Cooperative Building by Kaenga

Thank you very much for taking the time to review my proposal and for providing constructive and insightful comments. In the comments that follow I be keeping a record of my changes to show how I have adapted the proposal in light of your feedback.

1. I've extended the "What actions do you propose" section (specifically the forth paragraph under "What Kaenga will do" to make it clear that although the choice of whether the new dwelling will be more sustainable will ultimately be the choice of the future owners, nonetheless Kaenga can play an active role in promoting this by adjusting the choice architecture.

4. Added a subsection to the "What actions do you propose" section which deals with how we propose to engage the broader community, particularly group members and project financiers.

5. Expanded the 'Where Will These Actions be Taken' section to discuss why Wellington is well suited for this project including a discussion about the fact that two large suburbs have recently been zoned for medium density and more land is likely to be zoned medium density in the future. 

 

Kaenga will help to mitigate climate change by creating more energy efficient homes and by helping to reduce transport emissions through increasing urban densification and strategically placing these dwellings next to public transportation.

There are significant opportunities to reduce emissions. Six percent of New Zealand’s houses completely lack insulation and most houses have poor insulation that would not meet the requirements of the new Building Code.(20) A study found that New Zealand dwellings’ average winter temperatures were six degrees lower than World Health Organization minimum recommended temperatures.(21)

Until recently, there was little evidence that new housing was improving the situation. Average indoor temperature in the Lower North Island of New Zealand (the area where Wellington is located) actually decreased by 0.5 C, between 1971 and 2004.(22) A new law increasing the requirements for insulation and an energy efficiency programme may have improved things somewhat. Nonetheless, it is clear that New Zealand’s current real estate model will only improve its environmental performance when it is forced to.

Instead of focusing on building better houses, New Zealanders have been focussing on building larger houses – the average size of NZ houses has almost doubled over the last 70 years, increasing the area that needs to be heated and contributing to urban sprawl and unaffordability.

This is particularly disappointing because a McKinsey study on the cost curves of emissions reduction suggests that insulation provides one of the most efficient ways to reduce emissions and that improving water heating can also be done at a net cost savings.(23)

 

 

The building cooperative approach will allow people who want a more energy efficient and environmentally friendly home to achieve this in an affordable manner. Although Kaenga will not force its users to select environmentally friendly options, we believe that uptake of these options will be high for the following reasons:

1. We believe that most of the features that make a building environmentally friendly also make them people friendly. This hypothesis is supported by the fact that green office buildings see higher occupancy rates and better staff satisfaction and performance than standard offices. This impact is so noticeable that banks in New Zealand give favourable lending terms to commercial property with a high sustainability rating. It is also confirmed by the data which suggests that building cooperatives are more likely to be built to a high building standard.

2. Many studies find that the upfront costs of building green is only a little more than building in a traditional manner, and tends to generate saving in the long run.(24) Further, Kaenga will introduce economies of scale which will reduce cost both directly and indirectly by increasing the breadth of choice available in construction. For example, materials or technology which are not currently available in New Zealand could potentially be imported by a large group which may not be feasible for individuals who are building.

3. For example, a significant proportion of the cost of installing solar panels is the cost of the time for the installation crew to travel to the site. Installing several solar panels at once can significantly reduce this cost.

4. Finally, Kaenga will also provide users with relevant information in a digestible way to promote the benefits of environmentally friendly building and make clear the environmental/climate impacts of people’s decisions.

Beacon Pathways managed to produce a house which was able to generate a 50% reduction in electricity while housing 6 rather than the average 2.7 people.(25)

Transport emissions make up about 20% of New Zealand’s emissions. By increasing urban density, Kaenga will naturally reduce travel distances and as a result, it should reduce emissions. Further, with good planning, it should be possible to design these developments to maximise public transport options and eliminate the need for a car. This is crucial because as a report from the Australian Railway Association found, the savings the average Wellingtonian will make from using public transport to commute is only $3039 whereas their savings would be the savings the average Wellingtonian will make from using public transport to commute is only $3039 whereas their savings would be $10,586 if they gave up their car altogether. Therefore, incentives to take public transport are much stronger when they are coupled with the ability to completely do away with one’s car (and as discussed in Section 2, building costs can also be saved when a group decides to remove parking from its plans). 0,586 if they gave up their car altogether. Therefore, incentives to take public transport are much stronger when they are coupled with the ability to completely do away with one’s car (and as discussed in Section 2, building costs can also be saved when a group decides to remove parking from its plans).

