Climate Policy Initiative (CPI) associate director Tiza Mafira told The Jakarta Post on Monday that demand for green building was increasing, as reflected in a rising number of requests for the Greenship certificate issued by the Green Building Council Indonesia (GBCI).

Greenship-certified buildings have saved a total of 274 million kilowatt-hours (kWh) of energy as well as 2 million cubic meters of water and reduced carbon emissions by 244,187 tons annually, GBCI data show.

 

“The interest in getting Greenship certification is still limited to certain international and local companies,” Tiza admitted, adding however that demand for green buildings was expected to increase with the ongoing implementation of Government Regulation (PP) No. 16/2021 on buildings, which includes green building requirements for new construction projects.

The government issued two regulations affecting the industry this year, namely PP No. 16/2021 on buildings and Public Works and Housing Ministerial Regulation No. 21/2021 on green building appraisal, both of which aim to encourage the adoption of green building principles in infrastructure development.

Accounting for merely 2 percent of the total, buildings and commercial sectors so far have made only a tiny contribution to nationwide energy conservation against a business-as-usual consumption scenario, Energy and Mineral Resources Ministry data show.

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On their own, regulations mandating greener buildings, such as through designs to reduce electricity or water use, are not enough, according to GBCI chairman Iwan Prijanto. The government also needed to consider market demand to boost adoption, Iwan wrote in an article published in The Jakarta Post in 2019.

Emissions from buildings remain a key challenge that has yet to be fully addressed at the government or private sector level, according to sustainability intelligence services provider S&P Global Sustainable1.

Furthermore, research by US-based nonprofit group World Green Building Council has found that existing buildings and new constructions are the source of approximately 40 percent of global energy-related carbon emissions.

Global emissions from buildings need to fall by 56 percent over the next 30 years to help limit global warming to 2 degrees Celsius, according to a projection from S&P Global Platts Analytics.

 Read also: Greater energy efficiency 'crucial' for Indonesia's energy transition

State-owned banks have launched several financing schemes to encourage the construction of green buildings in Indonesia to help the government reach its net-zero target for carbon emissions by 2060.

Publicly listed bank BTPN wholesale banking head Nathan Christianto said the low office building occupancy rate due to the pandemic had had a negative impact on green building development in Indonesia. However, he remained optimistic that green building demand would increase in line with the country’s economic recovery.

“We hope to support more green projects going forward,” he said on Monday.

Bank BTPN on Oct. 19 introduced a green loan facility worth Rp 1.06 trillion (US$73.75 million) with a three-year tenor to developer PT Kepland Investama.

The real estate company would use the facility to refinance credits spent on the International Financial Centre (IFC) Tower 2 construction in Jakarta, which developers claim will be the first building in Indonesia to receive the Green Mark Platinum certification from the Building and Construction Authority of Singapore (BCA).

Bank Rakyat Indonesia (BRI), the country’s second-largest bank by asset value, disbursed a total of Rp 2.6 trillion in loans for green buildings in the January-September period of this year.

“Green building financing [is expected] to grow in the future, in line with increasing awareness on climate change,” said BRI corporate secretary Aestika Oryza Gunarto on Tuesday.

Read also: Green buildings key in strengthening our resilience to climate change

Green funding is expected to continue to increase, according to CPI’s Tiza, as more banks and capital markets adopt ESG strategies. “The green bonds uptrend might also increase the funding of green buildings as an underlying asset,” she added.

Meanwhile, Agus Praditya Tampubolon, the clean, affordable and secure energy (CASE) project manager for Southeast Asia with the Institute for Essential Services Reform (IESR), suggested the government implement a minimum energy performance standard (SKEM) for central air conditioning systems in buildings. As of now, according to Agus, SKEM only existed for small air conditioner units in private households.

“It’s important to ensure that air conditioning units used in buildings are energy efficient, because they consume the largest amount of energy,” he told the Post on Friday.

He also suggested that the government set a standard for building envelope, or the separation of the inside and outside of buildings through insulation, arguing that that could significantly reduce electricity consumption.