energy efficiency

How cities can fight climate change

Posted on by abrahamwien18

Urban activities — think construction, transportation, heating, cooling and more — are major sources of greenhouse-gas emissions. Today, a growing number of cities are striving to slash their emission to net zero — here’s what they need to do.

By: Deepa Padmanaban
View the original article here

Global temperatures are on the rise — up by 1.1 degrees Celsius since the preindustrial era and expected to continue inching higher — with dire consequences for people and wildlife such as intense floods, cyclones and heat waves. To curb disaster, experts urge restricting temperature rise to 1.5 degrees, which would mean cutting greenhouse gas emissions, by 2050, to net zero — when the amount of greenhouse gases emitted into the atmosphere equals the amount that’s removed.

More than 800 cities around the world, from Mumbai to Denver, have pledged to halve their carbon emissions by 2030 and to reach net zero by 2050. These are crucial contributions, because cities are responsible for 71 percent to 76 percent of global carbon dioxide emissions due to buildings, transportation, heating, cooling and more. And the proportion of people living in cities is projected to increase, such that an estimated 68 percent of the world’s population will be city dwellers by 2050. 

“Urban areas play a vital role in climate change mitigation due to the long lifespans of buildings and transportation infrastructures,” write the authors of a 2021 article on net-zero cities in the Annual Review of Environment and Resources. Are cities built densely, or do they sprawl? Do citizens drive everywhere in private cars, or do they use efficient, green public transportation? How do they heat their homes or cook their food? Such factors profoundly affect a city’s carbon emissions, says review coauthor Anu Ramaswami, a professor of civil and environmental engineering and India studies at Princeton University.

Ramaswami has decades of experience in the area of urban infrastructure — buildings, transport, energy, water, waste management and green infrastructure — and has helped cities in the United States, China and India plan for urban sustainability. For cities to get to net zero, she tells Knowable, the changes must touch myriad aspects of city life. This conversation has been edited for length and clarity. 

Why are the efforts of cities important? What part do they play in emissions reductions?

Cities are where the majority of the population lives. Also, 90 percent of global GDP (gross domestic product) is generated in urban areas. All the essential infrastructure needed for a human settlement — energy, transport, water, shelter, food, construction materials, green and public spaces, waste management — come together in urban areas.

So there’s an opportunity to transform these systems. 

You can think about getting to net zero from a supply-side perspective — using renewable, or green, energy for power supply and transport — which is what I think dominates the conversation. But to get to net zero, you need to also shape the demand, or consumption, side: reduce the demand for energy. But we haven’t done enough research to understand what policies and urban designs help reduce demand in cities. Most national plans focus largely on the supply side.

You also need to devise ways to create carbon sinks: that is, remove carbon from the atmosphere to help offset the greenhouse gas emissions from burning fossil fuels.

These three — renewable energy supply, demand reduction through efficient urban design and lifestyle changes, and carbon sinks — are the broad strategies to get to net zero. 

How can a city tackle demand? 

Reducing demand for energy can be through efficiency — using less energy for the same services. This can be done through better land-use planning, and through behavior and lifestyle changes. 

Transportation is a great example. So much energy is spent in moving people, and most of that personal mobility happens in cities. But better urban planning can reduce vehicle travel substantially. Mitigating sprawl is one of the biggest ways to reduce demand for travel and thus reduce travel emissions. In India, for example, Ahmedabad has planned better to reduce urban sprawl, compared to Bangalore, where sprawl is huge. 

Well-designed, dynamic ride sharing, like the Uber and Lyft pools in the US, can reduce total vehicle miles by 20 or 30 percent, but you need the right policies to prevent empty vehicles from driving around and waiting to pick up people, which can actually increase travel. These are big reductions on the demand side. And then you add public transit and walkable neighborhoods.

Electrification of transportation — the supply side — is important. But if you only think about vehicle electrification, you’re missing the opportunity of efficiency. 

Your review talks about the need to move to electric heating and cooking. Why is that important? 

There’s a lot of emphasis on increasing efficiency of devices and systems to reduce these big sources of energy use, and thus emissions — heating, transport and cooking. But to get to net zero, you also have to change the way you provide heating, transport and cooking. And in most cities, heating and cooking involve the direct use of fossil fuels.

For example, house heating is a big thing in cold climates. Right now, we use natural gas or fuel oil for heating in the US, which is a problem because they are fossil fuels that release greenhouse gases when they are burned. With many electric utilities pledging to reduce the emissions form power generation to near-zero, cities could electrify heating so that the heating system is free of greenhouse gas emissions.

Cooking is another one. Some cities in the US, like New York City and others in California, have adopted policies that restrict natural gas infrastructure for cooking in new public buildings and neighborhood developments, thereby promoting electric cooking. Electrifying cooking enables it to be carbon-emissions-free if the source of the electricity is net zero-emitting.

Many strategies require behavior change from citizens and public and private sectors — such as moving from gasoline-powered vehicles to lower-emission vehicles and public transport. How can cities encourage such behaviors? 

Cities can offer free parking for electric vehicles. For venues that are very popular, they’ll offer electric vehicle charging, and parking right up front. But more than private vehicles, cities have leverage on public vehicles and taxi fleets. Many cities are focusing on changing their buses to electric. In Australia, Canberra is on track to convert their entire public transit fleet to electric buses. That makes people aware, because the lack of noise and lack of pollution is very noticeable, and beneficial.

The Indian government is also offering subsidies for electric scooters. And some cities across the world are allowing green taxis to go to the head of the line. Another incentive is subsidies: The US was offering tax credits for buying electric cars, for example, and some companies subsidize car-pooling, walking or transit. At Princeton, if I don’t drive to campus, I get some money back. 

The main thing is to reduce private motorized mobility, get buses to be electric and nudge people into active mobility — walking, biking — or public transit. 

How well are cities tackling the move to net zero? 

Cities are making plans in readiness. In New York City, as I mentioned, newly built public housing will have electric cooking and many cities in California have adopted similar policies for electric cooking.

In terms of mobility, California has among the world’s largest electric vehicle ownership. In India, Ola, a cab company similar to Uber, has made a pledge to electrify its fleet. The Indian government has set targets for electrifying its vehicle sector, but then cities have to think about where to put charging stations.

A lot of cities have been doing low carbon transitions, with mixed success. Low carbon means reducing carbon by 10 to 20 percent. Most of them focus entirely on efficiency and energy conservation and will rely on the grid decarbonizing, but that’s just not fast enough to get you to net zero by 2050. I showed in one of my papers that even in the best case, cities would reduce carbon emissions by about 1 percent per year. Which isn’t bad, but in 45 years, you get about a 45 percent reduction, and you need 80-plus percent to get to net zero. That means eliminating gas/fossil fuel use in mobility, heating and cooking, and creating construction materials that either do not emit carbon during manufacturing or might even absorb or store carbon.

That’s the systemic change that is going to contribute to getting to net zero, which we define in our Annual Review of Environment and Resources paper as at least 80 percent reduction. The remaining 20 percent could be saved through strategies to capture and store carbon dioxide from the air, such as through tree-planting, although the long-term persistence of the trees is highly uncertain.

Are there notable case studies of cities you could discuss? 

Denver has been covering the most sectors. Some cities cover only transportation and energy use in buildings, but Denver really quantified additional sectors. They even measured the energy that goes into creating construction materials, which is another thing the net zero community needs to think about. Net zero is not only about what goes on inside your city. It is also about the carbon embodied in materials that you bring into your city and what you export from your city. 

