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by ROB WATSONExecutive Editor

REPORT2010

GREEN BUILDING

IMPACT

MARKETA

N

D

Dening and accelerating the business o sustainability.


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2 2010 GreenBiz Group Inc. (www.greenbizgroup.com). May be reproduced or noncommercialpurposes only, provided credit is given to GreenBiz Group Inc. and includes this copyright notice.

Contents

Researched and Written by Rob Watson

For GreenBiz Group:

Joel Makower, Chairman and Executive Editor

Matthew Wheeland, Managing Editor

Leslie Guevarra, Associate Editor

Pete May, Chie Executive Ocer

Eric Faurot, President and Chie Strategist

Samuel Smith, Marketing Manager

Inographics by Seth Fields

Thanks to Our Sponsors:

2010 GreenBiz Group Inc. (www.greenbizgroup.com). May be reproduced ornoncommercial purposes only, provided credit is given to GreenBiz Group Inc.and includes this copyright notice.

Executive Summary ...........................................................................

LEED Market Trends ................................................................................

Homes .....................................................................................................

International Market ................................................................................

Site and Land Use Impacts ......................................................................

Water Eciency Impacts .........................................................................Energy Impacts ........................................................................................

Materials Impacts ....................................................................................

Indoor Environmental Quality .................................................................

The Big Picture ........................................................................................

Appendix: Methodology ...................................................................

About the Author ....................................................................................

About the sponsors .................................................................................

About GreenBiz Group ............................................................................


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Conounded Expectations ReduxWere really wearing this one out, usingit two years in a row, but theres just no way around it The great Americanphilosopher Yogi Berra once noted: Its tough to make predictions, especiallyabout the uture. In 2009, we assumed that the phenomenal growth we hadseen the previous three years was not abnormal (even though it exceeded thetotal new foor area added in the US last year) and would somehow continue insome ashion going orward. Clearly, economic realities proved us wrong.

Our predictions o continued strong growth in LEED registrations werecompletely turned on their head as 2010 brought precipitous declines.Nonetheless, our certications orecast remain steadast: we came close with lastyears total foor area prediction, though LEED New Construction and LEED Core& Shell did not grow as much as anticipated.

New Certications Break Records, but Falls Short o Registration Boom

There is good news on the certication ront: This years total certied foor areanearly equals the previous ten years certied foor area combined. Last year,LEED or Existing Buildings Operations and Maintenance (EBOM) certied hal(49 percent) o all the domestic foor area in the LEED system and a quartero the international projects to equal the certied foor area o LEED or New

Construction (NC) and LEED or Core & Shell (CS) combined.

Also, given that certications almost equaled registrations this year, even moreimpressive is that certied newly-built LEED foor area exceeded 20 percent onew construction additions. All this notwithstanding, in order to keep pace withearlier registration rates, certications were going to have to triple instead oonly double. So, the sad result is that the percent o LEED projects graduatingto certication ell below the 70 percent goal that we believe represents ahealthy graduation rate.

Appropriately Mixed Metaphors: Registrations Tank, but Is that Really So

Bad? Any green lieboat we were positing last year was simply a mirage.

The spike o registrations most likely was some sort o panic or irrationalexuberance driven by the sunsetting o Version 2.2 or some last-ditch gambitto somehow ride the green wave into nancing or whatever.

Our year-end orecast o LEED registrations has them down almost 70 percentcompared to last year (NC and CS are o 80 percent and 90 percent in the U.S.respectively). As bad as that sounds, these lower registration numbers actuallyrepresent about 22 percent o the total expected new foor area to be addedthis year, which puts LEED near the top o its anticipated ull market saturationpoint o 25 percent o new construction.

LEED EB is the Certication Champion, CI Mirrors LEED Overall In 2010

LEED EBOM certied almost 50 percent more foor areaover 80 million squareeetthan did LEED NC, growing nearly 80 percent year on year. Cumulatively,since its launch in 2004, LEED EBOM has certied nearly the same total foorarea as LEED NC since its launch in 2000. In spite o this success, we believethat LEED EBOM is less than halway to where it needs to be to sucientlycontribute to minimizing climate change.

LEED CI showed similar schizophrenia as the rest o the system, growingcertied foor area by nearly 60 percent, while registered foor area declined by65 percent.

Exec

utiveSummary


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ENVIRONMENTAL TRENDS

Now that we have credit achievement tallies or all projects certied ater 2006,we have a much better handle on LEED environmental perormance this year.Unortunately, it is clear that this years lower foor area orecast dramaticallyshrinks the long-term environmental impact o the standard.

Land & Site Impacts Due to additional evidence that location ecientdevelopment has a bigger VMT impact than we used beore and due to the

large jump in LEED-certied foor area in 2010, we increased our estimate ovehicle miles traveled (VMT) reductions to 1.4 billion VMT to date vs. 400 millionrom 2008. By 2030, the annual gasoline savings equal our current importsrom Venezuela and Saudi Arabia together; impressive, though not nearly asmuch as we orecast last year. Although its still too early to know how the heavyemphasis on location eciency in LEED 2009 will infuence the market, therehas been a 20 percent shit toward more location-ecient projects since 2007.These gasoline savings result in impressive (carbon dioxide) CO

2reductions: 14

million tons to date, growing to 190 million tons in 2030. When coupled withestimated building energy eciency and renewable energy savings, these CO

2

reductions amount to about 6 percent o current annual CO2

pollution.

Water Impacts Total water savings this year are signicantly higher thanlast year, due to increased certied foor area plus a modest increase in thepenetration o water-saving measures across most o the LEED standards. Totalwater savings rom LEED through 2010 is 33 billion gallons, comprising 0.5percent o annual non-residential water use.

But by 2030, LEED will result in over 565 billion gallons o saved water, whichrepresent a respectable 14 percent reduction o annual non-residential wateruse. Thats only about hal o what we orecast previously, since total predictedLEED foor area in 2030 decreased by about 60 percent compared with lastyears estimates. These gures may go up as the more stringent requirements o

LEED 2009 begin to be elt.

Energy Impacts Buildings use more energy than any other human activity, andthe building sectors share o global energy use continues to grow. It will not bepossible to eectively address carbon pollution and climate change without anaggressive, concerted eort to reduce energy consumption in buildings. LEED isdoing OK at making a dierence, but much more needs to be done, both withinLEED and complementary activities such as increased mandatory standards.We estimate that the current annual CO

2savings rom LEED buildings is

approximately 8 million tons rom energy eciency and renewables. This guregrows to 64 million tons per year by 2020 and almost 170 million tons annually

by 2030, which is about 3 percent o our current annual CO2 ootprint. While theact that these savings show up at all is impressive, given our massive carbonbudget. But comparing a 3 percent reduction in 2030 to the needed 80 percentin 2050 seems pretty daunting.

Materials Impacts Based on average materials costs, green building materialsrepresented approximately $14.5 billion in cumulative spending through 2010,reaching nearly $120 billion by 2030. Moreover, the embodied energy inbuildings that are renovated instead o demolished by 2030 is expected to savethe oil equivalent o over 200 million barrels -- as much energy as we import

In spite o this

success, we believethat LEED EBOM

is less than halway

to where it needs

to be to suciently

contribute to

minimizing climate

change.


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this year rom Russia. In addition, an average o over 60 percent o C&D Wasteis diverted rom LEED projects, totaling almost 53 million tons to date andexceeding 430 million tons per year by 2030.

IEQ Impacts While operational savings are real and important, the nancialbenets in LEED are largely achieved through the enhancement o employeeproductivity: Salaries represent approximately 90 percent o the money fowthrough a building. Although our foor area projections are down, and as a resultthe total employees aected by LEED is lower, we eel that the preponderanceo evidence allows us to increase the estimated productivity benets, whichkeeps the total economic impact o LEED quite similar to last year.

We estimate that an average o more than 1.5 million employees are enjoyingimproved indoor environments in LEED buildings at present. Looking ahead,the green building workorce is expected to approach 5 million by 2020, andalmost 17 million strong by 2030. The productivity benets rom LEED buildingsto date are estimated at $6.4 billion and we expect this number to exceed $22billion by 2020, and nearly reach $75 billion by 2030.

