InterChinaInsight

BetterCity,BetterLife:

BuildingChinasEcoBuildings

By JaneZhu&YanYun | April2010

InterChinaConsulting

Beijing Shanghai Shenzhen Madrid Milan WashingtonDC

www.InterChinaConsulting.com 2010InterChinaConsultingAllRightsReserved

ManagementConsultants

InterChinaInsights

EcobuildingsareakeythemeoftheShanghaiWorld Expo.WhiletheconceptisstillinitsinfancyinChina, thecountryisactivelydevelopingitsbuildingsector in an ecofriendly direction, and already has demonstrated successful cases of ecobuildings. We expectthemarketdemandforecobuildingtosurge inthenextdecade. When seeking solutions to Chinas energy and environmentalproblems,anobviousstartingpointis Chinas towns and cities. On aggregate, buildings in China account for 40% of the countrys energy consumption,onethirdofwateruse,andjustunder onefifthofgreenhousegasemissions. Ecobuildings are environmentally sustainable and energy efficient in terms of design, construction, operation and maintenance. Such buildings use energy and water efficiently, pose no harm to residentsorworkershealth,andreducewasteand pollution. "EcobuildingsinChinahavejuststartedtodevelop, but they have enormous potential. The Chinese government is promoting ecobuildings and is a strong supporter," Ge Caoyan, head of the EcoBuilding Research Office at the Shanghai ResearchInstituteofBuildingSciencesaid. Chinaistheworldslargestconstructionmarket,and will account for over half of all new buildings constructed worldwide in the next decade. During that time, China will add at least 2 billion square meters of new building space annually, roughly equivalenttoabout80,000new20storeybuildings. Asoftheend2009,Chinahadonly45ecobuildings certified under the globally accepted Leadership in Energy and Environmental Design (LEED) standard, and only 19 other ecobuildings certified under Chinas domestic green standard. However, the trend is clear. The number of building projects applying for LEED certification is up from just 10 in 2006toasmanyas212asoftheendof2009. In addition to government interest in big cities, we are starting to see developers, owners and tenants
www.InterChinaConsulting.com 2010InterChinaConsulting.AllRightsReserved

ChinasEcoBuildings

creating a market for ecobuildings. Demand so far has come mainly from foreign companies, eager to enhance their corporate image and reduce energy andothercosts. Good examples include the manufacturing and design center of Plantronics Inc. in Suzhou, Nokia Chinas Headquarters in Beijing (see the box Nokia China Headquarters and its picture) and Siemens GuangzhouOffice. Respondingtogrowingdemandfromforeigntenants, some local developers have started ecobuilding projects.ProsperCenter,atwintowerofficebuilding in Beijing, and Le Sang Estate Shopping Mall in Harbin are both LEEDcertified buildings built by local developers. Prosper Center was developed by Beijing Fountainwood RealEstate Co. Ltd,while the Le Sang Mall was developed by Hadian Real Estate CoLtd.,asubsidiaryofHarbinPowerEquipmentCo Ltd.,thebiggeststeamenginemakersinChina.Both buildings are primarily occupied by multinational tenants. According to Mr. Zhang Ying, Beijing Managing Director of Jones Lang LaSalle, a global real estate services firm, multinational firms are attaching increasing importance to energy efficiency issues, and energy efficiencyhasbecome oneof the major criteria for their office location selection. 80% of our multinational clients have expressed their preferenceforecobuildingssaidMr.Zhang. The Urban Best Practices Area (UBPA) at the Shanghai Expo will further raise awareness and stimulate interest in China, with the showcasing of ecobuildingtechnologiesandmaterialsfromaround the world. This will include replicas of real projects from15cities. For example, Hamburg House, built by the city of Hamburg, has a primary energy requirement that is just15percentofatraditionalbuildinginGermany. The structure is insulated with special bricks and 3layer glass curtain walls, and solar photovoltaic cells supply 80 percent of the energy needed. It is alsoequippedwithwaterfreetoilets.

ExpoExcitement

Better City, Better Life Building Chinas EcoBuildings April2010

InterChinaInsights

TheHamburgHouse
450 square meters of solar power panels on the roof provides 80% of the electricity that the buildingneeds.

Special bricks ensure highinsulation. Threelayer glass curtain wall ensures high insulation.

The location and size of each windowiscarefullycalculatedin ordertousenaturallighttothe maximum.

35m
Heating and cooling of the building is through the geothermalsystemlaidinthe 35meterpilefoundation.

