SBM-R-12-3 Building-Integrated Vegetation: Redefining the Landscape or Chasing a Mirage? Rapid urbanization over the past five decades has led to environmental issues like air pollution, urban heat-island effect, and loss of green spaces. In response, cities such as Copenhagen, London, Singapore, and Chicago have announced mandates or incentives for vegetated roofs to reduce storm-water volume, clean air pollutants, reduce the urban heat-island effect, and sequester carbon dioxide. There also have been a number of demonstration projects for vegetated walls that offer similar benefits. However, the environmental benefits remain hard to monetize, and questions persist on whether urban vegetation will be a mainstream market or another green curiosity. Here, we examine the drivers as well as barriers for growth in this emerging market, and project the global market size for green roofs and walls from 2012 to 2017. Table of Contents EXECUTIVE SUMMARY 2 LANDSCAPE 3 Green roofs and walls offer multiple benefits, but competing technologies show a better cost / benefit tradeoff when evaluated for each benefit individually. ANALYSIS 12 BIV market grows to $7.7 billion by 2017. Maturing German and Swiss markets slow the green roof installations, but North America and Asia still provide growth opportunities. Lead Analyst Aditya Ranade, Ph.D., MBA Analyst +1 (857) 284-5689 aditya.ranade@luxresearchinc.com Contributors Kalib Kersh Jaideep Raje OUTLOOK 20 ABOUT LUX RESEARCH 21 ENDNOTES 22 Lux Research Inc. Lux Research does and seeks to do business with companies covered in its research reports. Thus, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. This report is based on information obtained from sources believed to be reliable but no independent verification has been made, nor is its accuracy or completeness guaranteed. This report is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Lux Research Inc. Boston New York Amsterdam Singapore Shanghai www.luxresearchinc.com
Building-Integrated Vegetation: Redefining the Landscape or Chasing a Mirage? 2 Executive Summary Executive Summary The rapid urbanization around the globe during the last five decades has come at a heavy price to the environment with rising air pollution, urban heat-island effect, and loss of biodiversity and green spaces. With increasing awareness about these issues, government bodies are looking at building-integrated vegetation (BIV) green roofs and green walls as a tool to mitigate the environmental degradation and improve livability. BIV is Driven by City-Level Incentives and Mandates Unlike other green sectors such as solar photovoltaic or biofuels, BIV adoption is not driven by national-level policy measures, but entirely by city-level hyperlocal priorities. Specifically, the two major types of policy drivers for BIV are: Building code requirements and mandates. Building code requirements on storm-water discharge such as those in London, mandates for green roofs such as those in Copenhagen, and mandates for green walls in Shanghai will drive adoption. Financial incentives. Financial incentives such as cash rebates for installing green roofs in Portland and exemptions in storm-water surcharge in London will shorten the payback period and the upfront capital expenditure. Value Proposition against Competing Technologies is a Major Barrier for Adoption Green roofs and walls offer a multitude of benefits such as reducing solar heat gain during summer, removing pollutants from ambient air, reducing storm-water volume, and increasing acoustic insulation. However, for every such benefit, a competing technology exists with arguably a better cost-to-performance tradeoff. Installed cost of $300/m 2 to $500/m 2 for green roofs and $900/m 2 to $1100/m 2 for green walls is an order of magnitude higher than technologies such as cool roof coatings that offer the thermal insulation benefits, photocatalytic coatings that remove pollutants from ambient air, and rainwater harvesting tanks that reduce the storm-water volume. Therefore, cities or building owners evaluating technologies to address a single environmental issue will likely not adopt green roofs or walls. Only cities that are looking at all possible environmental benefits of green roofs and walls will design supportive policy instruments. BIV will be a $7.7 Billion Market by 2017 In the likely scenario, green roofs will be a $7 billion market by 2017 with a $2 billion opportunity for suppliers of polymeric materials such as geosynthetic fabrics, and waterproof membranes, the rest going towards vegetation, installation, and operating businesses. In the likely scenario, green walls will be a $680 million market by 2017, with a $200 million opportunity for suppliers of materials such as self-supporting polyurethane foam growth media. Commercial buildings in North America and Asia-Pacific will be the growth segment. Maturing Swiss and German markets will slow down their growth, but early-stage markets in the Americas and Asia-Pacific will provide significant growth opportunities. Commercial buildings in particular will be a key growth segment, due to the tolerance for high capital expenditure. Finding right system integrator partners will be the key to success for materials suppliers. Payback periods for BIV run in decades, and building owners are rightly concerned about water leaks, maintaining the vegetation, and ensuring that the roof or wall underneath the vegetation is able to withstand the additional weight. This dynamic creates a preferential market opportunity for reputable systems integrators with expertise across these diverse domains, and materials suppliers should seek such partners as a channel to market.