Denver was keeping track of how much cement was being used, how much carbon dioxide was needed to produce that cement, called embodied carbon; what emissions were coming from cars, trucks, SUVs and energy use in buildings. They measured all of this before they did any interventions.

The city has also done a great job of transitioning from low-carbon goals (for example, a 10 percent reduction in a five-year span) to deep decarbonization goals of reducing emissions by 80 percent by 2050. During their first phase of low-carbon planning back in 2010, they counted the impact of various actions in each of these sectors to reduce greenhouse gas emissions by 10 percent below 1990 baselines, through building efficiency measures, energy efficiency and promotion of transit, and were successful in meeting their early goals.

Denver is also a very good example of how to keep track of interventions and show that it met its goals. If the city did an energy efficiency campaign, it kept track of how many houses were reached, and what sort of mitigation happened as a result.

But they realized that they’re never going to get down to net zero because, while efficiency and conservation reduce gas use for heating and gasoline use for travel, it cannot get them to be zero. So in 2018, they decided that they’re now going to do more systemic changes to try to reduce emissions by 80 percent by 2050, and monitor them the same way. This includes systemic shifts to heating via electric heat pumps and shifting to electric cars as the electric grid also decarbonizes.

So it’s counting activities again: How many electric vehicles are there? How many heat pumps are you putting into the houses that can be driven by electricity rather than by burning gas? How many people adopt these measures? What’s the impact of adoption? 

What you’re saying is that this accounting before and after an intervention is put in place is very important. Is it very challenging for cities to do this kind of accounting? 

It’s like an institutional habit — like going to the doctor for a checkup every two years or something. Someone in the city has to be charged with doing the counting, and so many times, I think it just falls off the radar. That was what was nice about Denver — and we worked with them, gave them a spreadsheet to track all these activities. 

Though very few cities have done before and after, Denver is not the only one. There are 15 other cities showcased by ICLEI, an organization that works with cities to transition to green energy.

I have worked with ICLEI-USA to develop protocols on how to report and measure carbon emissions. One of the key questions is: What sectors are we tracking and decarbonizing? As I mentioned at the start, most cities agree with tackling energy use in transportation and building operations, and greenhouse emissions from waste management and wastewater. ICLEI has been a leader in developing accounting protocols, but cities and researchers are realizing that cities can do more to address construction materials — for example, influencing choice between cement and timber, which may even store carbon in cities over the long term.

I serve on ICLEI-USA’s advisory committee for updating city carbon emission measurement protocols, and I recommend that cities also consider carbon embodied in construction materials and food, so that they can take action on these sectors as well.

But we don’t have the right tools yet to quantify all the major sectors and all the pathways to net zero that a city can contribute to. That’s the next step in research: ways to quantify all those things, for a city. We are developing those tools in a zero-carbon calculator for cities. 

Calculating the Costs of Moving to Net Zero

Posted on by abrahamwien18

Cutting greenhouse gas emissions will affect real estate investors. The question is how much?

By: Beth Mattson-Teig
View the original article here

In August, the Intergovernmental Panel on Climate Change issued a harrowing report that concluded that nations had waited too long to curb fossil fuel emissions and there is no longer a way to stop global warming from intensifying over the next 20 years.

That has put renewed pressure on countries to cut emissions to avoid an even worse trajectory. In the U.S., many cities and states are enacting net zero legislation with Boston becoming the latest city to pass an ordinance that sets emissions performance standards on existing buildings with the goal of decarbonizing the city’s large building stock by 2050.

That will mean upfront costs to increase energy efficiency and reduce emissions even as the toll of unchecked climate change is already having massive financial impacts in the form of disasters that are increasing in frequency and intensity. As of early October, the U.S. had experienced 18 different weather/climate disaster events that exceeded $1 billion in damages, according to the National Centers for Environmental Information. The cumulative costs for these events is north of $100 billion on the year, putting 2021 on pace to the third most expensive year since 1980.

What’s less clear is who will bear the brunt of the costs associated with the implementation of net zero strategies and how this will affect real estate investors’ returns. That’s what Green Street set out to answer with a recent report assessing the potential costs of net zero across 17 property sectors. It’s a particularly relevant question given that the operation and construction of buildings account for an estimated 40 percent of global greenhouse gas (GHG) emissions, according to the report.

In August, the Intergovernmental Panel on Climate Change issued a harrowing report that concluded that nations had waited too long to curb fossil fuel emissions and there is no longer a way to stop global warming from intensifying over the next 20 years.

That has put renewed pressure on countries to cut emissions to avoid an even worse trajectory. In the U.S., many cities and states are enacting net zero legislation with Boston becoming the latest city to pass an ordinance that sets emissions performance standards on existing buildings with the goal of decarbonizing the city’s large building stock by 2050.

That will mean upfront costs to increase energy efficiency and reduce emissions even as the toll of unchecked climate change is already having massive financial impacts in the form of disasters that are increasing in frequency and intensity. As of early October, the U.S. had experienced 18 different weather/climate disaster events that exceeded $1 billion in damages, according to the National Centers for Environmental Information. The cumulative costs for these events is north of $100 billion on the year, putting 2021 on pace to the third most expensive year since 1980.

What’s less clear is who will bear the brunt of the costs associated with the implementation of net zero strategies and how this will affect real estate investors’ returns. That’s what Green Street set out to answer with a recent report assessing the potential costs of net zero across 17 property sectors. It’s a particularly relevant question given that the operation and construction of buildings account for an estimated 40 percent of global greenhouse gas (GHG) emissions, according to the report.

“That’s why we looked at it more as a cost, because we think this is something that building owners will do more reactively to the pressure that they are feeling or the pressure that they expect to feel,” notes Dave Bragg, co-head of Strategic Research at Green Street.

The Green Street analysis starts with a tally of total greenhouse gas (GHG) emissions per square foot for a portfolio of REIT-quality operating real estate assets. Total emissions per square foot data is translated into a hypothetical total potential cost by multiplying a landlord’s owned square footage by an assumed carbon price. The data set is amalgamated from REIT and tenant disclosure, landlord surveys and meetings with ESG experts.

There are three main buckets for classifying emissions.

According to the report, “Scope 1 emissions are released into the atmosphere as a direct result of activities occurring in the building, like natural gas combusted in the boiler. Scope 2 emissions are reported for electricity, heat, steam, or cooling generated elsewhere but consumed at the properties and paid for by the landlord. REIT reporting on scope 1 and 2 is rather clear and consistent.”

One of the key takeaways from the analysis is that the movement towards net zero appears likely to result in a drag on property prices, property owners will have to invest in things such as more energy efficient systems, on-site solar and the purchase of green power purchase agreements. Ultimately, those costs will be offset, at least partly, by higher rents and/or lower operating expenses. However, there is still the cap-ex spending to consider. “The way that we think about it is that this will be a net cost and a net drag on property pricing,” says Bragg. “So, there is going to be an impact here that needs to be assessed by real estate investors and something that deserves implementing in an underwriting framework.”

 second notable finding is that the impact will be unevenly distributed across property types with some sectors better positioned than others. Those property sectors that are expected to experience a “big” impact of a 5 percent or greater reduction to warranted value are data centers, lodging and cold storage. Those likely to see a “moderate” hit of 2 percent to 5 percent are office, retail and industrial. Sectors with low levels of emissions that should feel a negligible impact to value of 0 to 2 percent are multifamily, student housing, storage, labs and gaming.