Source:HamburgLiaisonOfficeShanghai

MadridsPavilion:TheBambooHouseandtheAirTree
Thermal solar energy panels that operate the solarcoolingsystemused in the pavilion. These panels will heat water in acircuitthatleadsittoa thermal transformer, where heat will be convertedintocold. The Intemper plant roof incorporatesaseriesofrainwater collection tanks, as part of a lowmaintenanceroofgarden Thecentralatriumofthepavilion has a semitransparency photovoltaic glass roof, letting lightinfromthesky. Mini wind turbines with capacity of 1.7 Kwh, providing part of the energy used to operate theAirTree.

Bambooskinprovides heat insulation and soundproofs the flats, thereby saving on electricity.

Source:FundacinMadridCiudadGlobal2010,InterChinainterview

Better City, Better Life Building Chinas EcoBuildings April2010

www.InterChinaConsulting.com 2010InterChinaConsulting.AllRightsReserved

InterChinaInsights

A growing number of U.S., European, Japanese and Chinese companies are competing to supply their technologies and materials to ecobuilding projects inChina.TheseincludeARUP,designeroftheNokia ChinaHeadquarters;aswellassuppliersofmaterials withhighenergyefficiency,suchasBASF,whichhas contracts with the Expo; intelligent building technology companies such as Honeywell Building Solutions of the U.S., and Siemens Building Technology and Schneider of Germany; and air conditioner makers such as Daikin Industries of JapanandtheCarrierGroupoftheUS.

Technologies&Materials

Domestic companies can match their foreign counterpartsinsomeareas,suchaslightingsystems, butarestillstrivingtoclosethegapinotherareas.

KeyForeignandDomesticCompanieswithTechnologies&MaterialsforEcobuildingsinChina
Function Insulation Windows/Glazing Lighting HVAC Automation BuildingIntegrated Photovoltaic(BIPV) ProductSuppliers InsulatingTechnology(Australia),Rapidwall(Australia),OwensCorning(US),Dow*(US). Yaohua*(ChinaJV),SomfyGroup*(France). General Electric (US), Philips (Germany), Panasonic (Japan), IlumaLite (SinoAustralianJV) Solartube*(US),SunPipe*(UK);Eastview*(China). York(US),Trane(US),DaikinIndustries(Japan),CarrierGroup(US), Mammoth(US). HoneywellBuildingSolutions(US),SiemensBuildingTechnology(Germany),Schneider* (Germany). ENN*(China),Suntech(China),SingyesSolar(China).

*Note:SuppliersforUBPABuildCasesof2010WorldExpoShanghai. Source:InterChinainterviewswithexpertsresponsibleforUBPAprojectsandsecondaryresearch.

Technologies&MaterialsforEcoBuildingswithPotentialDemandinChina
Function Insulation Windows/Glazing Lighting HVAC Automation WaterConservation
Source:InterChinaResearch

ProductSuppliers Bubbleconcrete,XPSandEPS,doublepanedglass,roofingprefabricatedplasterwall, lowVOCpaints. Lowemissionwindows. LEDlighting. Variablespeedpumps,geothermalheatpumps,solarthermalenergycoolingsystems, CO2freerefrigerationsystems. Automatedmanagementsystems(lighting,temperature,andappliances),motion sensors. Graywatertreatmentsystems.

www.InterChinaConsulting.com 2010InterChinaConsulting.AllRightsReserved

Better City, Better Life Building Chinas EcoBuildings April2010

InterChinaInsights

LowAwarenessofEcoBuildingValues:Thereisstill a great deal of education needed before property developers, owners and tenants generally understand and accept the economics of ecobuildings.ForaLEEDGoldcertifiedecobuilding, the additional initial investment involved is 35% of thetotalbuildingcost.Witha1540%energysaving, the payback period on the additional initial investmentis35years. The financial community also tends not to be familiar with green building economics, generally viewingthemaspresentingmorerisksthanbenefits. Few financial arrangements are designed for higher upfront costs and lower lifecycle costs, so ecobuilding developers struggle to get bank loans ongoodterms. LackofExperience:Chinaslackofqualifiedbuilders and assessment professionals, including designers, architects and technical staff, presents another hurdle,saysGeoftheSRIBS. Some green materials require more sophisticated skills than for conventional materials. If workers, who tend to be unskilled migrants, are not adequatelytrainedtheywillnothandlethematerials correctlyandenergyefficiencywillsuffer. "Chinese workers were unfamiliar with the threelayerglass curtain wall, which they had never installed before. So we invited experts from Germanytotrainourworkerstoensurethebuilding was wellinsulated. Its not an easy case," said Lars Anke, director of the Hamburg Liaison Office in Shanghai. Legal Framework and Chinese Government Policy: Developersandbuildersmustalsobeabletoadapt advancedmaterialsandsystemstolocalconditions, notes Ge. Anke of Hamburg office Shanghai agrees. "TomakeHamburgHouseaccommodateShanghais construction standards, e.g. antiearthquake requirements, fire control and some other specifications, we needed to work closely with Chinesedesignersandredesignourpavilioninsome respects.Itwasabigchallenge,"Ankesaid.

