Decarbonising the Built Environment: A Whole-of-Life Approach to Value

In early May, our Directors, Raphaela and Campbell, presented at the Australian Institute of Architects Conference, addressing the critical need for the built environment industry to drive decarbonisation. While the session specifically delved into carbon, ahha's core message emphasised a holistic approach to sustainability, deeply aligning with the Te Ao Māori perspective of kaitiakitanga – recognising the intrinsic relationship between people and the natural world. This understanding ensures architecture is inherently part of te taiao (the environment). The property market in Aotearoa is currently undergoing a significant transformation, propelled by both top-down regulatory pressures and evolving consumer demands. As governments commit to net-zero targets and consumers increasingly seek sustainable and cost-effective buildings, property owners, investors, and developers face a critical imperative to adapt. This shift presents both challenges and substantial opportunities for those ready to embrace decarbonisation in their projects, and architectural firms are uniquely positioned to guide clients through this complex landscape. Through their presentation, ahha underscored the importance of integrating sustainable design principles from inception, embracing circular approaches that consider a building's full life cycle – from upfront and operational to end-of-life carbon impacts – to benefit both clients and the communities who use the built environment. So, what are the tangible benefits for a client when considering carbon and, more importantly, adopting a whole-of-life perspective in their projects?

The built environment is currently experiencing a significant market shift, with influence stemming from both top-down and bottom-up pressures. From local to central governments, commitments to net-zero have long been established, and the policy mechanisms driving industry change are now in motion. While governmental priorities may fluctuate, the overarching policy trend is towards decarbonisation. This translates to increased decarbonisation regulation on the industry and, consequently, on clients. As this approaches, partnering with professionals who are prepared for this change is crucial to mitigate future compliance risks. Simultaneously, consumer behaviour demonstrates a clear demand for more affordable, better-quality, healthier, and more environmentally sustainable buildings. Recent reports, like Infometrics' "Analysis of financial benefits of Homestar," link consumers' climate change concerns with the cost of living through green building. With ANZ offering interest rate reductions for Homestar-rated homes, alongside green finance options for developers and landlords, and lower operating costs through building optimisation, the potential for owners and renters to embrace certified homes is set to increase. In the commercial sector, JLL’s August 2024 research report, "Turning Green to Gold," highlights the growing demand for environmentally certified buildings and the financial benefits for developers, investors, and owners. Certified properties command a market premium for leasing and purchasing, while also boasting the lowest vacancy rates across the country. These reports collectively indicate that consumer spending is driving demand for more environmentally sustainable homes. So, while governments play a vital role in regulating and enabling through incentives, businesses will ultimately drive this change by responding to market conditions and the increasing availability of ESG-related finance and consumer demand.

How much is this all going to cost? There is a common perception that environmentally sustainable building comes at a high cost premium. Again referring to the Infometrics report, homes with a 6-star Homestar rating typically have 0.7-0.8% uplift in cost to build. However, the opportunity to reduce operational costs comes with reduction in loan interest rates, and lower energy consumption. The report suggests that a typical house would see a reduction in loan term of 2-3 years. With energy costs projected to increase in the short to medium term, this is likely to be a more significant benefit to those with higher performing homes in the long run. There are many other benefits to those who will live in the homes, including to their health and wellbeing as a result of better indoor air quality and thermal comfort. So, if a consumer is presented with a new home built to NZ Building Code standard which costs $1,000,000 to purchase with a 20% deposit, the servicing costs at 5% interest would be $988/week. Assuming the same deposit, and same servicing costs, but a 1% reduction in interest, the purchaser has the financial capacity to buy a Homestar certified house at $1,107,000. This has a sales premium of 10.7%, but only a construction cost uplift of 0.8%. It’s safe to assume that the developer is not selling the home at a loss, so this cost uplift is far outweighed by the financial benefit, whether in the developers pocket, the purchasers pocket, or shared.

The research outlined here averages results across the industry, meaning, there are opportunities to deliver above average results, for building performance, but also for cost management. We believe this is achieved by aligning a strong team around the project ambitions, and by looking to key points in our process to make sure decisions are made at the correct time to integrate them in rather than tack them on.

It’s important to set realistic targets at the outset that fit into the brief and budget of a project. If we force sustainable thinking late in the project, we often find that ideas are limited to adding some solar panels, overdesigning a building's insulation, or a myriad of other technological approaches. The problem with this strategy is that the budget blows up, and value engineering shakes off the tack-on initiatives designers desperately try to preserve to maintain a sense of environmental responsibility. This isn’t good for sustainability, nor is it good for the perception of architects' value. 

The architect’s ability to unearth a project direction through robust briefing, context, and existing building analysis, as well as opportunities identification, is pivotal to setting up a project for success. We don’t call this pre-design as we aren’t designing a response yet. We call this stage Discovery, because inherently we are researching potential.

