Green Buildings in Jordan Final Presentation January 14

Green Buildings in Jordan Final Presentation January 14 th, 2010

Agenda Introduction Benchmarking LEED cost LEED in Jordan Recommendations Appendix 1

Executive summary Green Building is new to Jordan but it has great potential • Green Building needs to be considered from the very start of a project • Green Building offers a lot of financial and environmental benefits for individuals and Jordan • Awareness and perception present the greatest challenges for Green Building • However, current momentum is building among stakeholders Green Building is more expensive but offers a financial payback • One-time added administrative costs are around 3% • One-time added hard costs are around 12% • With annual savings of 23% in operating expenses Green Building is a positive investment Use the current momentum to foster Green Building in Jordan • Promote Green community and awareness • Enforce building codes • Develop Green capacity 2

Green Building begins with design 1 1) Thoughtful design 2 2) Materials choice • Orient building to take advantage of sun • Design rooms to have attractive views and daylight • Reduce heat islands • Landscape to fit local weather conditions • Sufficient insulation • Low-E glass • Certified wood • Local materials, like stone 33) Care in construction • Limit dust • Limit construction footprint • Preserve green-space Thoughtful Design Materials Choice Care in Construction Renewable Energy and Water Conservation Systems 4 4) Renewable energy water conservation • Solar thermal water heaters • Grey-water systems • Solar panels • Low-flush toilets It’s difficult to make an existing structure truly Green; Green Building starts with thoughtful design. 3

The many benefits of Green Building Financial For the individual • Architects, contractors and engineers may be able to charge a premium. • Utility bill payer has reduced energy costs. • Bill payer has greater cost certainty due to less dependence on foreign energy sources. • Workers experience average productivity gains of 7. 1% with lighting control, 1. 8% with ventilation control, and 1. 2% with thermal control. 1 For Jordan • Green Building will stimulate a new industry in Jordan for the manufacture of building materials and technologies. • Fuel prices are likely to rise again in the future, just as they did last year. Reducing consumption will limit costs. Environmental • Consumers who seek out LEED are part of a forward thinking movement. Owning and renting LEED buildings is a status symbol in many places. • People are happier and more productive in Green Buildings. • Jordan is the 11 th poorest country in water resources. 2 • Jordan has incredible resources in sunlight and can use this to its advantage. Sources: 1) The Costs and Financial Benefits of Green Buildings: A Report to California’s Sustainable Building Task Force , 2003 , http: //www. calrecycle. ca. gov/greenbuilding/Design/Cost. Benefit/Report. pdf 2) World Water Resources by Country, FAO Corporate Document Repository, Natural Resources Management and Environment Department , http: //www. fao. org/DOCREP/005/Y 4473 E/y 4473 e 08. htm Sited 1/12/10; 4

Green Building in Jordan faces multiple challenges… Awareness of LEED and Green Building Perception Enforcement of current building codes First-time building hurdle Limited local Green industry • Many contractors have not heard of LEED and do not offer Green solutions. • Consumers do not seek out energy efficient offices or homes. • Subsidized water/electricity does not incentivize resource conservation • People may not believe in resource savings, since Green is new. • People may not like the Green aesthetic. • Local building codes specify energy efficient practices (eg. insulation, low-E windows, building orientation, ventilation) but these codes are not consistently enforced. • First time Green builders may need to do significant upfront legwork to learn about LEED and find suppliers. • There is only a small Green industry in Jordan, including local suppliers of Green technology, Green consultants, and LEED APs. • Imported materials are more expensive and defeat the Green purpose. 5

…but there is significant opportunity and some headway Awareness of LEED and Green Building Perception Enforcement of current building codes First-time building hurdle Limited local Green industry • Local momentum is building: The Jordan Green Business Council was formed, USAID is involved and many people are enthusiastic. • Many builders already use solar thermal, Low-E glass and local materials. • LEED is still a young framework (began 1998 in the US). • LEED is an international brand has appeal as a status symbol. • Focus on energy efficiency is correlated with energy prices. As these inevitable rise, interest in Green Building will too. • Many local leaders and business people recognize this gap, so it may be addressed in the future. • Codes themselves are strong and appropriate if enforcement is improved. • • Geography of Jordan is conducive to Green Building. Some buildings in Amman qualify for LEED Certified already. Jordanians already build Green, using stone to keep homes cool. Early adopters have the chance to gain significant market share. • Easy to order and access products from other countries. • No customs charge or taxes on Green imports makes products available. • Industry will expand with demand. 6

