In December 2006, the UK government committed that from 2016 all new homes would be ‘zero carbon’. In response to the Government target, the construction and property sector invested heavily in the green build economy. In July 2015 this policy was scrapped, but the investments over nearly a decade have led to continued growth and innovation in the green building economy.
Every business decision relies on a cost-benefit analysis. In construction, a project or installation is only agreed if it is expected to generate profit. If costs outweigh benefits, the project is shelved. With the construction of green buildings there are important additional considerations that influence the costs versus benefits analysis. With green building, the price of going green and the value it will pass on needs consideration since being “green” in construction is not an additional feature to a conventional build to be evaluated independently as to its relative financial burdens and benefits. Sustainable building requires models and processes that apply to the entire building process that make makes clear the benefits for health, economy and the environment.
Looking at green buildings in the same way as the traditional construction economy will flag up costs that may be more expensive than the traditional alternative because of the use of premium materials, high-efficiency equipment and additional levels of operations and management. Green building is not inevitably more expensive when the view is broadened to include the benefits of the designs on the buildings occupants and a life-cycle view of costs and benefits.
Researchers, designers and businesses who start a green building project find that a focus on sustainability at the beginning of the process can uncover techniques that will provide environmental and social benefits without additional costs. As an example: optimising windows and passive solar heat gain can enable developers and architects to design for lower energy usage and increased sustainability as well as offer daylight, which can increase productivity for employees without adding any additional construction expenses.
Another example of avoiding expenses in green build designs is the selection of cooling or heating equipment. If a green building design minimizes waste heat through efficient lighting equipment and includes an energy efficient building envelope, the building may require significantly less heating or cooling capacity, eliminating the need for an additional heater or chiller with the result that the project budget is reduced.
A green build construction that uses an integrated approach may result in little or no cost premium when compared to convention building construction, depending on the level of work being completed. The Building Research Establishment (BRE) green building rating system found that those seeking certification compared to a control group of non-green buildings, and normalizing for building function and other major drivers of cost, found no significant difference in average cost for green buildings as compared to non-green buildings.
The change of process required to design and construct a building in an integrated way takes effort. Owners and developers seek reassurances not only that green building will not cost more, but that it will also produce benefits substantial enough to justify the effort.
In the last few years there has been a push for more environmental product declarations, health product declarations and other labels that disclose the components of building materials, along with their environmental and human health concerns. As these standardized reporting measures become more commonplace, the use of materials that prove to be less hazardous to our health will increase and costs decrease.
Upfront costs can also be helped by the UK Energy Act of 2011 which created a new financing framework to enable the provision of fixed improvements to the energy efficiency of households and non-domestic properties. Improvements are funded by a charge on energy bills that avoids the need for consumers to pay upfront costs.
Another benefit to green building is its usefulness in public relations. The public has come to expect a certain level of environmentally friendly initiatives in their favourite organizations. A green building serves as physical and permanent message about an organisation’s commitment to environmental stewardship and accountability.
Investing in a green building is both a legal and social responsibility. Concern over climate change is spurring governments to enact laws mandating carbon-cutting measures. Shareholders are increasingly demanding that companies responsibly manage their environmental and carbon footprints whilst also addressing their own climate change risks.
Whilst these benefits may be perceived to add value, it is the financial return on the investment that remains the most important issue for most. When properly designed to maximize efficiency and minimize the use of resources, a green building will experience lower utility costs. It is not unusual for energy bills to be up to fifty percent less than for a building constructed to minimum code requirements and even lower when on-site renewable energy generation is included in the project.
This energy savings benefit, however, usually flows to the occupants of the building, not the original designer and construction contractor. The value economy can be measured in other ways:
a) the price premium for BREEAM certified buildings is between 10 and 30 percent.
b) Green buildings command higher rent premiums of around 3 percent
c) Green buildings are more attractive to tenants and have a higher occupancy rate of around 6 percent.
Tenant demand is the primary reason why green buildings are becoming mainstream, particularly in the commercial sector, though not all green buildings are the same. From a tenants perspective, a higher grade is more desirable, which increases revenue for the owner.
Not all green buildings are the same. The Building Research Establishment Environmental Assessment Method (BREEAM) is the world's leading sustainability assessment method for planning projects, infrastructure and buildings. It addresses a number of life-cycle stages including new construction, refurbishment and in-use. BREEAM gives credits to all types of buildings depending on the environmental impact of the builds. Globally there are now more 2 million buildings registered for assessment with BREEAM since it was first launched in 1990.