“The impact on warranted values equates to about one-third of the hypothetical total potential cost of emissions, which makes sense when considering that the cost will be borne in part by landlords and over a long period of time,” according to the report.

Is there a business case for net zero?

While much of the push for net zero is coming from external forces, real estate owners and operators are assessing the business case for adopting these strategies. Are they only a net cost or are their ways moving to net zero can improve the bottom line? Potential economic incentives include higher rents, reduced costs stemming from energy efficiency and after-tax savings or accelerated depreciation.

Marta Schantz, senior vice president of the Greenprint Center for Building Performance at the Urban Land Institute, argues that this is the case.

“What we’re seeing is that there is growing momentum for real estate owners and developers to work towards net zero, first and foremost because there is a financial business case,” Schantz says.

When operators reduce energy consumption and improve energy efficiency it translates to lower costs, higher net operating income and higher asset value. “So, there is a direct correlation to reduced energy consumption,” she says.

But Anthony M. Graziano, MAI, CRE, CEO of Integra Realty Resources, a commercial real estate valuation and advisory firm, says it is unlikely the market as a whole, absent regulatory pushes, would move fast enough to meet 2050 climate goals under a “Good Samaritan” theory of economics. “The primary driver has to be economic incentive–feasibility,” he says.

Regulatory pressure is already coming down as more municipalities pass ordinances on building-level carbon emissions that are tied to fines for those that don’t comply. For example, the first tranche of fines for New York City Local Law 97 will go into effect in 2024. In Boston, meanwhile, buildings that do not comply with emissions reporting requirements will eventually face fines of between $150 and $300 per day based on their size. And ones that do not reach the emissions standards could see fines of up to $1,000 per day. In addition, owners that do not accurately report emissions could see fines of up to $5,000. 

One of the challenges in the net zero business case is that it is still early in terms of developing quantifiable metrics. There are not enough buildings or portfolios that have achieved net zero goals to be able to offer data on how the strategies impact rents, occupancies and building values.

“There is certainly a component of the market that will sell the qualitative benefits, but we will not see measurable differences until we can quantify the economics,” says Graziano. Companies that are promoting qualitative benefits without economic realization are actually harming real efforts, because investors get poor returns and are discouraged from making changes across their entire portfolio, he says. “Other market makers are watching and seeking quantification, and the fuzzy math perpetuates more inaction,” he adds.

The CRE industry is working to create some metrics and benchmarks around the business case for net zero, but there is a long way to go. Traditional data points, such as building age, building operating cost analysis, market rent and tenant demand, are all primary current proxies for ESG, but are not explicitly derived indicators of ESG value, notes Graziano. One example of explicit indicators would be Platinum and Gold LEED buildings and their relationship to tenant demand and higher rents achieved in the market. For instance, mandates from GSA and others that a certain percentage of building leases must be for Platinum or Gold LEED buildings drives tenants to a limited stock of buildings. Theoretically, those buildings are then in higher demand and can command higher rents, he adds. 

 Cushman & Wakefield released a new study that compared rents at LEED-certified buildings delivered between 2010 and 2020 and compared them to non-certified buildings. The study found that, since 2015, rents for LEED-certified buildings averaged $4.13 or 11.1 percent higher rent than non-LEED-certified buildings.

“It is not inexpensive to achieve net zero overnight. Over time you can certainly do it in a more measured way. But the value and ROI in decarbonizing and reaching net zero is about more than increased rents and decreased operating expenses,” says Schantz. “There are a lot of different qualitative pieces, and more and more owners are seeing that.” And those qualitative factors, such as attracting and retaining tenants, future-proofing buildings and brand reputation are big drivers in the market these days, she adds.

Energy Awareness Brings Savings During COVID-19

Posted on by abrahamwien18

As commercial real estate owners face budget constraints, rediscovering efficient energy infrastructure paints a silver lining.

By: Diana Mosher
View the original article here .

As we settle into fall, some U.S. employees are being summoned back to the office. Physical occupancy in office properties was at 25 percent as of Sept. 9, according to data collected by Kastle Systems in 10 large U.S. cities. Most people are continuing to work from home, however, many with no return date in mind. In fact, when a viable COVID-19 vaccine is finally rolled out, some might discover they have no office to return to, with companies rethinking whether they need a physical base at all. Facing this turn of events, property owners and managers are prioritizing energy efficiency as they grapple with fluctuating consumption levels.

“Managing occupied, partially occupied and unoccupied spaces with cooling, heating and lighting is essential,” said Barry Wood, LEED accredited professional & director of retail operations at JLL. “Many tenants will not fully reoccupy, and owners and managers must be able to adjust and adapt their energy usages to the needs of the building and tenant.”

Built in 2008, 22 West Washington is one of Chicago’s trophy assets. The 17-story, 439,434-sq.ft. commercial property was designed by architecture firm Perkins + Will with high speed (minimal wait time) elevators; 14-inch raised floors for power, data and tenant-designed HVAC; digitally controlled, high capacity HVAC; and open floor plans that can be modified to meet social distancing protocols. 

According to Wood, improving energy efficiency is a differentiator in most buildings because utilities typically rank in the top five for expenses. “Also, because of COVID-19, many buildings are seeing that rental income and expense recoveries are down, and owners and managers must be creative in managing the balance of the property needs. Maintaining conveniences to the tenants and guests coming to the property is essential to ensure they are comfortable being there.”

Best practices depend on the facility, but Wood said they will certainly include varying the set points on chillers and rooftop equipment; ensuring the operation of chillers, cooling towers, air handlers and roof op equipment is within the highest efficiency zone; and working with tenants to cluster workers—within CDC suggested guidelines—for lighting and cooling efficiencies.

Additionally, properties should stagger schedules to take advantage of natural daylighting. Another item on the list is the revision of settings on occupancy sensors for lighting and cooling in walk-through traffic areas as well as individual offices that may have shorter stay times.

It will be a challenge to obtain the same capital improvement dollars as before. Wood said, “To be approved for this type of project at properties, many owners will focus this capital money on ‘must do’ or ‘re-tenanting’ projects rather than operating efficiencies, therefore the building operations and engineering team will be essential in finding savings through operating efficiencies.”

MONITORING ENERGY USAGE

Technology is bringing big advances in monitoring energy usage, but adoption has been sluggish. However, since COVID-19 has pushed up operating costs, having an efficient building has become sexy in the minds of owners. Energy consultants offering audits, such as Bright Power, have the receipts to prove that energy monitoring does save money and can reduce carbon emissions.

“When stay-at-home orders began, we saw our office and higher education clients’ building staff adjust equipment schedules to reflect the new reduced occupancy schedules,” said Samantha Pearce, director of energy management services at Bright Power. Clients that had action plans—or were able to easily prepare plans based on what equipment was essential for limited occupancy—are saving more.

According to Pearce, the best tip to offer is finding out how your equipment is operating, and how to adjust settings quickly and efficiently. “Remote monitoring and energy management services are an impactful way to mitigate the impact of COVID-19 on maintenance and operations plans.”

