The Building Advisor

The most comprehensive report linking climate change to death tolls per year was just published by The Global Humanitarian Forum headed by former U.N. Secretary-General Kofi Annan.   The human cost of climate change is estimated at over 300,000 deaths a year currently and has been silently occurring for several years.

The report’s official title is “Human Impact Report: Climate Change — The Anatomy of a Silent Crisis” and is another set of solid evidence driving world leaders in advance of the United Nations Climate Conference in Copenhagen in December.  We as a world need to come to grips with an all encompassing plan to combat climate change beyond the Kyoto Protocol.

Interesting set of statistics from the report:

• 9 out of 10 deaths related to climate change are caused by gradual environmental degradation.
• 99% of deaths currently are in developing countries which are estimated to have contributed 1% of overall carbon emissions.
• 45 Million of the estimated 900 Million chronically hungry people are in that position due to climate change.

I recently came back across an article from Buildings Magazine about energy benchmarking in buildings.   We are talking with a lot of people about benchmarking these days, so this is very top of mind.

The article raises a good question:  “is it ever possible to do an apples-to-apples comparison with another building, given that each one is unique? “  And goes on to answer that yes, it is, “as long as we’re comfortable with a degree of ambiguity around the edges of the data. It’s no different than miles per gallon, used to define a car’s performance. We all know that different drivers, different fuels, and different roads will change this [number] by as much as 20 percent or more…”
This is an important statement about the reasons for and limitations of benchmarking.  It is to get a general idea where you stand and if you should be investing in energy efficiency.

But, benchmarking is not an audit or assessment.   This point is made in section 6 on what to do with the data once you have it:  “Benchmarking can only tell you your ‘score’; it can’t tell you how to improve. It hints at potential for improvement, but you still need to figure out where to go.” You need an understanding of how your facility is used and the features of systems within your building.
Once you have your benchmarking data in hand, conduct an energy-efficiency audit. An assessment like this will help you pinpoint why/where you’re losing energy.  That’s where the building service provider, with the assistance of certain technologies, really comes into play.  Mechanical contractors, energy engineers, energy consultants, and others who know building systems and how they function are the ideal people to make the connection between where a building is now and where it needs to be.

Slowly making its way through a committee on capital hill is the combined energy and climate change bills that really look to enhance the synergies of a “Three Pillars” approach to this legislation.  The three pillars in this case are:

1. A federal Energy Efficiency Resource Standard (EERS) that reduces cumulative electricity usage by at least 15% and natural gas usage by 10% by 2020.
2. A Renewable Electricity Standard (RES) to increase overall production to 25% by 2025.
3. A greenhouse gas cap/standard that reduces overall emissions to 20% below 2005 levels by 2020 and 83% below 2005 levels by 2050.

The EERS and RES standards together can reduce the cost of meeting the climate goals under a cap and trade program by reducing the overall cost of electricity and reducing monthly demand.  The reduction in demand is through efficiency improvements lowering individual monthly utility costs.  Renewable energy makes electricity more affordable since utilities will not need to spend money on building expensive new power plants.  The efficiency standard also have the added benefit of creating jobs for the emerging market of energy assesments and drives the overall demand and carbon dioxide emisions lower.

It’s been around for awhile, but with the American Recovery and Reinvestment Act extending its life, the window of opportunity to take advantage of tax deductions created by the Energy Policy Act of 2005 remains open.

Per the EPA’s ENERGY STAR website, “A tax deduction of up to $1.80 per square foot is available to owners or designers of new or existing commercial buildings that save at least 50% of the heating and cooling energy of a building that meets ASHRAE Standard 90.1-2001. Partial deductions of up to $0.60 per square foot can be taken for measures affecting any one of three building systems: the building envelope, lighting, or heating and cooling systems. These tax deductions are available for systems placed in service from January 1, 2006 through December 31, 2013.”

If you’re a contractor looking for additional levers to pull to get projects moving forward, explore these options.  The ENERGY STAR website has a number of links that provide information on the rules, regulations, and requirements to take advantage of this valuable tax deduction.

Assembly Bill 1103

Reporting began January 1, 2009
Requires California utilities to report all commercial buildings’ energy use data to the EPA’s Energy Star Portfolio Manager.
Reports a performance Score, compared to similar buildings, on a scale of 1 to 100.
Effective January 1, 2010, this Score will be a Mandatory Disclosure to tenants, buyers or lenders.
Most contractors in California are well acquainted with this piece of legislation.  Building owners certainly are.

