Why Focus on Existing Buildings?
Building efficiency is key to cutting energy consumption. In 2007, 878 million metric tonnes of greenhouse gases were attributed to commercial buildings worldwide.1 Buildings account for 16 percent of world energy consumption2, with a higher share in developed economies (nearly 40 percent of total energy use in the United States)3. While roughly two percent of commercial floorspace is newly constructed each year, and a comparable amount renovated, the majority of opportunities to improve efficiency over the next several decades will be in existing building stock, most of which are constrained by old equipment, aging infrastructure, and inadequate operations resources. Improved efficiency of existing buildings—through building retrofitting and other measures—represents a high-volume, low-cost approach to reducing energy use and greenhouse gas emissions.
Even for new buildings—constructed in compliance with modern codes requiring higher levels of efficiency—there exist countless savings opportunities in the form of improved maintenance and more efficient operation practices. Buildings are often occupied without a commissioning process to ensure performance in line with original design. The potential disparity grows over time, as improper maintenance and changes in facility operation lead to more and more wasted energy.
In developed economies, at least half of the buildings that will be in use in 2050 have already been built.4 5 According to a recent survey by the U.S. Energy Information Agency, 72 percent of floorstock in the U.S., or 46 billion square feet, belongs to buildings over twenty years old.6
These older buildings use a great deal of energy. Efficiency measures such as building retrofitting represent a vast opportunity to improve energy efficiency. In some ways, they represent a “missed opportunity” for savings – bypassed design and construction decisions that could have led to large reductions in energy use and carbon emissions over the life cycle of the building. The challenge for existing building efficiency is to “unlock” that vast potential and realize the benefits of a built environment that is comfortable, efficient, and cost-effective.
In terms of energy use, improving building efficiency offers benefits beyond those realized onsite. For every unit of energy actually used by the building, many more units of energy are lost along the way due to inefficiencies inherent in the delivery system. In fact, there may be as many as ten units of fuel energy wasted for every one unit actually used by the building. Reducing energy demands at the point of use, therefore, produces magnified effects. The following graphic from the Rocky Mountain Institute illustrates the path of electricity from generation to consumption for a sample industrial pumping application.7
Building owners must decide where to rank efficiency projects within a list of competing priorities—social, financial, environmental. Certainly, improving efficiency produces an environmental benefit. From a financial standpoint, however, building efficiency is a winner, as well, comparing favorably against other investment vehicles.
Typically, when weighing an efficiency project against other opportunities, a metric such as return on investment (ROI) or internal rate of return (IRR) is applied to compare the financial attractiveness of various choices. Energy efficiency, coupled with a performance guarantee to transfer risk to the energy service company, provides an attractive investment when compared to common vehicles. When coupled with a savings guarantee through performance contracting, efficiency is low risk as well.8 Analysis by the American Council for an Energy Efficient Economy shows that the average return on investment for energy efficiency projects is over 20%:
From an environmental perspective, the economics of building efficiency compared to other environmental measures look good as well. In a recent survey of over 1,400 facility management professionals, over 45% of respondents identified energy efficiency in buildings as their top carbon reduction strategy. The Natural Resources Defense Council examined the net costs associated with several carbon reduction strategies and found that—after considering the benefit of reduced energy bills—carbon abatement through building efficiency actually results in a negative cost to society.9
1 IEA World Energy Outlook 2009
2 EIA International Energy Outlook 2009, Table F1
3 U.S. Department of Energy (2009) “2009 Buildings Energy Data Book.” Washington, DC. Prepared for the Buildings Technologies Program, Office of Energy Efficiency and Renewable Energy, U.S. Department of Energy by D&R International, Ltd.
4 Marnay, C and M. Stadler et al. (2008) “A Buildings Module for the Stochastic Energy Deployment System.” Lawrence Berkeley National Laboratory. Report LBNL-291.
5 Mahadev Raman (2009) “Mitigating Climate Change: What America’s Building Industry Must Do.” Design Intelligence.
6 EIA CBECS 2003, Table B9