Green Building Law Blog : Green Building Lawyer & Attorney : Shari Shapiro: Calliope Communications, LLC

Yesterday, a draft of the Boxer-Kerry senate version of the Waxman-Markey climate change bill was leaked to the media. I have previously posted about the proposed National Energy Efficiency Code in the Waxman-Markey bill and in the first proposed senate bill ACELA. 

Both of those proposed Energy Efficiency Codes had specific energy efficiency targets, timelines, adoption and implementation plans, and enforcement, though they differed somewhat in the specifics. Not so the Boxer-Kerry Bill.  What had been pages of turgid regulatory prose in the prior two bills has been condensed to a mere page and a half--Section 174, starting on page 113 of the draft bill for those of you following at home. 

The most interesting part is that all specifics have disappeared.  No mandated energy efficiency savings, no specifics for implementation timeline, no enforcement, nothing.  Just a mandate that the Department of Energy or "other agency head or heads as may be designated by the President" 

shall promulgate regulations establishing building code energy efficiency targets...beginnning not later than January 1, 2014... 

There is also a section requiring the suitable administrator to "promulgate regulations establishing national energy efficiency building codes."  The entire specifics of the regulations are as follows:

Such regulations shall be sufficient to meet the national building code energy efficiency targets...in the most cost-effective manner, and may include provisions for State adoption of the national building code standards and certification of State programs.

Many have argued that the Waxman-Markey and ACELA bills went too far--making the energy efficiency requirements too high, and requiring to fast an implementation timeline.  I would argue that the Boxer-Kerry draft does not go far enough--it simply does not provide the stick required to urge rapid development and adoption of a national energy efficiency code.  It also leaves a lot of room for further politicking at the administrative agency level.  What do you think?

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I wonder whether we are entering an era where the ethical corporations and citizens will  be divided from the unethical--the green pioneers from the greenwashers--in terms of their willingness to lead on climate change legislation.  Evidence suggests that such leadership will need to come from more than the usual suspects to be effective--WalMart's efforts will carry more weight than Whole Foods. 

Today, Excelon joined a growing number of utilities who resigned from the US Chamber of Commerce over its resistance to climate change legislation. According to the Philadelphia Inquirer:

Chairman and CEO John W. Rowe, in an address to the American Council for an Energy Efficient Economy, said his Chicago company is so committed to climate legislation that it will let its chamber membership lapse.

“Because of their stridency against carbon legislation, Exelon has decided not to renew its membership in the U.S. Chamber this year,” Rowe said.

Oskar Schindler was a German businessman who saved almost 1,200 Jews during the Holocaust by employing them in his enamelware and ammunitions factories.  Similarly, It is up to the corporations that lead this nation to use their dramatic influence to enable the passage of effective climate change legislation.   

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Oy. The amount of talk about green jobs and the new green economy is enough to make anyone a little...green.  But what if there was an event specifically focused on bringing great new green products to market? Actually creating new green jobs and new green industry? And what if it were in the fantastic city of Brotherly Love, home to cheesesteaks, the World Champion Phillies, and, of course, Green Building Law Blog? Good news--THERE IS!!

BuildGreen is taking place here in Philadelphia, October 14-15th 2009.  I spoke with Rob Fleming, the Co-Director of the Pennsylvania Green Growth Partnership about the conference.

GBLB: What is BuildGreen?

RF: Buildgreen started three years ago as a project of the Pennsylvania Green Growth Partnership.  The PAGGP is a consortium of universities, companies and nonprofits dedicated to propelling Pennsylvania to be the number one green products and technology center on the East Coast.

Two years ago we ran our first conference in Hershey. The purpose of the conference is to link companies and univertsities together, and to link companies and companies together and to link companies and nonprofits together to develop new green products.

For the past 3 years, the conference has been in Hershey. It had been in Hershey to link to the Pennsylvania state government in Harrisburg to inform them about all the great things happening with the green products. We didn’t get as many people coming to Hershey as we would have hoped. As a response, we decided to relocate to a major city, and this year it is in Philadelphia.