LEED MARKET TRENDS

It turns out that the green lieboat wasnt as big as we originally assumed. Inthe 2009 Green Building Market and Impact Report, we supposed that thehuge pulse o projects into the LEED system was in part due to the hopes oowners and developers that green certication would somehow keep themrom drowning in the emerging economic chaos. Like a brilliant chemicallyinduced insight that we were sure would change everything, we projected thatthese phenomenal numbers would continue into the uture. But they didnt.Now in the sober light o day, it seems that, until this year, a sort o irrational

exuberance has gripped the market since 2007, with LEEDs penetration ocumulative new construction reaching 54 percent during this period.

I we had just stuck with our estimates o LEED environmental perormance andmarket penetration to date, we would not be in the position o having to admitthat last years irrationally exuberant estimates o growth in LEED going orwardwere just fat-out wrong. Its cold comort to say that were in good companyconsidering how badly others have orecast the circumstances in which we haveound ourselves in the last two years. Regardless, we have a great deal moreinormation about how LEED-certied buildings earned their plaques, whichgives us greater certainty about certied buildings environmental perormance.

Newsfash: LEED is no longer a new construction standard. Domestically, thetotal new foor area in LEED or Existing Buildings: Operations and Maintenancein both registrations and certications exceeds all foor area in LEED or NewConstruction, plus LEED or Core and Shell, plus LEED Schools (together, thebuilding design and construction standards) or the rst time. As recently as2007, BD&C standards were 80 percent o the foor area in LEED. Globally,EBOM represented 46 percent o certications, while BD&C standardscomprised about 54 percent o the certied foor area this year and over 60percent o registered foor area.

LEED

MarketTrends


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This year still saw the addition o over 800 million square eet o registered foorareaabout 35 percent overseasor a cumulative total o over 7 billion squareeet o registered foor area worldwide since LEED was launched in 20001.Eight hundred million square eet seems like a large number, and it is, until yourealize that total registered foor area anticipated or 2010 declined by almost 70percent compared to last years totals. Cumulatively, we estimate that nearly 1.2billion square eet will have been certied by the end o the year.

The growth o LEED this year was quite biurcated between certication andregistration. Certication continued its torrid paceexceeding last years recordby over 50 percentand we project that the newly certied foor area addedthis year will nearly equal all certied foor area or the previous ten years.Cumulatively, LEED-certied buildings now total more than 1 billion square eet.

A total o 7 billion square eet is registered in LEED, about 2 billion o which (28percent) is outside the United States. But, unlike the expansion o certicationsin 2010, registrations dropped like a stoneor the rst time in LEEDs historycompared with 2008 and 2009, not quite even reaching the registration totals

This year still saw

the addition o over800 million square

eet o certied

and registered

foor area or a

cumulative total o

7 billion square eet

Worldwide since

LEED was launched

in 2000.

1In last years report we mistakenly added total certied with total registered foor area, when certied

foor area should have been a subset. The LEED system had nearly 6.1 billion square eet, not 7 billion as

reported.

449

1,125

6,715

18,965

430

2,020

3,453

143

438

1,804

65

Cumulative LEED NC Certified SF Cumulative LEED CS Certified SF Cumulative LEED CI Certified SF Cumulative LEED EB Certified SF

2010 2020 2030

GBMIR Floor Area Forecast(in Millions of Square Feet)

2,995


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o 2007. To be air, the entire non-residential market has tanked since 2007,perhaps with the exception o schools and government projects, starting about35 percent less foor area in 2010. Indeed, it is now apparent that the last yearssurge in registrations was an aberration caused by the sunsetting o Version 2.2.However, there is a silver lining in all this: 2010 NC/CS/Schools registrations stillexceeded 20 percent o new construction starts, which is consistent with themarket penetration expected and desired or the system.

Not unexpectedly, USGBCs membership counts have also suered somewhatover the last year, declining more than 15 percent rom its early-2009 high oapproximately 20,000. These appear to be principally smaller rms and currentmember retention rates are still quite healthy, though below those o the lastcouple o years.

Certications With this years continued impressive expansion, certicationscumulatively represent approximately 14 percent o cumulative registered foorarea based on a direct year-to-year comparison.2 As we have noted in previousreports, certications lag registrations due to the act that it takes some time orprojects to work their way through the systemwhat we call the certicationperiod, which can last over 9 years in some cases.

2010 LEED Certied Floor Area CHANGES vs. 20093

Domestic International All Projects

EBOM 80% 85% 80%

NC (incl Retail) 24% 53% 27%

CS 48% 39% 46%

CI 45% 251% 58%

Schools 377% 1536% 393%

LEED System 51% 64% 52%

In an ideal world, we would like to see at least a 70 percent graduation rate(registered projects become certied) which would show that most projects byand large are registering because o true intent to certiy, not simply to ride theLEED marketing bandwagon. Why do we say 70 percent is acceptable and nothigher (or lower or that matter)?

In our experience, there are any number o reasons why projects do not moverom registration to certication during their development and constructiontimeline: a late-registering owner may not wish to spend the money modiyingan existing design or, in some cases, partially-built building; other times adecision to relocate may be made ater a project is registered or nancing mayhave allen though or necessary permits were ailed to be secured and o coursesome projects simply ail to implement enough green measures to certiy. Giventhe recent economic chaos, compounded by irrational exuberance, the rateo registered projects ailing to certiy is bound to be much higher in the nextcouple o years.

Certication

continued its torridpaceexceeding

last years record by

over 50 percent

and we project that

the newly certied

foor area added

this year will nearly

equal all certied

foor area or the

previous ten years.

2Comparing cumulative 2010 certied foor area with 2010 cumulative registered foor area.

3Percentage changes are relative to the previous year or each rating system and not additive.


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Last year we reported that LEED exceeded a 70 percent graduation rate basedon a three-year graduation cycle. That is most denitely not the case this year.As we noted in 2009:

However, in order to keep up with the pace o registrations, certicationsin 2010 will need to triple compared to 2009. There is sucient capacityin the certication pipeline, but it remains to be seen what impact theeconomy has and whether acceptable graduation rates can continue.

Although impressive, this years increase in certied foor area could notkeep pace with the expansion o registered foor area begun in 2007. Thisyear, we have more accurate data on the certication period or each o theLEED standards, as shown in the table below. Applying these periods to theregistration and certication o each standard yields a rough graduation rate.

As can be seen rom the table, a two-year-or-less graduation rate is mostappropriate or all but LEED NC. For this reason, most standards decreasedtheir graduation rate against last years report. Given the strong pulse o projectsthat came in during 2007-2009, its still too early to ully know what the eventualgraduation rate is, but USGBC analysis estimates that over the long-term it

should be about 60 percent, which may be a bit high compared with what weveseen so ar, but not unreasonable.4

It was the Worst o Forecasts In the 2009 Green Building Market & ImpactReportwe talked about lieboats and other metaphors or what we were seeingin terms o LEED registration growththe growth in certications had a veryrational explanation; the USGBC was starting to get good at itbut maybe itwas just panic. Panic about the sunset o a amiliar system, panic about needingsome sort o external imprimatur to get nancing, we dont know. What we doknow is that the doldrums that hit the real estate market overall have nallycaught up with LEED registration numbers in complete contravention o what

happened last year. So, how do we look orward 20 years? More on that in theMethodology section.

Its About Operations, Stupid Last year LEED EBOM surpassed LEED NC orthe rst time and this year there is no question that this is the domestic trend.This year, EBOM surpassed BD&C (NC, CS + Schools) combined or bothregistered and certied foor area in the U.S., though BD&C still rules overseas.EBOM certied foor area grew by 80 percent compared with last year. Newfoor area registered in EBOM decreased by 55 percenta precipitous decline,

Although

impressive, thisyears increase in

certied foor area

could not keep pace

with the expansion

o registered foor

area begun in 2007.

LEED Standard LEED EBOM LEED NC LEED CS LEED CILEED orSchools

LEEDSystem

Certication Period: Time romregistration to certication

17 mo. 32 mo. 24 mo. 18 mo. 26 mo. 24 mo.

Period-weighted certication Ratesvs. registrations

42% 42% 21% 36% 9% 34%

2009 Estimated Graduation Rate(2-year, except or NC) 72% 57% 14% 68% 3% 29%

4In our modeling, we use graduation rates that vary between 50 and 70 percent depending on thestandard.


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o course, but compared to the 80 to 90 percent declines in NC and CS,respectively, it doesnt look so bad. Including last years surge, the cumulativecertied foor area or EBOM is now nearly equal to that o LEED NC.

