Events GreenBuild 2007 November 7-9, 2007 Chicago American Resort Development Association's Fall Conference November 7-9, 2007 Washington, D.C. NAREIT Annual Convention November 14-16, 2007 Las Vegas Toronto Real Estate Forum November 27-29, 2007 Toronto

	1,900 employees 45 offices, 28 countries $59 billion in assets $78 billion served assets

 

Reducing the Carbon Footprint

Editor's Note: To celebrate GreenBuild 2007, the national event that supports green building and sustainability, GREM's November issue includes a story on how commercial building owners and managers can reduce their carbon emissions.

Just a few weeks ago, global computer giant Dell launched a new initiative to become "carbon neutral" - the Austin, Texas-based company will take inventory of its total greenhouse gas (GHG) emissions and then implement strategies to reduce and eliminate those emissions.

To meet its carbon-neutral commitment, Dell is working with the U.S. Environmental Protection Agency and is focused on improving the energy efficiency of its operations by purchasing renewable power and offsetting remaining impacts, a term used to describe investments in other carbon emission reducing programs.

Dell's commitment to carbon neutrality represents a growing trend in corporate America - companies are increasingly interested in reducing their carbon emissions because of the financial, social and environmental benefits.

"Initially, the companies that focused on reducing carbon emissions did it to reduce and control energy costs," explains Scott Lyle, first vice president of operations for Arden Realty Inc., a Los Angeles-based real estate owner that has won four EPA Energy Star Partner of the Year Awards. "Now the interest isn't just pure economics but it's also about corporate and social accountability."

Arden, which launched its own energy conservation program almost 10 years ago, currently has 57 EPA Energy Star labeled buildings in its portfolio. The company's energy efficiency efforts reduced energy consumption by roughly 72 million kWh in 2006 alone and prevented roughly 100 million pounds of CO2 emissions - the equivalent of removing almost 10,000 cars off American roads annually.

"Commercial buildings are one of the biggest producers of CO2 emissions in the United States," Lyle says. "There's a lot of opportunity in the commercial real estate industry to reduce CO2 emissions, especially with existing buildings."

Commercial buildings AKA Big Foot

Commercial buildings account for nearly 40 percent of all carbon emissions in the United States, according to the 2007 Buildings Energy Data Book released by the U.S. Department of Energy. Carbon emissions are created from energy usage - heating, cooling and lighting. Energy is created at a power station and that's where the CO2 is emitted.

Heating and cooling accounts for nearly 30 percent of a building's annual energy consumption, while lighting represents about 24 percent. A typical commercial building uses 2.1 million BTU (British thermal unit) annually and generates nearly 600,000 pounds of CO2, according to the 2007 Buildings Energy Data Book.

That's why so many commercial property owners are now focused on their "carbon footprint" - a term used to describe how much CO2 emissions a company produces.

"Carbon emissions are now on the corporate radar and that includes commercial property owners," notes Pete Atkin, an associate with Green Order Inc., a New York City-based consulting firm that worked with Silverstein Properties to develop World Trade Center 7, one of the first office buildings in New York to be certified "Gold" with the U.S. Green Building Council's Leadership in Energy and Environmental Design (LEED) program. "They're getting pressure from shareholders to report their carbon footprint and many see that regulations related to CO2 emissions are not far away."

In fact, several real estate investment trusts (REITs) like mall owner Simon Property Trust have been questioned about their carbon footprint, Atkin says, adding that carbon emissions are viewed as a potential risk to a company's profitability - not only because of the expense of having an inefficient portfolio but also because tenants are increasingly sophisticated and want energy efficient buildings.

"This is really a competitive issue because an inefficient portfolio is less attractive to tenants," Atkin says. "Over the next two years, I think it will become commonplace for REITs to report on the carbon footprint in their portfolio."

New York City-based property owner Time Equities Inc. is just now evaluating its carbon footprint and how to reduce it, according to director of sustainability Alice Cook. "Our efforts are primarily driven by concerns about climate change," she says, adding that the company is reviewing its 12 million-square-foot portfolio, looking at lighting, mechanical systems and building envelopes. It also plans to conduct energy audits to see how much energy its buildings are using and benchmark their building performance against other similar buildings.

Retro-commissioning rewards

Property owners and managers can reduce CO2 emissions by utilizing the four strategies - energy efficiency, green energy, onsite renewable energy and carbon offsets.

