LEED and Green Building Incentives: Promoting Sustainability in India and the World

Post date: Feb 10, 2013 4:14:53 PM

Hasnain asks: Dear Mr. Turab, Thanks for the explanations which you give regarding each query. I am a student at Great Lakes Institute of Energy Management & Research. I have been reading about green buildings since 2 weeks, mostly from your website. But still I am not clear about the exact incentives given to different stakeholders. Like, I have read about the incentives given by MNRE for getting your building certified under GRIHA, but what about CII-IGBC, LEED India certification? Are there some incentives for LEED registered buildings also? I searched for it but could not get it. Also, are there any state government incentives for green buildings? If yes, then what are those? Are they Similar to the Central MNRE incentives? What are those incentives?

Advice provided by: Yusuf Turab, Y T Enterprises

Dear Hasnain

Many thanks for your timely question. I think it is highly relevant for the current times when it seems like the green building industry is slated to grow exponentially but only requires that little push from the government in order to get into top gear.

Green Building Incentives

You might have already read about the incentives that Ministry of New and Renewable Energy offers to the developers and architects taking up the GRIHA rating for their projects. There is no data available on how many projects have taken advantage of these incentives. My guess would be, not many because there are not many certified projects under the GRIHA rating at the moment.

As far as the Indian Green Building Council is concerned, there are absolutely no incentives on offer from their side. I raised the question of incentives at the launch of the Coimbatore Chapter of the IGBC. The response was that, there is no evidence that such an incentive actually attracts developers and also they are averaging more than one project registration a day hence there is no immediate need to lure in more projects. Secondly, IGBC is a private sector body and cannot dole out cash the way MNRE can.

At the state level I understand that there is plenty of policy framework going on but there have been very few concrete announcements.

Mumbai seems to have taken a lead according to this article; How govt plans to make Mumbai greener; but I think the guidelines are yet to be framed. The Andhra Pradesh government made some announcements a couple of years ago and the Hyderabad Metropolitan Development Agency also has a very informative website for architects and designers looking to build green.

The environment ministry recently said that green buildings would be given priority in the environmental impact assessment process. This is a welcome step that would not only reduce the time taken for such clearance, but also add value by quantifying environmental benefits that are measurable and can be monitored. In every conference that I have attended in the last two years, there has always been a government official who has assured that a certain incentive will be brought in. So I assume its only a matter of time before we start hearing of more local bodies offering cash and non cash incentives for green buildings.

Categories of Green Building Incentives

The main categories of green building incentives world over are:

1) Expedited Permits: Priority in building permit processing and plan review, sometimes with a requirement for posting a bond to guarantee the result.

2) Tax Treatment: Tax incentives, particularly property tax abatements, for projects achieving LEED Silver/GRIHA 3 star or better certification.

3) Increased FAR: Increased Floor-to-Area (FAR) ratios or FSI, which allow a developer to construct more building area than allowed by applicable zoning.

Developers need to research what each local jurisdiction offers and make sure that they are “at the table” when such incentives are being discussed and adopted.

You will find that in most cases developers are aware of these, but don’t always use them. One reason is that the timing of development decisions and the response time of local government don’t always mesh together. In a nutshell, developers need to make quick decisions, and governments prefer to move more slowly to observe “due process.”

The most significant barrier to the rapid growth of green buildings is perceived cost increase. In some developers’ opinions, the second highest barrier is the lack of knowledge of how to build green. In light of these I would encourage the government and the certification bodies to follow these recommendations that were coined by NAIOP, the Commercial Real Estate Development Association.

NAIOP Recommendations

1) Encourage developers to have a greater say in the incentive process. They will be more likely to buy-in to the programs and use the incentives.

2) Increase awareness in selected towns and communities of the benefits of green building so that there is a pull by political supporters of progressive local officials.

3) Continue to talk to developers in their language: business and finance. Work with other green building organizations to accumulate project cost and benefit data. Show hard numbers and statistics. They will be more convinced to build green.

4) Increase awareness among developers that there is a change in values within the development community and among consumers to support the rapid growth of green building construction and energy-efficient operations.

5) Start creating language for specific incentives that we know the development community wants:

  • a) Property tax reductions or abatements for significant periods of time.
  • b) FSI bonuses and entitlement assurances.
  • c) Accelerated building approval processing (this of course works best in cities where the permit process is convoluted and slow!)
  • d) Expedited permitting

I am not a developer but I would imagine the most desired incentives would be expedited approvals, tax reduction, FAR/FSI bonuses and reduced-cost building permits.

All in all in India, there is much that can be done to promote green building at the local level – actions that are not insurmountable by any means.