Whether it’s lack of awareness, resistance to new technologies or fears of higher costs, there are still many barriers to building green. Luckily, there are also many tools governments can use to change building behaviours and encourage more green construction.
Laws, policies and other regulations are important instruments for driving change in the building sector.
✓ Building regulations
Policies and regulations to implement these provide a strong and clear message to the market and influence the products delivered into the market. Regulations can progressively tighten over time, reflecting the evolution of technology, building usage and market demand.
✓ Compulsory energy performance certification (EPC)
EPC requires buildings to publish and show their energy performance so that buyers and tenants can choose between green and traditionally built properties. This strengthens the financial returns on green buildings. Government regulation came into effect in December 2020 making it compulsory, by 2022, for public buildings over 1000m2 and private buildings over 2000m2 to display EPCs. For more information click here.
✓ Carbon taxes
Business and industries that produce a lot of carbon emissions have to pay a carbon tax. Having a building that is energy efficient and produces renewable energy may help to reduce your carbon tax liability.
While the “sticks” of regulation provide certainty to the market and help to overcome some of the barriers to market development, “carrots” in the form of incentives are also important.
✓ Taxable income deductions
Investing in energy-saving equipment allows owners to qualify for tax deductions. Under the 12L income tax incentive, taxpayers can claim a tax deduction of 95 cents per kilowatt hour or kilowatt hour equivalent of verified energy efficiency savings.
Section 12B incentivises renewable energy through provision of a capital allowance in respect of equipment and parts used in the production of renewable energy on a 50/30/20 basis (an “accelerated capital allowance regime”).
✓ Money rewards
If a home or office generates electricity that can be fed back into the grid, the City pays the owners for each unit of electricity (this is called a reverse feed credit and varies from city to city).
✓ Rates reductions
eThekwini Metropolitan Municipality offers rates reductions for ‘as built’ green building certifications to encourage early take-up of the green building policy direction.
✓ Expediated applications process
Cities may create a ‘green desk’ that not only provides support to green developers, but also commits to a speedy approval process.
✓ Technical support and assistance for developers and investors
Cities have tools and guides to assist developers to build green. In the longer run, Cities hope to have staff with green design skills who can assist larger developments in optimising their green design elements.
Cities can also share green building data that can demonstrate the green value of property to the market and reduce lending rates.
✓ Greater bulk
Cities may not always be able to provide financial incentives, but they can offer opportunities that translate into money for developers. For example, a City may allow a developer who builds in the priority nodes of a city, such as along an activity route, to build extra floors (height) than stipulated in the zoning law.