In early February, ASTM International, which develops standards internationally, formally published its Building Energy Performance Assessment (BEPA) Standard. Its objective is to standardize the collection and reporting of energy consumption information for a building involved in a real estate transaction. That will make it easier for buyers, sellers and lenders to understand and predict energy costs.
It will:
- Collect building characteristic data, including gross floor area, monthly occupancy, and occupancy hours;
- Collect data on a building's energy use over the previous three years, including weather data representative of the area where the building is located;
- Analyze variables to determine what constitutes the average, upper limit, and lower limit of a building's energy use and cost conditions;
- Determine pro forma building energy use and cost;
- Communicate a building's energy use and cost information in a report.
The report will describe a commercial building's historical energy use and cost; how these factors can be affected by weather, occupancy, and other conditions; the building's carbon footprint and an energy consumption disclosure statement with supporting documentation. The standard may eventually be used as a complement to other benchmark and rating programs, such as EPA's Energy Star and US Green Building Council's LEED.
The standard is also important from a legal liability perspective. It should help reduce (or prevent) lawsuits where plaintiffs allege that green/energy-efficient buildings do not deliver projected cost savings or anticipated energy performance.
Energy Retrofits Rebounding
Each year, Johnson Controls' (NYSE: JCI), the world's largest energy efficiency service provider, conducts an Energy Efficiency Indicator survey of decision makers responsible for energy use in commercial buildings. In fiscal 2010 (ends in September), JCI's building efficiency division generated $13 billion in revenue, representing 38% of its total sales.
The survey shows that corporate efficiency spending is rebounding. What's driving efficiency investments? Respondents say, rising energy costs (95%), public image (65%), government/ utility incentives (60%) and climate leadership goals (63%). Despite the lack of climate legislation, more corporations are setting voluntary carbon reduction targets - building efficiency is a top carbon strategy.
30% say they undergoing or have retrofit plans, up from 22% in 2009, and 22% are undertaking new energy efficient construction projects, up fro 16% last year. The most popular upgrades are lighting, followed by education of facilities operations staff and building occupants, HVAC adjustments and installation of occupancy or daylight sensors. 31% are considering adding solar, but that's down from 46% in 2009.
Which Companies Benefit?
Green Building stocks that should benefit from these trends include LSB Industries (LXU) in geothermal heat pumps, NCI Building Systems (NCS), a leading supplier of cool metal roofs and insulated metal panels, efficiency services providers Ameresco (AMRC) and Johnson Controls (JCI), and architectural glass manufacturer Apogee Enterprises (APOG). To learn about these stocks and when to invest, subscribe to our green stocks newsletter, Progressive Investor.
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Rona Fried, Ph.D. is CEO of SustainableBusiness.com.