KeyChallenges

China currently limits the scope of operations of foreign building design firms by requiring the involvement of local architecture, design and planning bureaus in design approvals. It does not permit foreign construction firms, both WFOEs and JVs, to build ecobuildings on their own. There are restrictions on the conditions under which foreign contractors can participate in projects, even if Chinese companies involved lack the necessary technicalskillstocarryoutthework.

NokiaChinaHeadquarters

Nokia Chinas HQ building has received widespread publicityasChinasfirstnewlybuiltLEEDGoldcertified commercialbuilding(certifiedin2008).Itisasixstory building covering 70,000 square meters. It houses officespacefor2,000employeesandaR&Dcenter. Someofitsgreenfeaturesinclude: Achieves 20% energy savings and 37% water savingscomparedwithconventionalcommercial buildings. Abreathableglasscurtainwallreducesenergy useby14%:Ithastwolayersofglasswallswitha distanceof1.21.5metersinbetween.Thespace inbetweenhasaventilationsystemtomaintain a comfortable inside temperature in both cold andhotweather. 77%ofthebuildingislitwithnaturallight. All the lighting, air conditioning and projector systemsarecontrolledbyacentralcomputerand willshutdownsensorsindicatenoonehasbeen usingthemfor15minutes. A central water treatment plant recycles water foruseinflushingtoilets.

www.InterChinaConsulting.com 2010InterChinaConsulting.AllRightsReserved

Better City, Better Life Building Chinas EcoBuildings April2010

InterChinaInsights

Thegovernmenthassetatargetofreducingbuilding energy use in all cities by 50 percent by the end of 2010andby65percentby2020,fromthebaseyear of 1980. The country also plans to retrofit over 40 billion square meters of existing residential and commercial buildings to make them more energy efficientby2020. As China faces growing shortages of energy and becomes more acutely aware of energy costs and constraints, such goals may well need to be exceeded. While simple and economical measures will be used, more sophisticated ecobuilding technologies and materials will also have a role to play. AsymbolicstepwillbepassageofChinasfirstever comprehensive Energy Law, due to be enacted this year. The longawaited legislation will encourage energy efficiency, development ofclean energyand replacementofhighcarbonenergywithlowcarbon energy. If enforced, it will penalize energyintensive and highlypollutingprojects, disclosingtheir names and energy use to the public. It is to set new standards for products and equipment and impose highexporttaxesonenergyintensiveproducts. More tangibly, the Chinese government is also due tosetmoreaggressivegreenbuildingtargetsinthe 12th FiveYear Plan (20112015), which is now being drafted. The governments current plans focus on energy and neglect other crucial environmental issues such as water efficiency. China, with a large agricultural economy and scarce water supplies, urgently needs to dramatically improve its water efficiency. The 12th FiveYear Plan may include stringent water conservation goals for green buildings. However, for the most sophisticated ecobuilding technologies and materials on offer by foreign companies, government regulations may not be sufficienttogeneratedemand.Instead,theeffortto buildawarenessoftheeconomicargumentneedsto be strengthened, and the interests of property developers,ownersandtenantsbetteraligned.
www.InterChinaConsulting.com 2010InterChinaConsulting.AllRightsReserved

Conclusion

Better City, Better Life Building Chinas EcoBuildings April2010

InterChinaInsights

SelectedUBPABuildingCasesinthe2010WorldExpoShanghai
City Hamburg, Germany Case HamburgHouse A sustainable building of the highestecologicalstandard (Energy savings of 75% compared to traditional buildings) BedZedZeroCarbonPavilion FeaturedEcofriendlyTechnologies Powersupply:solarPVsupply80%ofpower. Insulation:specialbrickand3layerglasscurtainwall. Lighting:naturallighting,andwindowdirectionadjuststofollowthe sun. Heat&cooling:geothermalheatpumpforgeneratinghotandcold waterforheatingandcooling. Waterconservation:waterfreetoilet. Integratedautomationsystem. Power: solar PV (roof and windows), bioenergy generated from restaurantleftovers. Heating:solarheating(transparentsunhouse),andheatgenerated fromrestaurantleftovers. Ventilation:windpower(windcapsonroof). Coolinganddehumidificationofair:solarenergyandriverwater. Lighting: special coating interior wall to store solar power during daytimeandconverttolightinthenight. Waterconservation:rainwatercollectionsystemforwateringplants andflushingtoilets. Power:solarPVpanels(roof),windpower. Heating:solarwalltomaintainconsistentinteriortemperature. Lighting: energy saving glass, system to use natural light to the maximum. Power:solarPV,windpower. Insulation:thermalinsulationcoatings,hollowbricksmadeofsiltof YangtzeRiver,gypsumboards,3layerglassatskylight. Heating & cooling: shallowlayer geothermal energy application technology. Ventilation:naturalventilation. Lighting: natural lighting (atrium lighting system), LED lighting facilities. Water: reclaimed water system, which collects rainwater and grey waterfortoiletflushing. Buildingautomationsystem. Locallysourcedmaterials. Window: adjustable windows with functions of monitoring and maintainingairquality. Ventilation:naturalventilationssystemunderthefloor. Water:rainwatercollectionsystemforwateringplantsandflushing toilets. Insulation: highlytransparent and shakeproof filtration membrane doubledeckglass,windowblinds. Insulation: heat preservation brick, 2layer insulating glass, computer controlled solar energy wall that can be automatically openedandclosed. Ventilation:naturalventilation. Lighting:energysavinglighting,reacttosunlightvariations.

