1

Current status and trends of sustainable

construction in the U.S.

The difficulty lies not in new ideas, but escaping

from the old ones.

John Maynard Keynes

Business Consulting & Training, Inc.

www.bctbiz.com

2

Sustainable development is development that meets the needs of

the present without compromising the ability of future generations to

meet their own needs.

United Nations, March 20, 1987

Sustainability defined

Sustainability requires the reconciliation

of environmental, social and economic

demands - the "three pillars" of

sustainability.

2005 World Summit

3

CO2

Driving force of sustainable construction.

Current level: ~ 380 ppm

Catastrophic level: 450 - 460 ppm coined SCENARIO 450

2° C rise in temperature

Prevention: reduction of CO2 emission by 60%-90% from 2006 level

4

International Cooperation

Latest: The Copenhagen Accord at the 15th session of the Conference of

Parties to the UN Framework Convention on Climate Change on 18 December

2009.

The Accord itself is not legally binding. Countries pledged to reduce CO2

by 2020 (caveat – different baseline):

United States: 17% reduction, 2005

Japan: 25%, 1990

China: 40% - 45%, per unit of GDP!, 2005

Russian Federation: 15% - 25%, 1990

EU: 25%; 30% conditional on others, 1990

Brazil: 36.1% - 38.9%, over projected trend!

Regardless, the trend is downward for CO2 and global.

5

Why sustainability in buildings?

CO2 Emissions from Fossil Fuel Combustion, Tg CO2

1990 2006 2008

TOTAL US 4,735.70 5,652.80 5,572.80

Residential 932.2 1,152.90 1,184.50

Combustion 339.1 322.1 342.7

Electricity 593 830.8 841.8

Commercial 754.6 1,005.00 1,044.90

Combustion 216.7 206 219.5

Electricity 538 799 825.4

TOTAL BLDGS 1686.8 2157.9 2229.4

% TOTAL 35.6% 38.2% 40.0%Source: U.S. EPA, author

U.S. Inventories ~ 115 million of housing units

~ 70 billion m2 of commercial floor space

6

•

Execution of Sustainability: Codes

Sustainable construction is achieved by:

Mandatory statues:

Codes

Federal, State, and City legistlations

Municipal codes based on Model Codes:

ASHRAE Standard 90.1 for commercial design community

International Code Council for commercial & residential

International Green Construction Code – commercial

(Rhode Island is the first state to adopt the Code in 2012)

Federal: American Clean Energy and Security Act of 2009

The Act (has to be approved by Senate) calls for:

National building code energy reduction targets of:

• 30% below the baseline energy code (2006) in 2010,

• 50% below the baseline energy code in 2014-2015, and

• 5% additional reduction every three years to 2029-2030.

Codes and mandates work best; incentives help.

7

American Clean Energy and Security Act of 2009 (H.R. 2454)

The Act (has to be approved by Senate) calls for:

National building code energy reduction targets of:

• 30% below the baseline energy code (2006) in 2010,

• 50% below the baseline energy code in 2014-2015, and

• 5% additional reduction every three years to 2029-2030.

It does not matter that this example is for the U.S. Trend is similar in all

developed economies.

Two themes to investors:

trend that will continue for decades (early entrance)

state policies (incentives, direction, relative certainty)

Business opportunity:

more appealing homes

new construction technologies and materials

knowledge-based services

8

Leadership in Energy and Environmental Design (LEED) – C&R

Energy Star – C&R

National Green Building Standard – Residential

Passive Homes – C&R (mostly Residential)

It does not matter that those examples are for the U.S. Trend and

approaches are similar in all developed economies.

Execution of Sustainability: Voluntary Certifications

9

Think globally, act locally.

U.S. Conference of Mayors Climate Protection Agreement

1044 cities signed the Agreement - as of 9/27/2010

(52 from Illinois)

Under the Agreement, participating cities commit to:

Strive to meet or beat the Kyoto protocol targets in their own

communities, through actions ranging from anti-sprawl land-use

policies to urban forest restoration projects to public information

campaign.

Each city has its plan – many different approaches and initiatives

Key: cities include in codes LEED, or equivalent, standards!