It is difficult to rigorously model Kaenga’s impact. However, for the purposes of illustration, we have assumed that homes built by Kaenga will reduce emissions by 50% of their current average. We believe this is achievable and perhaps even conservative given Beacon Pathways’ data. We also assume that household commutes will decrease from 20 km to 10 km and 73% of residence will swap from commuting by car to commuting by public transport.

These assumptions will lead a single household to reduce their CO2e emissions by 760 kgs (562 from energy savings and a 198 kg reduction from transport emission). In our fifth year of operations, we will generate 285 metric tonnes of annual emission reductions from the 513 dwellings built over Kaenga’s lifetime. However, given that these buildings are long-lived (and rarely replaced once built) we believe it is more appropriate to consider lifetime emission reductions. To calculate this, we scale the annual emission reduction for the 400 dwellings built in year five by 50 years (a conservative estimate of a dwelling’s life). Based on this methodology, we calculate a total lifetime saving of 12 Mt CO2e.

In the long run, New Zealand’s total emissions could be reduced by up to 4% as a result of Kaenga and the building cooperative approach. This is based on the fact that emissions from housing make up 10% of New Zealand’s emissions, 50% emission reductions can be achieved using green building methods at little extra cost, and the fact that 73% of building cooperatives have shown a demonstrable commitment to sustainability.

 

(20) http://www.sbc.org.nz/__data/assets/pdf_file/0007/56545/Better-Performing-homes-for-New-Zealanders.pdf, p. 12.

(21) Pure Advantage (2012) “Green Growth: opertunities for New Zealand”.

(22) Pure Advantage (2012) “Green Growth: opertunities for New Zealand”.

(23) http://www.mckinsey.com/insights/sustainability/a_cost_curve_for_greenhouse_gas_reduction

(24) For example, one study found it was only 2% more expensive to build a green building (Kats, Greg, Leon Alevantis, Adam Berman, Evan Mills, Jeff Perlman. The Cost and Financial Benefits of Green Buildings, November 3rd, 2008).

(25) Pure Advantage (2012) “Green Growth: opertunities for New Zealand”, p. 224.

Kaenga will help to mitigate climate change by creating more energy efficient homes and by helping to reduce transport emissions through increasing urban densification and strategically placing these dwellings next to public transportation.

There are significant opportunities to reduce emissions. Six percent of New Zealand’s houses completely lack insulation and most houses have poor insulation that would not meet the requirements of the new Building Code.(20) A study found that New Zealand dwellings’ average winter temperatures were six degrees lower than World Health Organization minimum recommended temperatures.(21)

Until recently, there was little evidence that new housing was improving the situation. Average indoor temperature in the Lower North Island of New Zealand (the area where Wellington is located) actually decreased by 0.5 C, between 1971 and 2004.(22) A new law increasing the requirements for insulation and an energy efficiency programme may have improved things somewhat. Nonetheless, it is clear that New Zealand’s current real estate model will only improve its environmental performance when it is forced to.

Instead of focusing on building better houses, New Zealanders have been focussing on building larger houses – the average size of NZ houses has almost doubled over the last 70 years, increasing the area that needs to be heated and contributing to urban sprawl and unaffordability.

This is particularly disappointing because a McKinsey study on the cost curves of emissions reduction suggests that insulation provides one of the most efficient ways to reduce emissions and that improving water heating can also be done at a net cost savings.(23)

 

 

The building cooperative approach will allow people who want a more energy efficient and environmentally friendly home to achieve this in an affordable manner. Although Kaenga will not force its users to select environmentally friendly options, we believe that uptake of these options will be high for the following reasons:

1. We believe that most of the features that make a building environmentally friendly also make them people friendly. This hypothesis is supported by the fact that green office buildings see higher occupancy rates and better staff satisfaction and performance than standard offices. This impact is so noticeable that banks in New Zealand give favourable lending terms to commercial property with a high sustainability rating. It is also confirmed by the data which suggests that building cooperatives are more likely to be built to a high building standard.

