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Energy conservation and sustainability initiatives focused on existing buildings therefore have a significant potential to help decrease carbon emissions, the largest portion of green house gas (GHG) emissions. Programs to reduce waste in such buildings can also help reduce methane gas, the second largest contributor to GHG's. Water conservation techniques can help preserve scarce water resources in many regions.
Corporate real estate managers and building occupants, as well as members of the building industry, all have a role to play in reducing energy consumption and promoting sustainable commercial buildings. The most energy-efficient businesses in the U.S. already consume 30 percent less energy than their counterparts. What can organizations do with such savings? Possibilities include improving profit margins, increasing funds for development of new products and services, and enhancing overall corporate value.
Seizing the Opportunity
In recent years, sharply escalating energy costs have forced many facility managers to redirect money from planned building repairs or improvements. Many have implemented energy efficiency programs to help reduce long-term energy consumption and cost, ranging from the installation of automated lighting controls designed to reduce energy output to the installation of more energy-efficient HVAC equipment.
The commissioning of building HVAC systems, although it is a time consuming and costly process, has been gaining acceptance among maintenance and engineering managers who find the resulting reduction in energy use, improvements in the building environment and enhancements in system reliability and maintainability far outweigh the associated costs. Commissioning addresses deficiencies in systems that have evolved over time since initial installation, which may result in a variety of issues ranging from unnecessarily elevated energy use to compromised indoor air quality. For an existing building, commissioning typically results in energy savings of 15 percent in less than one year.
For organizations unwilling or unable to make a large an up-front investment in replacing or commissioning inefficient building systems, small changes to building temperature settings can have a surprisingly big impact. Lowering the temperature a few degrees during the heating season, for example, can reduce heating costs by 4 percent per degree.
The focus on facilities’ energy consumption today has undeniably been driven by the impact on the bottom line, as the cost of heating and cooling alone has in many cases doubled in just one to two years. However, the issue has created an opportunity for facility managers to gain support not only for investments in long-term energy cost saving measures, but also for broader-based sustainability initiatives. By looking beyond energy consumption to address the range of issues that affect a building’s environmental footprint, facility managers can affect the long-term viability of the built environment within their organizations.
Defining Sustainability Today
Sustainability is defined by the World Commission on Environment and Development as “meeting the needs of today without compromising the ability of future generations to meet their own needs.” Until fairly recently, sustainability as it applies to buildings was most often discussed in the context of new construction. The U.S. Green Building Council, the building industry coalition formed in 1993 to promote sustainability of the built environment, initially targeted its energy and environmental rating system at new buildings. This standard, known as Leadership in Energy and Environmental Design for New Construction or LEED-NC, defines six categories in which credit points are awarded toward certification: sustainable sites, energy and atmosphere, water efficiency, indoor environmental quality, materials and resources, and innovation in design.
New construction techniques and technologies still garner the lion’s share of the spotlight when it comes to media coverage related to building sustainability. But it is the facilities that already exist that represent the vast majority of building energy consumption and environmental impact. In recognition of this fact, the LEED-NC standards eventually led to the development of a similar rating system for existing buildings (LEED-EB), which was released in 2004. This standard adds one additional category to the LEED-NC performance criteria, related to building operation and upgrades.
Sheila Sheridan, vice-chair of the U.S. Green Building Council’s committee on LEED-EB, sums up her own definition of sustainability as “doing a little at a time and eventually making a difference.” For Sheridan, who played a part in several pioneering green initiatives in her former role of director of facilities at Harvard University’s John F. Kennedy School of Government, this incremental approach is ultimately an important part of what LEED is about. Sheridan is pragmatic about what will ultimately drive broader adoption of sustainability programs. While educational programs targeted at the public, property owners and vendors will have a slow but steady impact over time, the buyers and suppliers within the building industry need to see the return on investment for sustainability practices to become prevalent in the United States.
Those returns are becoming more tangible for many organizations today, who are increasingly taking advantage of utility rebate programs and purchasing the growing number of products and services that support green initiatives. The movement toward mainstream adoption of sustainable building practices is reflected in the growth of this market. In 2005, green building products and services in the U.S. represented a $7 billion market. Today, the total market value is worth upwards of $12 billion. Evidence of market adoption is similarly seen in the growth of USGBC’s membership, which includes more than 10,000 organizations.