We had a client who needed to switch from heating to cooling at their building. We were able to walk them through the switch remotely since we had installed a remote monitoring system before the stay-at-home order. And, we were able to verify that the switch happened correctly, rather than have the property staff wait for resident complaints or before receiving increased utility bills,” she said.

Since the pandemic began, virologists have been preaching for bringing in as much outside air as possible. Doing this during mild weather can actually improve efficiency; for example, by utilizing the spring outdoor air to lower the temperature in a crowded auditorium instead of using a cooling tower. However, during extreme weather, increasing outdoor air can bring a drop in efficiency. In both cases, the outcomes depend greatly on the site’s mechanical equipment.

“It becomes extremely important to know how to capture those savings (during mild weather) in order to possibly counter the potential increased costs of increasing outdoor air supply during the extreme weather seasons,” Pearce said.

NEW OPERATIONAL GUIDANCE

Commercial buildings sitting vacant since March are significantly less energy efficient and more expensive to operate. According to Jeff Gerwig, LEED green associate & national engineering manager for Colliers International U.S., the reason is new operational guidance from the American Society of Heating, Refrigeration and Air-Conditioning Engineers (ASHRAE) during the pandemic. ASHRAE’s new standards help create healthier indoor environments. However, energy efficiency measures implemented for years are now being reversed to achieve the recommendations.

“The primary impacts on energy efficiency and operating costs have been centered around three items,” explained Gerwig. “First, the increase of HVAC operating hours—ASHRAE recommends increasing building operating hours, if possible, up to 24/7. Also, outdoor air dampers are being opened to maximum percentages allowable to bring more outdoor air inside the property and create higher demand for HVAC operations.”

ASHRAE also recommends that dampers be opened up to 100 percent if possible, and Demand Control Ventilation (DCV) be disabled. “This technology worked in conjunction with outdoor air dampers. It measured indoor pollutant concentrations and used precise amounts of outdoor air to maintain spaces.” Gerwig added, “Given that ASHRAE recommends outdoor air percentages be increased to highest levels possible, these devices are being disabled.”

CREATING SAFE, HEALTHY ENVIRONMENTS

Employees are bound to continue reoccupying buildings in coming months, providing an excellent opportunity to consider both air quality and whether buildings are on track with long-term sustainability or efficiency goals.

“The types of air quality requirements we’re seeing put in place are very dependent on both the region/state and the type of building and can have a variety of implications on energy efficiency,” said Lou Maltezos, executive vice president of Ameresco, a company that specializes in renewable energy and energy efficiency consulting.

“As building owners have considered and experienced what ‘back to work’ looks like in communities around the world, we’re seeing a number of customers consider items such as touchless controls, updated HVAC systems and automated entry/exit systems to address both the efficiency needs of the building and the health and safety of the occupants,” Maltezos added.

For example, with the correct process and tenant instruction in place, owners can implement technologies such as ionization to their outside air units in return ducts that may reduce the amount of air needed to condition a space. Maltezos added that efficiency relies on utilizing data not only from the space, but the air handlers and controls system as well, for providing the correct amount of outside air.

RETHINKING PRIORITIES

In the current climate, it is essential to stay in touch with thought leadership on all matters related to energy. “Unfortunately, in most cases the energy savings reported (since COVID-19) for most buildings are not as significant as expected and not in line with occupancy reductions,” weighed in Thomas Vazakas, Cushman & Wakefield associate director of energy, infrastructure and sustainability for the EMEA region. “This is due to the inability in most buildings to have effective controls and zoning.”

For example, heating and cooling is provided to all open plan areas, whether occupied or not. Similarly, in many cases there are no occupancy sensors for lighting, therefore most, if not all, the lights will be on even though only a small area of the office needs it.

“As a result, we see most buildings using very similar energy to heating, cooling or lighting even though their occupancy is 50-90 percent less than it used to be,” explained Vazakas. “This is a great opportunity to install adequate controls in our buildings to ensure no energy is wasted.”

As the effects of the health crisis unfold, owners and managers continue testing in resilience. “Surely the loss of human lives is devastating, but at the same time COVID-19 presents an opportunity to rethink our priorities and change the way we live—and how we use our buildings. Many property owners are already looking into this and trying to use this crisis to help them develop and implement their sustainability goals and especially their corporate plans to meet Net Zero Carbon,” Vazakas concluded.

When this agenda also results in operational savings, it’s icing on the cake.

C-PACE Flips The Script On Energy Efficiency For Multi-Tenant Commercial Properties

Posted on by abrahamwien18

By Counterpointe Energy Solutions
You can view the original article here.

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Historically, making energy efficiency improvements to buildings has been uneconomic for owners of commercial real estate. There are structural reasons why leased commercial properties have traditionally lagged all other properties types in terms of energy efficiency. The results? Billions of dollars of inefficiencies, hurting the environment as well as most companies bottom lines. “Energy use in buildings is a $400bn to $500bn a year problem,” according to Stephen Selkowitz of the Lawrence Berkeley National Laboratory. Worse, tenants are inhabiting buildings with outdated infrastructure for seemingly no reason. These problems are well-understood, and the solutions are readily available, so what is holding commercial properties back?

THE SPLIT INCENTIVE

Common types of commercial leases, such as triple net or modified gross leases, make tenants responsible for energy bills. As a result, the benefits of any reductions in operating costs from energy efficiency upgrades accrue to tenants. As great as that is for the tenant, it leaves the property owner holding the bag and bearing the total cost of those capital improvements. So not surprisingly, property owners have virtually no reason to invest in improvements. They utilize equity for no return. This conundrum is known as “the split incentive”. Given this raw deal, it is no wonder that property owners have been reluctant to engage in energy efficiency projects.

PACE IS THE SOLUTION

Enter Commercial Property Assessed Clean Energy (C-PACE), an innovative financing option that can be used to finance 100% of renewable energy, energy efficiency and resiliency improvements to commercial properties. PACE financing also covers all development and soft costs, so there are no out-of-pocket expenses for the property owner. C-PACE solves the split incentive problem and uses the commercial lease structure to the owner’s advantage. Since it is an assessment, not a loan, C-PACE payments are paid with property taxes. And in most triple net and modified gross leases, tenants pay their share of property taxes. So now, the tenant who benefits from the upgrade is also responsible for repayment – thereby solving the split incentive problem.
For property owners, C-PACE is a definite win. They get to upgrade their assets, with no out-of-pocket expenses. The improved properties have lower energy bills, resulting in lower operating expenditures and higher valuations. The properties can also be marketed as “green”, allowing owners to take advantage of any rent premiums for environmentally friendly buildings, as well as better cap rates upon sale

Recently upgraded buildings are also an added selling point when attracting new tenants and buyers. For example, the World Green Building Council reported in 2016 that greener retail buildings correlate with happier customers and higher revenues for stores. When it comes time to find new tenants or renegotiate terms of a lease, property owners will benefit handily from having made a C-PACE assessment.

Tenants also benefit from C-PACE. Most C-PACE programs require energy efficiency improvements to have a savings-to-investment ratio greater than one. This means that tenants should be able to make each C-PACE repayment with only the funds they have saved from lower energy bills – and still have cash left over that they can pocket. Tenants additionally get to inhabit improved buildings with brand new HVAC, windows, chillers, and other features.

The community likewise benefits from the environmental impact of C-PACE. Energy efficiency reduces the emissions of greenhouse gases, minimizing smog and asthma-inducing particles and diminishes the need for environmentally disruptive fossil fuel extraction methods.
Energy efficiency has long been a difficult investment for owners of commercial real estate. C-PACE flips this script – energy efficiency projects are now not only a good idea but are a slam dunk for commercial property owners.