Building-Integrated Vegetation: Redefining the Landscape or Chasing a Mirage? 3 Landscape Landscape Green roofs and walls offer multiple benefits, but competing technologies show a better cost / benefit tradeoff when evaluated for each benefit individually. City Governments across the World are Promoting Building-Integrated Vegetation Cities have always placed a priority on creating and maintaining urban green spaces for aesthetics and recreation. However, the last decade has seen cities move beyond the aesthetics, and view building-integrated vegetation (BIV) as a means to actively reduce air pollution, enhance storm-water management, reduce the urban heat-island effect, and combat climate change via carbon fixing. Dorthe Rømø, the green roofs project manager for City of Copenhagen, told us that her city s ambitious mandate for green roofs was prompted by several factors including combating climate change, reducing storm-water volume, increasing biodiversity, and reducing the urban heat-island effect. We define BIV as exterior or interior building materials that incorporate vegetation for aesthetic, environmental, or food security purposes. Green roofs and green walls are the most prominent examples of BIV today, with regulatory drivers in place, well-defined products, and standards for performance measurement. Other types of BIV technologies such as vertical greenhouses in double-skin facades are still in demonstration stages and the market for them is still in its infancy. The idea of BIV, however, is not new. Green sod roofs have been in existence in Scandinavian countries for centuries. A typical sod roof consists of birch bark, cuttings from local pasture grass, and soil. Sod roofs provide some thermal insulation in cold climates and weigh up to 250 kg/m 2 in summer, and up to 400 kg/m 2 in winter. As shown in Figure 1, modern green roofs are layered structures, typically consisting of a waterproofing membrane, an insulation layer, a porous drainage fabric (also referred to as root barrier), growth media, and vegetation. Green roofs usually come in three flavors extensive, semi-intensive, and intensive. Intensive green roofs are thicker, heavier, support complex vegetation, and require more maintenance compared to extensive green roofs. Figure 3 summarizes the typical depths, weights, and vegetations for the three types of green roofs. As seen in Figure 2, green walls or vegetated walls are layered structures consisting of a waterproof membrane, a drainage fabric, cladding rails, growth media, and supporting cable systems holding the wall in place. Unlike green roof, green walls usually require an external irrigation system. The major types of commercially available green walls are green facades, and living walls. Figure 4 summarizes the differences in supporting systems, type of vegetation, and weight. The most popular species of vegetation for green roofs is sedum, due to its low external watering requirements and hardiness. However, as BIV solutions move to new geographies, there is increasing emphasis on using locally available vegetation to reduce the transportation and maintenance costs, e.g. the extensive use of prairie grass on green roofs in Chicago. The BIV attribute of most interest to the building owner can also dictate the choice of vegetation. Restaurant owners such as Japonez in Mexico City interested in BIV oftentimes grow herbs or salad greens. Cities like London, interested in using BIV to remove particulate matter, tend to choose broad-leafed species with large stomata openings, such as Crassulaceae. The widespread adoption for modern day green roofs started in Germany in the 1960s. Since the year 2000, various cities in other countries around the world have deployed supporting measures. As seen in Figure 5, the supporting measures range from cash rebates and tax exemptions to mandates. U.S., Canada, and Colombia are centers of activity in the Americas. In the Americas, U.S. and Canada are major centers of activity with cities such as Toronto, Vancouver, Portland, Seattle, New York, and Chicago offering a variety of supporting policy measures for green roofs. Chicago and Toronto have installed 700,000 m 2 and 35,000 m 2 of green roofs respectively to date. However, there are even a few developing countries
Building-Integrated Vegetation: Redefining the Landscape or Chasing a Mirage? 4 Landscape Figure 1: Schematic: Cross-Section of a Green Roof Figure 2: Schematic: Cross-Section of a Green Wall such as Colombia and Peru with supportive policies and burgeoning markets for green roofs. In our conversation with the President of Peru Green Building Council, Hector Miranda, we found out that the government of Peru is considering including green roofs in the eco-home project involving 200,000 homes. Hector believes that by using recycled construction materials, local vegetation that does not require external irrigation and providing do-it-yourself installation kits to homeowners will bring down the costs significantly. Andrés Ibáñez Gutiérrez, CEO of Biotectonica, notes that use of construction waste, such as recycled HDPE for drainage fabrics, and use of locally available materials, such as coconut husk and pumice rock as porous growth media, have brought the costs for green roofs down in Colombia. 1 Over the past four years, his company has installed 50,000 m 2 of green roofs in Colombia through successful demonstration projects, cost reduction, and customer education. Andrés expects that his green roof guidelines will be part of the sustainable construction code from City of Bogota next year.
