CoStar Green Report The Bottom Line
Source: CoStar.com, by Andrew C. Burr
June 13, 2007
A New Survey of Business Leaders Finds That Going Green Might Have Less to Do With the Environment Than You Thought
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| IBM's $1 billion project to cut energy consumption in data centers is just one of many new market-based initiatives from the business world. |
In this issue of the CoStar Green Report, we show how business is perceiving the rising cost of energy; IBM's $1 billion plan to clean up data centers; a new energy efficiency program from the man who gave us Energy Star; more green initiatives from the banking world; and a green building proposal you could soon see in your building code.
Survey Says: Businesses Battling Energy Costs With More Efficiency
A new survey by Johnson Controls finds North American business leaders expect energy costs to continue to rise, and that businesses are taking more meaningful steps to try to mitigate those costs.
The survey, conducted in March and released last month, polled employees across a wide range of industries and locations who were identified as decision makers for energy management issues within their organizations.
The survey shows that more than of half of respondents, or about 52%, cited cost savings as the primary motivator behind their decision to invest in energy efficient technology. Just 13% of those polled cited environmental concerns as the primary motivator, while 35% said the two factors weighed equally.
The results indicate that businesses believe energy efficient measures will save them money, contrasting a lot of not-too-distant skepticism on the financial benefits of going green. "There's a growing realization of the role commercial and industrial facilities play in energy consumption, and the role they can play in making the economy more energy efficient," said C. David Myers, president of the Johnson Controls Building Efficiency business.
The survey found that 79% of people believed that the cost of energy (defined as electricity and natural gas) will "increase significantly" during the next 12 months, with 62% responding that their companies are paying more attention to energy efficiency today than five years ago.
According to the survey, the main energy efficiency investments by businesses include educating staff members on how to conserve energy (70%); switching to energy efficient lighting (67%) and installing lighting sensors (46%); adjusting HVAC controls (60%); and installing energy-saving glass in windows (28%).
Johnson Controls is a global provider of environment solutions for the automotive and building industries.
Big Blue Goes Green
IBM (NYSE: IBM) is mobilizing to increase energy efficiency in one of commercial real estate's toughest sectors: data centers.
The company is investing $1 billion per year through an initiative called "Project Big Green" to reduce energy consumption at data centers through new services and products. The plan also calls for IBM to double the computing capacity of its own data center space -- more than 8 million square feet worldwide -- within the next three years without increasing power consumption or its carbon footprint.
According to analyst firm IDC, about 50 cents is spent on energy for every dollar of computer hardware, a figure that is expected to rise. IBM estimates that energy improvements made to an average 25,000-square-foot data center could achieve 42% energy savings.
"Many data centers have now reached full capacity, limiting a firm’s ability to grow and make necessary capital investments," said Mike Daniels, senior vice president of IBM Global Technology Services. "Today we are providing clients the IBM action plan to make their data centers fully utilized and energy efficient."
Under Project Big Green, IBM would help clients assess energy usage and identify inefficiencies, then provide an array of new software and technology to help them upgrade and manage the centers. IBM has developed software that measures 3-D temperature distributions, tracks and isolates energy usage, and automatically caps power and thermal outputs. The company is also offering new cooling solutions, a major factor in data center energy usage.
By implementing the program at its own data centers, IBM expects to save more than 5 billion kilowatt hours of energy per year.
Clinton Partners With Major Cities to Reduce Energy Consumption
Fifteen of the world's largest cities have joined a new initiative by former President Bill Clinton to reduce energy consumption and carbon emissions in their buildings.
The Energy Efficiency Building Retrofit Program, a project of the Clinton Foundation's Clinton Climate Initiative (CCI), will provide funding for cities to retrofit their existing municipal buildings and incentives for private building owners to follow suit. Clinton made the announcement at the C40 Large Cities Climate Summit held last month in New York City.
"Climate change is a global problem that requires local action," said the former President.
The retrofit program is being funded by five banks -- ABN AMRO, Citi, Deutsche Bank, JPMorgan Chase, and UBS -- each slated contribute $1 billion to the project. Owners will complete the retrofits at no initial cost and repay the loans with interest using savings in energy costs.
Honeywell, Johnson Controls Inc., Siemens, and Trane will conduct energy audits and perform building retrofits.
"The businesses, banks and cities partnering with my foundation are addressing the issue of global warming because it’s the right thing to do, but also because it’s good for their bottom line," said Clinton. "They’re going to save money, make money, create jobs and have a tremendous collective impact on climate change all at once."
The program is expected to reduce energy consumption in each building by 20% to 50% through energy-saving improvements and the installation of energy-efficient products, helping to close a widening gap in energy efficiency between existing buildings and new construction.
According to the Clinton Foundation, large cities contribute 75% of all heat-trapping greenhouse gas emissions despite occupying only 2% land mass.
The participating cities include: Bangkok, Berlin, Chicago, Houston, Johannesburg, Karachi, London, Melbourne, Mexico City, New York, Rome, Sao Paulo, Seoul, Tokyo, and Toronto.
Banks Banking on Sustainability
Continuing a different sort of "greening" trend among financial institutions, Citi is earmarking $50 billion over the next decade to support the growth of alternative energy and clean technology.
The plan includes offering "climate friendly" mortgage, card and commercial finance products to clients; increasing equity investments in alternative energies such as solar, wind, hydro and geothermal; and issuing climate-related notes and holding conferences to address sustainability. Citi is also reducing its corporate carbon footprint by slashing carbon emissions, purchasing green power and seeking environmental certification at all new facilities.
Wachovia and Bank of America have also announced green initiatives this year. Wachovia said it plans to build at least 300 green bank branches, in accordance with LEED standards, by 2010. The centers will reduce energy consumption by 20% and slash carbon emissions by 6,000 tons per year, or about the equivalent of taking 1,200 cars off the road. The plan also extends to leased space, where Wachovia will seek environmental certification under the LEED Commercial Interiors Retail program.
Bank of America has pledged $20 billion to encourage the growth of sustainable business practices, with focuses on real estate projects with LEED certification. The bank has invested more than $1.4 billion to achieve LEED certification in all new construction of its own facilities, and is constructing green towers in Charlotte, NC, and New York City.
New Green Standard Under Review
A new standard for defining what is and isn't a green building is in the last stages of review before its creators hope to see it included in building codes around the country.
The proposal, known as Standard 189P (Standard for the Design of High-Performance Green Buildings Except Low-Rise Residential Buildings), establishes minimum guidelines for the sustainable design, construction and operation of buildings. It is being developed by the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) in conjunction with the Illuminating Engineering Society of North America (IESNA) and the U.S. Green Building Council (USGBC).
The proposal would apply to new commercial buildings and major renovation projects, addressing key areas including energy efficiency, greenhouse gas emissions, sustainable site selection, water usage, materials and resources, and indoor environmental quality.
Unlike USGBC's LEED program, the proposal isn't a building rating system. Instead, it would act as a baseline for mainstream sustainable building, and possibly a prerequisite for certification under the LEED program. "Standard 189P will become the benchmark for all sustainable green buildings in the United States because it is being developed for inclusion into building codes," said committee chair John Hogan, chair of the Standard 189P Project Committee. "This means that owners and designers will have a consensus-based document that will set the minimum criteria that a building must satisfy in order to be considered a green building.
"The real impact of Standard 189P is that ASHRAE, along with IESNA and USGBC, is taking advanced energy conservation guidance mainstream for the general public's benefit," he said.
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