Who Cares About Better Buildings? A Diverse Group of Companies Answer, “We Do!”

Lane Burt
Technical Policy Director
U.S. Green Building Council

As a movement, we knew we had come a long way when President Obama announced the Better Buildings Initiative in February, establishing the goal of slashing energy consumption in commercial buildings 20 percent by 2020. Groups like USGBC, the Natural Resources Defense Council (NRDC), and the Real Estate Roundtable (RER) applauded the plan. But articulating the goal and achieving it are two different things, and we all realize that so much of the initiative hinges on coordinating and communicating as we are pursuing building improvements and smart policy changes. That’s why we have again joined with NRDC and RER to launch the Coalition for Better Buildings (www.C4BB.org), an action network dedicated to improving energy efficiency of commercial and multi-family buildings. The website went live last week and new members are joining daily.

With representatives across the building industries, we are stepping up to tell all who will listen how everyone benefits from better buildings and what changes are needed to realize those benefits. Whether it's for job creation, energy and water savings, health improvements, increased productivity, or other reasons, we are once again coming together to show why we care about better buildings.

• Building owners want to stop wasteful energy consumption. They want access to their building energy information so they can start making improvements. They want to see investments in their buildings lead to higher value. And they want access to financing so they can start the improvements immediately.
• Building operators want support to implement the money saving solutions they identify. They want to be able to get the data so they can show how much they are improving the buildings.
• Tenants want to make efficiency upgrades in their spaces and make sure their bills actually go down. They want to work with the owner on upgrades that will improve the entire building.
• Lenders want to get the information they need to understand the savings that will occur and risk of the project before they lend.
• Architecture and engineering firms want to design and sell better building systems.
• Builders want to see their best buildings in high demand on the market.
• Manufacturers want to sell their best, most efficient products that they have researched and brought to the market.
• Energy service companies want to increase opportunities to scale their low risk, high reward services.
• Commissioning companies want more jobs tuning building systems so that they operate as they were designed.
• Affordable housing providers need solutions to the same problems they find in multi-family buildings.

I could go on and on, but you get the point. And if you look at the C4BB mission and member list, you'll see that's exactly what these companies are saying.

We know you care about better buildings, too, so have your company join us in C4BB as we coordinate to tear down the barriers that are keeping us from achieving impressive reductions in energy consumption even before 2020. Let’s get started.

Encouraging Energy Efficiency: A Tax Fix Everyone Can Get Behind

Lane Burt
Technical Policy Director
U.S. Green Building Council

Pretend you are a small business owner. You happen to own the building where your business is housed, which has helped you weather the recession. Things seem to be getting better, and you have the opportunity to make some investments in your company that could really pay off in the long run.

You’d like to figure out how to cut your operating expenses, especially utilities, which have gone up and up and up over the last 10 years. You know your building is pretty old and leaky, and that much of that energy you buy is wasted. You’ve heard the President talk about efficiency retrofits and think that might be a smart investment that will cut your energy bills and pay for itself.

But there is a problem. If you invest in your own building energy efficiency, you will have to pay federal taxes on the value of the investment. If you were to keep wasting energy, all that wasted money would be completely deductible from your taxes.

That’s right; in effect our tax code unintentionally subsidizes wasted energy. Despite the economic benefits (not to mention the domestic job creation and the environmental benefits), investments to create energy efficient, better buildings do not receive the same treatment under the tax code as wasted energy.

That’s why USGBC is working with a diverse coalition of industry and environmental organizations, like the Natural Resources Defense Council and the Real Estate Roundtable, to change that. It’s our highest priority to convince Congress that energy efficiency is at least as valuable to the nation’s prosperity as wasted energy.

We’ve proposed changes to fix Section 179D of the tax code, and existing policy designed to encourage energy efficient new construction to make it usable for existing buildings. You can read more about those changes here.

The positive impact of this tax code tweak would be immense – 77,000 new jobs and immense savings on energy bills where we live and work. Those are benefits that will be felt not only by those who do the work, but also by everyone who works in an office, stays in a hotel, shops at a mall, or lives in an apartment.

But what will be the cost to the treasury? Not much if anything for one major reason – all those investments we want to encourage will drastically decrease the total amount of money spent on energy at businesses across the country, thereby lowering the total expenses deducted from their taxes for years to come. Instead of deducting wasted energy, they will reap energy savings and reinvest that money in much more productive ways.