2010 LEED Registered Floor Area CHANGES vs. 20095


EBOM -59% -36% -56%NC (incl Retail) -76% -82% -79%

CS -90% -24% -58%

CI -72% 72% -65%

Schools -53% 1396% -44%

LEED System -70% -61% -68%

Cumulative Certications 2000-20106 (sq. ft.)

EBOM NC & Retail CS CI Schools

445,921,051 472,296,456 172,603,480 71,891,745 6,010,253

38% 40% 15% 6% 0.50%

Beauty is Still on the Inside Again this year LEED Commercial Interiors (CI),continues to somewhat dey trends. CI certied foor area grew by 60 percentcompared with last years total, exceeding the 50 percent system-wide average.

Although CI mirrored the large percentage drop in registrations o LEED NCdomestically, it was the only established standard that actually grew in registeredfoor area in any market, increasing by more than 70 percent overseas.

2010 LEED System ShareCertied Projects

EBOM NC & Retail CS CI Schools

445,921,051 472,296,456 172,603,480 71,891,745 6,010,253

38% 40% 15% 6% 0.50%

New Construction: (Mostly) In the Toilet New construction certication(NC + CS) grew 30 percent compared to 2009, signicantly less than averagecertication growth this year, though at least it grew.

On the registration ront, the question becomes How low can you go? Well,U.S. Core & Shell registrations were down a stunning 90 percent comparedto last years, while New Construction registrations in the U.S. were down 80percent. O modest comort, the total foor area registered in NC, CS andSchools was equivalent to about 22 percent o estimated total construction foorarea orecast to be completed this year.

CI certied foor

area grew by 60percent compared

with last years

total, exceeding the

50 percent system-

wide average.

5Percentage changes are relative to the previous year or each rating system and not additive.

62010 certication totals are estimated rom year-to-date gures through September and trend-linedthrough the rest o the year.


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The total foor area

registered in NC,CS and Schools

was equivalent to

about 22 percent

o estimated total

construction foor

area orecast to be

completed this year.

2010 LEED System ShareRegistered Projects


EBOM 48.6% 16.2% 37.2%

NC (incl Retail) 33.2% 30.2% 32.2%

CS 3.7% 46.8% 18.8%

CI 8.4% 4.8% 7.1%

Schools 6.1% 2.0% 4.7%

Application Guides Gain Traction On the Application Guide ront, LEED orSchools saw a our-old surge in certied foor area (o an admittedly small base)and continues to do better relative to other new construction standards on theregistration ront, declining only hal as much as NC or CS.

LEED Retail continues to lag, principally due to the delayed public release othe standard that was approved earlier this year. The imminent release o theRetail new construction standard and the soon-to-be-introduced volume-buildprogram should cause foor area in this Application Guide to expand rapidly.

LEED V3 Teaser We have summary data or only 37 Version 3 certied projectsencompassing almost 11 million square eet across all V3 rating systems, but wecouldnt resist a sneak preview o what these projects look like rom certicationperspective.

Not surprisingly, EB and CI are o to early starts, simply because they have muchshorter average certication periods than the other standards.

Standard Penetration

EB 59%

NC 8%CS 3%

CI 30%

Domestic 81%

International7 19%

Perhaps more interesting is the distribution o certication levels. Version3 represents a decent jump in stringency, including higher percentageachievement in several categories, as well as benchmarking to more stringent

standards, such as the most recent ASHRAE 90.1. As you might expect soonater an increase in stringency, the certication levels are tending towardthe lower awards, Certied and Silver. Also interesting is the relatively highproportion o Platinumthree times the percentage under the earlier standards.Granted, this is a very small sample, but it may also indicate the presence o agroup o super-userswho are experienced and early adopters o the

7Interestingly, most o the international projects certied are in China.


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standardare making a strong early showing.

Distribution o Certication LevelsCertifed 32%

Silver 35%

Gold 16%

Platinum 16%

Homes is Where the Green is The U.S. residential sector represents morethan hal o the economic and environmental impact o the built environment.Because o the inherent disaggregation o the residential market, the LEEDsystem has been slower to develop and penetrate, with the LEED or Homesstandard only released in 2007. As o this year, we anticipate that a total o over9,500 homesboth single-amily and multi-amilywill be certied by the endo this year, with another 30,000 homes in the registration queue. (I anything,

the residential construction market was harder hit than the non-residential sectorby the last three years economic upheaval, so the market characteristics uponwhich the calculations o this section are based are somewhat atypical.)

Estimated LEED-

certied Homes Total Single-amily Multi-amily

Projected

Floor Area

2007-2010 9,630 4,064 5,566 16.8 million t2

The LEED or Homes pattern is similar to the non-residential pattern: LEEDregistrations are o 30 percent compared to the previous 12 months, but thenumber o certied homes doubled.

Interestingly, the preponderance o LEED certication has been in the multi-amily sector, which represents almost 60 percent o the homes certied, eventhough it represents 20 percent o housing starts over the last 5 years.

% o LEED Homes Certied

Single-Family Multi-Family

2007 31% 69%

2008 60% 40%

2009 63% 37%

2010 29% 71%

Cumulative 42% 58%

Homes


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Contrary to the impression that one sometimes gets rom the media, LEED-certied homes are not oversized custom eco-ego trophies or the glitterati.Indeed, Custom homes is the smallest major project type; more o the LEED-certied homes all into the Aordable and Military category by ar than in theCustom category. Production homes, those built en masse by the countryslargest homebuilding companies, orm the bulk o the units certied.

Certied Homesby Type

Percent ototal units

Custom 11%

Aordable 13%

Production 59%

Military 15%

Other 2%

LEED-certied homes in general are no bigger than average, either. Thoughthere certainly are LEED-certied residences that are larger than average, LEEDhomes are actually about 15 percent smaller than average in the single amilycategory, but about 7 to10 percent larger in multi-amily.

Avg LEED Unitsize (ft2)

2009 Housing CharacteristicsReport-Census (ft2)

Single Family 2,137 2,492

Duplex/Triplex 1,463Multi-Family 1,090 1,015

Environmental Perormance o LEED Homes The certication distribution oLEED Homes tended to be asymmetrically distributed skewed toward Silver,in part refecting the newness o the standard, as well as its relative stringencycompared to the average in the market.

Certication DistributionCertifed 12%

Silver 52%

Gold 22%

Platinum 14%

Contrary to the

impression that one

sometimes gets

rom the media,

LEED-certied

homes are not

oversized custom

eco-ego trophies or

the glitterati.


13/45


Below, we will restrict our detailed environmental ocus on LEED Homes energyperormance to date, without any projections.

Energy Energy is the largest section in LEED or Homes, with almost twice thepoints o any other section. Scoring energy or LEED or Homes relies on theHome Energy Rating (HERS) Index, which is a scoring system established bythe Residential Energy Services Network (RESNET) in which a home built to thespecications o the HERS Reerence Home (based on the 2006 InternationalEnergy Conservation Code) scores a HERS Index o 100, while a net zero energyhome scores a HERS Index o 0. The lower a homes HERS Index, the moreenergy-ecient it is in comparison to the HERS Reerence Home.

Each one-point decrease in the HERS Index corresponds to a 1 percentreduction in energy consumption compared to the HERS Reerence Home. Thusa home with a HERS Index o 85 is 15 percent more energy ecient than theHERS Reerence Home and a home with a HERS Index o 80 is 20 percent moreenergy ecient.7

LEED Homes average a HERS score o 62.5, which makes them almost 40percent more energy ecient than a conventional home built to IECC 2006

code, which just over hal the states have adopted. By comparison, Energy StarHomes have a minimum HERS score requirement o 85, though on average theytend to score between 70 and 80.

All told, the estimated energy savings rom LEED Homes is equivalent toapproximately 100,000 barrels o oil per year.

7http://www.energystar.gov/index.cm?c=bldrs_lenders_raters.nh_HERS

All told, the

estimated energysavings rom LEED

Homes is equivalent

to approximately

100,000 barrels o

oil per year.


14/45


International Market First, the good news: Newly certied international LEEDfoor area doubled the total certied to date. However, overseas markets orLEED also were hit on the registration ront, approaching 300 million squareeet o new foor area; a respectable number but a decline o about 60 percentcompared with the 750 million square eet registered last year. However, thisrelatively smaller decline saw the percentage o international new registrationshit a new high at 35 percent o all new foor area added to LEED.

Total registered foor area internationally approaches two billion square eet,comprising over 28 percent o the LEED system total, though domestic projectscontinue to dominate the system.