Boston, MA: over 50,000 sf must be LEED certifiable

Babylon, NY: over 4,000 sf for commercial & multifamily

10

Woodstock, IL – Sustainability Plan

Population: 25,500

82 km northwest of Chicago; area quite wild

Environmental Plan for 2020 per UN definition of sustainability

The concept of sustainability holds the promise of long-term economic

security, social equity and environmental integrity. It suggests that

through increased self-sufficiency and responsibility, the production and

consumption of goods and services can be maintained without harming

the natural environment.

The Plan included matters that citizens of Woodstock deemed suitable

for sustainability, such as:

Be a community of law abiding citizens with no tolerance for crime.

Be a community of choice for residents, visitors & investors.

Weave ethnic backgrounds together to celebrate diversity, promote

understanding, & support ―One Woodstock.‖

11

12

Woodstock, IL

13

Ecotourism

14

LEED: Leadership for Energy & Environmental Design

In LEED 2009 there are 100 possible base points. Buildings can qualify for

four levels of certification:

Certified: 40 - 49 points

Silver: 50 - 59 points

Gold: 60 - 79 points

Platinum: 80 points and above

Huge range of certifications, for: schools, hospitals, commercial, interior,

new constructions, renovations, neighborhood development, and

operations & maintenance.

LEED has been continually evolving and modified, though the main

concept remains the same.

