Kevin Grosskopf from the University of Florida School of Construction spoke on the topic of “Rate Absorption Approach for Business Sector Adoption of Energy Conservation Measures”.
Grisskopf began his presentation by emphasizing the importance of bringing consumers on board with the Green Building ideals. Without them, the movement will not be able to continue to grow.
LEED is good because it helps to brings Green Building initiatives into the market place. Right now, with over 5,000,000 buildings in the US, very few are LEED certified.
When looking to LEED, an owner is going to want to know how much cost is involved in becoming LEED complaint. The owner is then going to want to know how exactly these changes will affect long term costs for the better to help pay for the initial cost.
A problem is that the more alternatives you adopt into your system, the less each individual piece will contribute to the overall effect. This is the declining utility effect.
What needs to happen is that LEED needs to develop a payback mechanism that properly operates as to not leave incentive money unused. To do this, a look needs to be made not only into the effect on each building, but also to the externalities that each project creates.
Over the last 20 years, the average house size has increased 30%. 80% of residence dwellings are single-family detached housing. Many of these are being made in speculation neighborhoods. Contractors in this area are looking for items that help sell the home, not that necessarily help the environment. They look for the sale, not the cost. Buyers in general still favor the Corian countertop over an energy efficient air-conditioner. These buyers look to the mortgage to gage cost, not the energy savings over a longer period of time.
When asking homeowners about their use or possible use of Green items in the home, respondents with incomes 65K a year were more likely to make such investments.
Moving now to commercial buildings, over 80% of commercial property is lease space. Tenants have very little input in to what is built into the building, and often have high turnover and take space as the previous tenant left it. They are also a lot more skeptical about soft-benefits, such as employee health.
Moving to suppliers, these energy savings items can be an effective alternative to capacity issues. This type of savings, or even rebate for the owners low energy use, may help to tip the builder to use more energy efficient items.
So a paradox has been created. We cannot readily determine this tipping point.
Rate Absorption Approach for Business Sector Adoption of Energy Conservation Measures (ECM’s). By giving a business a reduction on their initial cost, say on the cost of a low energy air conditioner, the energy company then raises the rates of other buyers to offset their payment to the Green technology user. By looking to which industries use the most energy, incentives can be directed to them for the highest benefit.
However, most commercial buildings are leased. So why would a tenant want to adopt these technologies and pay the initial investment if they are going to leave the space within a few years, before they can recover their initial cost? This reasoning has led to a decline in leased space using these types of incentives.
A case study examining a hypothetical adoption of these technologies in different U.S. markets will be published soon.
So, by allowing bigger rebates than ever given in the past, Green technology adopters will be given a monetary advantage. But exactly what should the rebate be? How much would move you to adopt these Green technologies into your home or business?
2 Comments
Professor Grosskopf provided an interesting analysis about the relationship between the business sector and the adoption of conservation measures. The professor put forth the question that most needs answering, what level of rebate/incentive is needed in order to successfully entice the market to adopt these measures? The relationship between economics and the social aim for conservation and green measures is fascinating, and it is apparent that finding that balance is crucial for the successful implantation of conservation measures into the market. Until this dynamic is achieved, the capacity for success of the conservation efforts and green movements will be limited, is there anyway to expedite the process of finding this balance?
Fascinating thoughts on the interplay between the average consumer/buyer and the green movement. What will it take to move people to want to be green not only for the sake of morals/ethics, but on a tangible level that developers and buyers can actually see and implement? (read: their wallets and pocketbooks).