The Tokyo-based Asian Development Bank Institute sees the building and construction sector as a major energy consumer with massive potential for energy savings but found that less than nine percent of financing in building construction and renovation has been spent on energy efficiency projects.
The think tank estimates that green bond issuances in the Philippines and the region will grow as countries integrate it into their recovery in a post-pandemic world. “Tremendous scope exists to scale up investments in energy efficiency to maximize the energy-saving potential and address the lack of project financing in this sector,” ADBI said.
Green bonds enjoy high levels of institutional support in the region but compared to the global market, the issuances are still low.
ADBI pointed out that green buildings yield a higher return on investment than traditional ones. And since ASEAN countries are seeing a surge in energy demand due to growing populations, expanding economies, and rising living standards; investments in building design and energy efficiency improvements have a larger impact and allow for shorter payback periods.
It, however, pointed out the lack of standards for assessing the “greenness” of a building and the perception of high transaction costs that may discourage firms from issuing bonds as barriers to the financing of green buildings using the green bond market.
Although the benefits of buildings that are built or retrofitted with energy efficiency as a priority are numerous, doing so comes with a cost that can be discouraging. The green bonds that make green buildings potentially feasible will play a significant role in the struggle to recover from the economic impact of the Covid-19 pandemic.
It would be best for countries to start establishing the standards for green bonds and buildings as well as streamline the transaction costs so when we start to recover and rebuild greener, benefiting our environment and giving future generations a better chance at living in harmony with the planet.*
