Costs and Benefits
There appears to be some uncertainty with a building industry in transition. Though it is narrowing, a gap still exists between progress in green technology and evolution of policy and funding for sustainable development. Ordinances and codes don't always keep up with the green-building industry. The application of new technologies runs the risk of longer lead time, higher costs and/or limited supply. Designers and contractors, confronted with unfamiliar materials and processes, overbid to absorb the learning curve. Hesitant investors have been unfamiliar with products and processes and lending institutions have been notoriously conservative where innovative building processes are proposed. Certification requires considerable documentation – and cost – and close scrutiny by raters and reviewers.
While the subject is indeed complex, the central facts are simple. High performance green building is just a fancy description for good building. It is good for your wallet.
It is good for the environment. And it is good for people.”
* Thomas Menino, Mayor of Boston
*Everyone Benefits from Green Building…Everyone.
- The value of green building construction is projected to increase to $60 billion by 2010 (Source: McGraw-Hill Construction Analytics, SmartMarket Trends Report 2008)
- The green-building products market is projected to be worth $30-$40 billion annually by 2010 (Source: Green Building Alliance)
- Over 3.6 billion square feet of commercial building space is involved with the LEED green building certification system
- Every business day, $464 million worth of construction registers with LEED
- By 2010, approximately 10% of commercial construction starts are expected to be green (Source: McGraw Hill Green Building Smart Market Report 2006)
- The three largest segments for nonresidential green building construction – office, education and health care – will account for more than 80% of total nonresidential green construction in 2008 (Source: FMI’s 2008 U.S. Construction Overview)
- In a 2003 study, an analysis of first costs and 20-year operational costs and savings of 30 completed LEED projects showed that, on average, while the additional first cost was 2%, the total 20-year net present value of improvements attributed to energy, emissions, water, waste and commissioning is $11.98 (The Costs and Financial Benefits of Green Buildings)
- A critical review of dozens of green-building projects across the nation done in 2006 concludes there is no difference in average costs for green buildings when compared to non-green buildings (The Cost of Green Revisited)
- A 2007 report found while average construction costs across the board had risen 25-30% LEED certified projects were coming in within budget (The Cost of Green Revisted)
- A recently released 2008 study finds: (Commercial Real Estate and the Environment: CoStar)
- LEED buildings command rent premiums of $11.33 per square foot over their non-LEED peers
- LEED buildings have 4.1 percent higher occupancy
- LEED buildings sell for a remarkable $171 more per square foot than their peers
- Rental rates in Energy Star buildings represent a $2.40 per square foot premium over comparable non-Energy Star buildings
- Energy Star buildings have 3.6 percent higher occupancy
- Energy Star buildings are selling for an average of $61 per square foot more than their peers
- recycling can help reduce a contractor's construction costs (Building Savings, EPA)
- a "green" designation can also increase a building's market value as assessed by appraisers and investors (GREEN VALUE: Green buildings, growing assets Report)
- A 2007 study by Deloitte found companies declining to green existing buildings may incur unrecoverable loss due to increased operating costs, lower productivity, poor public image, worker dissatisfaction (The Dollars and Sense of Green Retrofits)
The Real Costs*
- Buildings represent 39% of U.S. primary energy use (Source: 2003 U.S. DOE Buildings Energy Data Book)
- Buildings in the U.S. account for 39% of all CO2 emissions (Source: EIA Annual Energy Review 2005. U.S. Energy Information Administration, U.S. Department of Energy)
- Buildings represent 70% of U.S consumption. (Source: 2003 U.S. DOE Buildings Energy Data Book)
- Buildings use 12.2% of all potable water, or 15 trillion gallons per year (Source: U.S. Geological Service, 1995 data)
- Buildings use 40% of raw materials globally (3 billion tons annually) (Source: Lenssen and Roodman, 1995, “Worldwatch Paper 124: A Building Revolution: How Ecology and Health Concerns are Transforming Construction,” Worldwatch Institute)
- The EPA reported 209.7 million tons of municipal solid waste of which 136 million tons were estimated as attributed to building-related construction and demolition (C&D) debris in 1996. (Sources: U.S. EPA Characterization of Construction and Demolition Debris in the United States, 1997 Update. U.S. EPA Characterization of Municipal Solid Waste in the United States, 1997 Update. Report No. EPA530-R-98-007)
It is estimated that buildings account for nearly half of all greenhouse-gas emissions, and over 75 percent of all electricity produced by power plants – a compelling argument for social responsibility by regional land-use planners and local governments, and the financing and building industries. Green building is good for business: The U.S. Green Building Council has continued to document green buildings conserve natural resources, protect ecosystems, improve air and water quality, decrease waste, reduce capital and operating costs, increase property values, boost worker productivity, improve the health, well-being, and quality of life for occupants, and benefit the community by reducing pressures on the local infrastructure and service-delivery systems. Green building serves what is known as the "triple bottom line": economy, ecology, equity.
With the release of An Inconvenient Truth and the revelation of building's impact on the health, energy costs and the future of the planet, shifting perceptions of the industry's role in greenhouse gas-emissions reductions, an unprecedented level of government initiatives, an increasing demand for green in residential construction, and improvements in sustainable materials have all served to expedite the growth of green building. Membership in the US Green Building Council (USGBC-LEED), including over 17,000member organizations including corporations, governmental agencies, nonprofits and others from throughout the industry, has more than tripled since 2000.