Building-Integrated Vegetation: Redefining the Landscape or Chasing a Mirage? 5 Landscape Figure 3: Types of Green Roofs Extensive Semi-intensive Intensive Depth of Substrate (mm) less than 100 100-150 Greater than 150 Weight (kg/m 2 ) 60-100 100-200 200-500 Type of vegetation Mosses, herbs, grass Grass, herbs, shrubs Lawn, perennial plants, shrubs, trees External Irrigation None Periodically Regularly Figure 4: Types of Green Walls Supporting Systems Green Facades Cable and wire rope systems, modular trellis panel systems Living Walls Mechanical fasteners Types of vegetation Climbing plants, cascading groundcovers Pre-vegetated mats, or panels typically using sedum Weight (kg/m 2 ) 60-100 40-60 Europe is the oldest market for green roofs and walls. The modern green roof market originated in Germany. To date, it remains the only country with national-level building code requirements and tax exemptions for green roofs. As a result, it boasts of 86 million m 2 of installed green roofs to date, with 700,000 m 2 in Dusseldorf alone. Among other cities, Basel, Switzerland has mandated that 30% of its flat roofs must be at least partially green by 2016. City of London has soft guidelines for incorporating green roofs and walls in commercial buildings, and storm-water tax benefits. Despite the lack of punitive measures, London has installed 300,000 m 2 of green roofs to date. The market in Asia-Pacific region is nascent. The market for green roofs and walls is relatively new in the Asia-Pacific region. Among the hot spots of activity are Singapore, China, Japan, and Australia. Beijing had the stated goal of greening 60% of low-rise (less than 12 stories) building rooftops and 30% of the high-rise building rooftops before the Olympics in 2008. In reality, the city installed only 400,000 m 2, about 10%, of this stated goal by 2011. Shanghai's city government has announced that the city will install 1 million m 2 of green roof products and 0.5 million m 2 of green wall products by the end of the 12 th Five-Year Plan. Many cities in China are desperately looking for solutions to reduce smog and the urban heat island effect and remain ripe for green roof adoption. Tokyo has a stated goal of achieving 30 km 2 of green roofs by 2020 and requires private buildings above 1,000-m 2 floorspace to green 20% of the roof area. Green roof and wall installations yield points under Singapore government s GreenMark scheme, and the Nanyang University in the country has been a pioneer in performance measurement of green roofs. Sydney and Melbourne have also announced several demonstration projects for green roofs and walls in the past three years. However, rainwater harvesting will likely be preferred over rainwater retention via green roofs in the drought stricken country.
Building-Integrated Vegetation: Redefining the Landscape or Chasing a Mirage? 6 Landscape Figure 5: Examples of Supporting Policy Measures for Green Roofs City Country Role Portland U.S. Cash rebates of up to $54/m 2 for eligible projects; 14,000 m 2 of green roofs installed to date Chicago U.S. All flat roofed public buildings as well as private buildings receiving financial assistance from the city mandated to install green roofs since 2000; storm-water ordinance of at least 0.5 inch of rainwater retention on flat roofs. 700,000 m 2 of green roofs installed to date New York U.S. One-year tax abatement of $48/m 2 up to a maximum of $100,000 per building Toronto Canada 2010 mandate for all newly constructed buildings with floor area greater than 2,000 m 2 to have green roofs; cash rebate program of $50/m 2 up to a maximum of $100,000 per project. 36,000 m 2 of green roofs installed to date Copenhagen Denmark 2009 mandate for all city government as well as commercial buildings with roof slope less than 30 to install a green roof; 50,000 m 2 installed to date London U.K. Tax benefits under Drain London program. Under the New London plan, the mayor expects all corporate buildings to incorporate living roofs and walls where feasible. 300,000 m 2 of green roofs installed to date Dusseldorf Germany Cash rebates of $15/m 2 and 50% reduction in storm-water tax. 800,000 m 2 of green roofs installed to date Basel Switzerland Mandate for 30% of all flat roofs to be green roofs by 2016 Sydney Australia Exemptions and waivers from city development levy Tokyo Japan City has stated target of 30 km 2 of green roofs by 2020; private buildings with area greater than 1,000 m 2 and public housing buildings with area greater than 250 m 2 required to green 20% of their roof area Figure 6: Benefits of Green Roofs and Walls Benefit Description Examples of Measurements and Simulations Thermal insulation Acoustic insulation Airborne pollutant removal Storm-water management Carbon fixing Green roofs and walls reduce the solar heat gain via shading and adding an insulating layer Green roofs reduce the sound level from the building underneath Green roofs and green walls remove pollutants such as NO x and particulate matter from ambient air Green roofs absorb and retain rainwater and slow down the discharge to storm-water channels The vegetation in green roofs and walls absorb CO 2 and convert it to oxygen and glucose via photosynthesis Study from National Research Council (NRC) Canada reported a reduction in roofing membrane temperature from 70C to 30C and air-conditioning energy demand from 7 kwh/day to 1.5 kwh/day after green roof retrofitting. The study also reported a reduction in temperature fluctuations : 45C between winter and summer for the reference roof, but only 6C for green roofs Green roofs reduce the sound by 8 to 18 decibel levels compared to a standard nonvegetated roof Prof. Pugh et al report 40% to 60% estimated reductions in NOx and particulate matter via modeling of vegetated walls. 3 Prof. Kohler et al report a 25% reduction in storm-water volume. A study from Nanyang University and Singapore National Parks reported a 50% reduction in peak-runoff after green roof installation. Study by Kristen Getter et al at Michigan State University report CO 2 sequestration of 375 g/m 2