Contributed by Sonja Gustafson:

Here at G2B Ventures, driving efficiency into existing homes is our core mission.  Locally and nationally, residential efficiency has increasingly become top of mind to homeowners and politicians alike, for a variety of reasons ranging from wanting a more comfortable home, to reducing our carbon footprint, to creating jobs, and of course, saving a few bucks on our utility bills.

We all agree that home efficiency is good, but how do we know what good is?  I intrinsically understand when I change out an incandescent bulb for a compact fluorescent one my energy usage goes down.

When my husband and I renovated our 1920s home in Wallingford, we spent some extra money on better insulation and windows, so I know that our home should be pretty snug, energy-wise.   We also selected sustainable materials and replaced the old boiler with an efficient radiant heating system.

So when I learned about the Energy Performance Score, a systems-based rating methodology that provides a sort of “miles per gallon” rating for a home, I thought it would be a great way to measure the success of our remodel.  Given our excellent windows, high R-value insulation, and several smart home measures (including those CFL bulbs) to manage our home lighting, I was feeling preeeetty confident that we would get a good score.

So when my EPS came back with a score in the red zone (green is good, red is bad), I was shocked.  Red zone??  My green home?   How could this be?!

After looking through the report that accompanied the EPS, it became abundantly clear why my house scored above the Washington target of 25,100 kWh/year.  You see, we live in a home that was built in an era where energy was not considered a valuable resource worth conserving, when the only constraint (for the original owner) was lot size.  Our home sits on a double lot, and so the original owner built a rather generously-sized home.  And when we did our big remodel, we chose to add a family room and a guest room for our frequent visitors who stay with us for weeks or even months at a time.

That remodel, while focused on maximizing the energy efficiency of the home, increased the overall square footage, which is the single biggest reason my home now scores so poorly in energy consumption.

So despite the fact that we used some of the greenest methods and materials available in the marketplace at the time of our remodel, the fact is: size matters.  And now we have proof. Although we live in a home remodeled with energy efficiency in mind, it still requires an abundant amount of energy simply due to its large size. I’m not sad to have a house this large; it is a warm and welcoming place that has offered shelter to a motley crew of friends and family.

But the EPS doesn’t lie.  Despite my deep commitment to sustainable homes, I have to admit that while my house uses energy efficiently, its size drives up our energy consumption, and, therefore, my EPS or "MPG" rating.  It bothers me to hold this up to the light of objective measurement, but at least now I have tools like the EPS to take a closer look, to learn more deeply about the various pieces that make my home green, and incorporate them into my work and life.

Contributed by Sonja Gustafson:

Dow Jones Newswires published an interesting article two weeks ago on one national homebuilder’s announcement that it will be measuring the efficiency of all its homes.  Using what it calls an Energy Performance Guide (EPG), national homebuilder KB Homes is positioning the rating along the lines of a “miles per gallon” score we are used to seeing on cars, and hopes to use this to differentiate their homes against the competition.

Although I think the EPG is imperfect because it does not account for absolute house size (that is, a big home can get as good a score as a little one, even though the larger will consume much more energy), the idea of a homebuilder asserting a measurement of efficiency is a powerful tool for both the builder and the eventual homebuyer.  For some builders, it may be a way to differentiate their product amongst plentiful competition, or be a way to highlight the company’s fundamental values.  And for buyers, it’s just another valid piece of information that they deserve as they make a major purchase decision.  In the state of Washington, we are required to disclose if a home has a leaky roof, why not leaky walls and windows?  An EPG score may help to tease out some important information about the quality of the home.

What really strikes me about this article is the reaction of another builder who is ignoring the green position.  “I will build whatever the market demands,” says Eric Lipar, chief executive of LGI Homes, a Texas-based builder. “It’s not what the public wants.”  The sad truth is that many builders have in fact built green homes only to see buyers choose something a bit cheaper, a bit bigger, a bit lower in quality.

But.  Let’s look back in order to look forward.  Remember when the public didn’t want airbags in their cars? (I know, this dates me. If you’re too young to remember, there was a big brouhaha over the “significant” cost of adding airbags to cars).  “People aren’t demanding it”, lagging automakers said.  “They won’t pay the cost.”   Then Chrysler decided to install airbags standard across the product line, and suddenly they had both a differentiating factor that made the competition look a little slow, and also played innovative market mover. Can you even find a new car without airbags anymore?  The market didn’t initially demand them; and automakers actively fought against them.  But then, data showing crash survivability emerged and the market moved, and the laggards scrambled to catch up.