Commissioning monitors and documents the proper installation and performance testing of building systems from the design phase, with a review of the design intent and constructability/maintainability issues. Commissioning can include the cost of rating and certification under LEED or being GreenPoint Rated. The process continues through operations, management review and operator training and should include benchmarking, energy information systems (EIS), building automation systems (BAS) and automated fault detection and diagnostic tools.
Market Research on Best Practices & Tools Energy Performance Tracking Guide, a guidebook produced in partnership with the National Conference on Building Commissioning, will be published December 2010. Presentations from the 18th National Conference on Building Commissioningare now posted.
Rating, certification and application for incentives is becoming more user-friendly, thanks to the coordinated efforts of the Heschong Mahone Group Inc, with assistance from the New Solar Homes Parnership, Build it Green and Davis Energy Group. Jointly, they have prepared a Residential Program Matrix that provides a comparison of requirements under multiple certification and incentive tools that include LEED, GreenPoint Rated, Tax Credits and utilities, and also by considering the type of program, the geographic breadth of service, eligible projects, program costs, incentives, processes and resources, all of which exceed Title 24 requirements by more than 15%. Utility-incentive programs, Energy Star, GreenPoint Rated, and LEED programs all recognize 15% better than Title 24 as a baseline for participation. From there, the programs are working to coordinate their review and rating criteria to build upon each other from the easiest incentive programs to those of more complexity, combining energy efficiency and resource management like the GreenPoint Rated and LEED certification programs.
The Value of Green Infrastructure: A Guide to Recognizing Its Economic, Social and Environmental Benefits,
Center for Neighborhood Technology (CNT) and American Rivers have collaborated to produce a guide book for planners, builders, and city officials charged with determining valuation of effective, energy efficient and environmentally sound long term infrastructure investments
2011 Green Outlook: Green Trends Driving Growth
McGraw-Hill Construction's industry outlook on market size, trends and insights into the future of the fast growing green building marketplace. Read more and to order…
- The US Environmental Protection Agency has determined air quality inside buildings – where Americans spend up to 90% of their day – can be two to five times worse than outside air
- Improved indoor environments can increase productivity in the workplace and reduce or eliminate respiratory problems in the home
- Green buildings assess at a higher value by appraisers and investors, and typically lease or sell sooner because they offer superior workmanship and lower occupancy costs
- An average building designed to LEED standards saves 32% in electricity annually and reduces CO2 by 350 metric tons
- A one-time investment of less than 1% upfront provides energy savings of 20-30% and combined energy/water savings cut utilities costs in half compared to standard building practices
- A "green" designation can also increase a building's market value as assessed by appraisers and investors
The 2007 study by Deloitte found companies declining to green existing buildings may incur unrecoverable loss due to increased operating costs, lower productivity, poor public image and worker dissatisfaction
Energy Savings for Lower Income Households
Energy and water use represents a quarter of total housing costs for lower income households and combined with rent pushes housing outside the level of affordability, which is why The Cold Facts: The First Annual Report on the Effect of Home Energy Costs on Low-income Americans, is a timely report demonstrating how proper use and maintenance of energy systems can significantly cut utility expenses and energy saving improvements, reducing energy costs by about 30 percent for low- and moderate-income families. To access the report, click here…
“Value Beyond Cost Savings: How to Underwrite Sustainable Properties, a new book by the Green Building Finance Consortium Executive Director Scott Muldavin, details how to value and underwrite sustainable properties.” The book can be downloaded for free as a public service of the Consortium. Click here to download the complete book
“Value Beyond Cost Savings is supplemented by separate publication of six expanded Chapters (I, II, III, IV, V, VI), which provide 400 additional pages of in-depth research, analysis, and performance information . Both the book and six expanded Chapters are provided without charge as a public service.” Click here to download the expanded chapters
Untapped Potential of Commercial Buildings: Energy Use and Emissions
Produced by Collaborative Economics for Next 10, the study examines the untapped energy efficiency potential held by existing and new commercial buildings in California, analyzes obstacles to achieving widespread adoption of building efficiencies and explores approaches to removing these barriers.
The Cost Effectiveness of Commercial Building Commissioning
Unlocking Energy Efficiency in the U.S. Economy
A recently released 165-page report from McKinsey & Company indicates U.S. businesses and individuals could save money, reduce green house gas emissions and other pollutants equivalent to removing all passenger vehicles and light trucks from U.S. roadways, cut energy consumption by 23% in the next ten years and reduce national dependence on foreign oil, through energy efficiency practices available today.
Commercial Real Estate and the Environment study by CoStar
The Cost of Green Revisited by Davis Langdon, 2006
The Cost and Financial Benefits of Green Building: A Report to the Sustainability Task Force
Building Savings Strategies for Waste Reduction of Construction and Demolition Debris from Buildings
Deconstruction Institute (online calculator)
The Dollars and Sense of Green Retrofits by Charles Lockwood and Deloitte,
*Estimates of Improved Productivity and Health from Better Indoor Environments, William J. Fisk and Arthur H. Rosenfeld, Indoor Environment Program, Lawrence Berkeley National Laboratory, Berkeley, CA