In Reinventing Green Building, I conclude that green building certification today only works for only a limited portion of the overall commercial and residential buildings market.
At the commercial level, green building certification’s fate in the US will be determined largely by LEED’s fate. Unfortunately, that is not looking so good at the present time. At the residential level, however, LEED is only one of many certification systems. Other important systems include NAHB, regional certifications such as Built It Green (CA), Earth Advantage (OR and WA), Austin Energy (TX), EarthCraft (GA, VA & Southeast).
In the United States, it’s clear that LEED is failing in its largest and most important market! At year-end 2015, LEED had certified about 0.7 percent of US nonresidential buildings and less than 4 percent of total nonresidential building area.[i] For residential units, LEED certifications amount to less than 0.04 percent of the 115 million US residential units (and less than 2 percent of the new housing units built just in the 2010–2015 period).
If cutting carbon is our overriding environmental concern and if green building should set its sights on the target of market transformation for at least 25 percent of buildings, there is no way that LEED, NAHB and others will ever reach this goal, either singly or collectively.
The Business Case for Green Homes
I first wrote about the business case for green homes in my book, Choosing Green: The Home Buyer's Guide to Good Green Homes, in 2008. Not much has changed since then, except that the various certification systems have been updated.
The market for green home certification is almost exclusively for new homes. Green home certification programs, including LEED for Homes and the National Green Building Standard (NAHB Green, based on the International Code Council’s ICC 700 national standard), as well as strong regional brands such as Earth Advantage in the Pacific Northwest and Earth Craft Homes in the Southeast, aim to help builders sell homes.
A 2009 study analyzing 10,000 third-party certified new homes in Seattle and Portland markets showed that in the Seattle metro area such homes sold at a 9.6 percent price premium when compared to similar non-certified homes, and in the Portland metro area they captured a price premium between 3 and 5 percent. A 2014 follow-up study for green home developments in several US regions showed similar results.[ii]
McGraw-Hill researchers studied US green homebuilding in 2014 and found that 19 percent of single-family homebuilders already build 90 percent or more of their projects to green standards (although their “green standards” definition is much looser than actual certification), with that number expected to double by 2018.
According to this survey, 13 percent of single-family homebuilders and 32 percent of multifamily homebuilders used LEED for Homes, while 30 percent of single-family homebuilders but only 13 percent of multifamily builders used the NAHB Green/ICC 700 standard, almost the exact opposite.[iii]
The NAHB green standard, supported by homebuilders’ national association, should make it more prominent in single-family home certifications, whereas LEED for Homes had a much more active multifamily program during the 2010–2014 period, one that cut costs and red tape dramatically for apartment and condominium developers.
About 884,000 privately owned US residential units were built in 2014, about 70 percent single-family.[iv] LEED home certifications were 6,000 in 2014 representing about 1 percent of single-family homes. The implication is stark: we’re falling farther behind each year in building low-carbon homes, if nearly almost all homes built each year don’t carry a green label. Once a home is built, it is unlikely to be renovated for at least 10 years, and probably not even then, so energy performance is locked in for decades, and is determined primarily by state energy codes at the time of construction.
Single-family (detached) homes and multifamily (attached) residences, both rental and owned, make up the residential market for green certification. There are an estimated 133 million existing US housing units. LEED reported[v] the following data for 53,554 total home certifications (since the program began in 2006) as of June 2014:
- LEED-Certified Single Family Units: 12,955
- LEED-Certified Multifamily Units: 40,599
Kelsey Mullen headed the LEED for Homes Multifamily Program for several years until the end of 2014. In the book, he says,
There is more competition for rating systems for residential projects than there is for commercial projects. For commercial projects, it’s LEED. For LEED for Homes, that’s not at all the case. When LEED for Homes came on the market, there were already 80 local and regional residential programs and other national programs. Residential developers have to consider which program to use, whereas commercial developers do not because there is basically only LEED. The competition is significant. The delivery models are similar with providers [consultants] and raters [certifiers]. Most providers who serve LEED also serve NAHB and other local programs.[vi]
Nonetheless, Mullen built a very successful program that certified about 80 percent of all LEED residential projects during 2014. He did this by altering the delivery model so providers could perform most work, keeping third-party review to a minimum.If LEED continues to use this very different delivery model, wherein the consultants also provide most data for certification at very low cost per unit, there may be hope for the future, and this is pretty much the same delivery model used by BREEAM and Green Globes. The residential new construction market is extremely cost-sensitive, and only a very low-cost system will work.[vii]
[i] 2015 year-end numbers are extrapolated from data in the LEED Project Directory, as of October 31, 2015.
[ii] https://www.earthadvantage.org/assets/documents/EAR%20CommunityDev-CaseStudy-141110-EOCvs.pdf, accessed June 3, 2015.
[iii] Information from McGraw-Hill, 2014b, pp. 1, 58.
[iv] https://www.census.gov/construction/nrc/pdf/compann.pdf, accessed June 24, 2015.-report/www.usgbc.org/articles/new-usgbc df/compann.pdf,
[vi] Interview with Kelsey Mullin, June 8, 2015
[vii] Personal communication, Kelsey Mullen, May 2015.