Team met with all relevant stakeholder groups A/E Firms and LEED Consultants (8) State Agencies and Private Sector Associations (6) Rashed Al-Nasa’a, LEED AP Consolidated Consultants Raouf Dabbas, Senior Advisor Ministry of Environment Yousef Farran, LEED AP Seville Engineering Malik Kabariti, Former Director NERC Yasser Al Sharif, LEED AP Abdulelah Al-mohanna Ruba Al Zu’bi, Dir. Envr. Sustain. Development Zone Comm. Lama Bashour, Mkt. Mgr Engicon Huda Dabbas, Engineer Housing & Urban Dev. Ala’ Azzam Yahya, Engineer Engicon Jamal Qtaishat, Sec. General JNBC Florentine Visser, Architect Independent Architect Mohamad Asfour, Director JGBC Jamal Naber, CEO Archisys Abdullah Bdeir, Technical Comm. JGBC Baria Abu Ghosh, Exec. Mgr. Archisys Majd Suleiman, Engineer Eco. Consult Ibrahim Suleiman, LEED AP Eco. Consult Lu’ay Jildeh, Country Mgr. Energy Mgmt Systems Fadi Al-Faris, Sr. Consultant Energy Mgmt Systems Contractor (3) Ammar Rihani, Owner Al Miqyas Ibtisam Abu Aisha, Owner Abu Aisha Elias Khoury, Chairman Wajih Contacting Comp. Developers (5) Yousri Barakat, Vice Chairman Specialized Co. Omar Salameh, GM Specialized Co. Isam Al-Khatib, Owner Al-Khatib Development Co. Na’el Kawar, Board Advisor Jordan Dubai Capital George Amireh, Director Abdali PSC Amer Battikhi, Program Manager CH 2 ML Hill Green Supplier (1) Shukri Halaby, Business Dev. Millennium Energy 7

Green Building stakeholders have differing views Developers What They Say Key Learning • Require <7 year payback on up front investment. • Willing to pay up to 5% premium for Green. • Many Green technologies still too expensive. “Generally, people use shorter time horizons [in Jordan] because of lack of patience and faith in the economy” “Green can be used as an image boost. ” -- Nael Kawar, Advisor Jordan Dubai Capital Contractors • LEED requirements make the construction execution much more difficult. • Site location is a significant factor in Green premium. • Limited local market for Green materials “We just do what the drawings say…. Clients specify the materials” -- Ibtissam Abu Eisheh “I was surprised with the new [LEED] procedures in the beginning, then I realized the environmental benefits. ” --Ammar Rihani A/E Firms & Consultants Agencies & Associations • Green fits Jordan: climate and resources • Must create a Jordan-specific set of Green criteria. • Government goal of 10% • Most Important Elements: energy reduction by 2020. • Passive design • Water reduce/reuse • Code enforcement a major • Insulation/windows issue. • Solar thermal water heat • Jordan needs benchmark • Regional materials measurements with which to compare Green. “We need more Green advertising to change the public perception. ” --Yousef Farran Seville Engineering Consultants “Green is not expensive. So much can be achieved with passive design. Payback is immediate!” -- Malek Kabariti Former NERC Director 8

Part II BENCHMARKING LEED COST 9

US LEED cost and savings benchmarks Economic value of Green Building = Energy cost savings + Sale or rental premium - Rental or Sale Premium Additional construction cost - Construction Premium Study Name Description Energy Savings Energy Performance of LEED for New Construction Buildings 2008, New Buildings Institute Compares US LEED buildings to national building stock assessment. Certified / Silver: 25% 30% Gold / Platinum: 50% Regional Green Building Case Study Project: A post‐occupancy study in Illinois; 2009 17 buildings in Illinois, USA, Control group of buildings in Midwest Advanced Customer Technology Test for Maximum Energy Efficiency, 1996, PG&E Design and retrofit several Green Buildings in California for the purpose of proving Green concept. The Costs and Financial Benefits of Green Buildings A Report to California’s Sustainable Building Task Force, 2003 33 Green Buildings in California Managing the cost of Green Buildings, 2003, KEMA Summarizes work from other California based research Certified: 0 - 2. 5%; Silver: 0 – 3. 5%; Gold: 1. 5% - 5%; Platinum: 4. 5%- 8. 5% Cost of Green Revisited: Reexamining the Feasibility and Cost Impact of Sustainable Design in the Light of Increased Market Adoption, ; 2007 Analyzed 221 US buildings of different uses. Difference not statistically significant. Does Green Pay Off? , 2008 Over 2000 US buildings from across the country Admin, energy modeling, and commissioning Admin. Commercial: 5% Office: 7% 55% – 65% from top quality projects. They managed 72% in one retrofit. 30% <2% 10% premium, controlled for location, type. 3% 10

