San Francisco Once Step Closer to Mandatory LEED

Mandatory LEED in San Francisco is a critical step closer to being fully approved, according to yesterday’s San Francisco Chronicle. The Building Inspection Commission signed off on it last night. Its now at the Board of Supervisors for approval.

Bare Bones Overview
Under the proposed addition to the building codes, the following  construction must be LEED-certified:

• new residential high-rise buildings taller than 75 feet
• new commercial buildings larger than 5,000 sf
• renovations on commercial buildings larger than 25,000

Additionally, new residential construction will have to comply with Build It Green’s GreenPoint Rated system.

The article also indicates that complying with the legislation will cost developers an additional 5% on their project budgets, but does not provide a source for this particular information.

No Incentives on Tap
Interestingly, a city official is quoted as saying that city officials had hoped to offer incentives to builders whose projects obtained highest levels of environmental performance, but they scrapped the idea because they feared “it could lead to developers unnecessarily tearing down buildings or remodeling structures in order to take advantage of incentives”.

Hmmm…. so exactly how much in incentive fundings did the City think it would have to shell out? I’m sure they could have devised some sort of method to reduce this particular concern, (if this was truly the main concern).

The quote:

“What we now have is legislation that says if you’re going to build, you have to build to this standard. But it doesn’t encourage you to build a green building in lieu of keeping an existing building.”

Read the article for yourself and decide.

Energy Efficiency German-style & LEED Grows Legs

Last week, I moderated an energy efficiency symposium that brought together German and American building and energy experts. The Germans were here to sell us a few building energy products and services. The Americans were there to look and buy. After a few great presentations and some hefty debate from an engaged audience, I started synthesizing clear differences between how Germans and Americans approach high performance buildings.

So here’s a few statistics and slides from the presentations, to give you a picture of the current state of energy consumption, how its being reduced in Germany as well as some thoughts on why Germany and the US are achieving different results. Go here to the German American Chamber of Commerce Website to see all the presentations in full.

Germany & Japan Use less Energy to Create the Same Economic Value as the US Fred Pollack, an architect with Van Meter Williams Pollack helped frame the current state of energy consumption in the US with the following statistics from the International Energy Agency:

Energy Consumption, in $/Gross Domestic Product as of 2006:

• USA = 3.2 kwh/ $GDP
  
• Germany=2.4 kwh $GDP (25% less than the USA)
  
• Japan=1.5 kwh / $GDP (53% less than the USA, 37.5% less than Germany)

So Germany and Japan can create the same unit of economic value as the US for 25%-53% less energy than the US. When you add to that, the current fact that the dollar’s value has weakened sharply against both the Euro and the Yen over the past year, then the idea of the US economy’s exposure to energy price risk becomes even more concerning.

When it comes to energy security, Germans have been walking another road, at a faster pace, for decades. Historical context frames these ideas and you’re probably familiar with the American version. Both Germany and the US experienced severe energy price shocks during the 1970’s. This experience kick-started Germany’s national policies that mandated decreases in building energy usage. That success has supported a steady walk to some of the cornerstones of Germany’s great track record in lowering its fossil fuel dependency: the wildly successful feed-in tariff, the creation of the low-energy and Passivhaus standards as well as the Plus-energy House.

Dr. Manfred Hegger, Professor with the Technical University of Darmstadt put up a slide summarizing how residential energy consumption in Germany has decreased as new legislation was enforced and innovative construction methods developed. Click directly on image to see an enlarged version.

Reduced energy consumption in Germany is more closely associated with investment value preservation. The German presenters kept stressing how their ideas and products contributed to “investment security”.  Americans currently talk about greening buildings in terms of lowering operating expenses, but the idea of investment security isn’t spoken about so widely. So I could see that German owners have developed the thinking that, to the extent a building is energy inefficient, the owner is exposed to energy price risk from the open market — a very bad deal. Bear in mind that Germany has 1) MUCH higher energy prices (gasoline in Germany now = ~$8/gallon) 2) a slower rate of economic growth than the US generally and 3) correspondingly lower interest and cap rates. So value appreciation through opportunistic rental rate increases like we can do here in the US (sometimes) is less likely.

