ENERGY EFFICIENCY AND CONSERVATION IN BUILDINGS: AN ANALYSIS OF LEED
BY
LINDSEY M. CHESSUM
FALL 2013
ABSTRACT
This paper introduces and explains the history and process of LEED certification, being the most widely
used ecolabel when dealing with energy efficiency and conservation in construction projects. The focus
will be on commercial buildings and the specific requirements LEED places on projects for certification
in new construction and major renovations. The Introduction begins with an explanation of the economic
and environmental problems with society’s outlook on energy today. Then this paper moves into a
discussion of LEED. After the general information about LEED is given, the paper shifts into a detailed
analysis of several requirements LEED utilizes. This portion explores the effect, use, criticism, and praise
of several requirements. After identifying the key weakness and strengths of LEED in this way, the paper
again shifts into a broader discussion of the regulatory framework surrounding energy law. This entails a
brief description of four different regulatory schemes as well as the associated benefits and detriments. In
concluding, this paper supports the hybrid approach represented by LEED, but encourages LEED to
continually heighten requirements, simplify approval of innovative approaches, and increase the amount
of operations data reported by certified commercial buildings.
I. INTRODUCTION
The Value of Energy
One of the major problems facing the world today is establishing the value of energy. Our world has
limited resources, but there were times when society lives as if resources were unlimited, and more
reprehensibly, as if resources could be squandered. Much of this is attributable to economics, rather the
short comings of supply and demand economics.
Simple supply and demand economics predict that when supply exceeds demand, prices drop, and when
an item’s value diminishes, people are likely to squander it. When demand exceeds supply, prices rise,
and with the increase in price, society values the item more and is less likely to squander it. The problem
with energy is that extraction can be increased or decreased fairly easily, increasing or decreasing supply,
in response to demand. This is what distinguishes sources of energy from precious metals. Extraction of
precious metals is limited in volume. Thus, the supply of precious metals reflects the understanding that
as a whole, precious metals are limited. Unfortunately, extraction of energy does not reflect a similar
understanding that the sources of energy are diminishing. That is, fossil fuels, not renewable sources.
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This means the price for energy is not an accurately valuation because it does not reflect the diminishing
resource due to the constant market supply. In fifty years oil wells might stop spewing oil, then society
will only have a couple years when they will be forced to pay a premium for the energy they use.
The Cost to the Environment
A second problem with the economic model is that the price of energy does not account for the
environmental cost of extracting, producing, and using energy. The price of energy does not include the
cost of pollution. When natural gas is extracted from the ground, no one pays for the chemicals left in the
ground or the carbon dioxide spewed into the air by machines. In a way, society pays for it because it
suffers the effects of increased carbon dioxide or contaminated groundwater, but no one pays for the right
to pollute. The environment succumbs to the tragedy of the commons.
This problem of pricing is two-fold. First, society is uninformed. A free market assumes participants have
perfect information, but when considering the effect of energy use on the environment, consumers have
no where near perfect information. People do not know how much carbon dioxide is emitted when they
use a gas stove for cooking, much less where the electricity they use comes from, renewable or
nonrenewable. Second, even if people knew how much they were polluting, it would be extremely hard to
put a dollar sign on it. The cost for one ton of carbon dioxide is a nebulous calculation. Should it be more
or less that one ton of sulfur? How about contaminated water, should that be measured by gallon or
intensity of the pollutant?
Even though there are significant difficulties facing society when considering the price of energy and the
environmental cost, none justify leaving the problem unresolved without attempting to create change.
Green Buildings
Today, change has come in the form of green buildings which emphasize energy conservation and energy
efficiency. Energy conservation is the reduction in use of energy. The impetus behind energy
conservation is an awareness of the environmental cost of energy consumption. By reducing
consumption, less harmful pollutants are emitted into the atmosphere. Energy efficiency is the better use
of the same amount of energy. In this way, energy becomes more valuable because it has a greater effect.
