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A Proposal for Improving Incentives for Seoul’s Green Building

Min Kyeong KimㆍHyun Jung Nam

Korea revised the Green Building Establishment Act in 2019 to enforce mandatory green building in the private sector from 2025 and expand it to small buildings from 2030. In addition, the plan is to strengthen the incentives for a stable policy environment. Seoul’s city government repealed the guidelines for environmentally friendly building designs that had been in effect since 2007 and has been applying the Seoul Green Building Design Standard since 2013. Further, since 2009, the Seoul city government has been providing incentives in the form of green building certification according to various rating systems, including Green Building, Building Energy Efficiency, and Zero Energy Building. These incentives have been launched over the past decade to compensate for the increase in initial construction costs and revitalize green buildings in response to concerns about a downturn in the construction market. However, due to frequent changes in the system, low effectiveness, and low public awareness, performance has been considered insufficient. The Seoul city government has perceived a lack of institutional and economic incentives for green building and emphasized the need to promote green construction by finding additional incentives at the beginning of this year. Therefore, before mandating green building construction, it is necessary to find a policy to increase the incentive effect through provision of intensive support. Current incentives include relaxation of building regulations (floor area ratio and height) and acquisition in tax reduction, but there exist a risk in carrying out a design using the incentives when the benefits are uncertain. Therefore, the incentives must be improved to reflect the actual needs. The Seoul city government needs to lead in systems and incentives to establish the design, construction, and operation plans for actual buildings and for residents to create zero energy buildings in the future. To this end, systematic and accurate data should be gathered and analyzed to find effective ways to improve incentives that would reflect local characteristics. For example, in the case of supporting a 10% additional construction cost in addition to the existing benefits, the payback period for residential, non-residential, and business buildings was set at 9 years. In addition, application of building coverage ratio to residential building resulted in an 10-year payback period, and a 10 years’ and 8 years’ payback period, respectively was set when the standard for establishing parking in non-residential and business buildings was relaxed. The introduction of subsidies is generally accepted overseas, but Korea does not provide financial support for new buildings. Subsidies that lower the initial cost of construction can increase the incentive effect and serve as an attractive factor that can convince the owner through the provision of intensive support.