EMERALD SKYLINE PARTNERS WITH BLUE PILLAR TO PROVIDE THE ENERGY NETWORK OF THINGS POWERED BY AURORA

Posted on by abrahamwien18

South Florida-based Emerald Skyline brings 21st Century technology to energy management.

“Over 75% of businesses say that Internet of Things (IoT) is critical to their future success, and nearly half of adopters are using IoT to support large-scale business transformation.” Vodafone IoT Barometer 2016

January 10, 2017 from Emerald Skyline Corporation (www.emeraldskyline.com)

BOCA RATON, FL, January 10, 2017 – FOR IMMEDIATE RELEASE

Today, Emerald Skyline announced that it has partnered with Blue Pillar, Inc. to provide the Energy Network of Things powered by Aurora for hospitals, office buildings, retail centers, industrial and municipal facilities. Together, we’re transforming the energy industry by developing intelligent energy management solutions to help facility managers achieve their energy resiliency, efficiency and sustainability goals.

Blue Pillar connects any energy “thing” (i.e., any asset that consumes, switches or measures electricity — including meters (water, gas and electric), generators, fuel tanks, automatic transfer switches, chillers, boilers, HVAC control panels, CHP, solar panels, EV chargers and just about any other intelligent mechanical equipment you can think of — into our Energy Network of Things platform.
Blue Pillar’s Aurora Energy Network of Things™ platform has an architecture that is open at the device and application layer, so it is perfectly positioned to solve the energy management data crisis. In addition to being open and providing ubiquitous connectivity, we also offer dozens of energy management applications the same way that a calculator or calendar app would be offered on your Apple or Android phone.

“As a sustainability and resiliency consulting and LEED project management firm, this partnership enables us to provide the industry’s most flexible platform for connecting and managing energy devices,” reports Abraham Wien, LEED AP O+M, Director of Architecture & Environmental Design for Emerald Skyline. “We are always looking for ways to provide superior products and services to meet our clients sustainability and resiliency needs and Blue Pillar is an IoT provider that we are proud to offer to the market.”

For nearly a decade, Blue Pillar has connected thousands of energy assets at a wide variety of deployment sites from hospitals and energy service providers to data centers and higher education campuses enabling them to work 75% faster and realize 30% more affordability.

To find out more information about the employment of the Blue Pillar IoT for building energy systems in your building or facility and unleash the power of real-time data that strengthens your infrastructure and improves not only your efficiency but provides opportunities for differentiation and even new revenue sources while providing for a greener tomorrow, please contact Abraham Wien at [email protected] or call us 305.424.8704.

The Importance of an Energy Assessment for Commercial Buildings

Posted on by abrahamwien18

By John Losey, Owner and Founder The BP Group, Energy Manager Today, 9/1/2016

View the original article here.

Building owners and property managers that take on the responsibility of limiting energy consumption can be looked at as environmental leaders. While energy management adds extra tasks to everyday lists, the benefits outweigh the time and money spent, which is usually returned in savings.

There are numerous areas to take into consideration when it comes to commercial buildings, and being that commercial buildings are generally large, the impact can be large as well. These areas include the HVAC system, chillers, windows, lighting, electrical equipment, and any other factors that may be contributing to the building’s energy consumption.

While there are various ways to be involved with bettering the environment outside of where you live and work, starting in a place that you occupy everyday has the potential of having long term results if the actions are carried through as often as you’re there.

Consider creating an outlined approach for managing the building’s energy with these areas in mind:

Identify Sustainable Alternatives Where Energy is Being Used:

  • Are there upgraded, energy-efficient versions of the equipment you can be using instead?
  • Could you use different settings on the equipment?

Assess the Purpose of Every Area:

  • Is the lighting being utilized in every room?
  • Is the size of the HVAC system an adequate fit for the building and its purpose?

Evaluate Maintenance Plans:

  • How frequent are the utilities maintained?
  • Do the maintenance technicians practice with energy efficiency in mind?

Look for Possible Areas of Energy Loss:

  • Are the building’s windows sealed properly?
  • Is the equipment too old for efficient functioning?

These are questions you should ask yourself if you’re trying to assess energy consumption and find that alternative route to save not only energy, but money as well.

After addressing these questions, you may find yourself planning to make some changes. Here is the information you should know for doing so:

Energy Efficient Equipment: Whether it’s the HVAC system, the utility lighting or the other various appliances being used in the building, there are energy-efficient options to consider. This includes ones with ENERGY STAR ratings, which match the standards set by the government.

Settings & Thermostats: Just by being knowledgeable about specific settings and the different types of available thermostats, you can be saving a substantial amount of energy. Depending on the type of building and the function(s) of the building, settings can be applied to use less energy in an area that doesn’t need it. The same idea goes for thermostats. Programmable thermostats allow for precise regulation of energy consumption. This means making sure the temperatures aren’t set too high or too low when the building or part of a building isn’t in use. Programmable thermostats keep the location comfortable when needed, but help save energy when it’s not.

Lighting: It’s better to be the building that turns its lights off when it isn’t being used, than a building that keeps them on 24/7. It’s also important to consider energy-saving types, such as LED or solar. With these kinds, you can also invest in timers and dimmers.

HVAC Size: According to ENERGY STAR, “at least 25% of all rooftop HVAC units are oversized, resulting in increased energy costs and equipment wear.” Determining what size HVAC system the building needs is a job for a professional technician, and it’s an important part of the overall building assessment.

Maintenance: Building maintenance is not only important for saving energy and money, it’s important for the building’s health and those occupying it. This includes electrical, HVAC, plumbing, etc. While there are tasks you can manage on your own, there are specific tasks that are recommended for the hands of a professional technician. Whatever the area, it’s important to have maintenance scheduled. Having a definite schedule helps to prevent sudden issues, which prevents sudden energy loss as well.

Technicians: Certain companies know the importance of offering energy-efficient services. This means that they practice in ways that are beneficial for the environment. Research the companies in your area and look for the ways they’re working to save energy and you money. This is an important quality, and more companies are beginning to realize that.

Windows, Replacements & Other Areas of Loss: Other ways to assess energy is by looking into the not so obvious. This includes windows, old systems that don’t show signs of stress until it’s too late, and too many running appliances and pieces of equipment causing heat. If windows aren’t sealed properly, especially in summer and winter, your HVAC system may be working harder than it has to in order to reach the desired temperature. Leaks of hot or cold air will cause this. Another concern are systems that don’t show signs of stress. If the system is old, it’s definitely recommended to have it maintained, even if you think otherwise. The inside has moving parts that may be working very hard to keep it running, and the machine giving out might be the first sign if you wait too long. Lastly, there may be too much heat. Too many heat producing appliances or pieces of equipment may cause the air conditioner to work harder, similar to an open window on a hot summer day.

Commercial buildings don’t function alone, they need the help of energy, and all building owners and property managers can help conserve it.