Overall LEED System Share 72% 28% 100%

Unlike the domestic market, international projects continue to emphasize BD&Cstandards, which represent over 65 percent o certied and almost 80 percent onew registered project foor area. This is not surprising given the preponderance

o projects in Asia, the Middle East and Latin America, where new construction isstill expanding.

International projects are about three and a hal times larger than the U.S.average, refecting the large amount o demand or modern buildings. Projectsoverseas also tend toward a higher level o certication than their domesticcounterparts with a predisposition or Gold.

International Project Certication Distribution

Certifed 19%

Silver 27%

Gold 43%

Platinum 11%

The structure o real estate development, particularly in Asia and the MiddleEast, tends to be more speculative than in the U.S., which accounts or the muchhigher proportion o LEED registered projects in CS compared with NC. Thewidespread use o strata titling makes it very dicult or these buildings, whichtend to be Core and Shell projects to make it to nal certication, as illustratedby the large spread between CS registered and CS certied foor area.

2010 International Certication Share8

EBOM NC CS CI Schools

14,676,652 24,029,301 13,932,461 4,740,583 230,000

25% 42% 24% 8% 0%

82010 certication totals estimated rom year-to-date through September gures and trend-linedthrough the rest o the year.

Intern

ationalMarket


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Top 10 Countries (Registered + Certied)

Country # Projects Floor area (t2)Average Project

Floor Area (t2)

India (Includes LEED-India) (1) 866 482,000,000 556,582

United Arab Emirates 708 475,500,000 671,555

Greater China (2) 442 293,000,000 683,141

Canada (Includes LEED Canada) (1) 2794 131,900,000 47,240

South Korea 106 131,000,000 1,236,061

Saudi Arabia 101 123,600,000 1,223,274

Brazil 169 57,400,000 339,714

Mexico 139 51,600,000 370,982

Qatar 68 24,500,000 360,391

Germany 116 23,900,000 205,676

Average International Project Size (all projects) 578,835

United States Average Project Size 164,707

(1) International project environmental calculations in report do not include Canada LEED or India LEED

(2) Includes Hong Kong, Macau & Taiwan

92010 registration totals estimated rom year-to-date through September gures and trend-lined throughthe rest o the year.

2010 International Registration Share9

EBOM NC CS CI Schools

47,433,233 88,437,271 137,029,914 13,961,609 5,984,404

16% 30% 47% 5% 2%

USGBC continues to rene a project certication structure that can adapt to thecurrent portolio o projects, but urther improvements are needed beore LEEDcan penetrate the international market at the same level as the U.S. market.

Challenges to increased penetration in large international markets include:

benchmarking LEEDs environmental perormance standards, particularlyenergy

development o qualied proessionals, rom designers to builders

translation o support materials to local language

inrastructure necessary to support, protect and certiy to the LEED brand


16/45


LEED addresses impacts to the land in a wide variety o ways, which can besummarized in three principal categories: location eciency, site protection andrestoration and site perormance.

Location Eciency Our chosen indicator o location eciencyreductions invehicle miles traveled (VMT)is used to illustrate the aggregate value o LEEDssiting & alternative transportation requirements.

Research on transit-oriented development communities by G.B. Arrington and

Robert Cevero or the Transportation Research Board10 indicates that density,transit service and proximity to mixed uses combine to reduce trips by nearly45 percent. John Holzclaws research or the Natural Resources Deense Councilshows similar correlations, reducing VMT by about 30 percent. We chose aconservative value o 35 percent savings or the combination o LEEDs locationeciency and sustainable transportation measures.

The 2010 estimates or VMT reductions more than double those o 2009,growing to over 1.4 billion ewer VMT avoided. This is a combination o the50 percent growth in LEED-certied foor area coupled and the commutingtravel reductions under EBOM as new data have become available. Also

driving this growth are a greater percentage o LEED projects in transit-richlocations and new research showing higher trip reductions rom transit-orienteddevelopment. Because o our dramatically reduced foor area orecast, projectedenvironmental benets are much lower than beore.

Our projections indicate that occupants o LEED buildings will drive roughly 8.7billion VMT by 2020, down signicantly rom last years projection o 15 billion,but up rom 4 billion rom 2008. By 2030, we estimate people living and workingin LEED buildings will drive 20 billion VMT less per year.

10Eects o TOD on Housing, Parking, and Travel, Transit Cooperative Research Program Report 128,Transportation Research Board, 2008.

11LEED NC and CS projects only.

12LEED NC and CS projects only.

LEED SustainableSite Trends

(Floor Area-WeightedCredit Achievement)

VMT reductionsby LEED building

occupants11

Site Restorationand Reduceddisturbance12

BrowneldRedevelopment

StormwaterManagement

HeatIslands

2008Non-comparable

methodology withother reports

35% 20% 24% 65%

2009 49% 44% 19% 52% 59%

2010 51% 44% 19% 44% 56%

SiteandLandUseImpacts


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2010 2020 2030

VMT reductions 1.44 billion 8.66 billion 19.93 billion

% VMT Reduction All Trips 0.07% 0.3% 0.5%

% Commute VMT Reduction 0.34% 1.36% 2.50%

Vehicle equivalents reduced 123,000 741,000 1,706,000

Gallons reduced 58,800,000 354,000,000 813,000,000

EMISSIONS REDUCTIONS (TONS)

Hydrocarbons 119 715 1,646

CO 5,396 32,434 74,626

NOx 175 1,049 2,414

Particulates 16 95 219

CO2

14,000,000 84,000,000 193,000,000

These reductions are the equivalent o over 120,000 vehicles o the road and

almost 30 million gallons o uel saved to date, eliminating approximately 14million tons o CO2. These gures grow to 1.7 million vehicle-equivalents and

over 800 million gallons o uel saved annually by 2030, preventing nearly 200million tons each year o CO

2emissions, as well as almost 80,000 tons o air

pollutants, such as carbon monoxide, NOx, and hydrocarbons.

Site Protection There was little change in the adoption rates o land protectionmeasures, so the 40-plus percent decline in site protection measure impacts vs.the 2009 report is principally due to decreased orecast growth o LEED-certiedprojects. As o 2010, we estimate that LEED-certied buildings prevented nearly1.3 million tons o soil erosion to date and ve million tons o prevented soil lossby 2020, which grows to almost 8.5 million tons by 2030.

The 2010 estimates

or vehicle milestraveled (VMT)

reductions more

than double those

o 2009, growing to

over 1.4 billion VMT

avoided.

1,441

Exit: 2010

Fewer miles traveled:

(in millions)

8,662

Exit: 2020


(in millions)

19,929

Exit: 2030


(in millions)

Site Impacts: VMT Reductions


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Through 2010,

we estimate thatLEED stormwater

prevention

and treatment

requirements have

avoided or treated

over 1 billion

gallons o toxic

fush.

Forecasts or sensitive land impacts similarly decline, due to the slower growth inthe number o projects and the strong shit to urban development and increasedrelative penetration o Existing Buildings. To date we estimate that developmenton approximately 40,000 acres o sensitive lands has been avoided, comparedwith 24,000 acres calculated in the 2009 report, because o certied projectgrowth. Forecast impacts show about 81,000 acres in 2020 vs. 70,000 orecast in2008. By 2030, the total exceeds 122,000 acres.

There was a small shit in the raction o certied projects seeking the Browneldrestoration certication between 2009 & 2010, but a jump in total certicationsindicates that LEED has resulted in an estimated 8,800 acres o Browneldreclamation vs. 4,800 calculated acres last year. We expect reclaimed Browneldacres to grow to over 17,000 acres by 2020 and 27,000 acres by 2030.

Stormwater Through 2010, we estimate that LEED stormwater preventionand treatment requirements have avoided or treated over 1 billion gallons otoxic fushsignicantly more than we calculated in 2009due to the growthin certied projects and the land associated with these projects. The volumeprevented and treated grows to exceed 2.2 billion gallons per storm event,quite a bit less than the 350 million gallons orecast last year, but a healthy

increase compared with 1 billion gallons estimated in the 2008 report. By 2030,LEED projects reduce or treat over 3.6 billion gallons o stormwater per each-inch storm event.

Urban Heat Islands About 26,000 acres o land and rootops have implementedmeasures to reduce urban heat islands and we expect almost 130,000 acres omeasures by 2020 and 250,000 by 2030.