2. Many studies find that the upfront costs of building green is only a little more than building in a traditional manner, and tends to generate saving in the long run.(24) Further, Kaenga will introduce economies of scale which will reduce cost both directly and indirectly by increasing the breadth of choice available in construction. For example, materials or technology which are not currently available in New Zealand could potentially be imported by a large group which may not be feasible for individuals who are building.

3. For example, a significant proportion of the cost of installing solar panels is the cost of the time for the installation crew to travel to the site. Installing several solar panels at once can significantly reduce this cost.

4. Finally, Kaenga will also provide users with relevant information in a digestible way to promote the benefits of environmentally friendly building and make clear the environmental/climate impacts of people’s decisions.

Beacon Pathways managed to produce a house which was able to generate a 50% reduction in electricity while housing 6 rather than the average 2.7 people.(25)

Transport emissions make up about 20% of New Zealand’s emissions. By increasing urban density, Kaenga will naturally reduce travel distances and as a result, it should reduce emissions. Further, with good planning, it should be possible to design these developments to maximise public transport options and eliminate the need for a car. This is crucial because as a report from the Australian Railway Association found, the savings the average Wellingtonian will make from using public transport to commute is only $3039 whereas their savings would be the savings the average Wellingtonian will make from using public transport to commute is only $3039 whereas their savings would be $10,586 if they gave up their car altogether. Therefore, incentives to take public transport are much stronger when they are coupled with the ability to completely do away with one’s car (and as discussed in Section 2, building costs can also be saved when a group decides to remove parking from its plans). 0,586 if they gave up their car altogether. Therefore, incentives to take public transport are much stronger when they are coupled with the ability to completely do away with one’s car (and as discussed in Section 2, building costs can also be saved when a group decides to remove parking from its plans).

It is difficult to rigorously model Kaenga’s impact. However, for the purposes of illustration, we have assumed that homes built by Kaenga will reduce emissions by 50% of their current average. We believe this is achievable and perhaps even conservative given Beacon Pathways’ data. We also assume that household commutes will decrease from 20 km to 10 km and 73% of residence will swap from commuting by car to commuting by public transport.

These assumptions will lead a single household to reduce their CO2e emissions by 760 kgs (562 from energy savings and a 198 kg reduction from transport emission). In our fifth year of operations, we will generate 285 metric tonnes of annual emission reductions from the 513 dwellings built over Kaenga’s lifetime. However, given that these buildings are long-lived (and rarely replaced once built) we believe it is more appropriate to consider lifetime emission reductions. To calculate this, we scale the annual emission reduction for the 400 dwellings built in year five by 50 years (a conservative estimate of a dwelling’s life). Based on this methodology, we calculate a total lifetime saving of 12 Mt CO2e.

In the long run, New Zealand’s total emissions could be reduced by up to 4% as a result of Kaenga and the building cooperative approach. This is based on the fact that emissions from housing make up 10% of New Zealand’s emissions, 50% emission reductions can be achieved using green building methods at little extra cost, and the fact that 73% of building cooperatives have shown a demonstrable commitment to sustainability.

 

(20) http://www.sbc.org.nz/__data/assets/pdf_file/0007/56545/Better-Performing-homes-for-New-Zealanders.pdf, p. 12.

(21) Pure Advantage (2012) “Green Growth: opertunities for New Zealand”.

(22) Pure Advantage (2012) “Green Growth: opertunities for New Zealand”.

(23) http://www.mckinsey.com/insights/sustainability/a_cost_curve_for_greenhouse_gas_reduction

(24) For example, one study found it was only 2% more expensive to build a green building (Kats, Greg, Leon Alevantis, Adam Berman, Evan Mills, Jeff Perlman. The Cost and Financial Benefits of Green Buildings, November 3rd, 2008).

(25) Pure Advantage (2012) “Green Growth: opertunities for New Zealand”, p. 224.