This paper focuses on commercial buildings because they accounted for 18.02% of energy consumption
in 2012, whether electricity for lighting, natural gas for heating, etc. In fact, buildings emit 38% of all
carbon dioxide and consume 73% of electricity. Commercial buildings also purchase construction
materials, furniture, and HVAC systems. All these contribute to pollution, whether in extraction of
materials, production, transportation, or consumption.
Commercial buildings are a particularly interest microcosm for analyzing and discussing energy prices
and environmental costs because large amounts of money are invested in commercial buildings. In 2013 it
was estimated an annual total of $165.4 billion of new commercial, office, and educational construction.
It is estimated that $85 billion of that was in the green building market. Reports indicate 63% of firms
plan to pursue new green commercial construction. These number demonstrate that implementing change
in commercial buildings will affect a significant portion of the economy, will be possible due to the
availability of funding, and will be seriously considered because anyone this level of money is necessarily
considering long term investment. Plus, there is marketing appeal for environmentally conscious
commercial buildings. Businesses often expect their offices or headquarters to reflect the business’s
persona, and most businesses want this persona to appear people friendly and environmentally friendly.
So businesses will go the extra mile to make their office sell their persona, sell their business.
For some years now, green building has been a best practice. Even when the environmental benefits are
unappreciated, the savings in operations costs remain are convincing for investors and builders. The
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overall goal of green building is to increase building efficiency and thereby decrease the impact on the
environment and human health. There are several different approaches to green buildings, but most
common is the “ecolabel,” a third party certification of a building as energy efficient. Just such an
ecolabel is LEED, and it is the most prominent
II. LEADERSHIP IN ENERGY AND ENVIRONMENTAL DESIGN (“LEED”)
Purpose and Scope
LEED was established by the United States Green Building Council (“USGBC”), a nonprofit “committed
to a prosperous and sustainable future for our nation through cost-efficient and energy-saving green
buildings.” LEED offers third-party certification to verify a project is designed, built, and operating in an
energy conscious and energy efficient manner. LEED started with the LEED Pilot Project Program, or
LEED v1.0, in 1999 for new construction. Then in 2000 an improved version was released as LEED v2.0
along with a system of certification for existing buildings. Then came v2.1 in 2002 and v2.2 in 2004, each
making alterations and improvements based on consumer feedback and member initiative. The most
recent release was LEED v3.0 in April 2009, and the next release, LEED v4.0, is anticipated to take over
in 2015.
Certification by LEED is recognized globally and has certified near 10 billion square feet of space, with
an average of1.7 million square feet added daily. As of June 2013, LEED had certified 13,500
commercial buildings in the United States, and today, it conveniently offers certification standards catered
to commercial buildings for new construction and major renovation, schools, retail, and healthcare as well
as new and remodeled residential buildings.
LEED is a point based system where certification is awarded for compliance with detailed standards.
Standards are divided into five categories: sustainable sites, water efficiency, energy and atmosphere,
materials, and resources and indoor environmental quality. Each category is further broken down into
prerequisites and credits. Prerequisites are threshold requirements that gain projects access to the points in
each category. Credits are the optional standards in each category with an associated set number of points
or a range of points a project can earn for compliance with the standard. There is a total of 100 points
available within these five categories, and there are two categories with bonus points: Innovation in
Design and Regional Priorities. There are four different levels of certification, ascending in prestige and
difficulty as follows:
Certified:
40-49 points
Silver:
50-59 points
Gold:
60-79 points
Platinum:
80+ points
Process
The process for LEED certification begins with “registration.” Before a project gets under way,
preliminary documents are submitted to LEED and a flat fee around $800. This gets your foot in the door.
Next comes submittal and another fee based on the size of the project and the level of certification
desired. There are two opportunities for submittal: after the design phase and after construction. After the
design phase the project indicates which points it expects to achieve and provides documentation showing
how it intends to get the points. Each credit is then marked as anticipated or denied. Denied credits can be
appealed, and anticipated credits are not officially awarded until after construction, and the second
submittal opportunity.
