We are living in an environment where “Climate Change,” “Carbon Footprint,” & “Carbon Emissions” are very topical in the media and in society in general. Consequently, many people have decided to adopt a “Greener Culture.” This process has been further accelerated by increases in energy prices across the globe. However, there is a perception out there that by “Being Green” it costs more, and in this article, we will try to ascertain do “Green Buildings” actually cost more to design and construct.
Daily the media is saturated with environmental articles and increasing energy prices. Assisted with the continued increases in energy prices people are adopting a “Green Culture” to reduce their dependence on fossil fuels and hence reduce their exposure to price increases in the future.
For example, the sale of Electrical Vehicles (EV) in Ireland for the first quarter of 2022 is up 119.4% compared to the same period in 2021. The Irish Government Climate Action Plan 2021 provides a detailed plan to achieve a 51% reduction in overall greenhouse gas emissions by 2030 and set the country on a path to reach net-zero emissions by no later than 2050.
Other examples include over 53% of electricity generated in Ireland for February 2022 was from wind. Large multinational companies are also under pressure to reduce their environmental impact as more consumers want green products. New product launches not only focus on the features but also detail how the product is manufactured from sustainable materials, how the product is 100% recyclable, and how the minimised packaging reduces waste and shipping carbon footprints etc.
These are significant signs that mindsets are changing, and society is becoming “Greener.”
Image via: EirGrid Group: TES 2019 Scenario 3: Coordinated Action. A scenario where sustainability is a core part of decision-making. Government and citizens recognise climate change as a risk and take appropriate action.
What is a “Green Building”?
There can be confusion or misunderstanding as to what is a “Green Building.” The World Green Building Council describes a “Green Building” as:
“A building that, in its design, construction or operation, reduces or eliminates negative impacts, and can create positive impacts, on our climate and natural environment. Green buildings preserve precious natural resources and improve our quality of life.”
“Green Buildings” typically feature several elements to make them “Green”:
- Efficient use of energy, water, and other resources
- Use of renewable energy, such as solar energy
- Pollution and waste reduction measures, and the enabling of re-use and recycling
- Good indoor environmental air quality
- Use of materials that are non-toxic, ethical, and sustainable
- Consideration of the environment in design, construction, and operation
- Consideration of the quality of life of occupants in design, construction, and operation
- A design that enables adaptation to a changing environment
It should be noted that there are varying levels of a “Green Building” with certification from various organisations. In Ireland, Leadership in Energy and Environmental Design (LEED), Building Research Establishment Global Environmental Assessment Method (BREEAM), & WELL are widely used for certification of “Green Buildings.”
So not all “Green Buildings” are alike and consequently, the costs associated vary accordingly.
Do Green Buildings Cost More To Design & Construct?
In most developed markets there is a business case for green buildings. A recent study in the UK found that green buildings cost 6.5% more on average to deliver. However, this can vary as the vast majority of green buildings in the UK are certified BREEAM Very Good or BREEAM Excellent which typically are 5% to 19% more expensive than conventional builds.
So, the premium for a “Green Building” greatly depends on the level of certification required. Studies carried out have shown that “Certified Green Buildings” sell at higher prices & rent at higher rates than conventional buildings.
In the UK “Green Buildings” typically rent for 13.3% to 36.5% more. “Green Buildings” by their design are more efficient to operate and run. On average they are 14% less costly to operate than their traditional counterparts with this figure likely to increase due to increasing energy prices.
So, when looking at “Green Buildings” a number of factors need to be considered:
- Design Costs
- Build Costs
- Reduced Operational Costs
- Selling Price Premium
- Rental Return Premium
So, in summary, “Green Buildings” will be more costly to design and build than conventional builds but this premium needs to be offset against potential higher selling prices, increased rental returns, and reduced operational costs.
Hence developers increasing look for full life cycle costs as a tool in making a business case for a “Green Building”
It is anticipated there will be a downward trend with regard to design and construction costs associated with “Green Buildings” when compared to conventional buildings as building standards become stricter, the supply chains for green materials and technologies mature, and the industry becomes more skilled in delivering green buildings.
More companies are becoming increasingly conscious of their environmental commitment and hence having a “Certified Green Building” aligns with their respective corporate and social policies. “Green Buildings” have reduced operating costs compared to conventional buildings and as a result use less energy. With energy prices continuing to increase across the globe the operating costs of a building will become more current.
“Green Buildings” also promote health and well-being and on the back of the COVID-19 Pandemic, this is very topical for employers and employees alike.
So, the future looks positive for “Green Buildings” and the business case has never been so compelling.
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