The LEED "Tax": $2 Billion Over the Next 5 years?

This book is a “must read” for people in the green building industry. It is well written, with good references and a clear message, certainly one of the most useful green building texts available. You hit the nail on the head!
— Eric T. Truelove, PE, GGA, LEED AP BD&C, Madison, Wisconsin

The “LEED Tax”

USGBC and others have tried to make a case that green building creates millions of new “green jobs,” both in products and services. In many ways, this is a specious argument: On the one hand, LEED advocates say it costs no more to build green. In this case, how can spending no additional money create additional jobs? If building green does cost more money, as many in the industry believe and can demonstrate from experience, then additional costs for certification act as a disincentive and work just as much to reduce green jobs as to create them.

It is also true that the green building revolution has led to many innovations in products and project delivery methods and that many products we use today in buildings are quite a bit better than those on the market 10 to 15 years ago. Green building supporters should rightly trumpet these achievements.

However, there is one area where LEED has to hang its head in shame: the “LEED tax.” Think about it this way: In 2014, LEED certified about 3,400 US projects, about 2,000 in new construction, 850 in interior fit-outs and 550 in existing buildings. At an estimated average project cost of $136,700 for LEED-related items, the annual LEED tax is about $382 million (See figure).

Over the next five years, at current certification rates, the LEED tax could easily cost the building industry nearly $2 billion, not counting any extra construction costs for LEED-required measures. Two billion dollars is a high price for the building industry to pay to implement greener buildings in a small fraction of all buildings! Given this tax, is it any wonder that LEED’s market penetration is so low?

This “tax” calculation excludes any additional capital costs for more energy-efficient products and systems; green roofs; the famed (and often little-used) bicycle storage lockers, changing rooms and showers; specially-sourced green materials, etc. Since about 40 percent of certifications are LEED Gold and Platinum projects, one can expect many to incur higher capital costs as well as to pay a higher LEED tax.

It is hard to believe, but for 15 years LEED has not tried (very hard) to reduce the cost of certification. USGBC and GBCI have not taken any serious action to cut costs dramatically, e.g., by changing the “delivery” model, despite overwhelming evidence that it was not reaching a broad market. Instead of taking away everything from the LEED system that is not essential to a green building and driving costs down relentlessly, in LEEDv4 USGBC and GBCI piled on more complications, more credit interpretations, more addenda and more prerequisites. Does that make sense to you?

You may argue that this is a small price to pay for better buildings, and you may be right. But shouldn’t you then also acknowledge that LEED’s high cost acts as a disincentive for many project teams to pursue high-performance green building and therefore inhibits new “green jobs?”

Isn’t it time for a major change in approach, one that lowers costs dramatically? Isn’t it time to reinvent green building for the “other 99 percent?”