KB Homes is clearly making a bet that people will come to value green, even if over time.  They are smart to use an energy rating to assert their position with measurable data.  (We at Green Canopy are happy to see a national homebuilder take this position, one that we announced in 2009 when we chose the Energy Performance Score.)  Part of why builders have not been rewarded for green is that buyers don’t know what the heck green is.  Taking a measurable position (such as energy efficiency) takes out the mystery and makes your case that much more simple to assert.

So I believe that Mr. Lipar at LGI Homes will be one of the many laggards forced to catch up as the rest of the market uses the transparency of an energy score to tease out the information that helps them make their decisions. In this Google era, people are not asking for less information.  They are not asking for less green.  And as valuable data such as energy scoring becomes more commonplace in the residential market, we think consumers will come to demand this sort of information–and the efficiency measures that drive the scores upwards.  The market is speaking, Mr. Lipar.  Move along.

Post contributed by Sam Lai:

If green, energy efficient homes are so hot right now, then why isn’t everyone doing it???

It seems like everyone’s going green these days.  When you buy your car, a tree gets planted in honor of your purchase, or the chemicals used to dry clean your shirts are “less toxic” than normal.  With every industry scrambling to get to the front of the green line, you would think that the housing industry should be no less affected.  And, with the amount of media attention on green, it would seem to indicate that we’ve reached a saturation point in every sector of society.  However, the availability of green housing seems relatively scarce even in the greenest corner of the left coast.

A recent report was published called the Green Building Value Initiative –Assessing the Market Impacts of Third Party Certification on Residential Properties by Earth Advantage Institute.

The report analyzed the market performance of third-party certified homes in the Portland and Seattle metropolitan areas.  Green homes are commonly recognized as homes that demonstrate a certain level of energy and water savings, CO2 reduction, improved indoor air quality and stewardship of resources.  Prior to the development of any certifications standards, consumers were left in the dark about the actual performance and attributes of homes which were being marketed as green or “sustainable.”  The analysis reports that certified homes in the Seattle metro area sold at a price premium of 9.6% and a 3 to 5% premium in the Portland metro area as compared to non-certified counterparts.  If this is the case, why don’t we see more available green housing stock in our Seattle metropolitan market?  Here are a few thoughts from the perspective of a certified residential appraiser in Seattle (me):

*Green Equals New

Although third-party certification of green homes has been an effective means to differentiate new construction green homes with a greater assurance of quality, certification of the refurbished existing housing stock has been non-existent or extremely uncommon.  Of the 500 homes sold in Seattle in the last 12 months that were marketed as being “green,” only 6 were built prior to 1990.  Of these 6 homes only 1 home was certified as green.  The other supposed “green” homes built prior to 1990 were marketed as having one or two marketable “green” characteristics such as low voc (volatile organic compounds) paint, non-toxic finishes, double-paned windows, energy star appliances, bamboo flooring, tankless hot water heater and energy efficient heat pump.  While many of these characteristics are certainly found in homes that are green, it is self evident that installing bamboo flooring is not enough to transform a conventional house into a “green” house.  One agent went so far as to write on the NWMLS marketing description that the house was “essentially like a brand new 3-star Greenbuilt home.”  In other words, “it’s not new or 3rd Party Certified, but trust me, it’s still green.”

*Live in a townhouse OR drive green?

The scarcity of available virgin home sites in these metropolitan areas also regulates the diversity of design characteristics of new homes that can be built.  Seattle is comprised of housing stock that was primarily developed prior to 1955.  While green/efficient housing is best fit for close-in metropolitan housing markets, these areas are typically already built-up of older housing stock with few development sites available.  The result is, of the 500 self-declared “green” homes sold in Seattle in the last 12 months, 442 were townhouses or ultra compact zero-lot-line cottage homes.  Would-be buyers of green homes are frequently forced to choose between a historic energy sucker built in 1926, a green triple level 2 bedroom townhouse designed for young professionals with no kids and no arthritis, or move to a “green suburb” and spend over an hour in traffic every day.