Looking Ahead LEED 2009 criteria signicantly boosted the amount o creditgiven to projects that are location ecient, meaning in ll lots adjacent tomass transit. Given this shit in emphasis, we expect that the transportationand land-related impacts going orward will be greater relative to earlier

versions. And, credits such as the much-maligned bike-rack credit receivemuch less weight compared to location eciency (1 point vs. 11 points) withinthe Sustainable Sites eld. However, there are only about 50 projects thathave certied to the version 3 criteria, so it is too soon to tell whether certiedprojects will become more location ecient as a result.


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Other Sustainable Site Impacts

2010 2020 2030

Topsoil Preserved romErosion Control Requirements

1,721,000(Tons)

6,035,000(Tons)

11,672,000(Tons)

Sensitive Land Avoided &Open Space increased rom

Site Selection Requirements

40,000

(Acres)

81,000 (Acres)122,000

(Acres)Brownfeld AcresRedeveloped

8,800 (Acres) 17,600 (Acres) 27,200 (Acres)

Acres o Heat IslandsMitigated

26,000(Acres)

80,800 (Acres)161,000(Acres)

Gallons Reduced per frst 3/4"

Stormwater 'Toxic Flush'

995,200,000(gallons)

2,232,000,000(gallons)

3,648,000,000(gallons)

LEED Version 3 increased the prerequisite savings to 20 percent above minimumstandards and to reward 30-40 percent savings. We expect to have data nextyear on the overall savings in projects certied under LEED V3.

The number o projects using greywater treatment systems again droppedslightly, in large part because water chemistry is very complicated and thesesystems require a great deal o maintenance and capital cost to install. It remainsto be seen whether, as on-site wastewater treatment experience grows andtechnology improvesnot to mention the expected $1 trillion water and sewer

Total Water Savings(in Billions of Gallons)

33.4 236.7 565.4

2010 2020 2030

WaterEfc

iencyImpacts


20/45


inrastructure bill our local jurisdictions are acing in the next decadethere willbe increased emphasis on buildings treating their own sewage on-site.

Aggregate Water Savings: Cumulative savings in 2010 rom plumbing,landscaping, and cooling towers usages combined is over 33 billion gallons,comprising 1 percent o annual non-residential water use. By 2020, with LEED

foor area exceeding 19 billion square eet, this gure is expected to approach237 billion gallons o water, or 6.7 percent o annual non-residential water,an increase o over 700 percent. This number will more than double by 2030,reaching 565 billion gallons o saved water, which represents a decent 14percent savings o annual non-residential water use.

Wastewater Reductions Based on the raction o LEED projects pursuing watereciency combined with innovative wastewater treatment, we calculated that9.6 billion gallons o wastewater have been avoided to date, a 0.2 percentreduction in the annual wastewater generated.

ETI expects savings o over 52 billion gallons o wastewater generation avoidedby 2020, which grows to more than 101 billion gallons by 2030. These guresrepresent 1.3 percent and over 2.5 percent reduction in annual wastewatergeneration, respectively.

Conservative These estimates are conservative because they dont include allo the reduced wastewater generated due to the savings rom cooling towersand plumbing xtures that are less than the 50 percent threshold o the credit.Indeed the plumbing xture savings are probably a more accurate estimate

13Numbers may not add exactly due to rounding.

14Please see the Methodology section or an explanation o the updated gures.

Water Eciency and Treatment Impacts

Units Impact to Date Projected Impact2020

Projected Impact2030

Total Water Savings13MillionGallons

33,400 236,700 565,400

Plumbing Water SavingsMillionGallons

5,672 47,135 115,904

Landscape Water SavingsMillion

Gallons17,698 105,322 245,315

Cooling Tower Water SavingsMillionGallons

9,986 84,206 204,149

Annual Non-Residential

Water Use% 1.0 6.7 14.3

Water Waste Reduction

TotalMillionGallons

9,628 52,161 101,297

Corrected 2009 AnnualWaste Water Reduction14 MillionGallons 3,984 52,914 99,487

Original 2009 Annual WasteWater Reduction

MillionGallons

18,100 852,000 1,890,000


21/45


o the true wastewater reductions, but we also have the potential or double-counting projects that save more water than LEED gives credit or.

Energy perormance in LEED buildings certied under the BD&C standardscontinues to be criticized and so, once again, we looked at this question: Donew LEED buildings save energy compared to standard buildings or not? And,once again, the answer is: Absolutely. However, not all LEED buildings perorm

as designed, just like all cars do not get their EPA driving test certied ueleconomy (your mileage may vary!).

How do we support our bold assertions o LEED energy perormance? First o,most critics are behind the times when they make blanket statements aboutLEED. LEED is not just about new building design any more. As readers o thisreport know, LEED EBOM this year comprised nearly hal o all registered andcertied projects and requires an Energy Star score, which is based on actualbilling data. The average Energy Star score o certied EBOM projects is 85 andindeed, over 20 percent o EBOM certied projects have an Energy Star score o93 or above.15

Second, on the new building ront, the National Research Council o Canada,Institute or Research in Construction (IRC) conrms that, on average, LEEDbuildings use rom 18 to 39 percent less energy than comparable buildings.16However, IRC also ound that nearly one-third o these newly built buildingsconsume more energy than their counterparts. This is o course a serious causeor concern, and the subject o the extensive research underway through theBuilding Perormance Partnership, launched by USGBC in 2009.

Energy Savings Trends in LEED As shown in the Table below17, the averagepredicted energy savings o new buildings alls solidly in the middle o therange expected by the Canadian study. We now have data on nearly 600 EB and

EBOM certied buildings, whereas in 2009 we had inormation on barely 100and in 2008 none at all.

2010 Green Building

Market & Impact

Report

Average %Savings in

LEED Projects% Savings in2009 Report

% Savings in2008 Report

All Projects Low High Low High

LEED NC (2.0, 2.1 & 2.2) 24% 16-31% 25-31%

CS 2.0 (whole building) 17% 15-20% 25-31%

EB/EBOM18 28%/35%(Energy Star 85) 28-37% 37%

CI 21.1 (kBtu/t2) 14.1 (kBtu/t2) N.A.

EnergyImpacts

15At the bottom end o the spectrum, the minimum energy prerequisite or EBOM certied projectsranges rom an Energy Star score o 60 (EB 2004) to 69 (EB 2009).

16Do LEED-certied buildings save energy? Yes, but Guy R. Newsham, Sandra Mancini, Benjamin J.Birt, National Research Council Canada Institute or Research in Construction, August 2009.

17More details can be ound in the Methodology section.

18EB savings gures are only used in 2010; EBOM going orward. EB projects represent about 1/3 o thecertied projects to date. The weighted average savings is 33 percent or Energy Star 83.


22/45


As reported last year, in 2007, USGBC responded to alarming trends o projectsnot pursuing energy credits with a minimum requirement to achieve a minimumo 2 points in order to certiy. Projects registered prior to June 27, 2007 weregrandathered under the earlier standard that did not require energy savingsbeyond the ASHRAE 90.1 baseline. But, as shown below, the adoption o thispolicy proved to be quite eective in pushing projects to save more energy.

Percent o NC 2.2projects achieving

EA Credit 1.2 (14% Savingsrom ASHRAE 90.1 2004)

2007 78%

2008 80%

2009 90%

2010 95%

Most o the change in energy savings (0.08 Quads* in 2010 vs. 0.03/0.04 QuadsLow/High in 2009) is driven by the rapid growth in LEED-certied foor area.Also, this year we have better inormation on all standards, which allows us touse a single orecast case with condence. From last years report there areminor changes in the expected savings rom the various standards, but LEED CIstands out, as there is a marked increase in energy savings based on the morecomprehensive inormation we have this year.

Given the contraction in orecast LEED-certied foor area over the next 20years, energy savings are signicantly below last years estimates. By 2020,energy savings are expected to reach 0.71 Quads and approximately 1.8

Quads by 2030, or 3.4 percent and 7.8 percent, respectively, o national annualcommercial building energy use. Although much lower than last years estimate,the energy saving equivalent amount o coal would be enough to ll every majoootball or soccer stadium in each o the 50 states, plus Washington DC, theCommonwealth o Puerto Rico and the U.S. Virgin Islands.

Given the

contraction inorecast LEED-

certied foor

area over the

next 20 years,

energy savings

are signicantly

below last years

estimates.

*Quad = 1 quadrillion Btu or about 8 billion gallons o gasoline.


