Real Estate Investor Magazine South Africa September 2013 | Page 16

COVER STORY
III Report on corporate governance; the Expected Business Benefits of Green Carbon Tax legislation; the energy efficiency Building in South Africa measures recently introduced into the National Source: McGraw-Hill Construction, 2013 Building Regulations; the recently approved New Green Building Green Retrofit Integrated Industry Waste Tyre Management Decreased Operating 7% 12% Plan (IIWTMP), funded through a levy on Costs Over One Year tyres, and the release of the South African Decreased Operating 33% 37% government ’s nationa l Climate Change Costs Over Five Years Payback Time for Green 7 5 Response Policy.
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tax, an increase of around 8%. It will also affect the cost of building materials, notably cement, and the cost of every other conceivable product and service.

Employee productivity
W h i le ef fec t ively dea l i ng w it h g reen consumerism, regulatory compliance issues and rising operating costs, going green also benefits companies – whether tenants or owner-occupiers – in respect of higher employee productivity and reduced absenteeism. International studies have shown that green buildings can produce a 20% boost in productivity, while people in green buildings have fewer incidents of colds, f lu and asthma as a result of better ventilation systems and environmentally-preferable paint and furniture. A 2004 study of professional women in France identified a 57.1% reduction in sickness absence, a 16.7% reduction in doctor visits and a 34.8% reduction in hospital stays among subjects with natural ventilation in their workplace.

The SANS 10400 part XA standards which form part of the National Building Regulations focus on how buildings are designed and built by providing guiding principles for minimum requirements for items such as hot water supply, energy usage, design assumption (ie the design process followed) orientation or location/ positioning of the building, f loors, external walls, fenestration (the design and placement of windows in a building) and roof assemblies. A further advantage for achieving such compliance is a tax refund in terms of the National Energy Act, 2008 Regulations on the Allowance for Energy Efficiency Savings (as published in Government Gazette number 34596). “The result is that builders, contractors and even architects must change the way in which they plan and construct all new buildings to ensure that the new laws are met,” comments Ori Saban of solar water heating company, AGS Solar. “Statistics identify the support of the new legislation, showing that the use of solar power in both residential and commercial buildings is now climbing swiftly, and has been doing so since the new legislation was passed. The bottom line is that this new legislation has remoulded the way in which properties are built, as architects/designers now need to implement the new standards and requirements to ensure they meet the new legislation.”

These projected reductions in operating expenses are not overly optimistic and will certainly make a substantial difference in a country where operating costs are soaring. In 2009, electricity tariffs increased 22.10 cents per kilowatt hour (c/kWh) to 33.14 c/kWh an increase of 49.95%. Price increases in 2011, 2012 and 2013 were 24.8%, 25.8% and 16% respectively, which means that prices were raised in four years by 173% above the price on

“New green buildings are expected to decrease operating costs by 33% over five years”
31 March 2009, and 147% above the inflation rate. And with the 8% per year increase over the next three years, electricity consumption will continue to be a major and growing cost for companies, especially landlords and property owners. Water tariffs can also be expected to rise as the water supply in South Africa becomes ever-more critical. Add to this the reality that the petrol price has already breached the R13 a litre mark, and going green in every aspect of a company’s operations becomes a survival strategy. In addition, a new cost factor will soon impact on companies: a carbon tax of R120 per ton of CO2 emitted will be introduced from January 1 2015 and will increase by 10% per annum. Any person or company using a lot of energy will be highly affected by the proposed carbon tax, given the fact that the cost of electricity price could increase by 4.8c per kWh as a result of the carbon

Sustainability
Perhaps more impor tant than a l l these benefits for forward-thinking companies is sustainability – ensuring that a company can survive the next decade. Going green is the only way to sustain a business into the future, not only in terms of being able to continue operating in the face of rising electricity, water and fuels costs, but also in terms of managing the ever-increasing risk of supply interruptions. Eskom has called on all South Africans to use electricity sparingly as “the power system is extremely tight”. When households are requested to switch off everything but one light and the TV, just to keep the power on, one wonders if we really understand just how tenuous the power supply in South Africa is? And do we recall the enormous economic costs of rolling blackouts as experienced previously? Our water supply is similarly under massive pressure, while the demand and supply realities in terms of crude oil will ensure petrol prices continue to rise and rise. Companies who do not embrace the green evolution – much like the companies who lagged behind in embracing computers and mobile technologies – will find themselves
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Lower operating costs
If there is one thing that grabs corporate attention, it is the opportunity to save on costs. And going green not only saves money now, but also for years into the future. “An interesting observation made in The World Green Building Trends report is the list of expected business benefits of green building in South Africa,” adds Townshend. “New green buildings are expected to decrease operating costs by 33% over f ive years, while green retrofits are expected to decrease operating costs by 37% over the same period.”
14 September 2013 SA Real Estate Investor