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What is “Green” and why is it a good investment?

Posted in Blog on Monday, September 19th, 2011 at 6:30 pm No Comments

Even if you don’t believe in the green energy Holy Grail or the studies showing that jobs are being created with the government investment in green technologies, http://www.npr.org/2011/06/13/137141008/is-obamas-bet-on-green-jobs-risky , do not throw the green baby out with the green bath water.

“Green jobs”, “green energy”, “green transportation”, “green buildings”.  What does “green” really mean and why is it a beneficial concept to us.  The idea of green is typically painted with a very broad brush, but all it encompasses can be placed into two ideas.   Being green really means efficiently using our resources, while leaving a minimal impact on the natural environment.   (The term resources means fossil fuel, water, wood, materials, labor, land).  The concept does not mean burdening yourself with buying the most expensive light bulb, an electric car, and placing solar panels and wind turbines all over one’s roof, (though this would clearly minimize your “carbon footprint”).  While some green ideas sound nice and are considered environmentally friendly, the tragedies that they avoid are still only hypothetical, at least regarding the timeframe with which the tragedies will occur (global warming included).  But if a green concept makes demonstrable sense for all of society then it should be embraced by all members of society.  “Green buildings” make sense.  Green buildings make sense in the long term and they make sense in the short term if designed properly.  We are not talking about proposed benefits of building green, we are talking about real tangible value.  The environmental effects of construction activities can be debated and should not be ignored, but this discussion is about creating a sustainable economy for the foreseeable future.  If constructing green buildings creates jobs then these should be considered “green jobs”, the term “green job” does not have to be reserved for someone working on a wind farm on the Californian coast.  The justification for the recent onslaught of criticism toward the government and their “green” policies may be verified for some of the policies, but this should not make “green” a crass concept.

Economies are driven by a demand for goods and services.  However a sustainable successful economy is driven not only by an immediate demand for goods and services, but by continuously improving the efficiency by which those goods and services are created, via allocating productivity toward developing these future more efficient methods once they are known.

Let’s imagine two fictional farms in the early 18th century.  One operator thinks it is more productive to sow the same seed for the highest priced crop onto all of his fields each year to maximize his immediate profit.  While the neighboring farmer is spending a little more of his time and resources to sow different seeds onto each field using a concept he recently became aware of known as rotating crops.  The crop rotation might limit his income the first few years because he is not able to plant the highest income yielding seed onto all of his fields.  However, he will realize the benefits after a few years once his neighbor’s high priced crop begins to show weaker yields after each consecutive year, and his fields continue to produce consistent yields.

This is an example of sustainable design in society.  At first it did not seem beneficial because the farmer’s income was reduced compared with others.  Yet once the wealthy farmer’s land was infertile he would be forced to live with his poor yield.  Perhaps he used his higher income to go buy more land early on and repeat the unsustainable process.  Or, we imagine a step further, to where the farmer with the unsustainable practices now owns most of the farmland in the city, because he had a higher early income, his operating costs are now too high, with the low yield, to continue this way any longer and the city is left with most of its farmland in ruin or in need of repair.  The net effect on the local economy would be based on specifics, but in this case it is easy to see that the city would have been better off in the long run if the farmer with the sustainable practices was operating most of the farmland.  Now the cost of food will rise while the farmland is recovered. And if the more sustainable farming practices are not adopted the cycle will continue.  The sustainable farmer wasn’t charging more money for his crops he just wasn’t making enough money to expand at the same rate as his competitors.*

This is reasonably analogous to comparing two future building owners, one who is paying engineers to design a commercial building for a more immediate return on investment, (via lower cost of investment), and one who is paying them to design a commercial building for sustainable long term operation with a resulting longer return on investment.  In a boom and bust market place, timing is everything, and if the owner had the idea of flipping his property it may not always work out.  But regardless of whether or not the investment pays off for the owner, the country is now left with a new and inefficient building.  This building will use more energy, more water, and have poor indoor environmental conditions, which costs everyone more money and uses more resources.   The lower upfront cost of the design and technology results in higher operating cost for the lifetime of that building, it results in higher energy consumption and a higher peak demand at the local power plant, which results in lower profit margins for the power company, which in turn results in higher energy costs handed down to consumers and more importantly faster depletion of our finite supply of natural resources (natural gas, coal, or oil burned in the power plant).

Again, part of being green means efficiently (intelligently) using our resources.   Breaking the budget on the most efficient air conditioning equipment, LED lighting, and solar panels all over the roof might not be the most efficient use of our resources for a green building design.  For starters, we should consider money a resource as it has value and is (usually) obtained through hard work and time.  Now couple that with the ROI time on PV panels of roughly 20 years** (assuming no grants or rebates), ROI of top of the line AC equipment and LED lighting (ROI over code minimum AC and lighting package) at 15 years.   There will be a payback eventually, but there are better ways to get there and market factors would work these kinds of designs out of the picture if this is true.  A green building would use an efficient and sustainable design utilizing a life cycle cost analysis, a full building energy model, and the experience of an engineer that has worked on and designed energy efficient buildings.  The resulting cost (outside of energy engineering fees) may be little to no increase in first cost.  No PV panels or LED lighting, but an efficient lighting layout, efficient plumbing fixtures, and efficient air conditioning control algorithms.  Discovering, through energy modeling, which of the buildings HVAC systems have a bigger impact on the utility bill, (cooling, heating, fans), and providing higher efficiencies where they will make the most sense to the owner and society.  A green building also forces designers to place emphasis on indoor environmental quality.  The benefits here, aside from health and well-being of the occupants and second-hand health care costs, are tangible.  A healthier indoor environment results in increased annual productivity, via fewer sick days taken, fewer hours complaining about the temperature, and fewer hours spent dealing with allergy symptoms.

Let’s now simplify the logic, and imagine that Jethro Tull has stopped by both farms offering them each an opportunity to buy his new seed drill and horse-drawn hoe.  This results in an immediate reduction in operating cost for each farmer, an ability to handle more land, and is an obvious instant benefit to society.  To me this is equivalent to the green building movement as a whole.  Green engineers and architects are being created (alongside those created during the energy crisis in the 1970’s) with the skills necessary to design new energy efficient buildings and optimize the efficiency of existing buildings.  With buildings using 39% of our total energy, two-thirds of our electricity, and one-eighth of our water***, this is a huge benefit to all of us.  And will directly result in better longevity of our finite supply of fossil fuels and lower utility rates for years to come, compared to a future filled with poor building designs.

Joe Fleming


* I am not an economist or a farmer, I am an engineer.   One may argue that there is a benefit to society when repairing the damaged fields because people are put to work, kind of similar to the thinking that natural disasters boost the economy because people get hired to help with the recovery, or that a low first cost building can be renovated with energy efficient retrofits later.  The sensible logic here is that the net cost to achieve the same result is higher with the disastrous route and any individuals employed while fixing the problem, assuming they even had the skills necessary to immediately fill these job rolls, would find ways to integrate themselves into society as productive members at some point.  The long term benefit of the analogy then being; keeping the skilled workers in jobs where they efficiently use their skills, preventing the farmland from becoming unproductive, and maintaining low food prices.

** PV panels also cost energy to make energy.  The energy used to create the panels is typically paid back to society in roughly 3-4 years, (labor and material cost not included).    http://www.oilcrisis.com/netenergy/EnergyPayback4PV_NREL.pdf

*** http://www.energycodes.gov/why_codes/

Energy accounting is a beneficial side effect of an evolving building design and construction industry.  What gets measured gets improved.