15

Sustainable Sites 26 Possible Points

• Prerequisite 1 Construction Activity Pollution Prevention Required

• Credit 1 Site Selection 1

• Credit 2 Development Density and Community Connectivity 5

• Credit 3 Brownfield Redevelopment 1

• Credit 4.1 Alternative Transportation—Public Transportation Access 6

• Credit 4.2 Alternative Transp.—Bicycle Storage and Changing Rooms 1

• Credit 4.3 Alternative Transp.—Low-Emitting and Fuel-Efficient Vehicles 3

• Credit 4.4 Alternative Transportation—Parking Capacity 2

• Credit 5.1 Site Development—Protect or Restore Habitat 1

• Credit 5.2 Site Development—Maximize Open Space 1

• Credit 6.1 Stormwater Design—Quantity Control 1

• Credit 6.2 Stormwater Design—Quality Control 1

• Credit 7.1 Heat Effect—Nonroof 1

• Credit 7.2 Heat Island Effect—Roof 1

• Credit 8 Light Pollution Reduction 1

LEED: Points – Sustainable Sites

16

Water Efficiency 10 Possible Points

• Prerequisite 1 Water Use Reduction Required

• Credit 1 Water Efficient Landscaping 2-4

• Credit 2 Innovative Wastewater Technologies 2

• Credit 3 Water Use Reduction 2-4

Energy and Atmosphere 35 Possible Points

• Prerequisite 1 Fundamental Commissioning of Building Energy Systems Required

• Prerequisite 2 Minimum Energy Performance Required

• Prerequisite 3 Fundamental Refrigerant Management Required

• Credit 1 Optimize Energy Performance 1–19

• Credit 2 On-site Renewable Energy 1–7

• Credit 3 Enhanced Commissioning 2

• Credit 4 Enhanced Refrigerant Management 2

• Credit 5 Measurement and Verification 3

• Credit 6 Green Power 2

LEED: Points – Water & Energy

17

Materials and Resources 14 Possible Points

• Prerequisite 1 Storage and Collection of Recyclables Required

• Credit 1.1 Building Reuse—Maintain Existing Walls, Floors and Roof 1-3

• Credit 1.2 Building Reuse—Maintain Existing Interior Nonstructural Elements 1

• Credit 2 Construction Waste Management 1-2

• Credit 3 Materials Reuse 1-2

• Credit 4 Recycled Content 1-2

• Credit 5 Regional Materials 1-2

• Credit 6 Rapidly Renewable Materials 1

• Credit 7 Certified Wood 1

LEED: Points – Material & Resources

18

Indoor Environmental Quality 15 Possible Points

• Prerequisite 1 Minimum Indoor Air Quality Performance Required

• Prerequisite 2 Environmental Tobacco Smoke (ETS) Control Required

• Credit 1 Outdoor Air Delivery Monitoring 1

• Credit 2 Increased Ventilation 1

• Credit 3.1 Construction IAQ Management Plan—During Construction 1

• Credit 3.2 Construction IAQ Management Plan—Before Occupancy 1

• Credit 4.1 Low-Emitting Materials—Adhesives and Sealants 1

• Credit 4.2 Low-Emitting Materials—Paints and Coatings 1

• Credit 4.3 Low-Emitting Materials—Flooring Systems 1

• Credit 4.4 Low-Emitting Materials—Composite Wood & Agrifiber Products 1

• Credit 5 Indoor Chemical and Pollutant Source Control 1

• Credit 6.1 Controllability of Systems—Lighting 1

• Credit 6.2 Controllability of Systems—Thermal Comfort 1

• Credit 7.1 Thermal Comfort—Design 1

• Credit 7.2 Thermal Comfort—Verification 1

• Credit 8.1 Daylight and Views—Daylight 1

• Credit 8.2 Daylight and Views—Views 1

LEED: Points – Indoor Environmental Quality

19

Innovation in Design 6 Possible Points

• Credit 1 Innovation in Design 1-5

• Credit 2 LEED Accredited Professional 1

Regional Priority 4 Possible Points

• Credit 1 Regional Priority 1-4

LEED certification covers almost all types of commercial & industrial development:

• New Construction & Major Renovation

• Existing Buildings: Operation & Maintenance

• Commercial Interiors

• Core and Shell Development

• Schools New Construction and Major Renovation

• Neighborhood Development

LEED: Additional 10 Points

20

Pros:

LEED is a growing knowledge-based business:

- Sustainability Consultant

Requirements create opportunity in supplies:

- cleaning products

Mostly applicable to occupancy-based buildings: offices, schools

Owners can differentiate properties

It’s healthier and more pleasant to stay in LEED bldg.

Cons:

Certification cost

You are married for life to it >> maintenance & operation

Cumbersome for residential homes

Bottom line: LEED will grow in the U.S. because of federal and state

mandates, and acceptance in commercial real estate.

LEED: Pros & Cons

21

Certified if:

Airtight building shell ≤ 0.6 ACH @ 50 Pa pressure

Annual heat requirement ≤ 15 kWh/m2/year (4.75 kBtu/sf/yr)

Primary Energy ≤ 120 kWh/m2/year (38.1 kBtu/sf/yr)

In addition, the following are recommendations, varying with climate:

Window U-value ≤ 0.8 W/m2/K

Ventilation system with heat recovery with ≥ 75% efficiency with low

electric consumption @ 0.45 Wh/m3

Thermal Bridge Free Construction ≤ 0.01 W/mK

Key principle: super-insulation and air-tightness

Passive House

22

There are over 20,000 passive homes (max 25,000) worldwide

About 20,000 are in Germany, Austria, Scandinavia

About 50 in U.S.

Passive House favors cold climates – but applicable to all climates

Success in Germany is attributed to incentives and policy

Passive House

23

Energy Star

Originated in early 1990 by the US Environmental Protection Agency

Designed primarily to promote energy efficiency.

Appliances are assigned Energy Star labels.

Example. Low-slope (2:12) roof materials:

Initial Solar Reflectance > 0.65

Reflectance after 3 years > 0.50

Overall a useful standard and certification. But….

2008 audits of the Inspector General found:

Claims regarding GHG reduction were inaccurate and based on faulty

data

Energy savings were unreliable or unverifiable

24

What Big Guys are doing?

Leading Builders of America – coalition of 16 largest homebuilders

Sold 99,000 homes in 2009, or 27% of total for U.S.

25

What Big Guys are doing?

2009 2008 2007

Beazer Homes USA 4,330 6,697 10,160 eSmart

D.R. Horton 17,034 21,251 33,687

Hovnanian Enterprises 5,659 11,281 14,928

KB Home 8,488 12,438 23,743 Energy Star

Lennar Corporation 11,478 15,735 33,283

M.D.C. Holdings 570 409 1,350

Meritage Homes 4,039 5,627 7,687 Energy Star + super eff

NVR, Inc. 9,042 10,741 13,513

Pulte Group 15,013 21,022 27,540 Energy Star & LEED

Ryland Group 5,129 7,352 10,319 HouseWorks

Standard Pacific 3,581 5,025 8,051

Toll Brothers 2,965 4,743 6,687

M/I Homes 2,409 2,025 3,173

TOTAL 89,737 124,346 194,121

Source: 10K reports, author

26

What Big Guys are doing?

