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Israel’s new housing starts must now go green, with energy efficiency labels

Knesset committee approves mandating a green grading system for new homes to help reduce carbon emissions

View of the "Halutziot" project, which includes the construction of a 55 megawatt solar power plant as a joint venture of the communities of the new pioneering region, in southern Israel. November 16, 2017. (Moshe Shai/Flash90)
View of the "Halutziot" project, which includes the construction of a 55 megawatt solar power plant as a joint venture of the communities of the new pioneering region, in southern Israel. November 16, 2017. (Moshe Shai/Flash90)

Israel will require all new homes to carry an energy efficiency label, the government announced Thursday, in a move aimed at helping the country deliver on emissions reduction targets.

Around 30 percent of Israel’s total electricity consumption currently occurs in residential buildings, and the approval this week of the obligation by the Knesset Economics Committee will now make this part of the Sale Law, which applies to all new housing units. The requirement is slated to come into effect immediately.

Israel has committed to cutting carbon emissions from 2015 levels by 27% by 2030, and by 85% by 2050, as set out in the National Energy Efficiency Plan put in place last October. Up until now, pressure to deliver energy-efficient construction has come primarily from multinational businesses using one global template for all their offices which prioritizes energy efficiency.

Now the Energy Ministry, working with the Housing Ministry and statisticians, is looking to a labeling system to provide buyers with more information, and to put pressure on the approach to residential buildings so that the energy used to build houses and to live in them also starts to fall.

Developers will need to provide an energy rating from A+ to F for all new homes, in advance of purchase, according to the framework established by the government. Potential homeowners will be able to check expected energy consumption in any new apartment they’re interested in, compare the running costs of one apartment against another, and look at the overall future energy running costs as part of their purchasing decision.

The construction process is also a major contributor to carbon emissions. As a result of traditional ways of building, the materials used, and the amount of waste that is generated, the industry is responsible for around 40% of total carbon emissions, with 8% coming from concrete alone.

A construction site of a new residential neighborhood in Kfar-Yona in the Sharon area, August 8, 2019. (Gili Yaari/Flash90)

Becoming energy-efficient requires rethinking the way buildings are made, and looking at new, more local and more technologically advanced materials and designs. Prior to 2018, there were perhaps around 50 startups operating in the green construction space in Israel, but Naor Caspi, who heads innovation for Israel’s largest private construction and real estate company, Tidhar, says there are now around 300.

These new construction technology businesses are looking at everything from more environmentally friendly concrete and tiles (e.g. ECOncrete and Criaterra) to ways of assessing energy savings across the construction pipeline (e.g. Viridian).

Globally, $530 million was invested in this sub-sector in 2021, according to Deloitte Israel. Many of Israel’s large construction companies are already working with innovators to explore different ways of doing things that can deliver the desired energy savings.

Energy rating label for new homes, approved on June 23, 2022. (Energy Ministry)

Delivering meaningful reductions in carbon emissions is not just about installing low voltage lighting and solar panels, though such moves may also play a role. Buildings need to be designed from the start to interact effectively with the climatic conditions around them, for example by using the size of windows and the type of glass in them to promote air circulation and insulation, rather than magnifying the heat of the sun and the subsequent need for air-conditioning.

The new legislation will require an energy rating in advance of purchase for every new apartment. Like the scale that has already been introduced for electrical products, grading will run from A+ to F, with higher ratings offering the highest energy and money savings for residents — potentially as much as 30%. A similar system already operates across the European Union.

Ziv Shor, Israel manager for international property company JLL and a real estate lecturer at Reichman University, believes “energy efficiency and sustainability are becoming the number one priority for people. It’s also a core requirement for investors, and it will soon become very difficult to finance projects if they are not sustainable.”

Shor said he recognizes that residential projects present different challenges to commercial construction, but he says that “a combination of legislation, pressure from occupiers, and the costs of old-style building and importation of materials will force change on the sector.”

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