Conversely, slow rental rate growth combined with volatile, already high energy costs greatly exposes a property to quicker value erosion. So Germans are combating real value deterioration via lowering building energy consumption. Energy has been relatively cheap in the US and American owners, while cost conscious, have focused on growing the top line and reducing first costs, but only now are thinking about risks to the building value from escalating energy costs.

Germans use an energy budget to drive the design and construction process, not just “optimization”. An energy budget is the maximum amount of energy a building is permitted to consume. Period. For example, in Germany, the low energy residential house standard basically restricts maximum heating usage to 30-20 kwh/sqm/yr (USA:8,000-6,000 kBtu/sf/yr). In the commercial property market, the concept has evolved to the point where an owner simply will not pay for a building that exceeds its agreed energy budget. It is the architect’s job to make sure that every building part and system works together to achieve the energy budget in addition to creating the building’s aesthetics. Over the years the energy budget of German commercial buildings has been reduced as innovations in building science were introduced. Architects and engineers distinguish themselves by the smaller scale of the systems that they
install into a building, not how much.

The Germans pointed out that the building is also usually cheaper, when it is dependent on smaller systems. They also had the strong opinion that American design and construction professionals still focus on “optimizing” using established building codes as benchmarks as opposed to obtaining the greatest absolute reductions in energy usage. And this optimizing mindset leaves too much room for tolerating more energy consumption out of buildings than is truly necessary. Their experience is that current building science and technology can deliver buildings that operate with greatly reduced energy consumption and systems at reasonable costs, if we Americans were to utilize an ‘energy budget’ mindset.

Measure Actual Energy Performance, Not Just Energy Modeled. One of the strengths of the discussions was that the German speakers had a great deal of actual data comparing the energy efficiency regulations implemented over the years with the actual energy decreases achieved. This supported the advice of Dr. Norbert Fish, Professor at the Technical University at Braunschweig, that one really can’t know a building’s actual energy consumption until its been tested during the first 1-2 years of operation. His slide below shows how widely the actual energy consumption of high performance buildings can vary.

LEED Gets Lots of Praise and is Growing Legs Andrea Traber, President of the USGBC Northern California Chapter, gave an update on the upcoming changes to LEED. I posted about this before and you can also find info about upcoming changes on the USGBC national website here.

The German participants were complementary about the LEED system as a way to provide a cohesive language to discuss the green building domain and its components. They also noted that they were seeing international investors, particularly Americans, approaching them in Germany and trying to relate green building performance there in terms of equivalent LEED ratings. So there was lots of interest in LEED generally, since it is starting to move through the investment market. After the event, I talked to a few German product manufacturers who said that they realized that in order to better market their products to US property owners, they were going to have to translate their products contribution to energy reduction into LEED-relevant performance data, since this has become the official language of the green building community in the US.

Photo Credit: Flickr/Popaver - Passivhaus.

Bundesagentur fuer Aussenwirtschaft (in German)

US-Markt für energieeffiziente Produkte bietet große Chancen

US-Markt für energieeffiziente Produkte bietet große Chancen

Erfolgreiche deutsche Präsentation in San Francisco / Hervorragende Aussichten für die Branche / Von Martin Gutzat

San Francisco (bfai) - Auf einem Symposium über Energieeffizienz bei Gebäuden fanden Produkte und Technologien der deutschen Teilnehmerfirmen starke Beachtung. Vielversprechende Kontakte brachten anschließend zahlreiche Treffen mit US-Firmen und Entscheidungsträgern. Die deutschen Geschäftschancen gelten als ausgezeichnet, und ein Markteinstieg wäre angesichts des riesigen Marktvolumens und Potenzials äußerst lukrativ. Dies gilt besonders für Gebäude, da Regierung und Wirtschaft erhebliche Einsparpotenziale realisieren. (Kontaktanschriften)

Sehr beeindruckend fand die US-Teilnehmerin Andrea Traber, gemäß einhelliger Meinung der US-Teilnehmer, die Präsentationen deutscher Firmen aus der Sparte Energieeffizienz auf dem “Energy Efficiency Symposium” in San Francisco.

Die Fachkonferenz mit dem Untertitel “Insight Into German & American Green Building” fand am 4.3.08 statt. Traber ist die Direktorin der Green Building Group bei Kema Services (www.kemagreen.com), eine Beratungsfirma für umweltfreundliche Bauprojekte, in Oakland im Bundesstaat Kalifornien.