*New Equals Green

Seattle Department of Planning and Development has a reputation for being one of the most stringent energy codes in the country and is touted as achieving potentially 10-20% energy savings over ASHRAE/IESNA Standard 90.1-1999 and Standard 90.1-2004 respectively.  I’ve heard numerous builders, developers and buyers say, “Yeah, if you’re looking at a new house in Seattle, you’re already looking at a green house.” Right or wrong, there’s a pervasive perception in the marketplace and in the building industry that new homes in Seattle have already undergone a high level of scrutiny to pass Seattle’s increasingly strict energy codes.  Therefore, the perceived delta between the efficiency of a Built Green certified home and a conventional new home in Seattle may seem diminished both for developers and consumers.  

*Green Is Custom-Built

When asked about the current trend of deep green projects being developed and certified in the Puget Sound, the program manager at Built Green, Koben Calhoun, responded:  “We are pleased with the number of projects we have seen come through at the 4 and 5-Star levels. Particularly in the past two years the number of 5-Star projects has increased dramatically. At the end of 2007 we had around 16 or 17 5-Star projects (the 5-Star program started in 2004 so in 3 years we had that many), and now in the past two years we have added about 50 more 5-Star projects. It is definitely exciting and I am hoping we can keep the trend headed that way.” While the numbers for 4 and 5 Star homes seem encouraging for the green market as a whole, many of these deep green homes are custom built, luxury quality and not available for middle market buyers.

*Green – It’s For You, Too

Where will the next wave of certified Green/Energy Efficient housing for the masses come from?  I think the answer is right under our nose.  Existing housing stock in major metropolitan cities across the country can be refurbished and repositioned in the market as certified Green and Energy Efficient housing.  According to the U.S. Department of Energy, almost 75% of the buildings in the country were built prior to 1979[1].  Refurbished Green/Energy Efficient housing resonates with the values held by consumers in metropolitan markets on a number of levels:

*Reduce/Reuse/Recycle – nuff said

*Green home buyers can select close-in neighborhoods in walk able/bike able proximity to employment & goods/service centers

*Reduce greenhouse gas emissions from some of the guiltiest perpetrators (old residential housing)

*Existing housing stock is plentiful and allows for a much more diverse & cost effective Green/Efficient housing options

*Homes built in the 1950’s and earlier are 50% more compact than average new homes today.

More to come…

Post contributed by Aaron Fairchild:

I got back from the West Coast Green building conference recently, and I continue to be struck by issues of contrast. Green “do-gooders” and green “capitalists” mingle about with policy wonks like one big happy family. I have written about this contrast before. But what I continue to find is that, while tension still exists, we are for the most part coming together nicely. There are a lot of people out there who have been fighting for the environment and changing their behaviors for a long time. Some of these folks have a proprietary feeling regarding issues of the environment, but the majority holds open their arms to welcome in the mainstream. I see the convergence of three major sectors around a new green economic imperative or paradigm on the horizon: for-profit business, non-profit, and government.

On the government side, I had the opportunity to talk to a small business owner at West Coast Green named Nathan Doxsey who wanted his city to do more to support sustainability. Nathan owns a small real estate company in the city of Austin, and is focused on marketing Green homes. Nathan was instrumental in helping the city adopt a brilliant ordinance requiring most all residential homes to have an energy audit done during the purchase and sale of a home. Energy audits performed at the point of sale is just smart policy. Energy is a public good and the use and application of energy affects everyone in society. It is already a regulated resource and the thoughtful use and monitoring of energy should not be left entirely up to the free market. The arguments pro and con couldn’t be exhausted in one or even two essays. Needless to say, at G2B Ventures we are promoting a similar policy for the city of Seattle.

At West Coast Green I also listened to panel discussions that were full of good intention and short on actionable ideas. Those panel discussions brought me back a few years, because they had the activist feel without creating pathways to sustainability through profitability. However, I also met Adam Boucher at West Coast Green. His resume need only read: “Entrepreneur with a golden revenue model; eco-capitalist.” Adam is creating financing solutions at the project level in addition to bringing solar panel to over 100 homes in southern California. Go Adam!

More recently, this afternoon I was at a round table discussion at McKinstry sponsored by Climate Solutions talking about Federal regulation. That was the trifecta of for- and non-profit coming together with federal and state policy makers around the issue of climate change and cap and trade. I have rarely seen such as sense of possibility and urgency as I witnessed in that gymnasium.