John Losey is the owner and founder of The BP Group, a leader in Commercial HVAC Services

LEED Project Update

Posted on by abrahamwien18

JulieBy Julie Lundin, Founder, LEED AP ID+C, NCIDQ, ASID
Director of Sustainable Interior Design for Emerald Skyline Corporation

Emerald Skyline Corporation in conjunction with Golden Spiral Design, is designing, renovating and repurposing an unoccupied industrial building located in Boca Raton, FL. This building was formerly an auto garage that stood vacant for several years and was environmentally contaminated. Our renovation includes many sustainable features with the intent to obtain LEED certification from the USGBC.

The above paragraph still holds true months later. However, we have had to re-think the project scope and move forward on a smaller scale. We spent months working on the design and drawings in preparation for submission as a development project. In our original design concept we envisioned a larger building footprint and a second floor addition. Vision often becomes qualified by reality, and our project is no exception. The property size cannot accommodate a larger building footprint and the FAR (floor area ratio) requirements limit the building size allowed. An addition of a partial second floor (FAR compliant) was our solution to the lot size and FAR restrictions. Although only a partial second floor was now being considered it would still require stairs and ideally an elevator. Also, the limited first floor square footage available to accommodate the new stairs and an elevator almost negated the second floor addition. Our conclusion was that adding the partial second floor was not adding the square footage desired, and the cost of construction and engineering did not make economic sense.

In January we made the decision to proceed with the project as a renovation of the existing building only. No additional square footage is being added. Our intent is to repair and replace what is there. The building will visually retain the auto garage industrial look but will be transformed into a sustainable, repurposed space.   As a sustainable consulting firm, it makes sense for us to not increase the size of the building. Our society often believes that bigger is better and we briefly fell into this way of thinking. Now we are committed to working within a limited space and we are re-focusing on creative design and the best use of that space.

As stated in our previous post, this project is a proposed LEED certified building. A key component of a LEED project is its reduced energy use. We have replaced the existing flat roof which was old and leaking with a new roof that has a high SRI (Solar Reflectance Index). We are also designing a high efficiency HVAC system and building envelope to optimize the energy performance of the building. All of the existing windows are being replaced with product that exceeds the Florida Code and are High Velocity, Hurricane Zone approved for Miami-Dade as our project is located in South Florida. In addition, to optimize energy performance in a hot climate our windows have a high VT (visible transmittance) and low SHGC (solar heat gain coefficient) to ensure adequate daylight is being admitted while still blocking significant quantities of solar radiant heat gain.

window radiation

LED lighting fixtures designed with specific task usage will be installed on both the interior and exterior of the building. The existing concrete floors of the auto garage are going to be polished and used as they are. The specifications of the interior finishes are just beginning and as an interior designer, this is the fun part. Low VOC products, adequate air ventilation, and controlled air temperature and humidity will be utilized to protect the buildings IAQ (Indoor Air Quality). Low flow toilets and faucets, and Energy Star appliances will all be specified to reduce the amount of water and energy that is consumed.

We hope to be in our new location by early fall. Once our building is completed we will post descriptions of the renovation details and photos. This project has been a long journey. We are proud that it is a shining example of a correct decision to repurpose a building that might have otherwise been overlooked.

New Law to Allow Tenants to Showcase Their Energy Efficiency Efforts

Posted on by abrahamwien18

By Robert Carr, National Real Estate Investor, 5/15/2015

{ View the original article here. }

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Office tenants who became believers in energy conservation in the heyday of the building sustainability movement about two decades ago only to watch building owners take all the credit have cheered a recent new law that will support, track and promote their efforts at being green.

President Barack Obama signed the Energy Efficiency Improvement Act of 2015 on April 30. The bipartisan-sponsored law promises to align the interests of building owners and tenants with regard to investments in cost-effective energy efficiency and water conservation measures, create studies that will examine successful sustainable practices, enact data-tracking systems and provide ways to promote voluntary tenant compliance.

The law, also known as the “Tenant Star” act, includes a new federally-sponsored green building designation that’s similar to the U.S. Environmental Protection Agency’s (EPA) popular Energy Star system. Energy Star, enacted in 1992, provides an energy-efficient rating system for building products, residential homes and commercial buildings. In a recent report, the EPA said the Energy Star system reduced utility bills for residents and businesses by $34 billion in 2014.

However, tenants, the backbone of energy use in commercial buildings, have neither had a consistent national program to measure efficient energy use, nor a way to tout their specific efforts. Allison Porter, vice president of sustainability services for commercial real estate services firm DTZ, says tenants will now have the same kind of opportunities as Energy Star provides for owners to turn data into a basis for action. The new law will allow space occupiers to take responsibility for their usage and receive recognition for conservation efforts, she says.

“Although whole-building measures like Energy Star are a valuable tool, it’s also crucial to acknowledge that tenants’ use of a space has a huge impact on how a building performs,” Porter says. “By encouraging tenants to design and build energy-efficient spaces, Tenant Star will help align the interests of tenant and landlord. I expect that this alignment will clear a path for a new wave of investment in energy-efficient office space, especially coming at a time when the cost of efficient technologies commonly used in office interiors, such as LED lighting and occupancy sensors, has decreased significantly.”

Porter is joined by many other tenant sustainability supporters in her praise of the new law. Anthony Malkin, chairman, president and CEO of New York City-based Empire State Realty Trust Inc., said in a statement that the new law will align office tenants with their landlords to make smart, cost-effective investments in energy-efficient leased spaces. “Broad adoption will save businesses billions of dollars on energy costs in the coming years,” he said.

Jeffrey DeBoer, president and CEO of the Washington, D.C.-based Real Estate Roundtable, which brings together commercial property owners, developers and managers to address national policy issues, called the legislation “a triple win that will spur the economy by creating jobs, enhancing energy security and preserving our environment by cutting greenhouse gases.”

Implementation

The General Services Administration (GSA), responsible for all federal government leasing in the country, will take responsibility for the first section of the law, also known as the Better Buildings Act of 2015. According to the act, the GSA will create model commercial leasing provisions for energy efficiency by Oct. 31, and may begin enacting these provisions in federal leases. The GSA will also publish these provisions and share them with state, county and municipal governments.

The Secretary of Energy is responsible, under this law, to create a study within one year on the feasibility of significantly improving energy efficiency in commercial buildings through design and construction, by owners and tenants, of spaces that will use energy efficient measures. The study will include, among other requirements, such metrics as return on investment and payback analyses, comparisons of spaces that use these measures and those that don’t, impact on employment and actual case studies and data on the spaces where these measures are implemented. The department will start seeking input on this study after Aug. 1.

In addition, to allow tenants to start touting their green policies, the EPA will create the Tenant Star designation as an offshoot of Energy Star. Not only will tenant data be added into the 23-year-old collection program already in place, the new designation will recognize tenants in commercial buildings who voluntarily achieve high levels of energy efficiency in their leased spaces. The EPA will also create a voluntary program to recognize owners and tenants that use energy efficiency in designing and creating new and retrofit space.

Al Skodowski, director of sustainability with commercial real estate services firm Transwestern, says this new law will help those companies that have been fully engaged in driving green practices for many years.

“The birth of Tenant Star, as another tool to help our tenants understand their use, reduce energy consumption and to save money, is a very exciting opportunity that will help us continue to improve efficiency in the industry,” he says.

Welcome to Sustainable Benefits – Let’s begin with the benefits of doing a commercial building sustainable retrofit….

Posted on by abrahamwien18

2/12/15

PJ Picture
By Paul L. Jones, Founder,
Director, Financial Advisory Services for Emerald Skyline Corporation

 

“Who is more foolish: The child afraid of the dark or the man afraid of the light?” (Maurice Freehill, British WW I flying ace).

