LEED: Market Enablers and Barriers

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LEED: Market Enablers and Barriers

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

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