23/45


2010 2020 2030

TOTAL LEED ENERGY SAVINGS (Quads) 0.08 0.83 2.08

Net Commercial Building Consumption 19.28 20.26 20.64

Percent o 2010 Baseline 100% 105% 107%

Projected U.S. Commercial Building

Consumption - Q19.36 21.09 22.72

% Savings o Total Commercial Energy Use 0.41% 3.94% 9.17%

I LEED is to make

any signicantcontribution to

absolute reductions

in non-residential

energy use, a

concerted eort

will be needed to

rapidly grow the

penetration o LEED

EBOM.

3.97

41.5

104.21

2010 2020 2030

Energy Savings(in Millions of Short Tons of Coal)


24/45


The level o savings based on this years lower LEED penetration assumptionsdo not overcome increased energy use driven by foor area growth. As aresult, there is still an absolute increase in non-residential energy use by 2030compared with 2010.

Given that growth in new construction is unlikely to resume to any signicantdegree in the near uture, i LEED is to make any signicant contribution toabsolute reductions in non-residential energy use, a concerted eort will beneeded to rapidly grow the penetration o LEED EBOM.

In order to achieve zero net growth in non-residential energy use by 2020, LEEDEBOM would need to at least double our orecast foor area to 15 billion squareeet. This would entail adding an average o 1.4 billion new square eet per yearin certied EBOM projects. Very aggressive to be sure, but denitely doableunder the right circumstances.

Renewable Energy Impact: Because renewable energy stands as a crucialobjective or delivering still more signicant environmental impact, we elt it wasimportant to measure the added energy rom renewable sources contributed bygreen buildings so ar. The percentage o renewably derived energy associated

with green buildings has grown considerably, both in the orm o on-siteadoption o renewable energy technologies as well as (in the case o LEED EB, inparticular) using clean sources o energy to power buildings through renewableenergy certicates, or RECs, and direct purchases o renewable energy.

The percentage

o renewablyderived energy

associated with

green buildings has

grown considerably,

both in the orm o

on-site adoption o

renewable energy

technologies as

well as using

clean sources o

energy to power

buildings through

renewable energy

certicates and

direct purchases o

renewable energy.

3,464,451

17,296,407

39,012,499

2010 2020 2030

Renewable Energy SummaryCO

2reductions (in tons)


25/45


Summary Energy Impacts:

2010 2020 2030

On-Site Generation (Billion kWh) 0.20 0.81 1.38

Grid Renewable Electricity Purchased

(Billion kWh)5.57 27.97 63.52

% Non-residential Electricity that's

renewable

0.4% 1.6% 3.1%

Household Equivalents powered by

renewables541,000 2,701,000 6,091,000

Annual CO2

reductions (tons) 3,464,451 17,296,407 39,012,499

From our ndings, we concluded that LEED buildings have purchased orgenerated 5.8 BkWh total renewable electricity to date, representing 0.4 perceno annual nationwide non-residential electricity.

Commensurate with our lower expectations or continued green building

growth, but higher penetration o renewable energy purchases, we orecastthat green building electricity rom renewable sources will approach 28 billionkilowatt-hours by 2020, exceeding 63 billion kWh by 2030. These numbersrepresent 1.6 percent and 3.1 percent, respectively, o orecasted annualnationwide non-residential electricity, equivalent to the energy use o more than6 million homes.

CO2

Emissions Reductions rom Energy Eciency & Renewables Weestimate that the annual CO

2savings rom LEED buildings is approximately 7.3

million tons rom energy eciency and renewable energy. This gure grows tonearly 63 million tons per year by 2020 and over 168 million tons annually by

2030.

Total CO2Reductions

Efciency + Renewables7,300,000 62,600,000 168,200,000

Financial Savings rom Commissioning and Monitoring & Verication (M&V)

In 2009, the Lawrence Berkeley National Laboratory (LBNL) updated its 2004study on the Cost Eectiveness o Commercial-Building Commissioning. Inthis update, no direct calculation o the economic value o non-energy benetsor Commissioning was included, refecting the diculty o evaluating themulti-aceted aspects o the commissioning process and lack o a baseline ocomparison.

The LBNL report did indicate that non-energy benets were likely to oset allor most o the upront costs o Commissioning. LBNL ound, on average, thatprojects or new and existing buildings resulted in median energy savings o 13percent and 16 percent, respectively, and had good paybacks: 4.2 years or newconstruction and 1.1 years or existing buildings.

LEED buildings

have purchased orgenerated 6.8 BkWh

total renewable

electricity to date,

representing

0.4 percent o

annual nationwide

non-residential

electricity.


26/45


Do LEED Buildings Save Energy? Yes, but Since the mostly discreditedcritiques that LEED buildings do not save energy continue to linger likeunwashed sweat socks, we will continue to address this question head-onbecause our work indicates that energy savings are the largest source oenvironmental benet in LEED.

Most important, LEED is about more than just operational energy. LEEDsholistic approach to building sustainability has expanded the denition obuilding energy consumption beyond the buildings ootprint to include thebuildings location, the upstream and downstream energy consumption o watersupply and treatment and the embodied energy o materials. LEED buildingsare more location-ecient than average U.S. buildings, more water ecient anduse a higher percentage o lower-energy materials.

The National Research Councils Institute or Research in Construction (IRC) oCanada, conducted an exhaustive statistical study in 2009 to try and answerthe question: Are LEED buildings more operationally ecient than regularbuildings?

IRC used the raw data rom the same data sets as the New Buildings Institute

study,

19

but applied a completely dierent and very rigorous statisticalmethodology that strictly compared like buildings in LEED with like buildingsin CBECS.20 The IRCs answer was essentially the same as the NBI: On average,LEED buildings are more energy ecient than comparable non-LEED buildings,but some arent.

Key IRC Findings

Average LEEDEnergy Savings

Percent o LEED buildings thatuse more than conventional

18% to 39% 28% to 35%

IRC took buildings rom the LEED database and compared them with buildingso similar occupancy, size (within 10 percent) and geographical location. Wherethe variables did not match up exactlysuch as dierences in the denition oclimate zones or occupanciesthe IRC team created conservative (stricter)and liberal (broader) comparison proxies and tested whether there was astatistically signicant change comparing the LEED building to the range ocomparative buildings.

The IRC study compared like with like, thus avoiding the messiness o havingto bang the two datasets into conormance with one another to allow statisticalcomparability. One very interesting result was that the IRC analysis showedthat an average LEED building with zero energy points still had an energy useintensity (EUI) about 14 percent below the CBECS mean, which reinorces a

Our work indicates

that energysavings are the

largest source o

environmental

benet in LEED.

19Energy bill data rom 100 medium energy occupancies LEED projects and the raw 2003 CBECS dataset. The 21 high energy occupancies were elt to have too ew data points to be statistically signicant.

20Commercial Building Energy Consumption Survey (CBECS) o the Department o Energys (DOE)Energy Inormation Administration (EIA).


27/45


point we made in last years Green Building Market & Impact Report that evenminimum conormance with ASHRAE 90.1 represents a signicant step up inmany parts o the country.

Somewhat counter-intuitive, but not entirely conounding, was the nding thatthere was no correlation with the level o certication o a LEED project and itsenergy eciency. One o the keys to LEEDs success is its fexibility in allowingprojects to pick the best mix o credits or their situation. To LEEDs energycritics, this is a atal faw, but we are absolutely certain that without its hallmarkfexibility LEED would be much less widely utilized and in a much weakerposition to push or change.

Also interesting, and to our mind a much more important nding, is the weakcorrelation between energy points and energy perormance. Clearly, theimproving the accuracy o modeling and real lie perormance will be key orimproving condence in the use o these tools to design better buildings. As aras the overall environmental perormance o LEED going orward, the shit toEBOM as the core standard o LEED makes this accuracy less important in theUS. But because o the continued growth in new construction overseas, this willbe an important question to tackle.

IRC also reviewed several post-occupancy studies o relatively small cohorts oLEED-certied buildings that came to similar conclusions: on average, buildingsperormed airly closely to predictions, but that on an individual-building basisthere was a tremendous amount o variability, with several projects consumingquite a bit more than expected.

Summary o the New Buildings Institute Study Although rendered moot bythe ndings o the Canadian research, the NBI study continues to receive thebulk o the attention and undue criticism.

About 550 projects were certied by LEED by the end o 2006 and all o these

projects were surveyed asked to supply their energy consumption inormation.About 120 projects responded with all o the necessary inormation. Another128 projects responded, but with insucient data or comparison. A totalresponse rate o approximately 45 percent is pretty phenomenal, given thesensitive nature o the inormation being sought. However, the NBI studydiscovered some problems in the cohort o certied projects, the most prevalento which was that the majority o projects were not adequately metered torespond to the survey. As a result o this nding, all LEED buildings certied toVersion 3.0 are required to report their energy consumption.