London, UK

Madrid, Spain Shanghai, China

BambooHouseandtheAirTree

ShanghaiEcoHousing

Calgary, Canada

WaterCenter

Milan,Italy

RHNESALP ES,France

Greenand BlueMilan:Thenew "ll Sole 24 Ore" headquarters: anexampleofsustainability Bioenergy & Sustainable Housing in an Urban Environment

Source:InterChinaResearch

www.InterChinaConsulting.com 2010InterChinaConsulting.AllRightsReserved

Better City, Better Life Building Chinas EcoBuildings April2010

InterChinaInsights

CoContributedby Ms.JaneZhu, InfoCenterHead, InterChinaConsulting Zhu.Jin@InterChinaConsulting.com Jane Zhu, a Chinese National, is a Consultant in the Strategy Practice of InterChina Consulting, based in Beijing. She runs InterChinas InfoCenter, a team of researchspecialistswhichsupportsclientprojects. Cocontributedby Ms.YanYun, AssociateConsultant, InterChinaConsulting Yan.Yun@InterChinaConsulting.com Yan Yun, a Chinese National, is an Associate Consultant in the Strategy Practice of InterChina Consulting,basedinShanghai. Edited by Kazuhiko Shimizu, Shanghaibased writer andeditor.

www.InterChinaConsulting.com 2010InterChinaConsulting.AllRightsReserved

Better City, Better Life Building Chinas EcoBuildings April2010

InterChinaInsights

Leading Consultancy: InterChina is a boutique management consultancy specialized in strategy, corporate and human resources services for companies doing business in China. Since being founded in 1994, InterChina has emerged as one of the leading consultancies in China, and half our project volume is accounted for by clients choosing toreturntoInterChinawhennewconsultancyneeds arise. ComprehensiveServices:InterChinasupportsclients along the sequence of challenges faced when enteringorexpandinginChina,andour3specialized consulting practices combine to provide a suite of comprehensiveandcomplementaryservices: InterChinasStrategyPracticeassistsourclients betterunderstandandpenetratetheirmarkets inChina. InterChinas Corporate Practice supports our clients establish and expand corporate structuresinChina. And InterChinas Human Resources Practice helps our clients recruit executives and other keypositionsinChina. Differentiated Approach: We deploy consulting methodologies developed in China for China. Our strategy solutions are practical, since we often support clients implement the strategies we recommend,andourcorporatesolutionsarealways oriented towards strategic objectives. We involve our clients in the consulting process, transferring understanding and receiving feedback, enabling our clients to better adapt to the Chinese environment andensuringcontinuityfollowingtheproject.

InterChinaConsulting

Strong Sector Expertise: As our clients are international companies with demanding consultancy needs, InterChina has developed expertise in select sectors to further ourdelivery of pioneering and practical solutions. These sectors include(butarenotlimitedto):Automotive,Energy &Power,Machinery,Chemicals,Healthcare,Food& Beverage,andDistribution&Retail. Stable Consulting Team: InterChinas Board of Partners is both Western and Chinese, and our Partnersprovidestabilitythroughtheircommitment tothecompany.Infact,InterChinaenjoysoneofthe highest employee retention rates in China, and as stability is fundamental for Consulting Teams to be successful, our clients benefit directly as a result. Moreover,allour50plusconsultantsarecommitted and capable professionals, with a balance of experience and skills that allow InterChina to customize Project Teams to meet the needs of individualclients. Local Presence: InterChina has three operations offices in China, located in Beijing, Shanghai and Shenzhen, supported by liaison offices in Europe, located in Madrid and Milan, and North America, locatedinWashingtonD.C. For further information, please visit our website at www.InterChinaConsulting.com

www.InterChinaConsulting.com 2010InterChinaConsulting.AllRightsReserved

Better City, Better Life Building Chinas EcoBuildings April2010