After the building is complete, the official review is conducted, points are awarded, and the level of
certification is determined. Of course, LEED retains the right to rescind certification if it later discovers
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noncompliance with any of the applicable credits. (LEED 2009 for New Construction & Major
Renovations Rating System, hereinafter “LEED 2009: NC&MR”).
III. LEED REQUIREMENTS
In order to fully and meaningfully analyze LEED, it is necessary to deal with the specific prerequisites
and credits is utilizes. Ideally, each prerequisite and credit will in some manner address energy
conservation and efficiency or some other solution to the problems of the undervaluation of energy and
the unaccounted for environmental cost.
Certification and Construction Costs
To kick things off, there are to items intrinsic to LEED that are given significant discussion, yet are not
specific LEED requirements. These are the cost of certification and the cost of construction.
Society assumes “green” means big dollar signs. Only the wealthy can be environmentally aware.
However, LEED encourages projects to view green buildings in the long term because LEED certified
buildings cost less to operate due to the reduction in energy bills and water bills. In fact, the Natural
Resources Defense Council (“NRDC”) states that LEED certified green building projects on average cost
only 2% more in upfront costs, and projects should consider the “life cycle” of the project. Over time
energy efficient systems pay for themselves. To take it a step further, the reduction in overhead costs of
the years will free up revenues and resources to be used in creating new jobs and expanding operations.
Lastly, LEED may qualify projects for certain tax rebates, grants, or zoning allowances.
The other directly monetary concern is the cost of certification. USGBC collects on average $35,000 per
LEED certification. As mentioned, this includes a flat fee and a fee per square foot of the proposed
project. People tend to complain about costs when it is a significant amount of money in comparison to
other purchases or the cost does not correlate to the benefit. Construction projects easily gets into the
million of dollars, but say for a project costing $2 million, the fee is only 1.8% of total costs.
Additionally, LEED maintains that certification increases property value and leads to a faster lease-up
rate. Paying $35,000 to get a tenant a couple months earlier may make it a wash.
Consumer Decision-Making
Another aspect of LEED related to cost is consumer decision-making. Critics complain that in LEED
“some improvements cost much more and have far greater environmental benefits than others”, yet they
received the same point value as cheaper, less beneficial improvements. For instance, Credit 4.2 awards 1
point for providing bicycle storage within 200 yards of building entrance for 5% of building users. By
comparison, Credit 2 “On-site Renewable Energy” offers 1 point for every 2% of energy produced by a
renewable source based on the building’s annual energy costs. It is simpler and cheaper to get bike racks
than to have renewable energy onsite. A review of 7,100 LEED certified commercial buildings by USA
TODAY showed designers targeted the easiest and cheapest points, including bike racks and showers as
well as preferred parking for fuel-efficient cars, while only 14% of buildings generated renewable energy
and 12% major steps toward water reduction (e.g. treating sewage on site). Thus, cheaper options are
preferred over labor-intensive options and cutting-edge technology.
While critics’ concerns are understandable, LEED is made for businesses with limited budgets. Some
would argue that the advantage of LEED is the opportunity to make cost-effective choices. Rob Watson, a
founder of LEED, explained the intent was to make LEED “accessible both economically and
technically.” The report in USA TODAY, despite its criticism of LEED, commended LEED on its role in
expanding the use of energy modeling in buildings and expanding the use of green products like lowflush toilets, low-emitting paints, and materials from sustainably harvested wood. Nearly, 90% of projects
use indoor paints, adhesives, and flooring with fewer contaminants. Besides, LEED does recognize some
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methods as more valuable and costly than other methods. Renewable energy onsite offers a maximum of
7 points while bike racks on bring in 1 point, and it would be simpler and probably cheaper for a project
to get all 7 points for renewable energy than figuring out where to get another 7 points elsewhere. The
requirements create efficiencies. Going even a step further, the credit for renewable energy aligns with
tax incentives and funding. Under 26 U.S.C. § 48, there is tax credit of 30% of costs for investing in solar
energy, and 10% of costs for certain geothermal equipment and heat pumps.