LEED Building Consumption Compared to Average One o the mostpersistent criticisms o the NBI study involves the comparison o the median

value o the NBI dataset with the mean value o the CBECS dataset. Everyoneagrees that this is not a great match statistically, the NBI study authors included.However, the NBI authors should not be criticized or doing the right thing ortheir dataset: or a small, highly variable dataset, the median is a better metricto use because it fuctuates much less as the data expands. O course, the largerthe dataset, the more robust the mean value becomes and the more appropriateit is to use that measure o central tendency.

There is no doubt that CBECS uses the mean value or all o their datasets, but

One o the keys

to LEEDs successis its fexibility in

allowing projects to

pick the best mix

o credits or their

situation.


28/45


the question is never asked whether in the 2003 report they should have used itor the data set o energy use o buildings built ater 2000. As shown in the tablebelow, or small datasets the CBECS mean is wildly variablethe 1990-1992EUI mean increases by over 65 percent between the 1992 and 1995 CBECSsurveys. The exact same thing may actually happen with the EUI o the 2000-2003 buildings when the 2007 CBECS is released. We just dont know. What wedo know is the mean value o the EUI or 1990s buildings becomes less variableover time with a larger data set, but still varies signicantly (EUI o 89 in 2003 vs.

69 in 1992) rom the initial survey values.21

90s Buildings -Cohorts

EUI-SiteEnergy

EUI-PrimaryEnergy

Source

1992 CBECS

90-9269 157

Table 3.2-Total EnergyConsumption by Major Fuel,1992

1995 CBECS

90-92 22115 242

1995 CBECS-Table 1. TotalConsumption Tables

90-95 105 225 1995 CBECS-Table 1. TotalConsumption Tables

1999 CBECS-90s 98 220Table C1: Total EnergyConsumption by Major Fuel

2003 CBECS-90s 89 2012003 CBECS Table C1(Non-Mall Buildings) p. 249

The other issue involves the mix o buildings in the underlying dataset,particularly the impact o high- and low-energy energy buildings on the overallEUI. The LEED dataset has about 17 percent o its buildings in the high-energycategory, compared with 11 percent in the CBECS survey. In addition, CBECSincludes such low-energy structures such as vacant buildings and warehouses,comprising 8 percent o the foor area, whereas LEED has none o these.

In conclusion, its important to understand what the NBI study is and isnt.

What it is:

The rst and largest post-occupancy study o LEED buildings to date.

An initial validation that average energy saving estimates o early LEED-certied buildings range rom 25 to 30 percent.

Based on projects that certied to LEED NC 2.0 and 2.1 our or moreyears ago.

An important warning that a large minority LEED buildings to not perormas expected.

What the NBI study is not:

The LEED dataset

has about 17percent o its

buildings in the

high-energy

category, compared

with 11 percent in

the CBECS survey.

CBECS includes

such low-energy

structures such as

vacant buildings

and warehouses,

whereas LEED has

none o these.

21Its obvious or the coherence o the CBECS report overall that a common statistical measurementshould be used, which is why the mean is used consistently throughout. Most o the datasets supportthe use o that measure.

22Commercial Building Energy Consumption Survey (CBECS) Energy Inormation Administration (EIA).


29/45


Representative o the LEED system as a whole: only 2 percent o allLEED-certied New Construction projects were evaluated.

Inclusive o LEED EBOM projects that rely on measured energy.

The last USGBC-sponsored research on this topic.

A cause or complacency that all is well on the LEED energy ront.

LEED continues to rapidly tighten its energy requirements and the Building

Perormance Initiative was launched a year ago to gure out how and why somebuildings perormance does not at all conorm with modeling predictions and ina large minority o cases is worse than existing buildings.

Building & MaterialsReuse Perhaps people are staying put in existing buildingand not doing any rehab, but the percentage o certied projects reusingbuildings decreased to 8-11 percent or LEED-certied projects compared withlast years 12-15 percent o LEED NC and LEED CS projects reporting signicantreuse o buildings and interior components.

For Commercial Interiors on the other hand, signicantly more foor area waskept as-is, which made up or most o the decline in the new building area.In square ootage terms this exceeds 107 million square eet to date, a slightlylarger percentage increase compared with the increase in certied foor area.Our calculations show that rehabilitated foor area will exceed 400 million squareeet by 2020 and approach 800 million square eet by 2030.

Embodied Energy Impacts We estimate that building and materials reusein LEED buildings have saved cumulatively almost 73 million barrels o oilequivalent in embodied energy, which will grow to over 200 million barrelsequivalent by 2030, which is approximately equivalent to the amount o oilcurrently imported rom Russia.

Construction & Demolition Waste This years report benets rom updatedwaste diversion gures rom the US EPA. Aggregate data show that over 60percent o the C&D waste generated by LEED NC projects is diverted. CSand CI projects are estimated to have a weighted waste diversion rate alsoexceeding 60 percent. We also have inormation on EB solid waste managemenand occupant waste diversion, which are included this year. Between cumulativeCertied and Built To projects, we estimate that, so ar, LEED buildings haverecycled or reused elsewhere a total o nearly 53 million tons o construction andconsumer waste. These diversion gures are expected to expand to nearly 216million tons in 2020 and 433 million tons in 2030.

Green Materials Impacts The varied use o materials and the lack o good datamake an evaluation o materials other environmental impacts dicult. For thisreason, LEED chose to evaluate several materials categories on a dollar basis, aswill we.

Based on average materials costs, local and recycled-content building materialsrepresented approximately $15 billion in cumulative spending through 2010. By2030, cumulative spending in this area is expected to approach $120 billion. Wenote again this year that we believe these gures are conservative because they

MaterialsImpacts


30/45


do not include the value o materials that are evaluated based on their indoorenvironmental quality characteristics, such as paints and adhesives.

Certied Wood There was a airly substantial growth in the number o LEEDprojects speciying Forest Stewardship Council (FSC) wood compared with lastyears penetration o this measure.

Percent Projects Speciying FSC Wood23

NC CS CI

2010 41% 47% 27%

2009 38% 18% 19%

Based on average non-residential wood use estimates and the penetrationo the certied wood credit in LEED, our evaluation shows that to date, over580 million board-eet equivalent o certied wood has been installed in LEEDprojects. I current penetration rates continue, this utilization will exceed 5.3billion board eet by 2030.

Anyone who ails to LEED-certiy their green building, preerring to spend their

23For 50 percent o the value o wood products.

To date, over 580

million board-eet equivalent o

certied wood has

been installed in

LEED projects.

2020

580 2,492 5,343

2020

LEED Use of Certified Wood(in Millions of Board Feet)

2010 2020 2030


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money on real green eatures, is oregoing thousands o dollars o marketvalue or every dollar they save.

In the intervening year since our last look at the data, new reports on the marketimpact o LEED certication have emerged that clearly show the faws o the90/10 Syndrome where people spend 90 percent o their time quantiying 10percent o the benets.

While operational savings are real and important, they are 10 percent or less o

the economic value o LEED. The nancial benets in LEED are largely achievedthrough the enhancement o employee productivity and higher income romthe market value o the LEED brand that gives condence that the building isa better building. A growing number o studies are showing productivity gainsar in excess o what we have been conservatively using in previous reports. Inaddition, there is growing data on the market value o LEED.

Productivity Salaries represent approximately 90 percent o the money fowthrough a building, the rest being amortized construction costs, operations& maintenance, including utilities. For our past estimates o green buildingbenets rom LEED, we assumed a conservative range o 1 to 2 percent

$6,436

$74,620

203020202010

Indoor Air QualityImpacts of LEED(in millions of dollars)

$22,325

Indoor

Environment

alQuality


32/45


24EPA Pamphlet: How Does Indoor Air Quality Impact Student Health and Perormance? April 2010

25DCS is partly owned by Johnson Diversey, a sponsor o this report.

26Fuerst, F.; McAllister, P.M. (2008). Does it Pay to Be Green? Connecting Economic and EnvironmentalPerormance in Commercial Real Estate Markets

productivity increase in built-to and LEED-certied projects.

