This document summarizes the business case for green buildings. It discusses how green buildings can provide savings through reduced energy usage, emissions, water usage, and increased health and productivity. It estimates that the net present value of savings over 20 years is $52.84 per square foot. However, there is still a perception gap around the costs of green buildings, with estimates ranging from 0.4-12.5% higher costs. This gap is decreasing as supply chains mature, standards converge, and knowledge increases. The document recommends conducting a similar study in the GCC region and increasing education and incentives to further the business case for green buildings.

1. 1
THE BUSINESS CASE FOR GREEN BUILDINGS
By: Hashim Abuelgasim MBA, PMP,LEED AP BD+C
Chief Sustainability Officer – PeoPla Green Institute

2. 2
1. Introduction – The Triple Bottom Line
2. The Business Case For Green
3. The Cost Dilemma
4. Recommendations
AGENDA

3. 3
TRIPLE BOTTOM LINE
PLANET: Impact
on air, water, land
and global climate.
PEOPLE:
Impact on a person happiness,
health, and productivity
PROFIT: impact
on a corporation’s
bottom Line

4. 4
THE BUSINESS CASE FOR GREEN BUILDINGS
33 Green Buildings in California
$150-$250 Cost/ft2
20 years Life time
5% Discount rate
The Costs and Financial Benefits of Green Buildings
O&M
SAVINGS
ENERGY
SAVINGS
HEALTH &
PRODUCTIVITY
EMISSIONS
SAVINGS
WATER
SAVINGS

5. 5
ENERGY SAVINGS
 Integrated Design
 High performance lighting
 Increased ventilation effectiveness
 Commissioning
 Heat Island reduction measures
 Supply optimization -
optimized utility systems
capacity
 On-Site generation
DEMAND SIDESUPPLY SIDE
$0.025/ft2/yr $0.44/ft2/yr
20yr PV OF ENERGY SAVINGS
$5.79/ft2
Key assumptions/limitations:
• 10% peak demand reduction by
green buildings.
• 30% energy use reduction in green
buildings.
• Average Building energy use of 10
kWh/ft2 per year

6. 6
EMISSIONS SAVINGS
$0.044/ft2/yr
20yr PV OF EMISSIONS SAVINGS
$1.18/ft2
Key assumptions/limitations:
• Average Building energy use of 10 kWh/ft2
per year
• 36% emissions reduction in green buildings.
• CO, ROCs, and VOCs are not evaluated.
• Market values for traded emissions are used
in the calculations.
Air pollutants associated with energy and burning of fossil fuels
NOx
principal cause of
smog.
PM10
principal cause
of respiratory illness &
contributor to smog
SO2 or SOx
principal cause
of acid rain
CO2
principal
greenhouse gas
$0.005/ft2/yr$0.033/ft2/yr$0.013/ft2/yr

7. 7
WATER SAVINGS
 Efficiency of potable water use
through better design/technology.
 Better leak detection.
 More efficient appliances.
 Aggressive audits
 Gray water use
 Storm water use
 Recycled/reclaimed water
use
DEMAND SIDESUPPLY SIDE
20yr PV OF WATER SAVINGS
$0.51/ft2
Key assumptions/limitations:
• Water cost assumed to include:
Fresh water price.
Sewerage treatment price.
Marginal costs associated with:
 Water supply expansion and treatment.
 wastewater capacity and treatment.
 Impact of climate change on the cost of
future water supplies.

8. 8
HEALTH & PRODUCTIVITY SAVINGS
Green buildings attributes correlated to increased productivity
20yr PV OF Health & Productivity SAVINGS
$36.89/ft2
Key assumptions/limitations:
• Employee cost is 10 time the cost of
space per employee and therefore 1%
productivity increase will reduce
property costs by 10%
• Assumed employee cost is $66,478
and space cost $6.477
Increased
Ventilation
Increased
Temperature Control
+1.8%
Increased
Lighting Control
Increased
Daylighting
+1.2% +7.1% +4%
+1%or 5minutes/working day = 2.96 ft2/yr

9. 9
OPERATION & MAINTENANCE SAVINGS
20yr PV OF O & M SAVINGS
$8.47/ft2
Key assumptions/limitations:
• Assumed O&M costs = 12.25/ft2/yr or
$3,039 per person per year
Commissioning
Metering
-5% O & M Costs
 Buildings meet and maintain
performance targets.
 better management of upgrades and
maintenance through anticipation of
equipment failure, leaks

10. 10
WHY SHOULD THE OWNER CARE?
+21%
+30%
+27.7%
RentPremiums
World Green Building Council

11. 11
THE BUSINESS CASE FOR GREEN
8.47
0.51
$52.84/ft2
ADDED GREEN PREMIUM
+2%
$5/ft2
GREEN BUILDINGS SAVINGS

12. 12
THE COST DILEMMA
-0.4 -12.5%
cost premiums of green
buildings based on
various studies
0.9-29%
estimated cost premiums of
green buildings based on
design stage estimates and
surveys
The Perception gap
World Green Building Council

13. 13
GAP REASONS
People are still hooked to the historical data –
Green Costs are coming down for 3 reasons
105 Suppliers and Manufacturers from 27 countries
Have Green characteristics in their products
70%
Have products made of recycled
content and/or are non-toxic50%
McGraw hill construction (2013)
1 Supply Chain is getting mature
Life Cycle data provided
30%

14. 14
GAP REASONS
Local standards and green standards are converging
Green Standards Local Standards
AD – May 2010
Dubai– March 2014
2016 2019
2

15. 15
GAP REASONS
3 Green Knowledge
60%
1%
11%
5%
4%
19%
LEED credentials holders in
GCC by June 2015
UAE Oman KSA Kuwait Bahrain Qatar
Worldwide LEED credential holders
200,000
2,380 (1.1%)
GCC LEED credential holders
$172 billion
GCC projects value 2015
Deloitte
USGBC
USGBC
By June 2015

16. 16
RECOMMENDATIONS
1. A similar study to that of state of California should be done in the GCC
region to confirm its findings within our local context.
2. Municipalities should encourage building green by passing 50% of the
estimated 10 times ROI of building green to developers/owners in the form
of incentive programs and subsidizing schemes.
3. EDUCATION..EDUCATION...EDUCATION…. the more people know about the
benefits of building green, the more feasible it becomes:
• Knowledgeable professionals = more efficient designs
• Knowledgeable policy makers = More holistic green regulations
• Knowledgeable suppliers = Green products benefits communication
• Knowledgeable end users = better green buildings rental premiums

17. 17
THANK YOU
www.peopla.ae