Similar efficiencies and incentives exist under the Energy and Atmosphere category. The prerequisite for
this category requires projects to comply with ASHRAE 9.1.-2007, and it uses the ASHRAE guideline to
calculate the building performance. (LEED 2009: NC&MR). Then Credit 1 “Optimize Energy
Performance” requires a project demonstrate energy improvement over a baseline rate through computer
simulation model and awards 1 point for every 2% reduction above the 12% minimum. (LEED 2009:
NC&MR). Conveniently, there is a tax deduction of up to $1.80 per square foot in commercial buildings
constructed to save at least 50% of the heating, cooling, ventilation, water heating, and interior lighting
energy cost of a building that meets ASHRAE Standard 90.1-2001. (LEED 2009: NC&MR). Not only,
does LEED encourage projects to comply with government regulation, but it incentives projects to exceed
the minimum requirements.
Environmental Effect
Critics argue that LEED allows for minor, low-cost steps with no proven environmental benefit as a part
of its standards, yet 14% LEED projects have on-site renewable energy, 12% took major steps toward
water reduction, and 90% use indoor paints, adhesives, and flooring with fewer contaminants. The real
complaint is not that LEED is without effect, it is that LEED is not doing enough to effect energy and the
environment.
LEED certification is awarded prior to occupancy. It does not consider actual energy use and water use.
With 19 points available under Energy and Atmosphere Credit 1 “Optimize Energy Performance,” a large
amount of points can be accumulated without proven effect. (LEED 2009: NC&MR). Computer models
are good at comparing and contrasting designs to find the most efficient design, but they are poor at
quantifying actual energy use because it depends on the building’s use and maintenance. A simple thing,
like not turning off lights or mechanical problems, can affect the energy efficiency of a building, and alter
results from the model’s prediction. In 2009, USGBC issued a press release stating LEED would require
operational data as a precondition of certification. Three options are available for projects: report annual
data, undergo recertification on a two year cycle, or allow USGBC to directly access data from the
building’s utility provider. This initiative will be furthered with the coming edition of LEED, LEED v4,
anticipated to be released in 2015. LEED v4 will require building operators to write a plan for the
efficient operation of the building, and to report energy and water use for five years. It has been suggested
that LEED might also move toward an annual review of certified buildings to ensure energy efficiency.
It would be misleading to say there are hard numbers for LEED’s actual effect on energy conservation
and efficiency because every report or study issued has critics pointing out reasons why the data may not
be representative or accurate. For instance, the General Services Administration (“GSA”) commissioned
the Pacific Northwest National Laboratory in August 2011 to create a report on sustainably designed
buildings. The report found 14 LEED certified and 8 Energy Star certified, federal buildings on average
used 25% less energy, had 19% lower operational costs, and 36% fewer carbon dioxide emissions as
compared to national averages. These numbers are evidence of success, but still critics say the buildings
used in comparison were older and therefore innately less energy efficient.
Another study was conducted on behalf of USGBC, and it found that 53% of the surveyed LEED certified
buildings were not in the top 30% of energy efficient buildings per Energy Star’s standards, a government
operated certification system. The NY Times made sure to harp on this fact while leaving out the rest of
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the study’s findings. The study found that on average LEED certified buildings save energy based on
energy intensity, Energy Star ratings, and even compared to the initial computer model. The study did
suggest that LEED incorporate more actual energy data and more aggressive benchmarks.