Figure 1 Empire State Building - LEED Gold

Figure 1 Empire State Building – LEED Gold

Throughout my 36-year career in commercial real estate, commercial buildings have generally been classified from A to C based on location, construction quality and tenancy. Class A buildings represent the cream of the crop. They secure credit-quality tenants, command the highest rents, enjoy premium occupancies, are professionally managed and have a risk profile that supports lower cap rates and higher values. Class B buildings are similar to Class A but are dated yet not functionally obsolete. Class C buildings are generally over 20 years old, are architecturally unattractive, in secondary or tertiary locations and have some functional obsolescence with out-dated building systems and technology. NOTE: No formal international standard exists for classifying a building, but one of the most important things to consider about building classifications is that buildings should be viewed in context and relative to other buildings within the sub-market; a Class A building in one market may not be a Class A building in another.

Based on years analyzing investments in income properties, it appears to me that in the recovery from the Great Recession the commercial real estate market has evolved to include energy efficiency and environmental design as a requirement for improving the marketability of a building – not to mention optimizing its operating income and value.

COMMERCIAL OFFICE BUILDINGS

On December 1, 2014, Buildings.com, in an article entitled “GSA Verifies Impact of Green Facilities,” reported that a study conducted by GSA and the Pacific Northwest Laboratory conducted a post-occupancy study of Federal office buildings, which varied in age and size and had been retrofit to reduce energy and water consumption. The following results were based on a review of one year of operating data and surveys of the occupants which was compared to the national average of commercial buildings: High performance, green buildings:

  • cost 19% less to maintain
  • Use 25% less energy and water
  • Emit 36% fewer carbon dioxide emissions
  • Have a 27% higher rate of occupant satisfaction.

One of the most famous sustainable retrofit projects undertaken was the updating of the 2.85 msf Empire State Building whose ownership directed that sustainability be at the core of the building operations and upgrades implemented as part of the $550 million Empire State ReBuilding program. According to Craig Bloomfield, of Jones Lang LaSalle (JLL), “After the energy efficiency retrofit was underway, JLL led a separate study of the feasibility study of LEED certification” which “showed that LEED Gold certification was within reach at an incremental cost of about $0.25 psf.

Graphics on financial benefits of high-performance buildings

Source: Institute for Market Transformation: Studies consistently show that ENERGY STAR and LEED-certified commercial buildings achieve higher rental rates, sales prices and occupancy rates.

Source: Institute for Market Transformation: Studies consistently show that ENERGY STAR and LEED-certified commercial buildings achieve higher rental rates, sales prices and occupancy rates.

According to the report “Green Building and Property Value” published by the Institute for Market Transformation and the Appraisal Institute, a trend is emerging where green buildings are both capturing higher quality tenants and commanding rent premiums. As indicated by the above graph summarizing four national studies for commercial office buildings back up this trend on rents and occupancy, as “certified green buildings outperform their conventional peers by a wide margin.”

  • According to the EnergyStar.gov website, “Transwestern Commercial Services, a national full-service real estate firm, has generated impressive returns through sound energy management. In 2006, Transwestern invested over $12 million in efficiency upgrades, for an average 25% energy savings. The Company estimates that dedication to energy management has increased the portfolio’s value by at least $344 million.”
  • According to John Bonnell and Jackie Hines of JLL – Phoenix, “In Phoenix, owners of LEED-certified buildings can capture a premium of 29 percent over buildings without this distinction.” The premium for Green buildings had disappeared during the Great Recession and reemergence in the first quarter of 2014 as a result of improving Phoenix market dynamics which is being realized in other major markets as well.

RETAIL

For retail buildings, the tenants are driving the shift to sustainability with green building as consumers become increasingly aware of the environment and the need to reduce, reuse and recycle. According to the “LEED in Motion: Retail” report published by the USGBC in October 2014, “LEED-certified retail locations prioritize human health: among their many health benefits, they have better indoor environmental quality, meaning customers and staff breathe easier and are more comfortable. In a business where customer experience is everything, this is particularly valuable.’ Green retail buildings also out-perform conventional buildings and generate financial savings:

  • On average, Starbucks, which just opened their 500th LEED-certified store, has realized an average savings of 30% in energy usage and 60% less water consumption.
  • McGraw-Hill Construction, which surveyed retail owners, found that green retail buildings realized an average 8% annual savings in operating expenses and a 7% increase in asset value.

It is noteworthy that, according to the third annual Solar Means Business report published by the Solar Energy Industries Association, the top corporate solar user in the United States is Walmart. In fact, almost half of the top-25 solar users are retailers (the others are Kohl’s, Costco, IKEA (9 out of 10 stores are solar powered), Macy’s, Target, Staples, Bed Bath & Beyond, Walgreens, Safeway, Toys ‘R’ Us, and White Rose Foods). Other Top-25 solar users with a significant retail footprint include Apple, L’Oreal, Verizon and AT&T.

In the competitive retail market, the study also noted that being distinguished for pro-active and responsible corporate social responsibility attracts customers and investors.

MULTI-FAMILY BUILDINGS

In a study of 236 apartment complexes conducted by Bright Power and The Stewards of Affordable Housing released last July, 236 properties in two programs, HUD’s nationwide Green Retrofit Program and the Energy Savers program available from Illinois’ Elevate Energy and the Community Investment Corp. One year of pre- and post-retrofit utility bills were analyzed. The researchers found the following:

  • Properties in the Green Retrofit Program had realized a 26% reduction in water consumption – or $95/unit annually.
  • The energy consumption in the Green Retrofit Program was reduced by 18% representing an annual savings of $213/unit.
  • Surveyed buildings in the Energy Savers program had reduced gas consumption by 26% and had reduced excess waste by an average of 47%.
  • The water saving measures in the Green Retrofit program reflected a simple payback period of one year while the energy savings measures had a simple payback period of 15 years.

In an article be Chrissa Pagitsas, Director – Multi-family Green Initiative for Fannie Mae, reports that 17 multifamily properties have achieved Energy Star® certification with two of them, Jeffrey Parkway Apartments in Chicago and ECO Modern Flats in Fayetteville, Arkansas, receiving financing from Fannie Mae.

  • The Eco Modern Flats complex is over 40 years old. With the goal of reducing operating expenses, the project was retrofit in 2010 with energy and water efficiency improvements including low-flow showerheads and faucets, dual flush toilets, ENERGY STAR® certified appliances, efficient lighting, closed-cell insulation, white roofing, solar hot water and low-e windows. As a result of the retrofit, the property achieved a 45% reduction in water consumption, a 23% drop in annual electricity use including a 50% savings in summer electricity consumption while increasing the in-unit amenities, obtaining LEED Platinum certification and increasing occupancy by 30% resulting in a significant increase to Net Operating Income.

Multi-family properties made sustainable gain a competitive advantage in marketing to young professionals and other target audiences who prefer to live in an environment that is healthy and energy-efficient which saves money on utilities.

HOTELS

In a 2014 study conducted by Cornel University, researchers compared the earnings of 93 LEED-certified hotels in the US to 514 non-certified competitors. The study included a mix of franchised, chain and independent facilities in urban and suburban markets with three-quarters of the properties having between 75 and 299 rooms.