Despite these indicators, the move to LEED certification for existing buildings is still a relatively nascent market today. Through mid-2007, only 53 buildings had been LEED-EB certified, but another 511 were registered for LEED Certification. However a total of 8,000 buildings, both existing and new construction, were registered for certification. Clearly, more and more organizations are recognizing the benefits of implementing sustainable practices.
Reaping the Benefits of Green
What benefits do organizations expect from pursuing LEED certification for their existing buildings? The LEED-EB process, which allows an organization to measure, document and benchmark its sustainability efforts, makes organizations aware of what their responsibility should be towards sustainability, particularly the energy component. That's extremely important when you consider that the EPA estimates that if every office building in the U.S. reduced its energy use by 30 percent, the resulting savings would be $30 billion a year.
Quantitatively, Sheridan reports that LEED-EB certified properties extend the longevity of a building by 2.6 years, with an annual net savings of $170,000 when combined with best business practices. Studies have shown that sustainable building practices also enhance employee productivity, as a healthier workplace leads to healthier employees, translating to less absenteeism, greater retention and improved productivity.
Since energy represents the largest operational expense for most facilities, an assessment of current energy usage and efficiency is a starting point for many organizations on the road to enhancing building sustainability. The results of such an assessment can lead to the identification of a variety of potential programs in both the short and long-term to reduce energy consumption. These programs may range from the installation of less power hungry fluorescent bulbs to the retrofitting of equipment that takes advantage of new technologies to heat or cool facilities more efficiently.
The Energy Policy Act of 2005 promotes adoption of such programs by offering commercial building owners federal tax deductions for making energy improvement. Organizations can take advantage of significant rebates from their local utility provider when installing such equipment. These rebates are not only limited to HVAC equipment however. Some utilities providers also offer rebates for companies replacing computer servers with newer models that employ more power-efficient processors.
Programs may also take the form of other improvements that are not part of a targeted energy program. Examples include increasing day lighting in the course of a remodeling job to cost-effectively introduce more energy-efficient design, or retro-commissioning a building, resulting in energy savings due to operational corrections.
By implementing practices and systems that help reduce energy costs, organizations can also take advantage of tax savings. For example, Energy Star programs under the Energy Policy Act currently enable owners or designers of new or existing commercial buildings to take a tax deduction of up to $1.80 per square foot if they save at least 50 percent of the heating and cooling energy of a building that meets ASHRAE standards for energy-efficient design. Partial deductions can be taken for measures affecting the building envelope, lighting or heating and cooling systems.
For those who have already taken extensive steps to reduce carbon emissions through fossil fuel conservation, carbon trading programs, which assign a dollar value to carbon dioxide emissions, are available in some regions to help curb the growth in greenhouse gases. States such as California have rolled out programs for trading emission credits to promote "carbon neutrality."
More recently, the House of Representatives passed a new bill, known as HR 3221, which will rewrite the US energy policy. As part of this Act, $16 billion in tax incentives will be shifted to renewable energy sources like wind and solar power and utilities will be required to generate 15 percent of their electricity from renewable sources by 2020. This legislation will spur a massive redistribution of energy production from fossil fuels to renewable energy.
Green is Gold
Ultimately, sustainable practices need to be integrated into both the facility management programs that organizations implement on a day-to-day basis, as well as into their long-term capital planning process. Facility managers today are on the front-line of this process, and positioned to raise the visibility and acceptance of these practices throughout their organizations.
As such practices increasingly make good business sense, organizations will drive rapid market adoption, of which we are only seeing the leading edge today. This more holistic and socially responsible approach to facilities management will ultimately make the jobs of facility managers more critical for their organizations, as well as for future generations.
By evaluating sustainability opportunities -- including those related to energy usage, environmental impact, and indoor environmental quality -- and planning recapitalization with sustainability as a priority, corporate real estate managers can be heroes -- making improvements that will not only improve the financial value of their real estate portfolio today, but also help to save the planet, one building at a time.