Flexibility in Form
LEED is an extremely flexible system of standards. Flexibility is prized because LEED is dealing with a
fairly new concept, ecolabeling. There is no set business model or established predecessor upon which
LEED can compare and evaluate itself. Plus, the technology and information surrounding energy and the
environment is in a state of change. New technologies are being developed and society is changing how it
views energy and the environment, so LEED should reflect and encourage these steps of growth. Perhaps,
most importantly, LEED is susceptible and responsive to criticism. Much of what it criticized about
LEED becomes the foundation for change. LEED as discussed has already gone through several
evolutions and in time will go through more. Two prime examples of flexibility and adaptation are the
bonus categories added to LEED in version 3.0: Innovation in Design and Regional Priority.
Innovation in Design was created in response to numerous complaints about the lack of innovation
stimulated by LEED’s detailed requirements. Innovation in Design provides for a total of 6 points with 1
point awarded for using a LEED accredited professional as a principal participant on the project and a
maximum of 3 points awarded for exceptional performance above and beyond the LEED requirements.
An example of exceptional performance would be achieving double the credit requirements. Any
remaining points, not awarded under exceptional performance and maxing out at 5 points, may be
awarded for innovative strategies not specifically addressed in the LEED standards. (LEED 2009:
NC&MR). These innovative strategies must be significant and have measurable environmental
performance. (LEED 2009: NC&MR). All credits under this category must go through a process of
vetting, where the intent, proposed compliance requirements, proposed submittals, and design approach
must be written out by the proposing project to be thoroughly reviewed and evaluated by the LEED
committee. (LEED 2009: NC&MR). The number of points awarded will be subject to the committee’s
review. (LEED 2009: NC&MR).
The second bonus category is Regional Priority. It offers from 1 to 4 points. (LEED 2009: NC&MR). The
USGBC has a database with a listing of credits specifically important to different regions based on
country and zip code. For each of the specific credits listed for the region, a project will be awarded an
extra point for compliance. (LEED 2009: NC&MR). For instance, on the database for the Los Angeles
area in California, specifies on-site renewable energy, building reuse, and water use reduction along with
three others. A project meeting the credit requirement for on-site renewable energy will receive the
corresponding points and 1 point for Regional Priority. (LEED 2009: NC&MR).
Another recent adjusted made to LEED was the number of points attributed to the different credits.
Previously, all improvements were assigned one value and people complained the points assigned to each
credit did not accurately distinguish more valuable and effective credits from the cheaper and less
effective credits. Thus, LEED now offers credits will varying point values tied to cost and effect. (LEED
2009: NC&MR).
A remaining issue for LEED related to flexibility is the amount of time it takes to certify a building.
People complain about the backlog of submittals, and the time span from submittal to certification.
Recently, this issue has been somewhat augmented by the use of Internet submittals, but backups continue
to be a nuisance.
Environmental Awareness
For years, consumers have been bombarded with “green” towels, “eco-friendly” shoes, etc., to the point
where businesses began to lose consumers’ trust, and consumers are no more educated about their actual
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effect on pollution. LEED does not attempt to educate consumers on the amount of pollution they are
eliminating by taking applying certain green methods to their buildings, but it does claim to benefit the
environment and to reduce energy consumption.
The problem and use of ecolabels is that they are not information heavy. Consumers can see one symbol
and know they are purchasing something environmentally friendly. If it required reading five reports on
the actual environmental effect of an ecolabel before a consumer would make a purchase, well, the market
for “green” goods would be significantly smaller. Ecolabels serve the cause of consumer awareness by
adding information at incremental levels and by building familiarity. For instance, LEED contributes to
awareness by establishing a method of best practice for new construction. LEED familiarizes designers,
engineers, and construction management with certain energy saving methods that have environmental
savings as well as cost savings. Increased familiarity then leads to increased use and reduced costs as the
market shifts. Eventually, this makes “green” less expensive, and even though consumers cannot quantify
the environment savings, they can understand and appreciate the result.
