Climate financing: a climate change risk resilience tool

Climate finance as part of green financing is playing a crucial role as a 'climate change risk resilience tool' as we see in green financing to green establishments like green building, affordable green housing, green industry and green appliances.

Green building refers to both a structure and the application of processes that are environmentally responsible and resource-efficient throughout a building's life-cycle: from planning to design, construction, operation, maintenance, renovation, and demolition. Green building also refers to saving resources to the maximum extent, including energy saving, land saving, water saving, material saving, etc., during the whole life cycle of the building, protecting the environment and reducing pollution, providing people with healthy, comfortable and efficient use of space, and being in harmony with nature.

Affordable green housing is a reasonably priced housing which has long term natured sustainable features as mentioned in the previous para ensuring everyone has a safe and healthy living space that meets certain standards, reduce natural resource consumption, more energy efficiency and produce less waste.

The Bangladesh Sustainable and Renewable Energy Development Authority (SREDA) has developed a 'building energy and environment rating system for green buildings'. Accordingly, Bangladesh Bank (BB) has incorporated an exhaustive guideline on green or environment friendly establishments where establishment of green building, green affordable housing, green industry, green appliances must be certified by appropriate authority such as USGBC LEEDs, GRIHA, BREEHAM, CASBEE, EDGE.

As per SREDA regulation, air conditioning system must account for more than 50 per cent of the total electricity costs in a centrally air-conditioned building. Lift or escalator must be fitted with controls & sensors to reduce speed or auto stop when no traffic is detected. Fresh air supply and mechanical ventilation and blower in basement floors should be there to allow fresh air supply in habitable floor. Limitation of lighting power density (LPD) will help design the lighting system in the most efficient way and reduce the lighting and cooling load in the buildings. Occupancy sensors, day light sensors, Co2 sensors are required to be in place. An energy efficient ceiling fan with energy consumption ? 65 watt saves around 35 per cent energy compared to regular ceiling fan. There should be provision for rain water collection and discharge with 2000 litre per day capacity tank and underground discharge system. Water Treatment Plant including recycling and reuse system with energy efficient pumping system, solar water heating system should be fitted to roof. In motor usage, variable frequency drives (VFDs) are used to match the work load.  Water efficient fittings include faucets, showerheads and flushes that use less water in order to perform the same function of cleaning as effectively as standard models. Efficient plumbing fixtures, sensors, auto control valves, aerators, flow control and pressure-reducing devices can result in significant reduction in water consumption. Concrete hollow blocks/interlocking concrete block/lightweight cellular concrete/auto cleaved brick fall into non-fire green efficient kiln.  Reinforced steel from energy efficient factories, ready mix content in low volatile organic compounds (VOC) to serve, Low- E-Glass - Energy-efficient glazing keeps home or office cooler and quieter as well as reducing our energy bills.  Window frame made of UPVC and roof top insulation & heat reflective paint or insulation blokes, 10 per cent recycle materials content, natural stone chips as course aggregate must be in place.

Site measures ensure proximity to public transport, top soil preservation, access to social infrastructure, green cover on-site, heat island effect, parking facilities for tenements, design for differently-able and senior citizens, basic facilities for construction workforce. Water Conservation covers efficient use of water during construction, rainwater harvesting, optimisation of building & landscape water demand, waste water reuse, water metering. Energy conservation includes energy efficient building envelope, shading elements for building openings, efficient lighting, on-site renewable energy, energy saving measures in appliances & other equipment. Materials conservation take care of segregation of house-hold waste, organic waste management, handling of construction waste materials, indoor environmental quality looks for tobacco smoke control, day lighting, fresh air ventilation, cross ventilation, exhaust systems, occupant well-being facilities, innovation and design process.

Climate resilient house construction takes strong wind, salinity, waterlogging, and heat factor in due consideration.

Strong wind factor contains compact volume to resist wind impact better, uniform or regular height roof of the building to avoid the strong wind, metal angle for roof framing, roof of veranda  to reduce wind pressure, tightening purlins to ensure a strong joint between roofing frame and building, covering the extended roof with solid bricks and mortar to tie-up the roof frame with the wall structure, holes on the wall to bind the roof trusses, palm or bush trees to protect the houses from possible cyclone damage.

Salinity factor focuses on use of exposed brick to reduce the impact of salinity on the wall; use of sweet water for curing and construction purposes to avoid the impact of salinity on mortar and plaster; use of d-salt to reduce the chances of oxidation due to salinity; use of class-i auto brick for its lower water particle absorbing capacity to reduce the risk of oxidisation by salt.

Waterlogging removal is done with base level height of building/housing. Sufficient depth of foundation to resist soil being washed out from underneath; using red oxide onto the surface to fight the damage caused by humidity and stagnant water; ensuring adequate and proper drainage paths.

BB's existing TK 10 billion core refinancing scheme for green building/affordable green housing/green industry/green appliances is a big opportunity for both the banks and FIs. Under the scheme the banks and FIs remain comfortable to offer the borrower a 5 per cent lending rate in a 70:30 debt equity ratio for a three to 10-year tenor with an exception of 20 years to affordable green housing which includes a grace period not exceeding one year and availing refinancing facility at 1 per cent from the central bank upon required certification. Green transformation fund of $200 million, €200 million and Tk 50 billion are also available for the exporters of all export-oriented industries like green textile industry to import green machineries. Eligible applicants will need to declare while submitting applications that they would like to avail loan facility from a bank or FI under BB's refinancing scheme. Prescribed documentation checklist, collateral free loan and personal guarantee for the deserving entrepreneurs under BB's personal guarantee scheme, technical support from technology experts/suppliers/service providers are expected and now in place.

Green industry pursues sustainable production and consumption patterns, considering elements such as resource and energy efficiency, low carbon and waste emission, non-polluting and safe industry through lifecycle management. In addition, green industry generates environment-related goods and services, such as waste management and recycling services, renewable energy technologies, and environmental analysis and advisory services.

Finance by banks and FIs need to be sustainable with climate financing to cope up with existing climate change threats and making their assets sustainable. So, banks and FIs need to finance green establishments as part of climate financing-- a climate change risk resilience tool and serve both the global and national agenda on sustainability that it demands.

The writer is a Faculty Member, Bangladesh Institute of Bank Management (BIBM) and former Director, Sustainable Finance Department, Bangladesh Bank. [email protected]