A building's energy efficiency can be determined by doing an energy audit, which will outline how much energy a building uses for its HVAC and lighting system, among other things. Because HVAC is the biggest user of energy for most buildings, many experts recommend doing a retro-commissioning study. Beyond cost savings, there are other signs that indicate a building's systems aren't working properly and need to be retro-commissioned. Those signs include: poor air quality, comfort issues and moisture problems.

These studies are usually performed by mechanical engineers and include an HVAC evaluation to make sure the heating and cooling systems are performing they way they were designed to perform. Once the analysis has been conducted, the retro-commissioning study will indicate what kind of changes need to be made, according to Doug Gray, vice president of consulting and design for EMC Engineers Inc., an Alpharetta, Ga.-based firm that specializes in retro-commissioning of commercial and institutional buildings likes schools and hospitals.

Gray estimates that less than five percent of existing buildings ever undergo a retro-commissioning study. However, he and other experts recommend that every commercial building less than 20 years old submit to retro-commissioning every two years.

Retro-commissioning is important because it "tunes up" a building. "Buildings traditionally have been built and the responsibility to make sure they operate correctly has been put on general contractor and the subcontractors," Gray explains. "No one goes through the building and makes sure everything is working properly and to its highest level."

Retro-commissioning ranges from 50 cents per square foot or more, but often has a very fast payback because of the money recouped from energy savings, says Lisa Raffin, vice president of professional services at VFA Inc., a Boston-based facilities management consulting company. "Retro-commissioning pays for itself in less than a year," she contends. "For buildings that are way out of tune, the payback could be less than three months."

Many of Arden's buildings have been retro-commissioned. "Retro-commissioning is one of the most critical aspects of energy efficiency," Lyle says. "It's necessary because systems will drift from their original performance or because you may acquire an asset that has not been optimized by the previous ownership or management."

Claire Bonham-Carter, director of sustainable development for global design and engineering firm DMJM H&N, suggests that every commercial building be retro-commissioned. "Even if it seems like all the systems are working like they're supposed to, there's always the possibility they could work better," she points out.

Renewable energy options

Beyond saving energy and using it more efficiently, many property owners are exploring ways to create renewable energy so they don't have to draw from their local power sources. For example, a number of states including California, New Jersey and New York offer tax credits for the installation of photovoltaic panels onsite, making solar energy attractive to a number of real estate owners, Atkin says. But, without these tax credits, onsite solar energy can be costly.

In addition to solar panels, thermal energy storage is another onsite carbon reduction strategy, according to Scot Duncan, vice president of energy conservation engineering for Lake Forest, Calif.-based Retrofit Originality Inc.

Arden has several buildings that use thermal energy storage, which involves using electricity at night when electricity rates are cheap to chill water. During the day, the chilled water can be used to cool buildings instead of using energy from the power station during peak usage times. The CO2 emissions savings is impressive since power usage during the day emits two times the CO2 as power created at night.

Others owners are investing in green energy - energy that is created by traditional power companies either from wind turbines or solar panels. Dell, for example, purchases about 10 percent of its energy for its Austin operations from renewable sources.

There's no payback in using green energy, however, which causes some hesitancy for building owners, Atkin says. "I am not sure many commercial buildings owners are choosing to buy green energy because it has about a 10 percent premium on electricity costs," he explains. Dell, for example, says it will buy green energy only when it's "economically feasible."

The other strategy, carbon offsetting, is still somewhat controversial. In short, when a company cannot avoid using energy, and therefore emitting CO2, it can offset those emissions by investing in a program that reduces CO2 emissions in another way. Some programs include capturing methane gas from landfills or planting trees.

"You get into murky territory around carbon offsets, and if you choose to do this, you want to make sure you're investing in a program or project that is credible," Atkin says. Dell, for example, plans to offset the emissions impact by investing in projects that can be monitored and verified, ensuring their long-term viability and assuring that the carbon savings are real.

Whatever strategies a building owner chooses to implement, it's important to remember that reducing the carbon footprint will make a building and owner more attractive to investors and tenants. "The carbon footprint is a concern for everyone, not just the landlord," Lyle says.

Copyright 2007, Penton Media.. All rights reserved. This article is protected by United States copyright and other intellectual property laws and may not be reproduced, rewritten, distributed, re-disseminated, transmitted, displayed, published or broadcast, directly or indirectly, in any medium without the prior written permission of Penton Media.