LBA estimates that additional costs for ―typical‖ new home are:

• $5,000 for 30% energy reduction

• $15,000 for 50% energy reduction

LBA worries that increased up front costs will eliminate many potential

buyers. Proposes to include Energy in mortgage (PITI + E).

27

All certifications for a private sector are voluntary - be it LEED,

BREEAM, or passive homes.

Residential:

Energy & water savings: payback in minimum circa 10 years

Greater likelihood of selling a house

Usually incentives provided by government

Commercial:

Positive differentiation against competitors

Assured better indoor air quality and healthy environment

Increased productivity

Energy & water savings

Lower vacancies

Greater rents

Incentives from government

Why certify? To prove the claim.

Benefits of certification

Why certify?

Certification makes sense when there is a transactional benefit between

SELLER BUYER

or

OWNER TENANT

When you plan to build a property for you own benefit and do not plan to

sell it or rent to others, certification brings limited benefits.

but….

IT DOES NOT IMPLY THAT THE STRUCTURE SHOULD NOT ADHERE TO

SUSTAINABILITY STANDARDS!!! IT IS JUST NOT CERTIFIED BY

THIRD PARTY.

If you are a developer or an investor, a transaction always takes place –

be it an office building, residential home, or industrial property.

A transaction always takes place in the form of a lease.

(a) NO TRANSACTION - If you do not plan to sell a home for, say,

minimum 15 years and do not plan to rent it.

(b) TRANSACTION – otherwise

It depends on a type of a property. But if you want to be perceived as a

good citizen, pursue certification.

Why certify: developers & investors

tenants & renters

homeowners

industrial company

Certification of public properties such as schools, universities, city halls,

and hospitals gives warranty per expected performance, provides

leadership in sustainable development , and creates healthier

environment.

Why certify: public property

In summary - real estate is mostly transactional. After all, that’s why we

have a thriving business of real estate agents.

31

Certification: Statistics

In God we trust, all others bring data.

Dr. W.E. Deming

Energy Star (1999) LEED (2000) Passive House (2000)

Commercial 11,787~12,720 (Worldwide)

Residential 1,111,856 7,882 ~50

Number of certified properties/units in U.S.

For LEED residential: 594 has Certified designation

3,628 Silver

2,056 Gold

1,604 Platinum

32

How to market ecological homes?

Passive House – Kansas City, KS, May 2010

1,700 square foot

$190,000 (worth at least double)

Still waiting for a buyer!

33

How to market ecological homes?

Passive House – Urbana, IL, 2007

1,450 square foot

$120,000 sold ($25k City + donations)

How to market ecological homes?

1. Be a resident of Champaign County, and

2. Be at 80% or below the median family income (see the chart)

Energy efficiency alone is not enough to differentiate

yourself in the marketplace!!!

Culture clash

EU

Europe leading the world - an Action Plan for Energy

Efficiency: Realising the Potential.

European Parliament resolution of 2008 January 31st

…calls on the Commission to propose a binding

requirement that all new buildings needing to be

heated and/or cooled be constructed to passive house

or equivalent non-residential standards from 2011

onwards, and a requirement to use passive heating

and cooling solutions from 2008.

Life-Cycle Cost Analysis

BUDMA 2011: Sustainable Construction - Investment in the Future

LCCA is most comprehensive. Includes all costs over life time.

LCC = I + Repl — Res + E + W + OM&R + O

LCC = Total LCC in present-value (PV) dollars of a given alternative

I = PV investment costs

Repl = PV capital replacement costs

Res = PV residual value (resale value, salvage value) less disposal costs

E = PV of energy costs

W = PV of water costs

OM&R = PV of non-fuel operating, maintenance and repair costs

O = PV of other costs (e.g., contract costs)

Problems:

It’s expensive and time consuming.

Assumptions about future (e.g., prices) are subject to huge variance.