Scores are based on a scale of 1 to 100, with buildings that score closer to 100 having lower operating costs compared to similar buildings in the market. Building owners are being bombarded with messages indicating that unless they take action, their buildings are likely to get low scores.  Building owners are being told that lower scores will likely translate into higher vacancy rates, lower NOI and reduced asset values.   Talk about a catalyst for driving owner action!!!

So if you don’t live in California, what does this have to do with you?  Well, like it or not, innovative legislation originating in California tends to be adopted by other states and, ultimatley, the Feds.  Monitor your state legislation to see what may be coming your way.

Regardless, the point is that building owners are watching this closely and learning the value of benchmarking their properties.  Contractors need to begin to build a strategy for delivering benchmarking services.  Lower performing buildings typically have issues centered around HVAC and Lighting and HVAC contractors stand to benefit from the demand for this service.  It’s a great way to “leg” into the market if you don’t deliver energy services today.

I just read an interesting article in this morning’s New York Times. A business writer was interviewing Microsoft President Steve Balmer.  When asked to fill in the blank to the question, “You want the culture of your company to be more____________”, Balmer responded, “efficient.”

Like executives around the world, we are faced with doing more with less.  Balmer goes on to explain that it is particularly challenging for a company that has grown each year for the past 30 years – operating in a constrained environment is new to most employees.

Working with commercial real estate owners, operators and their service providers, it is apparent that efficiency is on the minds of the entire value chain.  Commercial real estate owners and their employees are under extreme pressure to reduce their operating costs to offset increasing vacancy rates and decreasing rental rates.  Increasing energy efficiency to reduce operating costs has become a core strategy for building owners.  BOMA’s BEEP strategy is a great example of the industry’s acknowledgment of the critical role of energy efficiency.

The sheer number of existing buildings that could benefit from energy efficiency, in turn, drives the need for efficiency in delivering energy efficiency services.  At a time when demand for these services is growing, the industry does not have the manpower with the right expertise available to meet the demand, nor will it be able to train engineers quickly enough to meet that demand.

Automation is the key to efficiency in delivering energy services.  By automating many of the time consuming, repetitive processes, we can leverage the limited amount of energy expertise available.  We need to increase the number of buildings an energy engineer can support each year.  Automation of data capture, data crunching, analysis and reporting will be the key.  Not only will this help to increase the number of buildings analyzed, but it is likely to increase the percentage of owners that actually take action to improve their buildings’ performance.

Breakthroughs in wireless sensor technology, cellular communications, modeling software and report generation should significantly reduce the engineering time required to deliver an energy audit freeing up scarce engineers to focus on real value, analysis and recommendations.

Efficiency enables companies like Microsoft to do more with less in a challenging economic environment where demand for their products is problematic.  Energy efficiency is a potential source of operating cost reduction for building owners.  Delivering the services that drive energy efficiency must be delivered more efficiently in an environment of increasing demand.  Business as usual and doing things the same way will never get us there.

A recent study conducted by Johnson Controls in conjunction with the International Facilities Management Association revealed many of the realities plaguing the adoption of energy efficiency in a marketplace ripe for lowering operating costs.  The top three conclusions of the survey are very key to understanding how energy efficiency will shape our lives once some clarity on the future crystallizes.

1. Energy Efficiency has never been more important – 71% of the 1400 surveyed felt they were paying more attention to the energy spend than a year ago.
2. Limited capital means declining investment – 41% of respondents said they lacked sufficient funds to make investments
3. Too much uncertainty surrounding carbon policy, incentives & energy prices – 85% of respondents believe legislation is coming within 2 years mandating a carbon cap, but without it there is little incentive to drive action.

To review a few more of the important statistics this survey has determined, click on the Sustainable Facility article link: http://www.sustainablefacility.com/CDA/Articles/Industry_Watch/BNP_GUID_9-5-2006_A_10000000000000586236

And for additional commentary on the study, see the YourEnergyForum blog at http://www.yourenergyforum.com/index.html.

In 2007, we conducted a study of over 300 buildings to determine the frequency and nature of energy and comfort problems in commercial buildings in the U.S.  What we found was that over 90% of the buildings had at least one significant issue, but most had many more.  Read about the problems (i.e. opportunities):

State of Building Performance Report