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How Deep CO2 Reductions Can Help the Economy
Joe Romm, 15 Apr 10

An excerpt from the terrific fact- and chart-filled new book, "Greening Our Built World: Costs, Benefits, and Strategies" (Island Press) by Gregory Kats:

Perhaps because we spend the vast majority of our lives in buildings or traveling between them, we often overlook the scale of building energy use and the associated impact on climate change. For example, in a 2007 national survey of 1,000 homeowners, almost 75% said that they believed their homes had no adverse environmental impact. The reality is quite different.

According to the Energy Information Agency, residential and commercial buildings together consume 41% of the energy, including 74% of the electricity, used in the United States. And of course, it also takes energy to make the materials necessary to construct and operate buildings (e.g., bricks, concrete, mechanical systems); to transport the materials; and to actually construct buildings. Despite widespread misperception, at least 45% of all energy used in the United States and Europe is consumed directly in buildings. The level of energy use and the resulting CO2 emissions associated with buildings are almost as high as that from transportation and industry combined. Thus, the built environment provides a powerful and necessary lever for fundamentally changing our patterns of resource and energy use and responding to the grave threat of climate change.

Achieving the deep reductions in CO2 emissions that scientists tell us we must achieve to avoid the most severe consequences of climate change will require deep and relatively rapid reduction in energy use in buildings. This can only happen with a huge increase in building energy efficiency and a rapid increase in the use of renewable energy. Greening buildings provides a very cost effective way to achieve both objectives.

Green design is less expensive and more cost-effective than is generally realized. A shift to green design would increase investment in measures such as insulation and waste diversion, while cutting energy use and creating substantial additional employment. If green design were scaled up nationally, the employment, financial, and environmental benefits would be huge. A recent major study, published in Greening Our built World provides a detailed analysis of the financial and CO2 impact of a feasibly designed national transition to green design. Sponsored by the country’s largest real estate organizations and groups such as the American institute of architects, the study provides a basis for calculating the potential for a transition to a green low carbon economy.

Such a transition would require a monumental shift in policy and an enormous financial, political, and technical challenge. The good news is that green buildings have the potential to cost-effectively drive deep reductions in the use of fossil fuels and in CO2 emissions. Such a strategy would also create large economic and social benefits.

The study built on a detailed analysis of cost effectiveness of green design to compare a business as usual scenario to a green design scenario. Developed with 100 architects over a 20 month period the study details the financial impact of greening 170 green buildings, including energy and water savings, health and productivity increases, and societal benefits such as lower energy prices from reductions in demand and CO2 emissions. The study then used this data to compare the net present value of a green design scenario compared with a business as usual scenario. The findings demonstrate that the benefits of green building and green communities greatly outweigh the additional costs associated with high-performance design, materials, and technology.

Currently 12 to 15%% of all non residential construction is green. Based on growth in adoption and detailed cost benefits analysis in a green scenario green could becomes standard practice for 95% of the new construction market by 2020, and for 75% of retrofits by 2030-reflecting the likelihood that some types of buildings will remain unlikely candidates for greening. The lag in greening retrofits reflects the fact that current green penetration of the retrofit market is far lower than the penetration of the new construction market. Buildings typically last 50 years or more. By contrast, an automobile fleet is replaced every 12 to 15 years. Not surprisingly, deep reductions in energy use in the building sector cannot be achieved quickly—and cannot be achieved by 2050 without a relatively rapid rate of comprehensive retrofits of existing buildings. Accordingly, the Green scenario assumes that comprehensive retrofits, whether as energy-efficiency retrofits or as part of greening, occur more frequently than in the BAU scenario.

The financial benefits of a shift to green design probably offer the single largest opportunity to both strengthen the economy and address the critical challenge of global warming.

Net Present Value of Benefits: Business and Usual Scenario versus Green Scenario

A sustained national commitment to green design would create tremendous financial, social, and environmental benefits. The costs of building green are far outweighed by the benefits, which include reduced energy and water costs, enhanced health and productivity, and broad societal benefits. Applying the cost-benefit findings from the study data set to our two scenarios shows that when compared with the BAU scenario, the Green scenario creates roughly one trillion dollars in net financial benefits. This reflects the fact that green buildings generate financial benefits that—as this book documents—are five to ten times as large as their green cost premium. Additional benefits that were not quantifiable include lowered dependence on energy imports, increased employment, and increased economic competitiveness.


The book's author, Greg Katz, is my long-time friend and former DOE colleague. He is director of climate change at Good Energies, a multi-billion dollar global clean energy investor, where he leads the firm’s investments in energy efficiency and green buildings. Greg is a founder of the American Council on Renewable Energy (ACORE). He is founding chair of the Energy and Atmosphere Technical Advisory Group for LEED, and was the principal adviser in developing Green Communities, the national green affordable housing design standard. Previously, Greg served as the director of financing for energy efficiency and renewable energy at the U.S. Department of Energy.


Editor's Note: This piece originally appeared on Climate Progress.

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