Green Building cost in Jordan are different Lower costs Higher costs 1) Some basic Green Building materials are readily available § Stone is locally available and a great insulator § Insulation abroad is comparatively more expensive, and is a major building cost 1) Most Green technology needs to be imported § Recycled materials, RE technology, and other materials § Even without customs duty, products may cost more § Long-distance shipping charges § Few suppliers have significant pricing power 2) Labor here is 10 x cheaper than in the USA § Jordan unskilled labor: $10 JD / day ($15 USD) § USA unskilled labor: $100 JD / day ($150 USD) 2) Recycling infrastructure does not currently exist in Jordan and would require city-wide coordination and funding Incremental cost for meeting LEED Silver in Seattle 1 % 6. 0 4. 0 Small projects 2. 2 1. 0 2001 Large projects 0. 3 0. 0 2003 There is a learning curve in Green Building, and costs will decline over time. Source: 1) Managing the cost of Green Buildings, 2003, KEMA http: //www. usgbc. org/Show. File. aspx? Document. ID=5049 11

Part III LEED IN JORDAN 12

LEED criteria optimal in Jordan if water efficiency weighting increases 110 3 LEED Jordan 1 Regional priority (RP) Innovation in Design (ID) Indoor Environmental Quality (IEQ) In Jordan, water conservation is most important. Making WE equal in value to EA, and keeping all other LEED categories proportionally equal would yield the following distribution: Materials & Resources (MR) Energy & Atmosphere (EA) Water Efficiency (WE) Sustainable Site Selection (SS) 1. Team's estimate on optimal weights for LEED categories in Jordan 13

Green Building in Jordan can optimize on multiple fronts LEED Criteria Grouping Credit # Points / % Easy Pts Fin. Payback Environment SS 1, 3, 5 4 0 0 2 Development Density and Community Connectivity SS 2 5 2 0 1 Alternative Transportation SS 4 12 2 0 1 Storm water Design SS 6 2 0 0 0 Heat Island Effect SS 7 2 1 2 2 Light Pollution Reduction SS 8 1 0 0 1 WE 1 -3 10 1 1 2 Optimize Energy Performance EA 1 19 1 1 2 On-site Renewable Energy EA 2 7 0 1 2 Enhanced Commissioning EA 3 2 0 0 0 Enhanced Refrigerant Management EA 4 2 0 1 2 Measurement and Verification EA 5 3 1 0 0 Green Power EA 6 2 0 0 2 Site Selection, Brownfield & Development Water Efficiency 14

Green Building in Jordan can optimize on multiple fronts (cont. ) LEED Criteria Grouping Credit # Points / % MR 1, 3 6 Construction Waste Management MR 2 2 Recycled Content MR 4 2 Regional Materials MR 5 2 Rapidly Renewable Materials MR 6 1 Certified Wood MR 7 1 IEQ 1 -3 4 IEQ 4 4 IEQ 5 1 IEQ 6 -7 4 Daylight and Views IEQ 8 2 Design Innovation and LEED AP ID 1 -2 6 Regional Priority RP 1 -4 4 Building and Material Reuse Air Quality, Ventilation & Monitoring Low-Emitting Materials Indoor Chemical and Pollutant Source Controllability of Systems and Thermal Comfort Easy Pts Fin. Payback Environment 15

Hard Costs Soft Costs LEED premium in Jordan is around 15% LEED Fees & Administration <1% Incl. registration, design/construction review, energy modeling, add. labor for admin & documentation for medium building. Design <1% If Green is incorporated from the beginning, additional design (A/E) costs should be negligible. LEED Consulting 1% Dependent upon size of project. Commissioning 1 -2% Dependent upon size of project. Construction – Process & Materials 12% Includes material upgrades and additional construction costs for a LEED certified building. 16