We believe that our past productivity estimates understate the true benets ogreen. This year we up our LEED building productivity gain estimate to 4.88percent, which is the reported value ound by research by the University o SanDiego (USD) with support rom CB Richard Ellis on over 500 tenants in 124buildings and a ollow-up longitudinal study o 75 LEED EB projects indicate aproductivity gain o nearly 5 percent. These buildings also reported an averageo nearly three ewer sick days taken or an additional productivity gain o 1.2percent. As a conservatism we do not include the reduced sick days benet inour value o productivity assessment.

While not all buildings studied by USD reported these benets, a range ostudies reviewed by the USD researchers have uncovered productivity increasesrom green building measures ranging rom 1 percent in manuacturing to over25 percent in an Australian law oce.

Green Cleaning and Productivity Maintenance costs are also a large parto the overall Net Operating Income (NOI) o a building, which oten is usedto evaluate the asset value o a property. The cost o cleaning a building can

approach that o energy in many parts o the country, so boosting eectivenessand productivity in this area is important to the bottom line.

As experience with green cleaning grows, the evidence shows that costs comedown and that productivity, whether its lower absenteeism or lower inectionrates in schools as reported by the US EPA, increases24. And the 2008 bookGreen Cleaning or Dummies notes that eective green cleaning practices canreduce cleaning costs by 10 to 20 percent.

Daylight cleaning case studies by Daylight Cleaning Systems25 show that energycosts can decline by almost 8 percent, while tenants have expressed greatersatisaction in cleaning services and janitorial employees have lower turnover. In

southern Caliornia, Fluor Corporation lowered cleaning costs by more than 20cents per square ootover 12 percentusing a daytime cleaning strategy andcleaning-related complaints decreased.

Some concerns raised about daylight cleaning include the practice o wavingo maintenance sta i an occupant does not wish the room to be cleaned,which can present potential health problems i the room is not cleaned at all. Inaddition, or a variety o reasons, not all janitorial sta preer daytime cleaning.

Market Value In 2008, Furst & McAllister26 conducted an analysis o over 3,000US commercial properties o which 500 were either LEED-certied or EnergyStar. Ater controlling or potentially conounding actors such as location,

building age, size and vacancy rate, the analysis ound that LEED buildings wererenting or over 9 percent more than their conventional building counterpartsand selling or an impressive 31 percent more. A ollow-on study in 2009 by thesame authors using an expanded data set o 15,000 benchmark buildings, 200LEED buildings and over 800 Energy Star buildings ound slightly lower rentalpremiums o 5 percent and an average sale price premium o 26 percent or

As experience with

green cleaninggrows, the evidence

shows that costs

come down and

that productivity,

whether its lower

absenteeism or

lower inection

rates in schools,

increases.


33/45


27Miller & Pogue, 2009

LEED building.

These ndings are corroborated by additional work done by CB Richard Ellis(CBRE) on LEED and BREEAM certied projects internationally, which oundrental premiums between 2 and 6 percent. The same study ound that greenbuilding cost premiums essentially oset the rental premiums, but goes on tonote that the energy savings implemented through the greening program wereessentially ree.

Aggregate Economic Value rom LEED We quantiy the impact o the indoorenvironmental quality (IEQ) measures rewarded by LEED in terms o theeconomic value o increased productivity. Most o the IEQ measures in LEED doimpact eatures that employees have said they value, such as daylight and viewsgood indoor air quality and thermal comort. LEED buildings have been oundto have better IEQ perormance than their conventional counterparts.

Percentage o Respondents Agreeing or Strongly Agreeing27

47% Healthier indoor environment55% Convenient access to transit

61% Easier to attract/retain employees

74% Good image or clients & public

70% Good image or owners & shareholders

Taking an average o the number o employees aected by various eatureso green buildings, we ascertained that an average o at least 1.5 millionemployees are currently enjoying improved indoor environments in LEEDbuildings at present. Even at the lower orecast growth rate o green, greenbuilding workorce is expected to approach 5 million by 2020, becomingalmost 18 million strong by 2030. Even though these uture head-counts are waybelow last years value, the increase in estimated productivity more than makesup or it.

More than ever, our results reinorce the notion that the bottom line o greenis black: an estimated $6.4 billion has already been saved through addedproductivity o the green building workorce. Given continued growth in greenbuildings, we expect this number to grow signicantly in the uture: reaching

between $22 billion by 2020, and totaling between $75 billion by 2030.

An estimated $6.4

billion has alreadybeen saved through

added productivity

o the green

building workorce.


34/45


The Big Picture 2010 Unortunately, our crumbling, archaic economic system iscausing retrenchment at the exact time we need to be redoubling our eorts.

This year is on pace to be the warmest year since records have been kept. Basedon business as usual trends, the current worst-case climate scenarios makeearlier projections seem quaint by comparison.

Last year, based on trends rom the previous three years, cautious optimism thatbusiness-as-usual LEED might make a real dierence was warranted. Optimism

was cautious because, while LEED was penetrating rapidly, there was someunevenness in building perormance, so our projections required a airly broadspan to accommodate a reasonable condence interval.

So while we can say that over the last year our knowledge and certainty in theenvironmental perormance o LEED buildings has grown, our orecasts o howrapidly this perormance will urther penetrate have shrunk considerably, tothe point where at best there might be a zeroing-out o growth at 2008 levelso non-residential CO

2emissions, but there is quite unlikely to be any overall

decrease even by 2030, unless it is orced by some draconian economic orenergy crisis.

CO2 concentrations in excess o 450 parts per million (ppm)current CO2levels are at 380 ppm and rising 2-3 ppm per yearare eared to give rise tounmanageable global warming: A scenario that dees mitigation or adaptation.The general scientic consensus is that in order to maintain global carbondioxide levels at less than 450 ppm, by 2050 carbon dioxide emissions wouldneed to be reduced by 80 percent below those o the year 2000. To put themagnitude o this challenge in perspective, in spite o U.S. projected foor spaceincreases o 150 percent, total building sector emissions will need to be only 20percent o their current levels.

The Little Picture The good news is that LEED buildings continue to be a bit

ahead in terms o their own perormance relative to this goal. Average LEEDnon-residential buildings are 25 percent more ecient than average, whichmeans they are about 4 years ahead o the trend.

The bad news is that LEED is improving at only a raction o the 1.6 percentannual pace and will soon be overtaken. And when one considers that its notjust LEED buildings that have to improve this rapidly, but the entire buildingsector must hit this reduction target, any complacency must evaporate.

The sad act is that LEED buildings better perormance will make little to nodent in reducing o building sector CO

2emissions without greater penetration.

And without greater savings per building, we have no hope o hitting the 80

percent reduction.We need more savings, and aster, in order to reduce total emissions at thenecessary scale, scope and speed.

And or all the LEED critics braying about its inadequacy at saving energy andthe need to move to Living Building Challenge or some other real greenbuilding certication scheme, one cant help but notice that only three LivingBuildings have been certied in the our years since the system launched andthose in October 2010.

The sad act is that

LEED buildings

better perormance

will make little to no

dent in reducing obuilding sector CO

2

emissions without

greater penetration.

TheBigPicture


35/45


This is not at all to knock LBC and deeper green systems. Pushing the envelopeis crucial and needed: Indeed, LEED is developing a beyond Platinum tier.

Rather, we bring this up to point out that you can lead a horse to water, but youcant make it drink. There are market, technical and operational challenges inprogressing beyond the bar LEED has set without trespassing on the paradox oGandhis heretic: Leaders are tolerated so long as they are not too ar ahead othe pack.

In practice, LEED buildings are getting more energy-ecient, but they are notby any means bumping up against the energy eciency credit limits within thesystem. So, LEEDs lack o energy requirements is not the problem. There arestructural problems in our economic and political systems that prevent adoptiono the necessary technological and operational changes to bring on morebuilding eciency more quickly.

USGBC improvements to the LEED system have led to increased energyeciency, but the current market downturn makes longer-term predictionshighly uncertain. While LEED EB energy-saving perormance is on track at 35percent average savings, its penetration is severely lagging what we believe is

necessary to hit any kind o meaningul reduction in carbon pollution. UpdatedBD&C standard certication gures show that average energy eciency hasimproved by about 7 percent since 2007, but it is still less than 30 percent moreecient than the ASHRAE 90.1 requirements. New construction penetration isbumping up against the 25 percent market share upper limit

The eciency perormance o certied LEED EB projects and their growingpenetration is encouraging, but even our most optimistic orecast would needto double and be coupled with signicant improvements in minimum eciencystandardsor example national adoption o ASHRAE 189, which itsel wouldneed to improve about 5 percent

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