Besides often ecolabels, like LEED, gain traction, not because of the substantiated results, but because
they fit with a business’s persona. A business trying to appear people friendly, as opposed to the
stereotypical money machines, will pursue a “green” agenda. Plus, being “green” fits well with the
modern trend towards “corporate social responsibility” (“CSR”). CSR is the idea that businesses have a
responsibility to do more than make profits. They should be philanthropic. Of course, critics say “green
publicity” is just a show and cannot be evidence of real results or progress. However, whether projects
comply with LEED to appear “green” or to save the environment, they are still adding to the effort to save
the environment. Additionally, though there is not irrefutable data that LEED leads to energy efficiency
and conservation, there is reputable data showing it is adding to the effort.
Because of the amount of distrust and confusion amongst consumers, the Federal Trade Commission
(“FTC”) decided to step in and regulate “green” claims. In the early nineties, the FTC instituted “Green
Guides,” a set of guidelines to best avoid FTC prosecution. The simplest summation is that the FTC
prohibits unqualified or misleading claims. Certifications and seals of approval, like LEED, are
specifically addressed, but are given little direction. The Green Guides recommend against the use of
“environmental certifications or seals that do not convey the basis for the certification,” recommend an
independent, third party certifier, and recommend significant environmental benefit for certification. As
explained above, LEED has faced its fair share of criticism, but the ecolabel has been able to avoid
trouble with the FTC. Actually, USGBC submitted a comment letter to the FTC regarding the Green
Guides, and applauding the FTC’s efforts to make ecolabels trustworthy.
IV. REGULATORY STRUCTURES
Now, that there is a firm foundation covering LEED, it is necessary to take a step back an place LEED in
the larger context. There are three identifiable regulatory structures: control and command, incentive
based, and free market. The current state of affairs in the United States is a hybrid of these, and as
explained below, this is the best approach for energy usage in commercial buildings.
Foremost, to give an idea of the regulation in place right now, the USGBC estimates that “442 localities .
. . 35 state governments . . . [and] 14 federal agencies or departments” have implemented LEED in
government initiatives. More than 200 jurisdictions specifically require LEED certification for new public
buildings. Some jurisdictions, including Los Angeles, Miami, Boston, Washington, and San Francisco go
further and require some private commercial buildings be LEED certified. For example, the Los Angeles
Municipal Code specifically requires LEED Silver certification or equivalency as determined by Public
Works for high rise buildings. Similarly, nearly 200 jurisdictions offer tax breaks, grants, expedited
permitting, waivers, and other incentives instead of or in addition to requiring LEED certification.
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Control and Command
Control and command regulation typically consists of detailed, legal requirements on sources of pollution.
(Fitting The Bill: Proposed Regulatory and Non-Regulatory Approaches to Advancing Green Building
Technologies, 21 Fordham Envtl. Law Rev. 637, hereinafter “Fitting the Bill”). Traditionally, the
government develops these regulations with environmental standards, permit allowances, enforcement
procedures, and penalties. (Fitting The Bill). An example of this type of approach is the Clean Air Act of
1970 (“CAA”). The CAA gave authority to the Environmental Protection Agency (“EPA”) to set
standards for “best available technology.” Use of below standard technology resulted in fines.
The advantage of this approach is environmental issues are not ignored preventing a “race to the bottom.”
(Fitting The Bill). It is an effective approach when standards are easily understood and implementation is
quick. The flip side is when standards are complex and individuals under the standards are unconvinced
of the benefits or dangers, which is often the case for any regulation of corporations. (Fitting The Bill).
Another major drawback to a control and command approach is the lack of flexibility and adaptation.
(Fitting The Bill). This squelches innovation and leads to a dwindling of more innovative technologies
and more efficient processes because there is no incentive to exceed the standards in place. (Fitting The
Bill). Further, new technologies tend to be more stringently regulated than existing technologies, working
against the goal of creating new, more efficient technologies. On the other hand, when a change in
regulation is predicted, change is stagnated until the new standards for in place because the new standards
could undo or work separately from the prior standards. It creates a “moving target.”