In this early stage, we have the opportunity to support a client on site selection to ensure it fits within objectives of sustainable transport options, availability of amenity and is permissive of a compact urban form. These objectives have broader decarbonisation benefits, and are further solidified through the restricting of car parking, the provision of renewable charging, bicycle storage, and emphasizing active movement in spaces. These considerations often mean you’re getting a more premium site, making the end product more valuable to consumers. All this, and nothing even designed yet.

Further site studies should explore a bulk and location which focus on optimal low carbon structural grids setting a project up for a timber first approach to a buildings construction methodology. While considering floor plate depths can assist in passive daylighting and natural ventilation strategies making space for the potential of passive design approaches later in the project.

For architects, a compelling concept, story, and connection to place has long been an important characteristic of design. We think, this shouldn’t be about just beauty, it should also be about how we consider materials, or building performance, or how a space integrates with a street, and its neighbourhood character. We are all building for people, and people respond to the emotive power of a compelling story, so we make sure our concept narratives speak to the ethos of the sustainability direction. On a current project in Tamaki Makaurau Auckland, we are working on volcanic ground conditions with strong relationships with surrounding maunga. The site is set within a neighbourhood of transforming urban form, where strong villa verandah frontages still characterise a large portion of the residential style. This informed a concept emphasising local material direction, and the passive climatic control which a verandah has historically offered to villas. These directly informed the building form, facade shading devices, and passive stack ventilation in the entry lobby atrium, all contributing to the mitigation of upfront and operational carbon.

Get the basics right. Design for passive environmental control. Don’t just rely on technology, this adds cost and carbon across upfront, operational, as well as end of life stages. Keep it simple. Look to deploy a variety of solutions, such as a high performance thermal envelope, restricting window to wall ratios, providing shading solutions to suit different elevations, and allowing for cross ventilation. This will reduce the high cost associated with excessive glazing systems, the capital cost of mechanical systems, and the operational cost of maintenance and replacement of those systems in the building's lifetime.

Further to simply designing for climatic conditions, we use digital modelling as both a guide and a review tool to analyse thermal comfort, daylighting, embodied carbon, and, in some cases, cost. Robust analysis across these metrics allows a balanced approach to building systems design, allowing for an optimised solution for location, project demands, and budget. This can, and should be started when studying a site's bulk and location, right through to resource consent and detailing. Working through these approaches allows for fine tuning of shading devices, window sizes and openings, insulation levels, and structural systems, locking in key design moves for significant carbon impact early on while analysing the cost benefit of different approaches.

On all projects we identify early what already exists — a building, a waste product, a material — and identify how it can continue to hold its value, or how it could be adapted to enhance its value. This often has the benefit of not buying new raw materials, and instead using available resources to make something unique to the project. Where new materials, products, and buildings are needed, we consider how they can be highly utilised, through spatial design which allows multiple functions at different times, or through dematerialisation strategies, using less, making things simpler, and often cheaper.

Using the tools available in the industry can aid in decision making around cost and carbon. In an early stage study on our design for Clay Corner in Dunedin,  we worked with Quantity Surveyors - Logic Group and the Vquest modelling tool, to analyse the embodied carbon and cost analysis of a baseline concrete and steel construction vs. a CLT construction. This led to a decision for a hybrid mass timber and steel construction resulting in a carbon reduction of 70% and a cost neutral outcome. This study allowed us to make an early decision on structural systems and construction methods, validating that such an approach would have environmental benefits while not compromising on the development economics.

For ahha, research and development is key to our continued growth. On a current project with a series of eco-cabins requiring off-site assembly, we explored the relationship between cost, embodied, and operational carbon. This study looked at three build ups all with a similar thermal resistance rating but with different material selections. The first wall is an EPS SIP, which is a high carbon product due to extraction, processing, transport, and end of life. The second, a high performance timber construction, with limited ecological insulation options in Aotearoa, here we use a recycled polyester rather than virgin materials, and the third, a straw SIP panel with lime render has high biogenic carbon. These show us that high performance building can come at a variety of costs, both financial and for the planet.

In summary, property developers and owners need to consider decarbonisation in building, operating, and maintaining their property for a multitude of compelling reasons:

1. Lower operating costs
2. Increased asset value
3. Reduced maintenance costs
4. Future proofing investments
5. Regulatory Compliance and Avoiding Penalties
6. Enhanced Tenant Appeal and Occupancy Rates
7. Improved Building Performance and Occupant Comfort
8. Enhanced Reputation and Brand Image
9. Access to Incentives and Financial Benefits

In essence, considering decarbonisation is not just an ethical imperative but also a sound business strategy for property developers and owners to ensure the long-term value, competitiveness, and sustainability of their assets in a rapidly changing world.