaranteed savings realised from energy efficiency upgrades. An energy efficiency service company (ESCO) identifies a portfolio of cost-saving investments, guarantees the savings, and finances and manages the project. The project is repaid from the savings. This third way involving an ESCO is increasingly being used by cities to ensure the renovation of public building projects at scale. It was the model followed by the US city of Atlanta to conduct investment grade energy audits and develop packages of energy conservation measures across city-owned buildings greater than 25,000 square feet (2320 square metres). University campuses, office buildings and airport facilities were included in the Atlanta project. The improvements were forecast to bring about savings of almost $10 million a year for the city. “Guaranteed savings, with ESCOs reimbursing the city for any energy cost-savings not realised,” are highlighted by the city as a key advantage of the model.
Nr. Vium Skole won the Danish renovation prize in 2017 for its reuse of materials and insulation measures. By Erik Brandt dam Arkitekter
EASTERN PROMISE The involvement of ESCOs in the renovation of energy leaky public buildings in cash-strapped cities in Central and Eastern Europe is also becoming increasingly common. In Croatia, hospitals have been able to undertake significant renovations with ESCO companies providing 60% of funding from private investors and the remaining 40% coming from the Croatian Energy Efficiency Fund. In 2016, Karlovac Hospital near Zagreb underwent a deep refurbishment at a cost of €8.6 million, which included the renovation of the facade, roof, external windows and door frames. Natural gas was added as an energy supply along with heat pumps, solar collectors and a new cooling system. Since then, carbon emissions from the building have more than halved, with annual financial savings of around €540,000 a year. With that rate of return, the investment should be paid off in around 14 years. The thermal renovation of public buildings belonging to local municipalities has, until now, mainly been carried out in Poland thanks to EU and Polish funds. But public private partnerships are becoming more common, even if the model is treated with extreme caution by many cities. “The ESCO formula is not very popular in Poland,” says Szymon Firląg from Warsaw University of Technology, for a variety of reasons. It makes sense, however, for renovating a swathe of public buildings. He gives the example of a renovation project led by German engineering company Siemens involving ten public buildings, schools, kindergartens and a healthcare centre in Karczew, a city in the centre of Poland. The public-private approach is advantageous, says Firlag. “The municipality only has to pay a little and can pay back the costs over 15 years.” Moreover, the results of the renovation and the real energy consumption of a building during and after the project are monitored and if something does not work it is the responsibility of the private company to change it, he adds. But ESCOs are still viewed with suspicion by many town authorities in Poland. The contracts are legally complicated says Firląg. Municipalities have to rely heavily on lawyers. “The municipalities are often afraid that someone will cheat them and who will be responsible if the energy savings are lower than expected,” he adds. Given these concerns: “Monitoring is very important to show real and projected savings.”
CITIZENS ADVICE Bulgaria is making a similar transition: “Moving from a pattern of financing energy efficiency projects in the public and private sector with a significant grant component (in many cases, up to 100%) to more economically efficient and sustainable financing mechanisms,” says Dragomir Tzanev, executive director of EnEffect, a Bulgarian NGO. As in Poland, learning to rely on a private sector partner is not an easy process, with confidence lacking in the use of private financing from citizens and local authorities, he explains. “It is, however, recognised that there is no other way to maintain momentum in the building renovation sector,” says Tzanev. Expanding the ESCO market in Bulgaria will help make new public support programmes and innovative financing mechanisms socially acceptable, adds Tzanev. But he makes it clear that challenges will not dissipate easily. A particular issue in Bulgaria is the absence of energy management systems to provide data for energy consumption, which makes it “extremely challenging” to attract private investment because of the difficulties of proving energy savings as a result of a project. The need to get citizens on board is underlined in the conclusions of the US’s City Energy Project, which calls on cities to communicate their energy efficiency efforts in municipal buildings to the public. “When cities don’t communicate their actions meaningfully to the community, their work is often discounted and it undermines efforts to push the real estate community towards more aggressive energy efficiency action,” it states. Cities should report to the public from the “inception of projects to the end and beyond,” it adds. “Reducing energy waste in city buildings and the associated greenhouse gas emissions improves the resilience and health of a community as a whole.”
TEXT Philippa Nuttall Jones PHOTO Laura Stamer
This article is part of our special series looking indepth at how cities hold the key to the energy transition. All stories in the series will appear on our website and in the latest edition of our magazine to be published at the beginning of October 2019. Find out more about how to subscribe to FORESIGHT so you don’t miss out on any of our articles here