Die Fachkonferenz fand im Rahmen des Außenhandelskammer (AHK)-Geschäftsreiseprogramms der Exportinitiative Energieeffizienz statt. Mit dieser Initiative unterstützt das Bundesministerium für Wirtschaft und Technologie (BMWi, www.bmwi.de) deutsche Unternehmen bei der Auslandsmarkterschließung, um energieeffiziente Produkte, Technologien und Dienstleistungen “Made in Germany” im Ausland zu vermarkten. Neben dem Symposium hatte die AHK San Francisco in den folgenden Tagen individuelle Gespräche mit und Besuche bei Unternehmen und Entscheidungsträgern in den USA vermittelt.

Da Kalifornien unter den US-Bundesstaaten als Vorreiter in der Umweltpolitik gilt, war der Ort der Konferenz passend gewählt. Das neue Bundesgebäude “San Francisco Federal Building” gehört zu den “most energy efficient buildings” in San Francisco und erwartet das begehrte “Leadership in Energy and Environmental Design” (LEED)-Zertifikat.

Deutsche Teilnehmer zeigten sich in Gesprächen mit der bfai äußerst zufrieden. Sie hielten das Symposium und die anschließenden Treffen für nützlich, sahen die Kontakte als zukunftsträchtig und Vertragsabschlüsse als durchaus möglich an. Alle befragten Vertreter würden an einer solchen Veranstaltung nochmals teilnehmen und sie weiterempfehlen. Das Symposium lockte Dank des guten deutschen Rufs, unterstrichen von der Werbetrommel der AHK, etwa 150 Fachbesucher an. Und die AHK hatte für die deutschen Firmenvertreter insgesamt 104 Treffen mit 25 US-Partnern arrangiert, darunter mit Architekturbüros, Bauunternehmen, Consultingfirmen, öffentlichen Stromversorgern und Regierungsämtern.

Manfred Hegger, Professor am Fachgebiet Entwerfen und Energieeffizientes Bauen an der TU Darmstadt und Vorstandsvorsitzender der Firma HHS, brachte die positive Stimmung auf den Punkt. “Wir hatten viel erwartet, haben aber noch viel mehr bekommen.” Ein von Hegger geführtes Team von Studenten gewann 2007 den “Solar Decathlon 2007″ des Energieministeriums (www.solardecathlon.org). Bei diesem Wettbewerb konkurrieren 20 Universitäts-Teams darum, nach zehn Bewertungskriterien dass attraktivste, effektivste und energiesparsamste Solarhaus zu bauen.

Auch die US-Teilnehmer waren angetan von dem Symposium. Lisa Michelle Galley, Leiterin von Galley Eco Capital (www.galleyecocapital.com), eine Beratungsfirma für umweltfreundliche Immobilieninvestoren, und Moderatorin des Symposiums, lobte im Gespräch mit der bfai “The excellent presentations of the German companies really reflect Germany`s strong economic and political commitment to energy efficiency.”

Zufriedenheit herrscht auch auch beim Ausrichter. “Das Feedback von deutschen und US-amerikanischen Firmen war hervorragend, und es fanden sehr interessante Gespräche statt,” freute sich Kammerchef Johannes Buchholz. Er bezeichnete als einen der Höhepunkte, dass ein US-Unternehmen einer deutschen Firma anbot, den Vertrieb für den gesamten US-Markt zu übernehmen.

Dies könnte äußerst lukrativ werden, weil der US-Markt für Energieeffizienz sehr groß ist. Nach der Untersuchung “Renewable Energy and Energy Efficiency - Economic Drivers for the 21st Century” der American Solar Energy Society (ASES, www.ases.org) hatte der Markt, gemessen an Einnahmen beziehungsweise Budgets, 2006 ein Volumen von 932,6 Mrd. US$ erreicht und 3,5 Mio. direkte sowie weitere 4,5 Mio. indirekte Arbeitsplätze geschaffen.