In meeting after meeting, I have become more and more convinced the world is changing as you read this. All sectors of our society are pivoting toward green issues. Green had become code for being environmentally and socially responsible. Green equals awareness, but it shouldn’t only equal non-profit “do-gooder” or government bureaucrat. The free, public markets and making money is part of the economic green transformation. Note Apple rejecting the US Chamber of Commerce for its stance on climate change. Note Wal-Mart’s efforts to create a more sustainable supply chain. Note Daniel Pink’s video,  “the surprising science of motivation.” Green gives us a purpose to our businesses and makes those businesses more productive and profitable as a result. The green revolution is not only being televised, it is being brought to you in every sector of your life.

Post contributed by Aaron Fairchild:

I was recently invited by the Federal Reserve Bank of St. Louis to present in Louisville, Kentucky at a symposium on “Green” Finance Investing in Sustainable, Energy Efficient Developments. I was very honored to participate and to share what we are working on at G2B Ventures. You can download a PDF of the agenda here. There were a lot of other very cool programs presented, like The Babylon Project out of Babylon New York, and Enterprise’s Green Communities program.

I headed to Louisville with a healthy dose of humility, expecting to be an outlier from the speaker’s podium, and left there with the impression that I was indeed an outlier, but only because I was one of the only speakers talking about for-profit approaches to improving our existing residential building stock. In fact, G2B was the only group represented on stage with a for-profit solution to improving the energy efficiency of existing single family housing. As a result, I had a great time sharing what we were working on and enjoyed several questions and discussions about how to implement a program similar to ours in Louisville and beyond.

I also left Louisville with a new outlook on the city. They are making big strides toward energy efficiency, and Kentucky is working on retrofitting 10,000 homes with their Clean Energy Corps! I had the opportunity to visit a very progressive and fun hotel / museum, 21C, and would recommend the city to anyone interested in visiting. Thanks for the hospitality Louisville and thanks to the team at the Federal Reserve Bank of St. Louis.

Post contributed by Sonja Gustafson, LEED AP:

This week the New York Times published an article entitled “Some Buildings Not Living Up to Green Label," discussing the energy under-performance of buildings rated with the LEED system. (BTW, LEED stands for Leadership in Energy and Environmental Design, so energy matters!) The article cites various examples of LEED-certified buildings falling short of predicted energy efficiency and notes industry criticism of the lack of accountability in tracking actual energy performance.

I’m glad to see the discussion moving this direction, as any pragmatist will tell you that it’s all about how a building performs according to its green goals, not about some shiny LEED plaque on the wall. I do want to offer two comments about this discussion, however, that provide some perspective on the role of LEED in the building industry.

My first point is that the organization that oversees the LEED system, the non-profit United States Green Building Council, is not fighting the criticism, but in the past 2 years has been tracking the performance of buildings and provided much of the data that pointed out the deficiencies. As a result, last week the USGBC launched its Building Performance Initiative, which not only tracks energy efficiency but provides feedback to building owners to help address performance gaps. It also provides outreach and education to help architects and engineers understand energy issues before they begin building design. Tracking energy performance is now part of the conversation, and I’m glad to see it stick.

My other point has to do with why a building owner may elect to get LEED certification. “Green” covers a wide spectrum, and although energy use is certainly one of the most important (and required) components of LEED, there are other ways to reduce carbon emissions in building green. For example, a building owner might choose to locate her project in an urban setting in order to provide building users/tenants greater access to public transportation and services. Or, if the building is a redevelopment, it might conserve enormous amounts of energy by using materials and infrastructure that are already embodied in the existing building. Energy use by a building might be lower if the project were built from the ground up on undeveloped suburban land, but the carbon footprint might in fact be higher than a redevelopment due to increased commuting, parking needs, and greater need for virgin materials. Other buildings may choose indoor air quality as a top priority which will require additional energy consumption in ventilation systems. Green goals matter, so looking at a green building may require looking not only at energy consumption, but at the larger spectrum of green.

I’m glad to see the scrutiny being paid to LEED’s (ahem) leadership of energy performance. This rising tide of accountability will float all boats at a new level and perhaps even generate discussion on the variety of issues that matter in green buildings.