GREEN CONSTRUCTION PROHIBITIVELY EXPENSIVE?
THINK AGAIN.
Chitro Neogy

Ask a man on the street his take on the green economy and you are likely to receive a rich outburst of platitudes – curb greenhouse gases, minimize carbon footprint, recycle everything and deal with wasteful behavior as criminal offense. Either the government is to blame for much needed, tardy regulations or the O&G companies are in cahoots with auto barons blocking commercialization of clean powered vehicles.

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The less likely response is that all buildings should be constructed or retrofitted green; and yet, this single move is likely to have the greatest impact in ensuring a sustainable civilization.

The facts stare us in the face. In the United States alone, buildings burn 40% of overall energy and 72% of electricity produced in the nation, generating 39% of CO2 produced and 30% of waste output (USGBC.org). In the process, they also consume 14% of the potable water. A 2005 study by Goulding, Goldman and DiMarino estimated that the 4.7M US commercial buildings then needed about 18% of the US primary energy produced, consuming 17 Quadrillion Btus (quads) per year. Green buildings can halve the energy use, reduce emissions and water usage by at least a third and cut solid waste generation up to 70%.

These numbers, astounding as they may seem, are not unknown to the building community. There are several reasons why we don’t see more examples of 100% green buildings, especially those certified as LEED. In the design-build framework for new construction, developers are reluctant to try new methods that may yield future benefits, especially if there is menace of project delays. The second issue is of adequate incentives. For example, in owner occupied buildings, energy bills may be only 1% of operating expenses and cost mitigation efforts are often focused on big ticket items like human capital optimization. In rented buildings, such utility costs are passed on to the tenants. In general, owners look at ROI of each component before making green related investments. Finally, the builder often perceives green buildings as expensive to make and recertify, while the inherent benefits to the sponsor are somewhat nebulous in financial terms.

Benefits of LEED

So why care for a LEED rated building? Advocates cite the following as key payback elements in green investment.

 Tax Credits and Incentives
Under DOE EPACT ’05 legislation, commercial buildings meeting ASHRAE standards 90.1-2001 can deduct up to $1.80 per square feet (DOE.gov). This provision has been extended through 2013 by the Emergency Economic Stabilization Act of 2008. Just currently registered LEED buildings could achieve a $4B/year savings from this act. There are also Green Building tax credits in certain states, such as New York.
 Reduction in Operating Expenses
Depending on the energy efficiency of the buildings, tenants can save up to 50c per sq ft and reduce water usage by 40%. As green buildings draw lesser resources from the surrounding habitat, the local jurisdictions are likely to reward them with property tax rebates. Apart from energy savings, green buildings have equipments with longer life, required fewer maintenance calls.
 Increased Prestige and Customer Perception
A LEED building is a major marketability statement for the developer. This is a major reason why corporations are undertaking green construction.
 Environmental Stewardship & Responsibility
Industrial firms have Corporate Social Responsibility and the need to demonstrate leadership in innovation and sustainability. By helping the green economy to take off and creating healthier environments, companies gain respect and admiration of customers which directly impact their performance.
 Potential for stimulus grants and awards
The American Recovery and Reinvestment Act of 2009 (recovery.gov) makes available revolving loan funds for construction of healthier schools and retrofits of existing buildings.
 Compliance with State Mandates
In some states (e.g. AZ, CA, NM, WA, NV) all publicly funded buildings must be certified LEED Silver. Some jurisdictions, such as Babylon in NY has gone a step further in requiring ALL buildings above 4000 square feet must be LEED compliant. Net-zero building legislations are also under way in states like MA, which will mandate local clean power generation and integration with smart grids.
 Fosters Innovation within the building community
LEED buildings not only providing a flourishing culture of general innovation but also become part of green economy innovation. New products are invented to support building infrastructure, bringing down costs and catalyzing the industry.

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