Going green: Energy efficiency through buildings

Hakim Hayat

The world has been struggling with the COVID-19 outbreak which has damaged the global economy, and ASEAN is not an exception. The magnitude of the economic impact is hard to predict and depends largely on the effectiveness of pandemic containment efforts.

The International Monetary Fund (IMF) in its first World Economic Outlook report since the pandemic shut major economies projected that the world economy will likely contract at -3.0 per cent, while the ASEAN 5 (Thailand, Singapore, Malaysia, the Philippines and Indonesia) is likely to contract at -0.6 per cent in 2020, much worse than during the 2008–09 financial crisis.

The IMF report also lowered Brunei’s GDP growth projection to 1.3 per cent this year and 3.5 per cent next year. In its earlier forecast in October last year, IMF said for 2020, it has projected the country’s GDP growth at 4.7 per cent, taking into account the first production of the downstream oil and gas industry for the Oil and Petrochemical Plant Project in Pulau Muara Besar (PMB) as well as the construction of Brunei Fertilizer Industries (BFI) plant.

IMF earlier also forecast Brunei’s GDP growth to be 3.6 per cent for next year, citing the pandemic’s impact of inflicting high and rising human costs worldwide, coupled with protection measures which are impacting economic activities.

According to a renewable energy expert in this region, the immediate priority is to restore the economy by bringing jobs back as quickly as possible and governments will need to consider stimulus packages that could create long-lasting and positive impacts on a wide range of issues.

“This is where energy efficient (EE) building can address two of the most important issues: energy savings and jobs,” explained Senior Energy Economist at Economic Research Institute for ASEAN and East Asia (ERIA) Han Phoumin.

“Fostering energy efficiency through retrofitting existing buildings will generate local jobs quickly while decreasing the costs of running buildings which will assist households as well as businesses to recover more quickly from the crisis,” he said.

Meanwhile, Consultant at Green Technology Solutions PLT Malaysia, Ir Leong Siew Meng observed that many countries in ASEAN lack capacity to provide sufficient stimulus packages to save the economy and may have already experienced difficulties in addressing rising unemployment, slow domestic demand, and the depletion of national savings.

“The scale of impact on social wellbeing will largely depend on how long the pandemic continues and the region. The longer it takes, the deeper the hardship as households’ savings are depleted further and large household debts may end up in default. Without proper economic stimulus packages, economic recovery will be slow, and the impact will be enormous,” Meng said.

Phoumin also noted that some countries in ASEAN do not have formal social protection systems in place, and people rely on adaptive social networking where families and friends support each other during difficult times.

“But the scale of this crisis hits all families at the same time, making these informal social protection systems fall apart under the weight of too many demands at once,” he added.

Phoumin said many households will need immediate subsidies, otherwise, the level of poverty will increase suddenly as many people are already living close to the poverty line of USD1/day in some developing countries of ASEAN.

Poor households in ASEAN are mainly engaged in the occupation of hired labour. The migration from rural to urban or to neighbouring countries to seek job opportunities is an important contribution to households’ income. However, as a result of the pandemic, there are far fewer jobs in the construction, garment, footwear, and textile industries.

As part of the economy stimulus planning, Meng said that governments can plan EE projects to create local jobs quickly as well as helping business recovery from the current crisis. “Beside building energy efficiency, the application of energy savings in households and industries could save huge amounts of spending. Optimising EE in a building is cost-effective because it can be up to 70 per cent more efficient than conventional commercial buildings and will offer owners a quicker pathway to reduce energy consumption, and hence, building operating costs.”

The stimulus package could also consider the investment in Energy Service Company (ESCO) in the ASEAN members. Energy efficiency is also known as the ‘hidden fuel’ and can be translated in the equivalent of an energy resource as it will make unused energy available for other economic activities and to a larger population.

Because energy demand is expected to expand quickly once the crisis subsides, Phoumin said that appropriate energy policies will be needed in ASEAN to guide the development of energy efficiency.

“ASEAN will need to act swiftly to prepare energy policy changes to embrace renewables, clean energy technologies and energy efficiency into national energy development plans to transition energy system towards sustainability. The investment in EE will help to avoid building more power plants, and the savings can be put back into the economy.”

Due to Southeast Asia’s hot and humid climate, air-conditioners and mechanical ventilation (ACMV) are the biggest draw on power in buildings.

Although ACMV systems in most non-medical buildings are not in high-use during the current COVID-19 pandemic, building owners and operators now have another challenge besides making their building energy-efficient, said Meng.

Because of the small chance of the virus spread through ventilation systems, ACMV systems have new operation rules based on a regimented guidance, he added.

“These rules require that fresh air be brought in from outside the building, which increases energy consumption because outdoor air intake will increase the cooling load demand. However, there are other EE measures that could be explored to reduce building operating costs and greenhouse gas emissions,” he said, adding that governments can consider two-pronged approach to energy efficiency retrofitting.

Many countries in ASEAN do not have EE retrofitting demonstration projects. Thus, Meng said it is a good time to include them in the economic stimulus package to showcase the methodology and the practical aspects of implementation. In addition, the achievement of energy savings and return on investments can be quantified to demonstrate the viability and sustainability of EE projects.

In the stimulus package, both experts also suggest that governments in ASEAN should provide funding to the private sector to conduct energy audits for large buildings that consume yearly energy exceeding a certain amount (which is to be determined by respective governments as the threshold values vary in different countries).

Governments may also consider providing fiscal incentives such as an EE investment tax allowance, EE equipment import duty waivers, etc. “The combined effect of government initiatives through stimulus package by including EE projects and improved building operations under the current pandemic scenario will provide benefits such as safer working environment in buildings through improvement in building operations and cutting the risk of virus spread due to poor equipment standard in air-conditioning.”

Furthermore, the implementation of EE buildings and investments will create immediate job opportunities directly, hence, contributing to business recovery.

Both experts said it is a good time for the government to seriously invest in the EE building as it will bring a large benefit to the environment and society at large, and particularly create quick local employment where the majority of the buildings will outsource manpower and services for such type of building retrofitting, and the purchase of new energy-efficient appliances and devices will make business industry and market to come back to normal as quickly as possible.