Incentive Based
An incentive based approach is considered a more flexible alternative to command and control. (Fitting
The Bill). Incentives based approaches make compliance optional, but they encourage individuals to
voluntarily act to achieve change. (Fitting The Bill). Often incentives are utilized to make new
technologies or processes competitive in the market. (Fitting The Bill). In this way it prompts growth in
certain, identified areas. This simplifies enforcement because participants freely choose to comply.
An advantage of this approach is that it allows the government to experiment with new methods of
regulation. Participation can indicate public support or effective targeting. Since not all jurisdictions are
confronted with similar problems, this approach can create change in one jurisdiction without affecting
individuals in another jurisdiction where the regulation is superfluous. However, this can also be a
disadvantage because the scope of this approach is limited by its nature. Governments want to limit the
money given in tax break or grants, meaning change is slower and not as comprehensive. Lastly, while
incentives create a change in behavior, the feat is, once the incentive is removed behavior may revert.
Free Market
The free market approach relies purely on voluntary compliance and removes all government regulation.
The advantage to free markets is that price and value are mobile. Markets can account for change while
the change is occurring. On the other hand, government regulation is more established. Also, free market
have a propensity to encourage technological innovation and competition, leading to lower prices and
greater public accessibility to new technologies. (Fitting The Bill).
The drawback to the free market is when prices do not reflect true value. This is due to a lack of
information. Free markets operate on an assumption that participants have full access to relevant
information regarding price. When dealing with environmental concerns, information is often not readily
accessible. Moreover, free markets have not been entirely effective. If it was then these other approaches
would not be a consideration today. In certain areas free markets have been useful. For example, the free
market fostered the creation and growth of “environmentally friendly” products. Once, businesses saw
consumers would buy-in to the “green” idea, they directed production and design to these products types.
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Hybrid
A hybrid approach is what is emerging in this arena. It combines the advantages of a standards based
approach with market controls. More than just tax breaks, a hybrid system creates a interwoven system, a
mesh, of regulation and free market initiatives. This hybrid approach is commonly represented by
“ecolabels,” like LEED. Ecolabels consist independent organizations developing a uniform set of criteria
for an entire class. Essentially, ecolabels are an information strategy, but in a hybrid approach they go a
step further by requiring physical, but voluntary, compliance. It is essential compliance remains voluntary
because it allows individuals to appear “green” while internalizing some of the costs of pollution.
Another benefit of a hybrid approach is on the free market side of things. There is more than one ecolabel
to choose from. If critics are dissuaded by LEED’s arguments and data, they can go elsewhere. That is,
unless regulation requires use of LEED as some jurisdiction do. This eliminates the free market benefits
in the hybrid approach. LEED for all intents and purposes becomes an arm of the government, a nonprofit
corporation operating as a government agency. Still critics say more government influence is necessary to
standardize ecolabels and to encourage consumer trust and understanding. But that is essentially a push
towards the command and control approach, and all the negatives associated with it.
Some of the other ecolabels active today are briefly described below.
Green Guide
Green Guide for Healthcare (“GGHC”) is the leading green building system for the health-care
industry. GGHC believes hospitals and healthcare facilities face unique problems: 1) operations are
24/7; 2) there is a high level of dangerous waste; 3) occupants have an increased sensitivity to
chemicals and pollutants; 4) there are stricter regulatory standards than typical commercial buildings;
and 5) there is a difference in transportation expectations. Because of this, GGHC focused on creating
a separate system of standards specific to hospitals and healthcare facilities.
GGHC is distinct from LEED, but it has a history of collaboration with LEED. GGHC adopted
LEED’s structure, and its guidelines provide strategies relevant to complying with LEED standards.
Also, certain standards required by GGHC may be used for innovative points from the LEED system.
Energy Star
Energy Star was introduced by the U.S. Environmental Protection Agency (“EPA”) and the U.S.
Department of Energy (“DOE”) in 1992. It applied to appliances and electrical devises, but was
expanded to commercial building efficiency as well as whole-home efficiency. Energy Star is
different from other third party certifiers because each year buildings apply for certification, and each
year, certification is awarded to only the top 25th percentile of buildings based on the EPA’s National
Energy Performance Rating. This process requires Energy Star’s to constantly revised and updated its
standards for certification to keep ahead of the market.
