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'Increase in the number of insulated buildings decreases the demand to energy'
Enhancing the insulation of buildings is a primary strategy for Turkey to conserve energy, said Fatih Öktem, vice general director of İzocam.
"Merely 10 to 12 percent of 20 million buildings are insulated," said Öktem, in an interview Monday with daily Referans. "Considering Turkey imports 85 to 90 percent of its annual energy need, the more we can insulate, then the more we can conserve.
"It is possible to conserve up to $7 billion worth of energy," he said.
Government measures to promote better insulation need to be implemented, Öktem said, suggesting insulation credits, reducing the level of value added tax, or VAT, to 1 percent, and tax exemptions. By 2012, these measures could double the market size of the sector, which stands at $600 million currently, he said.
Prime Minister Recep Tayyip Erdoğan declared 2008 as the "Energy Year," said Öktem, adding that the government set the goal of doubling the market size of the sector within three years. He said this target could only be attained with full implementation of insulation standards and by making credit promotions obligatory, underlining that European countries act as regulators for the rules in insulation.
Credits with favorable conditions need to be implemented in order to convince people of the necessity of insulation, said Öktem. These credit opportunities would encourage people to insulate their buildings, he said, adding that the credit to be given by Vakıf Bank and Halk Bank is a positive but insufficient move.
Öktem noted that the insulation credit will be given for a period of 24 to 36 months, with an interest rate of 1.67 to 1.7 percent.
The high level of VAT levied on insulating materials was inhibiting the sector on two grounds, Öktem said. The 18 percent VAT on materials increased the informality of the sector, which in turn raised the costs for those materials, he said.
"Turkish ministers have attended day-long meetings with the representatives of International Monetary Fund to be able to receive $700 million credits. If we manage to insulate 5 to 10 percent of the buildings each year, then 50 to 60 percent of the buildings will be insulated after 10 years," Öktem said. "This means $1 million savings in the first year, while this level increases by one-and-a-half to two fold in the second year. However, the Ministry of Finance has not taken any initiative to reduce the value of VAT although the Ministry of Public Works and Electrical Work Examining Board supports this move."