ULI Russia and Russian Green Building Council hold panel discussion on PPP issues and green industry

On May 23, 2012, Urban Land Institute (ULI) Russia and the Russian Green Building Council held a panel discussion on public-private partnership issues in green buildings, as well as on the development of the green industry.

This was the first joint event held by the two leading international organizations in this country that are dedicated to sustainable building practices. It was attended by over 100 representatives of leading Russian and foreign companies. 

Participants discussed state programs of energy conservation and energy efficiency, theory and practice in the development of ‘Smart Cities’, legislative initiatives to create more favorable conditions for sustainable development in Russia, the spread of ecological thinking among Russians, and the heightened attractiveness of green projects in Russia for investors. 

The ULI-RuGBC Green Buildings panel discussion was supported by Herbert Smith, the Russian Energy Agency, Ernst & Young, Devereux Architects, EcoDolie, CRE-Solutions, HALKGYO, and MEP Engineering. Stephen Terzolo, Investor Relations Manager at IMG Partners Ltd. and member of the Russian branch of ULI Young Leaders Group, was the Event Coordinator. The Moderators of the panel discussion were Guy Eames, CEO of the Russian Green Building Council, and Adrian Salter, co-founder and General Director of MEP Engineering.

"This event – and the large number of people attending it – demonstrated the importance of green building issues in Russia. ULI as an organization is dedicated to promoting best practice in development and construction. Thus we enthusiastically join together with focused organizations like the Russian Green Building Council to conduct events on subjects that are key in our industry,” Darrell Stanaford, Chairman of ULI Russia, said.

“ULI represents leading international players and is one of the key partners of the Russian Green Building Council. That is why its involvement in the current debate about the economic benefits of green buildings in Russia is extremely timely," Guy Eames, CEO of the Russian Green Building Council, added.

Energy conservation and energy efficiency up to 2020 

Issues related to the Russian federal program ‘Energy conservation and energy efficiency for the period up to 2020’ were touched upon by Nelly Segizova, Strategic Development and International Cooperation at the Russian Energy Agency. 

The state program, among other initiatives, provides co-financing for regional programs and guarantees loans for the realization of projects that foster energy efficiency. It is also working to create a state information system and to implement educational and other programs aimed at raising awareness and promoting energy efficiency among various segments of the population. 

In 2011, the total amount of funds allocated by the Russian Federation for the implementation of energy efficiency programs was 12.287 billion rubles. Funds from the Federal Budget allocated to co-financing expendable liabilities of subjects of the Russian Federation reached 5.271 billion rubles in subsidies. As a result, 54 regional programs received financial support. 

The FSFO ‘Russian Energy Agency’ (REA) is the operational manager for state programs to promote energy efficiency. The agency, together with the not-for-profit organization ‘Smart City.Tech’, launched a concept called ‘Smart City’ as a basis for further public-private partnerships.

Green buildings legislation

Great interest was attracted by the second presenter, Margarita Slavina, Senior Associate in the real estate division at Herbert Smith. She summarized the current status of green buildings legislation in several western countries, including Austria, Britain, Germany and the US. 

She also discussed proposals for improving legislation for promoting green building practices in Russia, which have been developed by a working group within the Russian Green Building Council lead by R. Ismailov and consisting of representatives from Herbert Smith, Ernst & Young, Pepeliaev Group, K&L Gates, and Alrud.

The most important incentive mechanisms for promoting green buildings in Russia, according to the report issues by RuGBC’s working group, are the implementation of green standards, the creation of programs to offer state financial support to offset higher costs to developers, government incentives for building occupants to decrease energy consumption, and the development of renewable energy sources. 

Other initiatives proposed include administrative measures and changes in the tax code, the adoption of which would contribute to the development of green buildings in Russia.

Green initiatives

In addition to government initiatives to promote green buildings, the panel discussion focused on green initiatives currently underway by developers. 

Konstantin Filippishin, General Director of developer EcoDolie, noted that “low-rise buildings comprise more than 50% of the construction market. EcoDolie, a member of the Russian Green Building Council, succeed in building ecological housing not only for business-class residences, but also economy-class.” 

In 2011, EcoDolie pursued construction of a village of over 4,000 ‘green’ dwelling units in the Orenburg Region.

Economy-class units built at EcoDolie’s Orenburg site employ a new innovative insulative material, NEOPOR with graphite nano-additives, as well as heat pump units, heating systems using solar panels, and LED light bulbs. As a result, the consumption of natural gas and, thus, CO2 emissions, decreased by 45%, annual fuel consumption was reduced by 61%, and specific heat consumption was reduced by 34%. In sum, annual utility costs have been reduced by 42% in EcoDolie’s housing units. 

Currently, similar projects are being implemented in the Kaluga and Samara Regions, and are planned to start in the near future in the Republic of Bashkortostan and the Moscow, Sverdlovsk and Leningrad Regions. Shareholders in EcoDolie are Baring Vostok, Private Equity Fund and the European Bank for Reconstruction and Development.

The next presenter, Aleksander Asafov, Principal Architect at Devereux Architects, highlighted the negative effects of personal vehicle use on both the environment and quality of life in Russian cities. Moscow residents spend approximately 5 million man-hours per year driving their cars, not creating anything useful. 

Asafov also brought much attention to the problems of intensive development on the ecology and personal health in Russian regional cities.

Other presenters at the event discussed the attractiveness of green facilities for investors and the benefits of sustainable development for efficiently managing development risks. Anna Shilova, Principal Consultant in Risk Management of Real Estate Investing at CRE-Solutions addressed issues of sustainable development from the perspective of risk management. 

From Drees & Sommer, Steffen Sendler, Managing Director and Partner, and Marina Zakharova, Senior Engineer, highlighted the effects of green development on energy cost savings for construction projects and the merits and challenges associated with obtaining green building certification. 

Concluding the panel discussion, Dr. B. Kaðan Ceylan, Assistant General Manager of Halk REIT in Istanbul, Turkey, spoke on how the use of LEED and BREEAM standards affects the investment risks and the attractiveness of real estate objects, both development projects and standing assets.