Law and the Environment : Environmental Lawyer & Attorney : Foley Hoag Law Firm : Boston, Washington D.C.

Yesterday, the Daily Environment Report noted the formation of the Coalition for Better Buildings, or C4BB, an alliance of environmental, business, and real estate interests intended to increase the incentives to make buildings more energy-efficient. Its members include real estate trade groups such as the Real Estate Roundtable and the Building Owners and Managers Association, as well as some heavyweight companies, such as Vornado. It also includes environmental groups such as the NRDC and companies who will look to profit from investments in building efficiency, such as Siemens and Johnson Controls.  

The C4BB’s mission is to:

• Propose policy solutions from commercial and multi-family building stakeholders to foster greater energy efficiency in the structures we own, manage, finance and service.
• Save businesses billions of dollars every year by reducing the energy used in commercial and multi-family buildings.
• Create jobs through building efficiency retrofit projects that will put the construction, manufacturing, and service sectors back to work.  

All of this is good stuff and I am always encouraged when environmental and business groups succeed in finding common ground. One obvious intersection is support for tax incentives for building efficiency. Certainly such programs are going to have a greater likelihood of success with this kind of organized support. However, given the gaping hole in federal and state budgets, it will be difficult to enact new tax programs that provide sufficient incentives to make a difference.

The C4BB web page also notes that it supports “improving benchmarking tools including the expansion and enhancement of Energy Star.” This starts to get on to much shakier territory. One form of benchmarking could conceivably be use of building rating systems, which would push buildings towards energy efficiency by giving grades to buildings, with lesser buildings getting the proverbial scarlet “I” for “Inefficient.” As I noted in a post in August, the Institute for Market Transformation – which is a member of the C4BB – has put out a study on the state of building rating systems.

While the environmental groups and the energy efficiency companies may like building rating systems, owners of old buildings may not like them so well. It will be interesting to see whether the Real Estate Roundtable will support or oppose building rating systems. It is important to remember that much of the action in this area is at the state or local level. In states such as California and Massachusetts, rating systems may look better than mandatory efficiency targets. 

In any case, since buildings make up more than a third of energy use, and since some states still are pursuing hard targets for energy usage reductions, the issue of how to increase the energy efficiency of buildings is not going to go away.

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We have previously noted that efforts to achieve economy-wide reductions in greenhouse gas emissions will necessarily go beyond the electricity generating sector. One obvious target will have to be greenhouse gas emissions from buildings, which EPA estimates account for 17 percent of U.S. carbon emissions.

Although there have been efforts, particularly in California and Massachusetts, to use state NEPA analogues to control carbon emissions from new projects going forward, and there have been similar efforts to build energy efficiency into state building codes, existing buildings will inevitably become a focus, simply because their carbon emissions are too big to ignore.

Yesterday, EPA Region II and Cushman & Wakefield got out ahead of the curve, announcing a voluntary agreement pursuant to which Cushman & Wakefield agreed to reduce energy consumption from the 3,000+ buildings it owns or manages by 30 percent by 2012. There are other aspects to the agreement as well, such as a commitment to achieve LEED certification for new construction. 

The size of the reduction to which this agreement commits Cushman & Wakefield is notable, in that a 30 percent reduction by 2012 is more aggressive that the nascent regulatory schemes are envisioning. It certainly suggests, as environmentalists have argued for some time, that there is a lot of low-hanging fruit to be found in the energy demand management area.

This type of agreement is almost certain to become more common as the threat of mandatory regulation becomes more tangible. In fact, depending on the nature of greenhouse gas reduction regulations, such agreements could provide significant economic benefit to the Cushman and Wakefields of the world, if they are allowed to obtain early reduction credits or other economic recognition of the reductions achieved under the voluntary agreements.

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The new Determination of Need Guidelines for Environmental and Human Health Impact adopted by the Massachusetts Department of Public Health are further evidence that sustainability and green development are much more than just buzzwords in Massachusetts. It appears that this administration is serious about incorporating green development principles into all executive branch decision-making.

In brief, the Guidelines require a health care facility applying for a Determination of Need (“DoN”) for new construction or gut renovation to meet LEED-HC “silver level” green building standards. The scope of the Guidelines’ impacts could not be broader, implicating site selection, water and electricity use, and choice of construction materials. And because the Guidelines take effect as soon as January 1, 2009, it is likely that projects already under consideration will need to meet the new standards.

I look at the Guidelines as just one example of how the “green” movement is reaching into all corners of our economy. In the past, environmental regulation was concentrated on industries such as mining, agriculture, manufacturing, and power generation. This is changing. Today, government is taking steps to ensure that businesses in a wide variety of industries take cognizance of their water use, energy efficiency, and greenhouse gas impacts. It certainly appears that any types of facility subject to government funding or approval should be thinking about green development in general and LEED certification in particular. If health care facilities must meet LEED standards, why not affordable housing or education institutions funded by the Commonwealth? Why not municipal facilities? Indeed, more than a dozen municipalities in the greater Boston area already incorporate LEED or similar green building standards into their zoning bylaws. 

While this changing regulatory landscape is certain to impose up-front costs in complying with these standards, there may also be business opportunities for organizations that are proactive in addressing these issues. Companies and organizations that get out ahead of the curve will be well-positioned to take competitive advantage of the real push for green development.

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