The results show that green or sustainable hotels had increased both their Average Daily Rate (ADR) and revenue per available room (RevPAR) with LEED properties reporting an ADR that was $20.00 higher than the non-certified properties (prior to certification, they reported an ADR premium of $169 vs. $160).

The researchers noted that these premiums were realized in price-competitive markets and that the amount of the premium was unexpected. From the results, they concluded that Eco-minded travelers were willing to pay a modest premium to stay at a verified green facility.

Further, the savings realized in electricity and water usage as well as reductions in waste disposal fees and costs as well as reduced maintenance costs go straight to the bottom line resulting in increased Net Operating Income. Here are some examples:

  • The Hampton Inn & Suites, a 94-room facility in Bakersfield, had REC Solar install carport-mounted solar panels which is offsetting 44% of the electricity costs, or up to $8,800/month – adding over $100,000 to the property’s bottom-line.
  • The 80-room Chatwall Hotel in New York completed an LED lighting retrofit project mid-year 2014 which will result in a first year savings of almost $125,000. The cost: just about $1.00 per LED light after rebates.

According to Flex Your Power and ENERGY STAR® statistics, the hospitality industry spends approximately $4 billion on energy annually with electricity, including the HVAC system, accounting for 60% to 70% of utility costs. In fact, excluding labor, energy is typically the largest expense that hoteliers encounter and the fastest growing operating expense in the industry (www.cpr-energy.com). The EPA has concluded that even a 10% improvement in energy efficiency is comparable to realizing a $0.62 and $1.35 increase in ADR for limited service and full service hotels, respectively.

Many studies show that hotels do not realize the full benefit of many energy efficiency measures as guests feel no obligation to employ sustainable practices and wastes the opportunity for savings afforded by the hotel’s energy efficiency measures; however, almost half realize savings in excess of 20% reflecting that many operators have found ways to enlist guest cooperation in saving electricity and water.

According to the US Energy Information Administration (EIA) 2012 Commercial Buildings Survey, the United States had approx. 87.4 billion square feet of floorspace in 5.6 million buildings that were larger than 1,000 sf which also excluded heavy industrial manufacturing facilities. Ninety percent of the buildings that will exist in2035 have already been built – and buildings consume 80% of energy used in cities worldwide and represents almost 20% of all energy consumption in the United States.

Source: US Department of Energy 2013 Renewable Energy Data Book, 1/22/2015

Source: US Department of Energy 2013 Renewable Energy Data Book, 1/22/2015

 

The evidence is clear – building and operating sustainably pays dividends – in improved NOI from cost savings and increased revenues. Attracting higher quality tenants, improving market perception and reducing risk indicates that going Green is becoming a key for maintaining the Class of a building – keys to improving long-term values through lower cap rates.

So, why aren’t more building owners and managers going green? We will seek to discern this matter in our next Sustainable Benefits.

Perhaps the Scientists are sounding too much like Chicken Little

Posted on by abrahamwien18

11/5/14

PJ Picture
By Paul L. Jones, Founder,
Director, Financial Advisory Services for Emerald Skyline Corporation

 
This week, the United Nations’ Intergovernmental Panel on Climate Change issued its latest report on the effects of climate change on the world if corrective action is not taken. The headline in the Miami Herald read “Scientists’ warning is most alarming yet.”

A review of articles on climate change reflects similar headlines and worse – like “Goodbye Miami” or “Florida developers facing environmental woes.”

The alarm bell is ringing – and the headlines are starting to sound like Chicken Little crying “The sky is falling, the sky is falling!” in the children’s books. I know it does to me – and I know that the scientists have done their homework which is the opposite of Chicken Little and all his furry friends – Hen Pen, Duck Luck, Goose Loose and Turkey Lurkey.

In fact, a group of industry experts and sustainability professionals met in London last summer to dialogue about a report being issued by DNV GL, a leading ship and offshore classification, a leading technical advisor to the global oil and gas energy and a leading expert for the energy value chain including renewables and energy efficiency. The report, entitled, A Safe and Sustainable Future: Enabling the Transition, provides an analysis of challenges to sustainability in the global economy, societal well-being and governmental and corporate governance.

In an article published in Maritime Executive (http://www.maritime-executive.com/article/Too-Much-Climate-Change-Doom-and-Gloom-2014-07-12), entitled “To Much Climate Change Doom and Gloom,” participants expressed concern that the messaging around climate change is too much “doom and gloom” and not enough on the opportunities that are arising from addressing the effects of a warming world. Bjorn Haugland, executive vice president and chief sustainability officer at DNV GL was quoted:

“We believe there is a need to put the focus on the opportunities. For corporate leaders and politicians to speak a positive narrative is so important as it directs so much activity in society.

“We believe it is possible to create a thriving economy, it is possible to stay within the limits of the planet and it is possible to create a society for nine billion people to live well if we want to. It is human activity that has taken us into this situation and it is human activity that will take us out of it.”

Much of our perspective on the world, including our economic systems, is based on the belief that the world has an infinite supply of natural capital and a warming planet; however, the headlines about water shortages, famines, super storms, flooding, the hottest year on record, rising sea levels, ice caps melting and other calamities highlight that the scientists are not Chicken Little – the evidence is all around us.

Whether or not the global warming is man-made or from natural causes does not really matter, it is affecting the future for man-kind. Further, resource limitations can be extended – like the Green Revolution in agriculture where research, development and new technology between the 1940s and the 1980s increased agricultural production around the world – saving hundreds of millions of people from starvation.

Challenges abound everywhere, but where there are challenges, opportunity also exists.

DNV GL’s research report highlights 36 “barriers to sustainability” which range from economic and market hurdles to policy, societal and behavioral attitudes and habits – including reactive and short-term thinking, “denialism” and a lack of urgency. (available here: http://dnvgl.com/Images/DNV%20GL%20SSF_20_aug2014_tcm212-595432.pdf)

The Report concludes with Pathways to a Sustainable Future, which is summarized as follows:

“Our vision for a safe and sustainable future is within reach. Humanity has faced, and overcome, grand challenges in the past. Undoubtedly, we can surmount our present challenges too – if we choose to. Changing course will depend on our ability to work together, to act quickly and to harvest opportunities both today and tomorrow.

“We can develop an economy that is sustainable and regenerative, we can rejuvenate our ecosystems, and we can build the stable, equitable and thriving societies that we desire for the future. We are at a moment in time where there is a unique opportunity to shape the future we want.”

The scientists are not Chicken Little. It is time to stop ignoring the headlines which are designed to instill a sense of urgency and realize that the time is now for each of us to act.

It is real estate owners and investors who have the most to lose as the effects of climate change will most definitely be seen in utility bills, property taxes and insurance premiums.   With the new building management technologies, energy efficiency, water conservation capabilities and waste management programs, building owners and managers have the ability to reduce operating costs while making the building sustainable. We know. We see it being done – in both new and existing buildings.

As Glenn Pickett reports in his article on “the Drumbeat for Climate Action Grows,” published in Environmental Leader on 11/3/2014,

“The appetite is all but gone for hearing more about our frightening global forecast and who’s at fault for it. The more time the environmental and sustainability movement spends sharing solutions, the more mainstream these choices will have the chance of becoming….. It’s time for action, and leaders will be rewarded.”

Read more: http://www.environmentalleader.com/2014/11/03/the-drumbeat-for-climate-action-grows/#ixzz3I7KNzYO0

May we all become good stewards of this earth.