LEED certification and documentation costs are low US small/ less complex Project type US large/ more complex Adjustment Average factor Jordan 1 Cost in Jordan Project registration fee $1, 200 100% $1, 200 Design and construction review $2, 750 $27, 500 $15, 125 100% $15, 125 Energy modeling $15, 000 $50, 000 $32, 500 50% $16, 250 Admin & documentation $15, 000 $60, 000 $37, 500 50% $18, 750 Total certification costs (USD) $33, 950 $138, 700 $86, 325 Total certification costs (JOD) $51, 325 JD 36, 441 LEED certification and documentation costs are less than 1% for a JD 4 M building 1. Mostly accounting for lower cost of labor Note: Figures assume Gold certification levels. Small project assumes ~5, 000 sqm $5 m building, large project assumes ~50, 000 sqm $30 m building. Source: Green Building Certification Institute website and KEMA study, October 2003 and HBS Green Building Team estimate. 17

We analyzed added costs of Green Building in 3 steps What are relevant Green measures? "Solar thermal water heating has the fastest payback. " "Every building in Jordan should have proper insulation. " What is the added cost of Green measures? "Double glazed windows are twice as expensive. " "You don't need additional labor for efficient lighting. " What costs are affected by Green measures? 100 Other Electrical HVAC Plumbing Green Measures Finishes Openings Measure 1 Thermal protection Measure 2 Wood & plastics Masonry Measure 3 Concrete . . . Existing conditions Hard costs List of Green measures Costs of Green measures Hard costs of Green Building 18

List of measures Description Quantified Added hard costs 1 Reduced OPEX 2 Altering measures Add. thermal insulation Insul. /low-e windows Building orientation Accessible location Energy efficient lighting Energy efficient HVAC Effect on power system Low flow fixtures Grey/rain water reuse Ecological painting Clean Construction Use minimum 5 cm, high density (60 kg/cbm) insulation Use double-glazed, low-e windows with properly insulated frames Position building in order to optimize daylight use and insulation Locate next to public transport Use high quality fixtures and efficient light bulbs, avoid halogen Use energy efficient equipment and room specific controls Efficient equipment reduces requirements on power system Use dual flush toilets and motion sensor faucets Collect rain water/grey water to use for irrigation and toilet flush Use no-VOC paint Prevent dust and soil erosion during construction Yes Yes Yes + 1. 82% + 1. 36% + 0. 00% + 3. 25% + 1. 60% – 0. 50% + 0. 47% + 2. 32% + 1. 07% + 0. 52% – 4. 5% – 0. 0% – 2. 3% – 4. 5% – 0. 0% – 0. 5% – 1. 5% – 0. 0% Additive measures Relevant Green measures in Jordan are quantified Solar water heating Waste recycling Bike racks Showers Covered parking Solar space heating Solar PV Geothermal heating Use solar panels for water heating requirements Install waste collection facilities that permit waste separation Install bike racks Install showers to encourage bike usage Offer covered parking to reduce heat island effect Use solar panels for space heating requirements Use solar panels to generate on-site electricity Use geothermal energy for space heating requirements Yes Yes No No No + 0. 07% + 0. 00% + 0. 01% n/a n/a n/a – 6. 8% – 0. 0% n/a n/a n/a 14 + 11. 99% – 23. 1%3 Some measures not quantified because of lack of information 1. Percent change of total hard cost (excl. design, etc. ) 2. Percent change of total operating expenses 3. Total savings are not equal to sum of measures' savings in order to account for a reduced savings potential if multiple measures are combined Source: USAID Green Building Model 19

Additional hard costs of 12% for Green Building Standard hard cost 100 Other Electrical HVAC Plumbing Finishes Openings Thermal protection Wood & plastics Masonry Concrete Existing conditions Standard Building hard costs Cost impact on category 1 Building orientation + 0% Accessible location + 0% Bike racks + 1% Green Building hard cost 112 Other Waste Recycling + 0. 1% Solar water heating + 17% Energy efficient lighting + 33% Effect on power system – 5% Energy efficient HVAC + 20% Openings Grey/rain water reuse + 29% Thermal protection Low flow fixtures Electrical HVAC Plumbing Finishes Wood & plastics + 6% Masonry Ecological painting + 10% Concrete Insul. /low-e windows + 27% Existing conditions Add. thermal insulation + 36% Clean Construction + 5% Green Building hard costs 1. Cost impact on individual hard cost category affected by Green measure. For example, "insulated/low-e windows" increases category "openings" by 27% Source: USAID Green Building Model 20

