A lot of good economic reasons exist to pursue energy efficiency. Still the average person tends not to. This is no surprise. If I cannot see, touch, buy, sell, trade or save efficiency, if it’s invisible, how can I pay it any real attention?

Often on the vanguard, Boston-based Conservation Services Group is working on an idea to make home efficiency more tangible. It is a surprisingly simple idea. One that is likely to leave a lot of people saying, ‘Of course. Why didn’t I think of that?’

You might say CSG is making energy efficiency the next granite kitchen counter top of the real estate business.

Through a $348,000 grant from the Doris Duke Charitable Foundation, CSG is working on a metric to describe a home’s energy efficiency value. When a homeowner lists a house for sale, the metric would be included in the multiple listing service (MLS), right along with the home’s price, number of bedrooms, square-footage and location.

Suddenly, efficiency is tangible, something that can be quantified and can add or detract to home value.

It’s not yet clear what that metric will look like. It might be a numerical score or a certification like the Energy Star label. Figuring that out is part of CSG’s task, as it puts in place a program for New York over the next two years.

“You can imagine the pitfalls in establishing what this score would be,” said David Weitz, director of CSG’s Applied Building Science Division. “How do you present it in a way that is accessible to the greatest number of people.  Unfortunately, there is no right answer.”

CSG plans to hold focus groups with homeowners to get a sense of what might work. The idea is to come up with a measurement that translates into a selling point, much like the granite counter top or hard wood floors. The hope is that sellers will install efficiency to increase their grade. Presumably, the higher grade will make the home more marketable.

Weitz also must convince MLS administrators to accept the metric and include it in the listings. Fortunately, CSG is not alone in this pursuit. Similar programs are in the works in other parts of the country. In addition, the US Department of Energy is working on creating a national an ‘e-scale’ label for homes. Weitz hopes the DOE effort and various local labeling initiatives will come together to create consistency in labeling nationwide.

In winning the award, the 26-year-old CSG edged out more than 350 proposals, submitted last April, from organizations in 44 states that offered scalable approaches for spurring energy efficiency retrofits in existing buildings. Grants totaling $2.7 million went to nine winners, which were evaluated by a panel of experts in real estate, finance, construction, government policy and energy efficiency technologies.

“In the past, people would buy a house without any real understanding of its ongoing energy costs.   Establishing an energy efficiency category, within MLS listings, will help during the selection process by providing homebuyers with another essential piece of information,” Weitz said.

If it’s successful, who knows, maybe someday the real estate mantra will no longer be ‘location, location, location,’ but instead, ‘efficiency, efficiency, efficiency.’

Elisa Wood is a long-time energy writer whose work appears in many of the industry’s top magazines and newsletters. She is publisher of the Energy Efficiency Markets podcast and newsletter.

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Without question, energy-efficient and sustainable homes are legitimately gaining popularity. A very high percentage of new homes built this year – I have seen estimates as high as 40 to 50 percent – will be “green.” According to the U.S. Environmental Protection Agency, almost 17 percent of all single family homes built in the United States in 2008 qualified for the Energy Star label.

Unfortunately, green home demand still does not approach the demand for conventionally-built homes; and without proper education and marketing, sustainable design and building may not emerge from the housing recession as solidly as some would hope. There are many obstacles that stand in the way of total acceptance and an increased market share.

How “green” is “green?”

There are many local, regional, and national green-building certification programs – private sector and government initiated – that provide systematic approaches for mandating, quantifying and verifying sustainable building practices, but all of the programs are not created equally.

Reputable and accredited third-party certification is essential to providing credibility and withstanding the skepticism that has emerged in response to over-saturation and complexity.

However, recognition can be somewhat misleading as a result of the multitude of green certification levels within each program. The ability in most programs to achieve certification is based on a total score with a limited number of prerequisites and few restrictions in place to enforce how additional points are accumulated. Naturally, individuals seeking certification will follow the path of least resistance for each particular project, which may result in inconsistent performance within each certification level or program.