This is one tax fix that nearly everyone can get behind. We plan to advocate tirelessly for these changes on behalf of our members, many of whom own the buildings, make the more efficient products, and will design and engineer the retrofits. Stay tuned for opportunities to get involved.

New Report: Better Buildings = 114,000 New Jobs

Lane Burt
Technical Policy Director
U.S. Green Building Council

Today USGBC, with our partners at the Real Estate Roundtable and the Natural Resources Defense Council, released an analysis conducted by the Political Economy Research Institute that concludes that President Obama’s Better Buildings Initiative (BBI) will create over 114,000 jobs.

As background, the Better Buildings Initiative is a collection of legislative proposals and federal agency actions designed to encourage the efficiency improvement of commercial buildings. The President has recommended tax incentives, grant and challenge programs, and increasing the availability of financing for the improvements. The analysis covers the major components of the initiative: the tax incentives, the financing programs, and the grant programs.

The full report is available at http://www.USGBC.org/advocacy/BBIJobs. Here’s what you need to know:

• The Better Buildings Initiative would create more than 114,000 jobs.
• The greatest jobs-creating impact – over 77,000 new jobs – would derive from a revised tax incentive to encourage building retrofits.
• New job creation would ripple throughout the economy. New jobs would be created directly at construction sites, which in turn would spur more jobs in the manufacturing and service sectors.
• The Better Buildings Initiative’s federal incentives are an investment to trigger private sector spending, which in turn produces widespread benefits. For example, tax incentives would encourage at least three times as much private investment to make buildings more efficient.
• Businesses would save over $1.4 billion in energy bills as a result of retrofit projects spurred by the tax incentive, which would in turn be re-injected into the economy.

The most significant job creator considered is the revision of the existing tax deduction for energy efficient commercial buildings, section 179D. These are the same revisions supported by 86 diverse organizations and the subject of the recent letter to the Senate written about last week. The proposal with its unique structure would create 77,000 jobs while achieving real quantifiable energy efficiency improvements. Actual measured performance is required to take full advantage of the redesigned incentive.

The report also outlines how these jobs would be created in engineering and in performing the retrofits, manufacturing the new efficient equipment and materials, operating, commissioning, and servicing the buildings, and finally in the re-spending of the significant energy savings.

The conclusion that commercial building energy efficiency creates jobs, and a staggering number of new jobs is not new. This report joins and supports the conclusion of a host of others on the topic.

• McKinsey found 600,000 to 900,000 new jobs in energy efficiency over all sectors.
• ACEEE found 333,000 new jobs in proposed energy efficiency legislation last year. Over 150,000 of these jobs were from the bi-partisan yet now politically infeasible HomeStar program for home retrofits.
• UC Berkeley found that California’s energy efficiency policies on the books will create 200,000 jobs by 2020, with more jobs of higher quality possible with some additional measures.

With this new analysis we now know how much of the huge opportunity for job creation through energy efficiency may be achieved through implementation of the Better Buildings Initiative. USGBC and its member companies will continue to support the agencies moving forward with the administrative components of the BBI while working with our many allies to convince Congress to move forward with the changes to the tax code that could potentially unlock a huge number of jobs in commercial energy efficiency. Stay tuned to this blog for opportunities to get involved.

Building Industry and Environmentalists to Congress: This is How to Encourage Better Buildings

Lane Burt
Technical Policy Director
U.S. Green Building Council

A few weeks ago USGBC, along with the Natural Resources Defense Council and the Real Estate Roundtable, spearheaded the development of a letter sent to several key Senators on proposed changes to the tax deduction for energy-efficient commercial facilities, as put forth by President Obama as a component of the Better Buildings Initiative. The letter outlines a few key principles uniting an extremely broad stakeholder community around commercial and multifamily energy efficiency, and you can take a look here.

As background, the tax policy, known as Section 179D, was designed to encourage the construction of energy-efficient commercial buildings. The section allows a building owner to take a deduction of up to $1.80 per square foot of space for buildings that are constructed to be 50% better than the 2001 energy code. Enacted in 2005, back before the recession decimated new construction, the policy has been dogged by a lack of clarity on how to document compliance and take the deduction. Multiple requests have been made to DOE and IRS to fix these problems, and it appears that the agencies are finally working to provide some more usable guidance.

Helpful as that will be, 179D was not designed to encourage the large-scale retrofits of existing buildings. Changing times have made encouraging retrofits not only a component of the President’s plan to “Win the Future,’ but also the focus of stakeholders in the commercial real estate industry.