Life-Cycle Cost Analysis

Lean & clean management, Joseph Ramm

The most misquoted example of LCCA!

Personnel Salaries refers to salaries of

persons working in the occupied space.

Excellent book, and in 1994.

Example is given to emphasize that a lot of savings could come from

improved productivity of employees.

Indeed, studies show that designing of buildings per LEED certification

increases productivity.

40

In U.S., zero energy building refers usually to net zero site energy use: the

amount of energy provided by on-site renewable energy sources is equal

to the amount of energy used by the building.

Passive House + Clean Energy = Killer Application

Zero energy building (ZEB)

41

Clean energy: geothermal, solar, wind.

State Amount Year

Arizona 15% 2025

California 33% 2020

Colorado 30% 2020

Connecticut 27% 2020

Delaware 20% 2019

Hawaii 40% 2030

Illinois 25% 2025

Oregon 25% 2025

Pennsylvania 18% 2020

Rhode Island 15% 2020

Utah 20% 2025

Virginia 12% 2022

Washington 15% 2020

West Virginia 25% 2025

Renewable Portfolio Standards. Selected States.

Policy and incentives are primary

drivers for clean energy.

But incentives are often in under-

developed localities.

Technology choice comes

afterwards.

Utilities will opt for large projects

(e.g., wind farms) to satisfy reqt’s.

Utilities are to make profits for

shareholders.

Costs will be passed to

customers.

42

Geothermal (Ground Source) Heat Pumps

Proven technology, stable, can work 24/7, and be installed ~ anywhere

Over 600,000 units installed in the U.S. But EU grows faster.

Per research from Oak Ridge National Laboratory (ORNL/TM-2008/232),

key barriers to growth of GHP are (in order of importance):

1. High first cost of GHP systems to consumers

2. Lack of consumer knowledge and/or trust or confidence in GHP system

benefits

3. Lack of policymaker and regulator knowledge of and/or trust or

confidence in GHP system benefits

4. Limitations of GHP design and business planning infrastructure

5. Limitations of GHP installation infrastructure

6. Lack of new technologies and techniques to improve GHP system cost

and performance.

43

Solar

Implementation totally driven by incentives.

Germany, Italy: feed-in tariff system

U.S.: market-driven rebates

Poland: no incentives for PV >> no implementation

PV not at parity with grid yet

Market in U.S.: mostly affluent households and industrial applications

44

Wind

Limited potential for small turbines in a city because of obstructions

from other dwellings disturbs wind patterns

Wind farms: very feasible and profitable endeavor

45

Paliwo/technologia 2006 2010 2015 2020 2025 2030

W.Brunatny-PC/Fluidalne 8,819 9,177 9,024 8,184 10,344 10,884

W.Kamienny-PC/Fluidalne 15,878 15,796 15,673 15,012 11,360 10,703

W.Kamienny-CHP 4,845 4,950 5,394 5,658 5,835 5,807

Gaz ziemny-CHP 704 710 810 873 964 1,090

Gaz ziemny-GTCC - - 400 600 1,010 2,240

Duze wodne 853 853 853 853 853 853

Wodne pompowe 1,406 1,406 1,406 1,406 1,406 1,406

Jadrowe - - - 1,600 3,200 4,800

Przemyslowe Wegiel-CHP 1,516 1,411 1,416 1,447 1,514 1,555

Przemyslowe Gaz-CHP 51 50 63 79 85 92

Przemyslowe Inne-CHP 671 730 834 882 896 910

Lokalne Gaz - - 22 72 167 278

Male wodne 69 107 192 282 298 298

Wiatrowe 173 976 3,396 6,089 7,564 7,867

Biomasa stala-CHP 25 40 196 623 958 1,218

BiogazCHP 33 74 328 802 1,293 1,379

Fotowoltaika - - - 2 16 32

RAZEM 35,043 36,280 40,007 44,464 47,763 51,412

Moce wytwórcze energii elektrycznej brutto [MW] KRAJOWY PLAN DZIAŁANIA W ZAKRESIE ENERGII ZE ŹRÓDEŁ ODNAWIALNYCH

Ministerstwo Gospodarstwa

46

Cost of Energy Production

1 QBtu (1015) of Delivered Energy1 Btu = 1055.06 J

COAL Plant: $256.0 Billion

NUCLEAR Plant: $222.0 Billion

BUILDING EFFICIENCY: $42.1 Billion

Reduction of GHG via building efficiency is much less

expensive than building power plants.