While obtaining certification is ideal, there are also many builders and owners of existing or new homes that are incorporating green-building elements for improved energy efficiency, marketability, and so forth without seeking formal certification or third-party verification. Even when intentions are commendable, there are no guarantees that the tradespeople getting the directives are performing the work correctly and meeting owners’ expectations or substantiating builders’ marketing efforts. Many builders may be attending trainings and making claims to stay relevant, but reverting to their old ways, or simply building to code, on the job site.

Also, the current economic climate may be contributing to a misrepresentation of the overall, long-term demand for green homes. Large quantities of builders are employing green building practices in an attempt to increase marketability and overcome competition in this dismal residential market.

Some individuals may be inadvertently purchasing these homes due to availability, affordability, or other related reasons. Optimistically, this scenario will help to perpetuate further acceptance and demand.

However, it is possible that many of these homes are marketed as green with few substantial changes, or that home buyers will make purchases of quality green homes without a proper understanding of the home’s features or how to market the home for sale in the future. In addition to evaluating authenticity and demand, it is also important to understand potential reasons for resistance to green building.

Market Resistance

Green home communities, traditional neighborhood developments, lifestyle centers, and other new urbanist or sustainable developments, as well as autonomous green homes definitely have appeal and strong consumer demand in many areas throughout the country. A large number of green homes and homes in or near sustainable developments are pre-sold and the communities are flourishing and extremely successful.

However, in many instances these homes still only appeal to individuals in a niche market – for example, not dissimilar to general appreciation or contempt of condominium living in a city’s urban core versus more conventional arrangements. In order to reach broader acceptance, the industry must genuinely assess and understand the elements that influence decision-making.

What are the most important issues that dictate an individual’s willingness to purchase a home:  cost, quality, energy efficiency, proximity to work and amenities, livable area, lot size, fancy finishes, length of investment, resale value? All of these are reasonable and largely depend on demographics, but the overriding sentiment is that most people prefer to live the way that they have always lived, or better.

In order to increase demand, the green building industry must work to alter expectations while also continuing to provide traditionally accepted deliverables and increasing quality.

Many people currently purchasing or renovating homes are very interested in lessening their impact on the environment, but there is an inherent resistance to change. When it comes to green building, the general public is undereducated and discouraged by the complexity, the overuse of “green” terminology, and the anticipated cost. Inadequate research often leads to uniformed decisions regarding design and construction.

Many people begin projects claiming that they want to incorporate green-building practices and make their homes as energy efficient as possible. In the end, most efforts are add-ons and not an integral part of the process, lessening the effectiveness and undermining the economics.

Another critical component of the equation is realtor training, awareness, and involvement. In many areas, the real estate industry seems to be lagging behind other industry segments. Recently, more training opportunities and credentials, such as NAR’s Green Designation, have become available and it is imperative that real estate professionals are educated and able to convey applicable information and make generalized comparisons between green and conventional homes. Many realtor databases now make sustainable features searchable, but significant progress still needs to be made.

Long term, energy-efficiency ratings, provided by energy assessments that will be as common as conventional home inspections, as well as building certifications will provide an unbiased mechanism to evaluate and compare available homes, but there must be a way for realtors to market and consumers to evaluate homes as the number of green properties continues to grow.

Above all, sustainability must be client driven. Consumer demand will dictate builder practices, fuel the evolution of certification programs, force realtors and developers to provide information, and continue to change the residential industry.

Providing Solutions

Certification, verification and marketing must reach a higher level of standardization, professionals must continue to change perceptions regarding economic constraints, and everyone involved must work to inform consumers and ensure that green building remains relevant without becoming diluted.

Currently, there are multiple certification programs competing for market share, many professionals obtaining credentials to stay competitive, and, fortunately, a large number of previously inactive consumers and developers that are now beginning to make decisions regarding building or purchasing homes. Now is the time to take advantage of the market conditions, but it is very important that all sectors of the industry work collectively.