To illustrate, consider the internationally recognized retrofit of the Empire State Building. Owner Tony Malkin decided to not just renovate and update the iconic building, but also to make it as energy efficient as possible. He assembled a team of the Clinton Climate Initiative, Jones Lang LaSalle, Johnson Controls, and the Rocky Mountain Institute to create a showcase project for efficiency innovation. The retrofit team managed to slash energy consumption by 38%, saving more than $4 million each year. The entire process considered more than 60 different energy efficiency measures and was optimized with eight simple measures executed under a performance guarantee contract. The measures (such as renovating the windows in a pop-up factory on the fifth floor of the building) have maintained the historic character of the facility. The project has been submitted for LEED EB:O&M certification, and according to the project team, targeting the LEED-Gold level. This success story (www.esbsustainability.com) has raised awareness of what is possible in a quantitatively driven energy efficiency retrofit in even the world’s most iconic buildings, but this project would not qualify for the existing tax deduction.

Why not? The issue is one of baselines, where the existing policy has a code baseline as used in new construction, where as the Empire State Building cut consumption compared to where it began. Shifting the baseline for an existing building to compare to previous performance is one of the principles that united the industry in support of this proposal.

The principles in a nutshell are:

• Measure energy savings compared to the existing building baseline. Rather than requiring existing buildings to meet and exceed the requirements of the energy code for new construction, as is the case currently in 179D, measure improvements in how much energy consumption was reduced compared to where the building started.
• Link the amount of the incentive to energy savings achieved. Greater energy savings and deeper retrofits warrant larger incentives to reward innovation and to reflect the larger investments and greater environmental benefit. Energy savings in excess of 50% are possible, and will be encouraged by this approach.
• Tie a portion of the tax incentive to implementation of efficiency measures and a portion to demonstrated energy savings. There are good reasons to reward a building owner for implementing energy savings measures, and even better reasons to reward energy savings actually realized on the energy meter. This proposal uniquely does both and maximizes accountability by allowing the building owner to claim 60 percent of the incentive at the time the energy efficiency measures are put into service, and the remaining 40 percent of the incentive after two years of demonstrating the expected savings have occurred.

This last principle would be groundbreaking for energy tax policy. Instead of providing an incentive up front when the measures are installed but not requiring follow up, we are suggesting that 40% of the incentive be held until there is confirmation of success. This unprecedented level of accountability will encourage the proper operations and maintenance in high performance buildings, an Achilles heel of efficient designs that depend on the operators to live up to their full potential.

In the end, more than 85 organizations representing real estate owners, builders, contractors, building managers, energy service companies, building efficiency manufacturers and suppliers, energy efficiency financiers, environmental advocates, architects, engineers and other stakeholders supported these principles. Stay tuned for updates on our progress as we work to turn these principles into a bill in Congress and then generate support for its consideration.

USGBC Urges Restored Funding for Critical Data Program

Bryan Howard
Legislative Director
U.S. Green Building Council

Today USBGC along with more than 70 organizations, companies and advocacy organizations sent a letter to the Senate and House Appropriations Committees urging that Congress restore funding for the Commercial Building Energy Consumption Survey (CBECS), a national survey that gathers statistical information on U.S. commercial buildings, at the Energy Information Administration (EIA).

The letter was drafted and circulated by USGBC, the Natural Resources Defense Council (NRDC), the Real Estate Roundtable (RER) and members of the Real Estate Network for Energy and Climate Policy (RENECP), a network of professionals who support comprehensive clean energy and climate policies that advance building and location efficiency.

CBECS, a little known acronym outside of the building industry, has a huge impact on the real estate community as it is the data backbone of important programs such as LEED for Existing Buildings and ENERGY STAR. The recent budget compromise brokered by Congress and the White House cut EIA's funding by 14 percent. Because of the size and the timing of the budget cut EIA chose to suspend its work on CBECS for 2011.

Signatories of the letter, representing a diverse group of national buildings organizations, commercial real estate owners, architecture firms and advocacy organizations, urged that funding be restored to CBECS to ensure that chances to increase efficiency in commercial buildings are not squandered due to lack of meaningful comparative data.

“Opportunities to increase building efficiency and upgrade our building stock will be missed in the absence of more current and reliable CBECS data. Further delay in collecting and publishing new data will diminish the efficacy and reliability of energy benchmarking systems that depend on CBECS.”

The committees of jurisdiction are expected to consider funding for EIA in the coming weeks.

