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Maximizing the Retrofit Market

San Francisco's existing buildings and a new way to look at efficiency financing

Kirsten Nelson-Johnson

San Francisco is a city that has largely been developed and constructed. The potential of existing building retrofits, however, is enormous.  Existing buildings are among the greatest historical and cultural resources in the city; and conserving the existing cityscape and meeting the long term needs of the city are a balance that must be struck.

The amount of square footage that has been LEED certified has more than quadrupled in the first 9 months of 2009, with many more projects in the works. More than 80% of LEED certified space in San Francisco is in existing buildings – either in recognition for operational best practices or tenant improvements. These figures not only tell us of the vast improvements already made, but of the potential of the retrofit market in any developed metropolis.

One of the city's latest example is the newly retrofitted Transamerica Pyramid, which received a LEED EB Gold certification . The Transamerica Pyramid achieved a LEED rating ahead of two other iconic buildings that are currently seeking LEED ratings: the Empire State Building and Chicago's Willis Tower. The LEED Gold certification is a result of a number of improvements including a 50% water usage reduction in the past year, a high-efficiency co-generation plant, the purchase of renewable energy credits, recycling and composting to reduce the building's waste-stream, and the use of green cleaning products.

However, many are arguing that the retrofit market itself is not exactly the high point of efficiency. The retrofit market involves thousands and thousands of small, scattered transactions, usually involving small-scale buyers and small-scale providers. Investments in building efficiency are extraordinarily secure, stable, and, over time, will surely be profitable. The problem is the amount of time it often takes to see a return on investment (ROI) as well as the amount of upfront costs to be absorbed. Upfront costs tend to be higher in 'green' building when compared to traditional construction, and lending institutions don’t have much experience with financing efficiency projects, so they tend to be more reluctant to impart funds.

One solution that looks promising is a loan model originating in Berkeley, California. Property Assessed Clean Energy loans or PACE loans for short, are targeted toward small-scale renewable projects and efficiency retrofits. Under the PACE program, loans to building owners are paid back out of property taxes. That advantage of a PACE loan comes when the property is sold and the loan goes with it solving two problems at once. First, it virtually eliminates upfront costs. Second, it addresses the fear of building owners that they’ll pay all the costs to improve efficiency but will not stay long enough to reap the benefits. New York state has also adopted a PACE bill recently, and there are indications the program may begin to go national through the recently unveiled 'Recovery Through Retrofits' program. PACE is perhaps one of the most overlooked stories of 2009 and will emerge as a key clean-energy driver in the next few years.

 

 

 

 

 
News

How to Pass the LEED Exam the First Time

EIA has helped its students achieve pass rates of over 90% by helping them establish and follow a clear strategy for success.  There is no getting around it:  LEED exams are hard.  However,  you can pass the first time, and with much less effort, if you approach the exam with a clear strategy.  Over 140,000 professionals have become LEED APs - and so can you!

Here are EIA's six proven secrets to passing the LEED exam the first time. 

Read more...

 
News

Copenhagen Accord Creates a Climate of Uncertainty

World's largest carbon-emitters fail to create clear mitigation targets

Kirsten Nelson-Johnson

In 1992, at the Earth Summit in Rio de Janeiro, representatives from more than 150 nations- including former President George H.W. Bush- signed an agreement giving birth to the United Nations Framework Convention on Climate Change. Its mission: for the nations of the world to work together and effectively mitigate and respond to climate change. It began holding sessions called the Conference of the Parties—COPs. The conference in Copenhagen this past month, is the 15th such session. One of the most historically significant sessions was COP3 in 1997, which established the Kyoto Protocol.

The Conference of Parties 15 has just come to a close and has disappointed much of the international community. Since the conclusion of the conference on December 18th, a number of participants have been blamed for the short-comings of the Copenhagen Accord. 

The conference did serve its purpose in bringing together the most important players in the international community on climate change. It opened the discussion to scientists, politicians, activist, business' and non-profits alike.

The location of this conference could not have been a better example of what individual countries need to do on a domestic level. Denmark, and its minister Lene Espersen, are committed to creating sustainable policies that change the way business is done. It seems as if the Danes took a hard look at themselves after the 1973 Arab oil embargo and found themselves totally dependent on Middle East oil. Subsequently, they went about  putting in place a long-term strategy to make Denmark energy-secure and start a new industry at the same time.

Today, Copenhagen puts only 3 percent of its waste into landfills and incinerates 39 percent to generate electricity for thousands of households. Although it still generates the majority of its electricity from coal, Denmark has reduced its greenhouse gas emissions by 14 percent since 1990. Over the past two decades Danish energy consumption has also stayed constant and Denmark’s gross domestic product has grown by more than 40 percent. Renewable resources currently supply almost 30 percent of Denmark’s electricity, with wind power being the largest source of renewable electricity.  Denmark is the most energy efficient country in the European Union.

However, you may still be asking what the Copenhagen Accord did achieve, aside from attracting criticism. First, it provides for real cuts in heat-trapping carbon pollution by all of the world’s big emitters.  Second, it established a framework for evaluating countries’ performance with increased transparency.  And third, it will start a much larger flow of resources to help developing and vulnerable nations cope with the impacts of climate change and adopt clean energy policy.

No one, politicians included, is pointing to the accord as all we need to stop global warming. President Obama was candid upon the conclusion of the conference, and remarked that it is only “a first step”. Are we holding the accord to standards and expectations that no possible outcome could have been reasonably met?

The general consensus on the part of the scientific community is that we must mitigate climate change and avoid an increase of  2° Celsius (3.6° Fahrenheit) in order to avoid the most horrific effects, which have the potential to create millions of environmental refugees across the globe. The accord reached is generally considered to not to be enough to keep us under this 2° C threshold.

In reality, the accord creates an “open enrollment” period through the end of January for countries to record their emission reduction commitments and actions.  Countries that sign up in this period will be sort of original co-sponsors, although later participants and  any commitments can be recorded anytime thereafter. So far larger companies have identified their goals in the past year, but have not committed them to a binding agreement.

Hopes now lie with COP16 to be held next year in Mexico City, where the Copenhagen Accord is meant to be made a binding agreement between countries. While no commitments were made to this effect, the progress made during the COP15 is clear. Much of what has been discussed and agreed upon by world leaders would have been almost unthinkable only a year ago.

To follow the future of this agreement and to find out more, here are some useful links:

http://en.cop15.dk/

http://cop15.state.gov/

 
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