Green homes and sustainable developments must be definable, verifiable, marketable, and ultimately make sense to consumers on all fronts – including economics, comfort, quality, location, and design – in order to gain a more significant market share. By placing the focus on providing high-quality, well-built new or renovated homes that are designed and constructed as interrelated systems, saving the environment and decreasing societal impact simply become a desirable byproduct.

photo: Wonderlane

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Investing in energy efficiency is a critical piece of the climate change puzzle. Given that the built environment accounts for 39 percent of total energy use in the US, real estate investment represents one of the most effective ways to implement energy efficiency strategies. A recent report from Ceres and Mercer, reviewed in Environmental Leader, outlines the business case that investing in energy efficiency enhances value in real estate portfolios. The report draws on key industry and academic research on building efficiency’s economic impacts and outlines steps and best practices for leveraging efficiency in real estate investments, including pertinent case studies about TIAA-CREF and CalPERS.

Furthermore, the results of the report indicate that companies who fail to factor energy efficiency into their real estate investment decisions might be assuming significant risk in the future and could be overlooking substantial opportunities to enhance returns.

Once the recession subsides and business begins to churn again, it will become increasingly important that building owners and developers do what they can to improve the overall performance of their buildings if they want to gain a competitive advantage. According to Ceres President Mindy Lubber, “This report documents what common sense tells us – that an energy efficient building is a more marketable building.”

The report provides some very worthwhile suggestions about how investors can begin the process of improving the energy efficiency of the properties they own. Benchmarking energy consumption of real estate portfolios is the key first step to make properties more energy efficient. Energy Star operates an easy-to-use online benchmarking tool, Portfolio Manager, that enables building owners to benchmark and rate the energy performance of their commercial buildings.

Much of the concern about energy efficiency improvements is how to finance projects. Although lending is tight these days, there are ways to make these projects work. Government incentives, such as EPAct’s Commercial Building Tax Deduction, or  ancillary sources of financing should not be ignored when prioritizing energy efficiency measures.

The benefits experienced by those in real estate will vary depending on the program implemented and the types of investments targeted, but previous research done to date and the data included in the Ceres report demonstrates that:

• Energy efficient buildings offer financial benefits in the form of higher rent, occupancy, valuation and lower operating costs.
• Poorly performing buildings represent an opportunity for a significant investment gain when it comes to energy efficiency.
• No and low cost energy efficiency improvements can have quick and dramatic impacts on property operating costs.

The results from this report may seem obvious, but there is still considerable reluctance with respect to energy efficiency investments. Hopefully reports like this one will help building owners, as well as homeowners, realize that energy efficiency investments can offer short payback periods and long term energy and cost savings. Homeowners, in particular, often say that energy efficiency is important to them, but when the rubber hits the road, they prefer to spend their money on improving their home’s aesthetics.

About Ceres

Ceres is a leading coalition of investors, environmental groups and other public interest organizations working with companies to address sustainability challenges such as global climate change.

About Mercer

Mercer is a leading global provider of consulting, outsourcing and investment services. Mercer works with clients to help solve benefit and human capital issues as well as health and retirement benefits.

Article by Cory Vanderpool, appearing courtesy of TriplePundit

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In my first post of this series I described the US Green Building Council’s LEED (Leadership in Energy & Environmental Design) Green Building Rating System, and how individuals looking for a clean tech career should consider LEED AP certification to broaden and document their understanding of sustainability issues, and to stand out among otherwise equally-qualified candidates.

LEED provides sustainable design guidelines and a point-based rating system for various compliance levels including Certified, Silver, Gold and Platinum. With demand soaring for LEED-based solutions, a growing market opportunity clearly exists for individuals who can help design, build, commission and operate resource-efficient facilities and communities. Only you can determine if LEED AP certification is in your best interest or relevant for a clean tech career. But I can attest to thinking more broadly about RE, EE, environmental and worker productivity issues having started this journey.