1) ESCO (energy service company industry); 2) HVAC (Heating, Ventilating, and Air-Conditioning)

Quelle: American Solar Energy Society (ASES, www.ases.org), 2007

Auch die Aussichten sind glänzend. Nach verschiedenen ASES-Prognosen werden die Einnahmen des Sektors bis 2030 unter den bescheidendsten Annahmen (”Base Case”) um 95% auf 1.818 Mrd. US$ steigen und die Anzahl neuer direkter und indirekter Jobs um 85% auf 15,0 Mio. zunehmen. Im günstigsten Fall (”Advanced Scenario”) erreicht der US-Markt für energieeffiziente Produkte und Dienstleistungen eine Steigerung um 320% auf 3.933 Mrd. US$ und schafft unmittelbar 32,2 Mio. neue Arbeitsplätze.

Besonders bei Gebäuden, vor allem bei öffentlichen Bauten, gewinnt Energieeffizienz schnell an Bedeutung. So haben bis Ende 2007 rund 4.100 Gebäude und Fabriken den “Energy Star” des Umweltschutzbundesamtes “U.S. Environmental Protection Agency” (EPA, www.epa.gov) erworben. Allein 2007 kamen in etwa 1.400 Gebäude hinzu. Die ausgezeichneten Gebäude umfassen etwa 1.500 Bürogebäude, rund 1.300 Supermärkte, 820 “K-12″-Schulen (von der 1. bis zur 12. Klasse) und 250 Hotels. Ferner haben über 185 Banken, Finanzzentren, Krankenhäuser, Gerichtsgebäude, Lagerhallen, Studentenheime und erstmals ein Diskont-Einzelhandelsgebäude den Energie Star erhalten. Zudem wurden mehr als 35 Fabriken ausgezeichnet, darunter Zementwerke, Kfz-Montagebetriebe, Maisraffinerien und erstmals eine Ölraffinerie.

Kontaktanschriften

Einen Einstieg mit Basisinformationen und Links zu weiterführenden Informationen über die Exportinitiative Energieeffizienz des BMWi bietet das Außenwirtschaftsportal iXPOS (www.ixpos.de)

Deutsch-Amerikanische Handelskammer

German American Chamber of Commerce, California Branch

201 California St., Suite 450

San Francisco, California 94111, USA

Tel.: 001415/248-12 40, Fax: -627-91 69

E-Mail: info-ca@gaccny.com, Internet: www.gaccsanfrancisco.com

Sekretariat Exportinitiative Energieeffizienz

c/o Bundesministerium für Wirtschaft und Technologie

Scharnhorststrasse 34-37

10115 Berlin

Tel.: 030/186 15 63 00/-63 01, Fax: -53 00

E-Mail: sekretariat@efficiency-from-germany.info, Internet: http://www.efficiency-from-germany.info/

Anmeldungen für Geschäftsreisen:

Berliner Energieagentur GmbH

Frau Anja Krechting

Französische Str. 23

10117 Berlin

Tel.: 030/29 33 30-0, Fax: -30-99

E-Mail: krechting@berliner-e-agentur.de, Internet: www.berliner-e-agentur.de

(M.G.)

Energy Efficiency & Building Value: Co-Star Statistics

Looking for data to support the value of building green? Join a growing crowd and read on…

If my software let me write sarcastic subtitles, this one would be “Most often cited statistics at green real estate conferences in Spring 2008″. Seriously, now that so many in commercial real estate are trying to quantify how much (additional) asset value can be created by green initiatives, I think it is good to share those zeitgeist concepts that help shape the industry’s attitudes towards investing in green real estate.

Like alot of you, I’ve been to quite a few green building finance conferences lately. I’ve noticed that in the larger venues, the findings from the Does Green Pay Off? report always get a slide or two throughout the presentations.

Take a look at one of the basic statistics connecting greater energy efficiency with higher sales prices (click directly on the image to see a larger version):

Data source: Does Green Pay Off? by Norman Miller, Jay Spivey and Andy Florance

I read this paper some time ago when it first circulated, and was a little hesitant about how much weighting to apply to its findings since it is focused on energy efficiency, which is only a part of developing green buildings. I am still hearing people speaking about Energy Star and LEED as if they are synonymous — they are not.

Nevertheless, green real estate investors are using this information as support for the idea that optimizing a building’s energy consumption is already being rewarded in the capital markets when they sell their properties.

Based on what I’ve been hearing, many of them are also assuming (hoping!) that the seller of a fully green building should be rewarded with an even higher sales price.