Get more information on RENECP »
Read the full letter »
Read the EIA press release »

USGBC Testifies on Strategies to Increase Efficiency in the Federal Government and Promote the Better Buildings Initiative

Doug Gatlin, U.S. Green Building Council’s Vice President of LEED, testified before the Senate Environment and Public Works Committee on the how the General Services Administration (GSA) can eliminate waste, cut costs and improve environmental performance through improved building management and purchasing.

“With an inventory of more than 7,000 government-leased and 1,500 government-owned buildings – representing more than 354 million square feet of space nationwide – GSA has an extraordinary capacity to reduce the environmental impact of our nation’s buildings and save taxpayer dollars,” said Gatlin.

Joined by GSA Administrator Martha Johnson and other members of the real estate and business community, Gatlin provided Senators with a number of options to improve environmental performance while decreasing costs to taxpayers. He outlined a number of strategies including consistent funding to update, maintain and commission existing buildings.

“… commissioning costs, on average, $0.30/ft2 and generates between $0.25-$0.30/ft2 in whole building energy savings for a payback time of 1.1 years, and a 91% return on investment (ROI). This type of commissioning is arguably the single most cost effective strategy for reducing utility costs in buildings today.”

Jeffrey DeBoer, the President and Chief Executive Officer of the Real Estate Roundtable, also joined Gatlin in calling for changes to the Energy Efficient Commercial Building Tax Deduction (179D) to make it more useable for existing buildings.

“As GSA develops its program to release excess properties into the marketplace, Congress should take complementary steps to enable retrofits of those assets by re-designing section 179D,” said DeBoer.

Changes to the tax deduction along with a number of other programs to spur commercial building efficiency were included in the recent Better Buildings Initiative (BBI) announced by the President Obama earlier this year.

To watch the full archived hearing or to read the full testimony click here.

For a detailed summary of BBI click here.

Related posts:
USGBC and the Better Buildings Initiative: How Do We Get Started Sooner?
Congressional Outlook Uncertain, but Executive Branch Opportunity Abounds

Congressional Outlook Uncertain, but Executive Branch Opportunity Abounds

Lane Burt
Technical Policy Director
U.S. Green Building Council

There has been a whole lot of negative talk about the prospects for energy, climate or other significant legislation coming out of our newly divided Congress, and that is not the best news for the green building industry. However, this does not imply that green building advocates should pack up and go home – in fact, it means quite the contrary. It turns out that a renewed focus on utilizing the legal authority already granted to federal agencies by Congress could reap huge benefits for architects, engineers, builders, developers, manufacturers and others involved in the green building process.

The shocking size and scope of the United State’s potential energy and water savings were highlighted by a 2010 study on existing authorities held by the executive branch to push efficiency in commercial and multifamily buildings. USGBC commissioned this study with a diverse group of building sector organizations (e.g., the Natural Resources Defense Council, Real Estate Roundtable, and Building Owners and Managers Association).

The findings of this report were clear. There is something, and usually something very impactful, that nearly every agency can do to improve the public and private building stock. The more digging we did into the existing authorities, the more opportunities we discovered to “stoke the fire” of the building industry and its sustainable potential. I wrote about the highlights of the report when it was released, and the opportunities I noted then remain before us—still knocking—today.

In many ways, the sheer quantity of opportunities identified by the report (and sheer size of the report itself) is daunting. Where should the White House, the Department of Energy, the Environmental Protection Agency, etc. start? Which potentially transformative policy must come first?

That’s why the full report was just the beginning of a broader federal push. Over the weeks and months to come, we will be reaching out to our 16,000+ member companies and working with our other partners on the report to generate support for industry- and agency-specific recommendations—ones that are targeted, actionable, and potent. We want to make sure that the voices of our member companies and the larger green building community are heard by the executive branch. We expect to deliver real results from their advocacy and leadership. We have already sent our top three recommendations over to the Department of Energy. Our January 21st memo recommends action on a green real estate appraisal standard, the tax deduction for commercial energy efficient commercial buildings, and loan guarantees for financing retrofits.

And the executive branch is paying attention! The President recently announced the Better Buildings Initiative (BBI) to improve commercial building energy performance, and he touched specifically on two of the three priorities. The BBI calls on Congress to take action but also lays out the steps the Administration is going to take by utilizing their existing authorities to create better buildings, better jobs, and lower energy bills.

By targeting executive branch action— along with continuing to push Congress to make progress on BBI and our other priorities like energy and water efficiency, healthy built environments, livable and walkable communities— we will continue to push forward toward the transformation of the built environment. Elections may change our strategy, but they certainly don’t change our priorities—or our expectations for meaningful results.