Energy Star requires actual energy use data proving energy efficiency over a year of occupancy for
certification. This is where LEED got the idea for an operational data requirement. Recently, Energy
Star and LEED agreed, buildings will be allowed to submit data in Energy Star’s Portfolio Manager
to meet the operational data standard for both Energy Star and LEED.
Green Globes
Green Globes is an online, questionnaire driven building assessment tools for both residential and
commercial buildings. It is generally acknowledged as less cumbersome and less expensive than
LEED, though not as rigorous or well-known. It is based on a 1,000 point scale with a minimum
threshold of 35% to achieve certification.
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Future Direction
LEED plays a significant role in the hybrid approach today. The dominant problem is maintaining the free
market aspects of this hybrid approach. Government has a tendency to expand, and governments are
making LEED not voluntary, but mandatory. This opens up LEED to may of the problems found in
command and control regulatory structures: bureaucracy, red tap, and lack of innovation.
Even with eliminating LEED from government regulation, the government plays a key role in its success.
First, the government still should establish a regulatory floor. It should take a stand on clear and direct
initiatives to promote energy savings, but this is more likely focused on extraction and production of
energy. A second role for the government is as a consumer. As experienced with Energy Star products,
the government has played a key role in the growth of LEED as a consumer. 26% of LEED certified
buildings are government owned, and the government has made green building extremely attractive for
public buildings under the Department of Energy’s Federal Energy Management Program. Beginning
with the National Energy Conservation Policy Act, government placed specific energy management goals
on public buildings. Stricter requirements were added under the Energy Policy Act of 2005, the Energy
Independence and Security Act of 2007, and under a number of Executive Orders. Of course, critics argue
LEED certification is an unnecessary cost at the expense of tax payers, since the GSA estimates $150,000
is added to the cost of a new federal building for fees and LEED consultants. But arguably that cost is
better spent here, than on government enforcement of the same standards under a command and control
structure. Besides, the time and expense of having a government agency regulate building energy
efficiency would outweigh any benefits. Already, Energy Star is struggling to handle demands of a
changing environmental scene. Another positive roles taken by the government are tax incentives.
Because of the limited scope and timeframe for every tax incentive, the government can spark change
without becoming the sole force behind the movement. Ideally, the government will make new
technologies and initiatives competitive with the market through tax incentives, until competition drives
costs down making increasing demand to the point where tax incentives are no longer necessary.
The other recommendations, when looking to the future, are directed toward LEED. LEED has made
significant changes to its standards throughout the years, and as it continues to do so, there are several key
initiatives it needs to focus on. First, LEED needs more actual energy use data from certified buildings.
The steps taken in LEED v4 are good, but it should go further and require updated energy use data every
five years. Five years will not over burden building managers or create a cost disincentive. But it will
keep building managers cognizant of their energy consumption. Certification should be revoked or higher
levels awarded based on performance during these reviews. Second, LEED needs a more attractive
process for innovation. The present Innovation in Design process is daunting to most projects because of
the uncertainty. Innovation in Design should be streamlined and allow for points to be awarded even
before construction is complete. This give projects a special reason for pursuing innovation.
V. CONCLUSION
In concluding, this paper supports the hybrid structure represented by ecolabels and specifically LEED.
The flexible nature of the hybrid structure and the inclusion of government without government becoming
the leading force, creates a balanced and self-reinforcing system where government and free markets take
on the roles best suited to them. In this vein government is encouraged to step back from mandating use
of ecolabels in private buildings, and LEED encouraged to continually heighten requirements, simplify
approval of innovative approaches, and increase the amount of operations data reported by certified
commercial buildings. With this approach, energy conservation and efficiency in commercial buildings is
on track to make significant strides towards a healthy environment.
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