Builders Urge Green Building Subsidies

Green building already offers paybacks for up to $300 billion per year in the world's major markets, the World Business Council for Sustainable Development reported Monday.

Building green may offer its own payback, but to squeeze the greatest energy efficiencies out of new and existing buildings will require government subsidies.

That's the gist of a report on green buildings released Monday by the World Business Council for Sustainable Development. The report claims that, with enough investment, buildings in Brazil, China, Europe, India, Japan and the United States could cut as much energy use as that now used by transportation and industry worldwide by 2050.

But getting there will take more money than "justifiable on economic return grounds at today's energy prices," the report claimed – and that's where the subsidies will come in.

Buildings account for about two-fifths of the energy used in the world today, with about 80 percent of that coming from heating, lighting, powering and otherwise keeping them running. The remainder comes from making and transporting building materials, construction and maintenance, but Monday's report didn't focus on those costs.

Plenty of energy efficiency steps are economically justifiable today, the report found. That's in keeping with several studies of green building that show paybacks come not just in energy savings, but in the increased valuation and rents that green buildings can command (see Green Building: Cheaper Than You Thought and Green Buildings: No Subsidies Needed?).

The green building movement has spawned a host of startups focusing on everything from less energy-intensive building materials to systems to curtail building HVAC and lighting power needs (see Startups Following Serious Materials Into Green Walls and The Year in Green Building).

The report found that, with oil prices at about $60 per barrel, investments of about $150 billion per year could cut overall building energy use by 40 percent and pay themselves back within five years. Another $150 billion per year with payback within 10 years could bring that overall energy reduction to about 52 percent, the report found.

But those savings only make up for a third of the report's full-scale projections for reducing buildings' energy use. To go beyond those payback-ready energy savings will require "integrated actions from across the building industry, from developers and building owners to governments and policy-makers," the report stated.

First off, tax incentives and subsidies will be needed to spur investments beyond a 10-year timeframe, the report said. Also needed will be new building codes and inspections focused on energy efficiency, restructuring building projects to include integrated energy efficiency planning, and "appropriate energy process and carbon costs," the report stated.

Some of those incentives could come from industry changes. For example, the U.S. Green Building Council launched the third version of its LEED (Leadership in Energy and Environmental Design) guidelines on Monday, with a host of new efficiency standards including state-by-state best practices (see Green Light post).

Others are already set forth in the $787 billion stimulus package passed in February. That includes $4.3 billion to fund a 30 percent tax credit for certain household energy efficiency purchases, as well as $5.5 billion program to fund to make federal buildings more energy efficient (see Obama Signs Stimulus Package).

The report's long-range goal is to cut enough building energy use to help cut global greenhouse-gas emissions by 77 percent of projected growth by 2050, as called for by the Intergovernmental Panel on Climate Change.

Sponsors of Monday's report include cement makers Lafarge and Cemex, steel maker ArcelorMittal, chemical company DuPont, lighting company Philips and others. 


Join industry leaders and influencers at Greentech Media's Green Building Summit in Menlo Park, Calif., June 11.