For example, as a commercial property owner I’m now much more aware of the responsibility I have to manage stormwater runoff from my roof as it can add significant and unnecessary cost to the municipal water treatment process; and now I’m thinking of ways to capture and reuse stormwater to minimize potable water use in the building. If you think about it, do you really need drinking-quality water to flush toilets or irrigate landscape?

Points can be earned for each element, with 21-26 total points needed for ‘LEED Certified’ status, and 42-57 points for a Platinum rating. Of the LEED facility categories, I have chosen to take the Commercial Interiors certification exam, which addresses the following elements:

• Sustainable Sites 
• Energy & Atmosphere
• Water Efficiency
• Materials & Resources
• Indoor Environmental Quality
• Innovation in Design 

Today, let me focus on the first of these elements – Sustainable Sites.

Location is everything
In retail as in real estate, location is everything – and it’s no different when trying to achieve LEED certification. Up to 7 total points can be earned for Sustainable Site elements (plus 1-3 bonus points for “other quantifiable environmental performance characteristics”, which must come from having a really clever architect and creative project manager prepare the extensive submission paperwork).

The highest possible individual point score awarded is, ironically, for simply locating your project in an existing LEED-certified building (3 points). With only about 1,800 buildings currently LEED-certified, and another 7,400 estimated to be registered for certification in 2008, it’s unlikely a company will find an existing LEED-certified building with sufficient space available to meet its needs.

If a LEED-certified building is not available, a project can earn up to 3 points through a combination of the following:

1. redeveloping a Brownfield site,
2. reducing stormwater runoff by 50% or more (roof gardens and ‘pervious’ parking lots are common methods used, asphalt parking lots are the worst with nearly 100% stormwater runoff and a huge heat island effect as well),
3. filtering stormwater runoff (via bioswales or constructed wetlands),
4. reducing the heat island effect (heat radiated from your roof, building or parking lot)
5. reducing light pollution (uplighting is a real no-no; therefore, the Luxor hotel casino in Las Vegas must be the worst example of uplighting ever as it can even be seen from space),
6. reducing or eliminating potable water used for irrigation (note – you may find yourself calculating your ‘landscape coefficient’ and thinking about ‘evapotranspiration’ as a result),
7. reducing potable water use by at least 20% (two common approaches are dual-flush toilets and waterless urinals — not as gross as they sound),
8. generating at least 5% of the building’s total energy use through on-site renewable energy systems (sadly, you get ½ point for generating 5%, and 1 point for generating 10% or more of your energy needs; if you generate 100% of your energy needs you still only get 1 point)

One point can also be earned for high ‘development density’ by selecting a location within ½ mile of at least 10 basic services (bank, church, convenience store, etc.). Another three points can be earned by being close to public transportation, providing bicycle storage and changing rooms, and by aggressively discouraging single-occupancy vehicle use (e.g., providing no more than the bare minimum number of parking spaces per local zoning ordinances).

A great (not perfect) process
Many folks find fault with the current LEED rating system, primarily because they feel that LEED does not weigh RE/EE heavily enough. While I agree that energy issues can and should play a more prominent role in the rating system, I think most criticism of LEED misses the point. LEED was not designed to achieve energy independence – it was designed to guide the development and retrofit of high-performing buildings, with energy just one element of the overall sustainability equation. Furthermore, the LEED process continues to evolve rapidly. It was just overhauled for 2009 and is likely to continue to change to meet our collective understanding of, and need for, high-performing and sustainable buildings and communities.

What I appreciate the most about the LEED AP certification process is the holistic, systems-level perspective it provides. Renewable energy generation, waste/trash, water use, environmental impact, indoor air quality, worker productivity…. all of these elements are integrated and balanced in a LEED-certified project. An appreciation for this inter-relationship can make you a more knowledgeable and marketable CleanTechie.

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