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 our presentation, we 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?

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 a 0.7-0.8% uplift in construction costs. However, the opportunity to reduce operational costs comes with lower loan interest rates and reduced 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 living in these homes, including improved health and well-being due to better indoor air quality and thermal comfort, so while there is a cost premium, this is outweighed by a sales premium through increased demand for higher quality products and reduced costs both in operation and in interest repayments to the consumer.

The research outlined here averages results across the industry, indicating opportunities to deliver above-average results in both building performance and cost management. We believe this is achieved by aligning a strong team around the project's ambitions and by identifying key points in our process to ensure decisions are made at the correct time to integrate them effectively, rather than tack them on.

Setting realistic sustainability targets at a project's outset is vital; otherwise, late-stage, technological additions often exceed budgets and are cut, harming both environmental outcomes and the perceived value of architectural design.

The architect’s ability to unearth a project's direction through robust briefing, context, and analysis of existing buildings, as well as opportunities identification, is pivotal to setting up a project for success.. We call this stage Discovery, because inherently, we are researching potential.

At this early stage, we have the opportunity to support a client in site selection to ensure it aligns with the objectives of sustainable transport options, the availability of amenities, and is conducive to a compact urban form. These objectives have broader decarbonisation benefits and are further solidified through the restriction of car parking, the provision of renewable charging, bicycle storage, and an emphasis on active movement in spaces. These considerations enable a more valuable end product without the need to even design anything. 

Further site studies should explore a bulk and location that focuses on optimal low-carbon structural grids, setting a project up for a timber-first approach to a building's 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 have 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. Therefore, we ensure that our concept narratives align with the ethos of our sustainability direction. On a current project in Tāmaki Makaurau, Auckland, we are working on volcanic ground conditions with strong relationships to 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's form, facade shading devices, and passive stack ventilation in the entry lobby atrium, all of which contributed to the mitigation of upfront and operational carbon.

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 enables a balanced approach to building systems design, allowing for an optimised solution that considers 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 the 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, or a material — and determine how it can continue to retain its value. This often has the benefit of not purchasing new raw materials, and instead utilising available resources to create 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 enabled us to make an early decision on structural systems and construction methods, validating that such an approach would yield environmental benefits without compromising development economics.

For us, research and development are key to our continued growth. On a current project involving a series of eco-cabins that require off-site assembly, we explored the relationship between cost, embodied carbon, and operational carbon. This study examined three build-ups, all with a similar thermal resistance rating but differing in material selection.

The first wall is an EPS SIP, which is a high-carbon product due to its extraction, processing, transportation, and end-of-life impacts. The second, a high-performance timber construction, has limited ecological insulation options in Aotearoa. Here, we use recycled polyester rather than virgin materials. The third, a straw SIP panel with lime render, has high biogenic carbon content. These show us that high-performance buildings 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.