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LEED: Market Enablers and Barriers
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  • 1. LEED: Market Enablers and Barriers PIEC University of Florida K.R. Grosskopf, Ph.D. State of Florida Certified Building Contractor #CBC1250624 Director, Center for Collective Protection Associate Editor, ASC International Journal of Construction Education & Research Rinker School of Building Construction University of Florida 336 Rinker Hall PO Box 115703 Gainesville, FL 32611-5703 352.273.1158 Fax 352.392.9606
  • 2. Background
    • Building Contractor
      • Residential and commercial
    • Utility Analyst
      • Demand-side management programs
    • Academic
      • Safety and sustainability in built environment
      • Finance and feasibility
  • 3. LEED is good
    • Good first start at defining measurable performance objectives for design and construction industry
    • Limited market penetration
    • Why?
      • LEED specific issues
      • Non-LEED (market) specific issues
  • 4. LEED specific
    • How much does a LEED rating cost?
    • What alternatives will minimize my costs and maximize my LEED score and payback?
    • What will be my payback?
  • 5. LEED specific
    • Lack of design flexibility
      • Prescriptive vs. performance metrics
    • Competing objectives
      • IAQ vs. energy efficiency
    • Lack of synergy among scoring criteria
      • Silo effect
    • Rater qualifications(?)
    • Declining utility functions
      • Energy systems
  • 6. Declining utility
  • 7. Market specific
    • Defining consumer willingness-to-pay for “green” building alternatives
      • Those alternatives that provide payback in terms of reduced energy and other operational costs while promoting more sustainable use of natural resources when compared to conventional practices
  • 8.
    • Hard costs
      • Extent life-cycle savings payback added construction costs
        • Competitive returns on discretionary investments
        • Time until capital cost recovery
    • Soft costs and non-cost issues
      • Social and environmental externalities (e.g., “true costs”)
      • Irrational behaviors?
    Market specific
  • 9. U.S. construction
    • 2006 US Construction $1.2 trillion USGDP
    • ~1/3 residential
    • ~1/3 commercial
  • 10. Residential issues
    • 80% single-family detached housing
    • Average size has increased 30% in last 30 years (500% if you are Al Gore)
    • Spec homes
      • “ Take it or leave it”; little or no buyer input in design
      • Builders look for amenities that maximize sales value at minimal cost
    • Holding period; transient nation
    • Seasonal occupancy
  • 11. Residential issues
    • Wide spread in consumer demographics; different consumer behaviors
    • Large percentage of irrational consumer behaviors
    • Public awareness
    • Discounting of future benefits; live for today!
      • Choice between Corian countertops and Jacuzzi tub or 18 SEER heat pump?
    • More willing to accept soft-cost benefits
      • Improved health, productivity, etc.
  • 12. Residential survey
    • Consumers age 45-54 were twice as likely to select cost as a primary willingness-to-pay variable than all non-cost related variables combined
  • 13. Residential survey
  • 14. Residential survey
    • Respondents with annual incomes greater than $65K are nearly twice as likely to invest in high performance green building bid alternates
  • 15. Residential survey For every ~2 years added time until CCR, willingness-to-pay declines 25% ( r 2 = 0.95)
  • 16. Residential survey
  • 17. Residential survey
    • Nearly all homeowners are willing to invest in green building alternatives if monthly savings are greater than added monthly mortgage payments
    • More than 90% of all respondents were willing to invest in some form of green building for either hard or soft cost benefits
  • 18. Commercial issues
    • Rational, hard dollar; understand investment
    • 80%+ lease space
    • Tennant has little control over building design and performance specifications
    • High turn-over; little incentive to invest
    • Skeptical of soft-cost benefits; e.g., worker health and productivity
      • BOMA – “the check is in the mail”; rejoice in rolling back ASHRAE 62-2004 ventilation requirements
  • 19. Other Issues
    • Defect Claims?
      • Exclusions for LEED performance coverage alongside asbestos, mold, etc.
      • Sureties claim performance measures will be difficult to validate; risk exposure impossible to quantify
  • 20. Supply Issues
    • Conservation can be a cost-effective alternative to expanding capacity
    • Supplier (utility) rebates can lower the “tipping point” for investment in green building alternatives
    • Optimal level of incentive or disincentive (I/D) where the most significant demand-side reductions can be achieved
  • 21. Supply Issues
    • Of 262 utilities selling 75% of all power produced in the US, 55% have DSM programs.
    • Combined, these utilities reduce net energy consumption an average of 1.1%
    • Conservation often contributes much more to profitable base-load generation than to costly peak-load generation
    • DSM expenditures fell from US$2.74 billion in 1993 to US$2.5 billion in 1999
  • 22. Conclusions
    • Regulatory and Market-Based Approaches
      • We need a National energy policy
    • Socioeconomics; understanding consumer behavior
      • Technology is not the barrier
    • Supply and (not “vs”) Demand
      • Incentives/Disincentive (I/D)
      • Win-win
  • 23. Discussion
    • K.R. Grosskopf, Ph.D.
    • State of Florida Certified Building Contractor #CBC1250624
    • Associate Editor, ASC Journal of Construction Education & Research
    • Director, Center for Collective Protection
    • M.E. Rinker Sr. School of Building Construction
    • University of Florida
    • 336 Rinker Hall PO Box 115703
    • Gainesville, FL 32611-5703
    • 352.273.1158 Fax 352.392.9606
    • [email_address]