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Clarification Please! Is Green Building More Expensive or Not?


Recently, I attended a guest lecture by a seasoned real estate developer, and he was talking about the profitability of his projects.  This speaker has major experience will all types of investments including retail, single family, industrial, condo, etc.  I put him on the spot and asked him about the numbers he's seen on sustainable developments.  His answer:  "They're expensive, a break-even proposition at best.  Development is going that direction, but not now.  They're not cheap, at all.  We're talking 20, 30, 40% more expensive.  I won't do them."  I was blown away. 

In stark contrast, on Monday, January 22, Rick Fedrizzi, CEO of the U.S. Green Building Council, said to the Miami Herald, "We are now at the point where you can build to LEED standards and it is not one penny more than conventional buildings.  We are more experienced now.  We have a proliferation of green building products and services."  From this perspective, it's profitable and financially responsible to be environmental and build green. 

Someone's wrong, who is it?

When I hear Fedrizzi's statement, I'm led to believe that he's accounting for construction on a first costs basis (not including the operational savings).  And I think he is.  He's saying it costs the same to build green as non-green, on a first costs basis.  I mentioned the obstacles to building green recently, so is this a case where the developer was unaware?  What's the deal?  I'm interested in hearing some real world discussion here. 


Comparing "REAL" green buildings to standard structures has been oversimplified and compared to matching up an SUV and a hybrid. It's not that simple. There's truly a revolution going on in this country in buildings. Japan and europe are decades ahead of us. Mostly triggered by fuel costs. Not many business types are motivated by the fact that the electricity we use in the U.S. to run our buildings contributes more to global warming than the cars we drive. Here it's only the buck that gets us to do things differently.

O.K. enough rant.

Building a custom green building that's high performance will cost the same to build as a custom building that costs more to heat and cool and has poorer indoor air quality... if the team knows what there doing. Signing up to have it LEED certified at all the different levels will add to the cost for fees (unless you reach the Platinum level...the USGBC is running a sale on Platinum ;), commissioning the building and hiring the LEED qualified accredited professional who had to pass a test to show he/she knows how to do the paperwork to get a facility LEED's certified. The test has nothing to do with good sustainable design.

The other challenge is that LEED's the current yardstick for sustainability doesn't give points for common facing the building the right way or having the right amount of glass or putting in the right amount of thermal mass to keep the interior "temperature flywheel" operating smoothly.

And, like many programs, lobbyists and special interest groups tweak the system. In the case of LEED's ..points are given for putting in high efficiency HVAC..You get no points if the building is designed so well it doesn't need it.

My 2 cents is that the Taos Pueblo that's all adobe and over 1,000 years old can't meet LEED's. The oldest continually inhabited dwelling in North America isn't green by the USGBC standards! That's a structure we should be studying for how to make something sustainable. Fossil fuel, hydrogen and electricity may come and go and that native american pueblo will still be warm and dry.

Architects since about 1940 when A.C. became available have forgotten some basic principals that took our ancestors thousands of years of trial and error to perfect. Oooops, I was ranting again.

So back to the question at hand.
Do green buildings cost more to build initially than standard boxes?
Yes..if you want to LEED register it.
No. . .if you have a team that uses an integrated design approach and common sense ..Passive before active systems. Is the building daylit in all areas? . ..the basics. . . and you do like the U.S. navy and require a silver LEED level but don't spend the $$ for the certification and plaque. Not to say that buildings shouldn't be LEED's certified. LEED's has done a great job of marketing and quantifying green design. And the upcoming LEED for homes is vastly improved. Architects and consultants just shouldn't design a building based on LEED's points that aren't site or climate specific. That's like making investments based o the tax write-off you'll get. Not always the best plan.

Eventually the public will get educated as to what sustainability really means and looks like. Check out the fuel bill for a start. And the big question for the uncertain times ahead...would that building provide comfort and safety if the power went out.."passive sustainability" All the other stuff like non-toxic finishes and recycled products are mostly a wash on costs today.

Bottom line . . consumers will need to start demanding better buldings that put performance, function and better health for the occupants and our planet as a more important value than some past romantic style.

Thanks for reading..great blog - keep it up.

I just added you to our list of green blogs.
We are not in yours.
It would be nice to be in :)
Take care

Per Rocky Mountain Intitute's Amory Lovin's writings, I think this developer is unaware. He was written up in the New Yorker this week, RMI tells me.

However, my real world developer/builder/realtors tell me the same unaware story, largely because they're unwilling to do anything differently. Could we make mainstream houses in an entirely new and deep green way, and how much would they cost? Nobody here is willing to make the experiment in order to get some answers to those questions - well, except me, with my very own house. As I make progress, I'll post it.

"Sustainable" is not the same thing to all people.

I'm inclined to agree that there's a fair amount of unawareness here, but I also think that your two viewpoints aren't as diametrically opposed as it first seems.

They are talking about different things: Fedrizzi is most likely speaking of LEED-certified projects, while the developer was responding to your question about "sustainable developments" which he easily could have taken to mean "Zero energy homes" or something similar.

LEED-certified (not Silver, Gold, or Platinum) is a fairly low efficiency standard, and many of the points required to get there are indeed free or cheap(white roof, xeriscapeing, bike racks, etc.) I don't think anyone is arguing that LEED Platinum can be done fro free, nor can Zero Energy (since you need solar panels, in addition to your efficiency measures.)

Here's some more info on the middle ground:

"Typically, a gold-level LEED building costs 1.8 percent more, or an additional $3 to $5 per square foot, to construct, according to the nonprofit Alliance for Sustainable Colorado...

A gold LEED building typically uses 37 percent less energy and 42 percent less water than a conventional building, according to the alliance."

From "Greener buildings for state proposed"

By John Rebchook, Rocky Mountain News
January 25, 2007

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