Savings in operating expenses of 23% annually Standard building operating expenses Solar water heating 100 Other Water Standard Building operating expenses – 15% Energy efficient lighting – 5% Energy efficient HVAC – 10% Insul. /low-e windows – 10% Add. thermal insulation – 10% Building orientation – 10% Grey/rain water reuse – 15% Low flow fixtures Electricity Green Building operating expenses Savings on category 1 77 Other – 5% Effect on power system 0% Ecological painting 0% Accessible location 0% Bike racks 0% Waste Recycling 0% Clean Construction 0% Electricity Water Green Building operating expenses 1. Savings on individual operating expense category affected by Green measure. For example, "insulated/low-e windows" decreases category "electricity" by 10% Source: USAID Green Building Model 21

Green Building is a positive investment Full time horizon Jordanian time horizon Cash flows ('000 JD) 2, 500 1, 500 2, 419 2, 287 500 Annual saving . . . 0 1, 000 Terminal value 500 . . . 0 -500 -1, 000 -1, 089 -1, 500 0 1 2 3 . . . 10 Year NPV: 384, 000 JD , Payback 11 yrs 0 1 2 3 . . . 10 Year NPV: -497, 000 JD , Payback 11 yrs With increase in energy and water costs Green Building becomes even more attractive Note: Utility cost growth rate: 4 -10%; Discount rate: 10%; Calculated for a 10, 000 sqm building with value of 7, 500, 000 JD Source: USAID Green Building Model 23

There additional savings not included in the model Reduced maintenance - Smaller systems/appliances needed to fulfill performance requirements reduces maintenance labor/materials. - Reduced equipment usage lessens wear and tear. - Higher quality equipment typically with longer life cycle. - However, high tech equipment can also increase maintenance. Reduced absenteeism Increase in Productivity - Improved indoor air quality lessens illness, colds, asthma and other health problems. - Worker productivity gains of 1%-7% result in financial benefit that outweighs energy savings. 1 - Pleasant work environment with plenty of natural daylight leads to lower absenteeism. - Lower absenteeism is linked to lower overall employee turnover. - Productivity gains come from worker control of environment: - 7. 1% with lighting control - 1. 8% with ventilation control - 1. 2% with thermal control 2 - Greater daylight reduces worker stress. These savings are significant but difficult to quantify, particularly since each building is unique Source: 1) Harvard Business School case: Genzyme Center, 2009 2) The Costs and Financial Benefits of Green Buildings: A Report to California’s Sustainable Building Task Force , 2003 , http: //www. calrecycle. ca. gov/greenbuilding/Design/Cost. Benefit/Report. pdf 24

Part IV Recommendations 25

Policy recommendations to foster Green Building Short Term Promote Green community and awareness Enforce existing building codes Long Term Develop Green capacity • Link together all interested parties into the Jordan Green Building Council. Hold regular JGBC meetings and mixers. • Distribute Green literature and cost-benefit studies to the broader Jordan building community. • Educate community about the different levels of quality in Green materials, so that poorly crafted devices do not tarnish Green’s reputation. • Foster awareness, that resources in Jordan are limited and largely underpriced because of current subsidies There are three main ways to enforce building code: • Government inspectors check on adherence to code infrequently, but violation penalty is very high • Government inspectors check on adherence to code consistently, with a moderate (but still higher cost than initial compliance) fine. • Contract with a 3 rd party organization who receive a percentage of the penalty fee, and are thus incentivized to monitor construction closely. • Build an environmental course of study at a local university. • Encourage local manufacturing of Green technology 26

Part V APPENDIX 27

Appendix: LEED criteria applicable to Jordan Water Efficiency Sustainable Sites Dev. Density Parking – hybrid vehicles Site Dev Storm-water Design Heat Island Effect Brownfield Site Selection Light Pollution Reduction Total 5 3 2 2 2 1 17 Materials & Resource Building reuse Construction waste mgmt. Material Reuse Regional materials Rapidly renewable materials Certified wood Total Water-efficient landscape Innovative wastewater tech Water use reduction Total Energy & Atmosphere 4 2 4 10 Optimize energy performance On-site renewable energy Enhanced commissioning Enhanced refrigerant mgmt Measurement/verification 19 7 2 2 3 Total 33 Indoor Environmental Quality 4 2 2 2 1 1 12 Outdoor air delivery 1 Increased ventilation 1 Construction indoor air quality 2 Low-emitting materials 4 Chem/Pollutant control 1 System controllability 2 Thermal Comfort 2 Daylight and Views 2 Total 15 Innovation in Design LEED professional 5 1 Total 6 Source: LEED version 3. 0 (2009) 28