GBLB: What is the focus of the Conference? 

RF: The focus of the conference is not only to link universities doing research on green products with companies to bring them to market, but also to link investors and venture capitalists to inventors of new green products. We can’t rely solely on public money in an industry that we ultimately need a lot of private money.

We also realized there is a lot of interest in the federal stimulus money and other public opportunities. When we were building our session tracks, we were keen to offer people experts that would be useful to support their efforts.  This is a unique educational opportunity and a rate opportunity for groups of people who wouldn’t usually be together to get together for a couple of days for a conference.

The concern is that the general green practictioner--the engineers and architects--doesn’t feel that the educational tracks appeal to them, so we are also running an expo floor that has a resonance for the practioners. The other thing that is important is that not everyone has time or money to go to GreenBuild in Arizona. This is a opportunity to get acquainted with regional green industry.

GBLB: Who is speaking?

RF: One of the speakers we are excited about is Dayna Baumeister from the Biomimcry Guild. Biomimicry is the study of how we can mimic nature’s biological systems and materials to create better human designs, manufacturing and products. For example, people look at spider webs and they are unbelievably strong. If we could make construction materials that perform similarly, we could find efficiencies in the things we make. The army studies beetles and their shells—they have a composite structure that is lightweight but very strong. Part of the focus of the conference is looking at emerging and new materials, so Baumeister will speak about what is on the horizon in terms of green materials.

Another speaker is Dennis Yablonsky, the former Secretary of Commerce for PA. He is going to talk about all the things that PA is doing to make PA the destination state for green products.

Philadelphia Mayor Michael Nutter is going to participate in the opening session.

GBLB: Who should attend?

RF: 

• People who own companies or are starting companies that want to be in the green sector
• Investors and venture capitalists interested in investing
• Univ professionals looking to get involved in sustainability
• Students that want to learn more about the green world
• Govt officials who want to leanr more about catalyzing the green economy
• Practitioners who want to be exposed to the cutting edge of green technology
   

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CB Richard Ellis, the worldwide behemoth of real estate services, issued a report which addresses "the economics of sustainable buildings." Their conclusion? Basic level of certification adds between 2-3% to the cost, higher levels of accredidation add 5-7% of construction costs.  This is fairly in line with other cost estimates which have been issued.  However, there were some other interesting conclusions from the report:

• Although developers will reap some rewards in terms of higher rents and enjoy higher rates of rental growth,the rates of rent additionality is about the same as the excess development costs (2-6%), so the additional rental value is essentially a wash.
• Improvements in energy savings can be between 10-50%, a major number. 
• Residential customers will pay some premium for green, but not necessarily the actual cost of the green improvements
• Extra value will need to accrue from the investment markets for the lower risks and higher valuations of green buildings.

How should this study effect decisions making at the policy and business level?

• The potential market benefits from greening buildings have not solidified--this means that incentives can still be powerful tools to motivate green projects.  The incentive may be the tipping point.
• Energy savings, and measurement of the realization of energy savings, is an important factor in "pencilling out" green improvements.  From a policy perspective, this puts even more value on reporting and disclosure of building performance measures.
• Policy measures need to be different for commercial and residential sectors to motivate green.  There may need to be different levels of incentives applied to motivate different segments.

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In an interesting business move, property management company Jones Lang LaSalle announced today that it would begin offering "Pre-Acquisition Sustainability Services." 

According to BusinessGreen:

Pre-Acquisition Sustainability Service (PASS) would build on existing due diligence processes and help firms identify the environmental risks and opportunities associated with a property.

What's so interesting about this? The reason that JLL is doing it:

Alex Edds, associate director in Jones Lang LaSalle's Sustainability Services team, said that the combination of new legislation, increased operational costs, growing demands from occupiers and the possibility of securing higher rents for greener buildings meant property investors increasingly needed to understand the environmental performance of buildings across their portfolio.