47

Sustainability in construction

Sustainability is being adopted by all forms of construction –

not only in buildings.

City of Chicago renovates neighborhood employing principles of

sustainability in a formal way.

In practice it means: preserving environment & saving energy

O’Hare airport (~$20 bil project) is renovated employing sustainability

Transportation: manuals are being developed for building roads

Implication:

To get a contract for municipal work, one has to know sustainability or

be certified as LEED (or equivalent) contractor.

Proposing a development (any) that does not have sustainability

features is not welcome, especially for downtowns.

48

Sustainability: Municipalities

49

Sustainability: Transportation

50

Sustainability: Airports

51

Seattle's Office of Sustainability and Environment

Portland Office of Sustainability

City of Cleveland: Office of Sustainability

Office of Sustainability for the City of Indianapolis

Maryland Office of Sustainability

City of New Haven Office of Sustainability

City of Palm Springs Office of Sustainability (California)

Lee County’s Office of Sustainability (Southwest Florida)

The Office of Sustainability, Columbia, MO

The Office of Sustainability, Evanston, IL

Sustainability at Texas A&M University

Yale Office of Sustainability

Office of Sustainability, The University of Chicago

Office of Campus Sustainability Michigan State University

Office of Sustainability University of Illinois at Urbana-Champaign

Office of Sustainability of the University of South Florida

Princeton University Office of Sustainability

Sustainability permeates through all fabrics of U.S. society

52

CO2 reduction by compact development

Transit-oriented development: key preference for municipalities,

especially in affordable housing

53

Conclusions

Whether you like ―green building‖ or not; or if you agree or disagree

with the concept of sustainability, it does not matter much.

You will be sucked into it by the global trend. The sooner you embrace

it, the sooner you may rip off benefits, or at the minimum enhance your

professional credentials.

Sustainability is business: first entrant advantage

Sustainability trend will permeate through all fabrics of construction

Technology follows policy.

Certification - be it LEED, Energy Star – provides a tool for systematic

analysis, and implementation, of sustainable solutions.

Technology follows policy.

Government should play a big role:

provide incentives

promote best practices

incourage innovating and reward those who do better

54

Conclusions

Government should play a big role:

provide incentives

promote best practices

incourage innovating and reward those who do better

actively implement sustainable solutions

2030?2011

Construction

Standards

LEED

Current

Codes

1. Standards will merge.

2. Why not utilize LEED now.

INNOVATIONS PROGRESSIVE POLICY

EDUCATION

56

Chinese workers build 15-story hotel in just six days

Innovations

57

Conclusions

.

Jako odpowiedzialny deweloper, rozumiemy znaczenie zrównoważonego

budownictwa. Dlatego decyzja, aby zgodnie z jego zasadami realizować

inwestycje Skanska Property Poland, jest spełnieniem naszych

zobowiązań wobec pracowników, przyszłych i obecnych najemców, a

także lokalnych społeczności.

Nicklas Lindberg, dyrektor generalny Skanska Property Poland.

That statement epitomizes attitudes of corporate America.

58

GREENBUILD 2011

IN TORONTO

59

Impact of PITI + E

P - servicing of principal

I - interest

T - property taxes

I - insurance Affordability = f(PITI)

In the current Energy Efficiency Mortgage, interest rate is the same as for

regular applicable mortgage. Only greater amount can be loaned.

To qualify for Energy Efficiency Mortgage, the property must have Home

Energy Rating System (HERS) report.

Pending S. 1379, the Energy Efficiency in Housing Act of 2009, would

likely lower interest rates on mortgage. Lenders are reluctant – more work

Implications: passive houses, and net-zero energy homes could flourish

Very bad for existing stock of homes if E permanently in PIPI. Buyer of a

home with low HERS will pay higher interest rates >> pressure on prices

>> but increased activity in renovation to meet current standards.