View: Sectoral allocations are missing Budget 2022’s energy-efficient buildings plan


Promoting energy savings in large commercial buildings through Energy Service Company (Esco) business models – which allows for building-owners to pay for their building’s retrofit cost at a pre-determined rate – was the only announcement that pushed the envelope in this year’s Union budget when it comes to building efficiency. While this is an excellent initiative, the budget missed an important link between public health and efficiently built environments, especially when many have been spending enormous amounts of time indoors.

Currently, the building sector accounts for nearly one-third of India‘s energy use and one-fifth of total greenhouse gas (GHG) emissions. Rapid urbanisation and construction trends suggest that the residential building footprint will increase from nearly 20 billion sq m to 50 billion sq m by 2040, signalling the huge opportunity in our real estate sector to transition towards low-carbon buildings and avoid carbon lock-in for the next decades.

The budget did announce the construction of 80 lakh new affordable houses under the Pradhan Mantri Awas Yojana (PMAY). Therein lies the opportunity to make energy-efficiency principles and low-carbon supply chains mainstream, making PMAY the prototype to transition to sustainable infrastructure projects.

Currently, affordable houses have low energy consumption due to low appliance penetration. But increasing purchasing power, rise in ambient temperature and change in comfort needs will lead to a surge in energy consumption. Responding to this increasing cooling demand through passive building designs, which focus on natural ventilation, will help delay the penetration of high energy-consuming air-conditioners into households (that can afford them). The ministry of housing and urban affairs (MoHUA), on its part, must ensure sustainable housing practices are baked into guidelines and procurement rules for future affordable housing projects.

Ceiling fans are the most-owned home appliances in India. There is, however, limited awareness of energy-efficient brushless direct current (BLDC) fans among residential consumers. Employing super-efficient ceiling fans in affordable housing projects will result in massive energy savings. Use across 80 lakh affordable houses would save nearly 30 lakh MWh of electricity in the next decade. The associated monetary benefits are equivalent to ₹1,000 crore, and the environmental benefits include avoiding nearly 20 lakh tonnes of carbon dioxide emissions.

Most beneficiaries under PMAY fall under middle- to low-income and economically weaker sections, who may not afford higher-priced, star-labelled appliances. They often purchase second-hand inefficient appliances. GoI could incentivise energy-efficient appliances by lowering taxes on these products or offering discounts.

The budget has allocated ₹1 lakh crore to assist states in catalysing overall investments in the economy. States are can use this amount for reforms related to building bylaws, town planning schemes, etc. They should use these provisions to encourage passive design strategies and construction practices by offering incentives along with a stamp duty waiver for those buildings that comply with the Energy Conservation Building Code (ECBC) and Eco-Niwas Samhita (ENS), the building-efficiency codes introduced by the power ministry that set minimum energy performance standards for commercial and residential buildings.

For the building sector, where new technology and construction practices keep emerging, there is a need to invest in dedicated research programmes and testing for new materials and technologies. Also, houses planned under the Affordable Rental Housing Complexes (ARHC), a programme designed to provide affordable rental housing to urban migrants, offers an excellent opportunity to test the feasibility of different innovations in construction and design technologies, as the occupants do not have a direct stake in these properties.

Budget 2022’s commitment towards energy-efficient buildings is welcome. But more needs to be done.



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