I think that this is a great idea--developing due diligence tools which assess in advance the green building legal issues is a great risk management tool.  This would also be an opportunity to assess the leases for a rental property to determine the benefits and responsbilities for pursuing sustainable building upgrades and operations approaches. 

An interesting thing to reflect on, however, is whether JLL (as parent of the Green Globes Rating System) is in an awkward position to provide these services.  Will it promote Green Globes as the standard for evaluating buildings for due diligence purposes?  Is that a conflict of interest, or merely using a tool to provide other, marketable services?  

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My new friend Timothy Hughes over at Virginia Land Use & Construction Law Blog had a nice piece highlighting the flaws in the New York Times analysis of the Nathaniel R. Jones Federal Building and US Courthouse (Youngstown, OH) which it used as a primary example of LEED buildings failing to live up to their green claims.  Most interesting in his expose was the fact that the Jones Federal Building did not purport to have energy efficiency as its primary goal:

 A review of the GSA study on its website reveals a few interesting facts that the Times left out of the article:

The GSA study was of 14 first wave green GSA buildings ; 8 were LEED certified, 2 were LEED registered, one used Green Building Challenge, and three were designed with an emphasis on energy efficiency
The Federal Building project did not seek any credits for energy efficiency under EA Credit 1. Similarly, the project did not seek points for additional commissioning, measurement and verification, or green power
While the Federal Building project did not receive the 75 score required to qualify for Energy Star, it did in fact reach a 58 despite the fact the building did not even try for the energy efficiency credits. Every other GSA project contained in the study qualified for Energy Star
 

I perceive this as an example of Energy Myopia, which we have seen in recent green building regulation, particularly the Waxman-Markey Bill.  Section 201 of the Waxman-Markey bill calls for an energy efficient building code, as described in greater detail here. It does not, by definition, address water efficiency, site selection, indoor air quality, or materials usage, the other components which most green building rating systems, particularly LEED, encompass.

Why is this? There are a few factors at play.

First, energy efficiency is important.  With carbon emissions causing global warming, and coal fired power plants producing lots of carbon emissions, reducing energy use is critical.  However, with global warming, many are arguing that water efficiency is at least as paramount.  Moreover, saving water through reduced use literally makes more water available for other uses--it is a direct resource saving, in a way that the impact of building energy savings is not. 

The second reason that energy has been the focus is the same reason people rob banks--because that's where the money is.  As I wrote earlier here, of the entire ARRA allocation of $60 billion for "green" programs, the EPA was allocated exactly $0 for green building, and a measley $7 billion over all.  By contrast, the DOE was allocated $32.7 billion, with $5 billion for weatherization alone.

Third, energy savings is comparatively easy to measure. How do you measure the environmental savings of selecting an urban infill site instead of a suburban greenfield? In vehicle miles saved? Runoff averted? Stream quality? It is easier for proponents of green buildings and critics alike to use energy savings as a proxy for environmental friendliness. 

It is critical for green building regulations to encompass the mulit-faceted environmental impacts of the built environment, and to look holistically at the environmental impacts of so-called "green buildings." 

Later this week...Why Holistic Green Building Regulation Is Hard And What To Do About It.

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The American Bar Association is doing its annual list of 100 best law blogs.  You can vote for your faves here !

Thanks!!!

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As I mentioned here, there has been a lot of tongue wagging on the internet about LEED performance issues.  Yesterday, Rob Watson, USGBC Board Member and Greenerbuildings.com Executive Editor responded. The gist of his response is that critics of LEED should really be participating in improving it:

The thing that really pisses me off is when people who should be helping something like LEED succeed cut it down. The only thing that benefits is the status quo. So stop your whining and moaning and put your energy into moving toward what Elaine Gallagher Adams calls the seeds of the municipal carbon economy where LEED is playing a key role in getting buildings beyond code minimum.

Many of Rob's points are good ones--tearing down LEED without providing constructive suggestions for how to improve the problem is about as useful as throwing rotten tomatoes.  Also, critiques coming from those that are not engaged in the processes for developing the standards--be it USGBC, ICC, ASHRAE, etc.--may not be fully informed about the efforts that are ongoing to fix the issues, and those critics certainly are not participating in the hard work that is necessary to build something, which is much more difficult than tearing down what others have done. As Secretary of the Delaware Valley Green Building Council, member of USGBC's legal advisory board and participant in the ICC green building code team, I try to do my part in being fully informed and active in the process of creating great green building standards.

However, Rob takes a very harsh stick to the dialogue about LEED and building performance:

People need to stop pretending they are providing any insight on issues LEED needs to deal with. Honestly, anyone who thinks that the issues of energy use per square foot, how to get at operations energy though a design standard, how to make energy modeling more representative of what actually happens in a building, etc. haven't been discussed at LEED since 1995, needs to stop sniffing whatever it is they're sniffing. Really . . . it's bad for you.

There is an important role for analysis and critique in any complex process.  Not only do outside observers from different points of view pick up on things that participants in the process may not see, they may have constructive suggestions about how to improve either the process or the underlying problem. 

But even thoughtless criticism has a place.  It serves as an important temperature gauge for the institution about how well it is communicating its message, and where opponents to a given position may have a toehold.  The gun-toting, expletive shouting health care contrarians may not have much constructive to say about how to fix the healthcare system, but they gave a big indication of the fact that Obama's message was not being effectively received, and where the plans needed to be shored up. 

The New York Times article was, as Rob and I have noted, old news to those of us who have been working in this field.  But it gives the USGBC an excellent opportunity to highlight the efforts it has made, as Rob notes, for years to manage the energy issues, and to spotlight buildings which are performing well.  When the Grey Lady is choosing to report on energy performance, you know you have made it into the mainstream.  Now the USGBC should take its publicity--good and ill--and, like Paris Hilton, use it to promote the brand and move green building forward. As Oscar Wilde once said, "The only thing worse than being talked about is not being talked about."

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Although many green building experts have been discussing the issue of whether green buildings are performing up to their claims for some time, the mighty grey lady spoke on the issue this week and set the blogosphere humming. The New York Times article comes in the wake of the USGBC's announcement that it would begin to track the performance of LEED buildings after they have been certified, and potentially to revoke the certification of those buildings which failed to perform, which also kicked up a lot of discussion. On top of all this, ACE announced that it would begin to guarantee the certification of green buildings it was involved with.

These events have an important nexus--risk of liability.  If the USGBC tracks building performance, failure to perform up to the requirements now brings with it the threat of decertification.  In the past, no one was really tracking the claims and there was no consequence for failure, except PR embarassment. Now that design professionals guarantee achievement of certification, failure to do so brings enhanced contractual liability as well (although ACE seeks to limit its liability to a refund of its LEED administration fee, it remains to be seen if this limitation would hold, especially if the failure to acheive certification were due to the professional negligence of ACE).

To protect against the risk of liability, professionals turn to insurance.  As I reported here on Monday, Argo Insurance Brokers and Lloyd's of London are looking to fill this niche by bringing to market the first green professional liability policy for architects and engineers.  Among other things, the policy includes technical consulting, site selection, water efficiency, and other sustainable services as "covered services" under the policy. In addition, it "specifically includes coverage for guarantees and warranties of achievement of green certification."  Thus, through the Argo policy, architects and engineers can now manage their risk. 

On the whole I think the Argo policy is progressive and a great tool for design professionals looking to go green.  If I were an owner, I would want the professionals I engage to have this coverage.  However, I would like to see more explicit language in the policy regarding the "coverage for guarantees and warranties of achievement of green certification," particularly as it relates to performance after certificate of occupancy.  The Argo/Lloyd's policy is probably just the first of its kind in this area, and it will be interesting to see the policy language develop over time.

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