Though studies continue to show that there is a huge, untapped potential for energy efficiency improvements in U.S. buildings, only a small proportion of that potential is being realized today. This summer, the Institute for Market Transformation (IMT), as the U.S. Hub of the Global Buildings Performance Network, and the Johnson Controls Institute for Building Efficiency (IBE) convened a roundtable in Washington, D.C., to help us better understand this reality and try to identify ways to increase market adoption for deeper energy renovations.
The attendees, including experts from government, the private sector, and non-government organizations, responded to results from two recent research studies on opportunities and challenges to wider adoption of energy efficiency. The first of these, Achieving Scale in the U.S., was commissioned by GBPN and produced by the Economist Intelligence Unit, and summarized the results of a number of interviews with U.S. industry leaders. The second report, IBE’s 2013 Energy Efficiency Indicator Survey, evaluated energy priorities, practices, and investments being made by executive decision-makers for buildings in markets around the world.
The IBE report included quantitative data on the perceptions of people in the industry, while the EIU report provided additional context and personal perspectives on the challenges. Together, these two papers set the stage for a productive conversation with roundtable participants, which led to a number of thought-provoking observations.
First and foremost, although everyone would like to see more innovative financing mechanisms, this does not appear to be the main barrier to more widespread energy efficiency investments, at least for Class A office space. The IBE study shows that the majority of respondents in the U.S. use internal operating or capital budgets to fund energy efficiency.
Roundtable participants noted that the challenge is not lack of funds, but rather that energy efficiency is not being prioritized. There is a general lack of appreciation of the true magnitude of the benefits that energy efficiency investments could provide, which means that these opportunities never get enough attention to rise to the top of the stack when firms are prioritizing investment decisions.
Roundtable participants shared a number of best practices that demonstrate how effective organizations are getting beyond this barrier:
1. Consider co-benefits—the benefits of energy efficiency improvements flow to a number of different cost centers within most large organizations. While we tend to focus exclusively on reducing energy costs, the building engineer may also see lower maintenance costs, the HR director may see lower health costs and improved employee satisfaction, and the CFO may observe higher asset valuations and lower vacancy rates.
Often, none of these benefits, when viewed individually, are significant enough to get the attention of senior management and justify the necessary investments. Only when an organization breaks down silos and considers all of the benefits as a whole will they begin to prioritize energy efficiency improvements.
2. Adopt a portfolio-wide approach—a corporate commitment to energy efficiency requires that organizations think about their complete portfolio of buildings, rather than approaching this on a building by building basis. By looking portfolio-wide, and honestly comparing the actual performance of buildings, businesses can easily identify the best and worst performers.
Although it is important to celebrate the buildings that are performing well, it is equally important to identify those that are performing poorly, as those are typically where the largest and most cost-effective energy efficiency opportunities can be found. By looking objectively across its entire portfolio of buildings, an organization can identify the stars, where they can learn best practices for energy efficient operations, and the poor performers, where they can then apply those best practices.
3. Provide easy access to the right data—to make intelligent decisions, building owners, operators, and investors need to have information about how their buildings are performing. But the information they need is not the same; the detailed data a building engineer wants to see about how the chiller is performing is irrelevant to an investor who wants to know how the overall cost of operations and maintenance compares to similar buildings.
With today’s smart meters and other technologies we have access to vast amounts of data, but we shouldn’t confuse these reams of raw data with actionable information. We need to understand how to efficiently provide different audiences with the information they need to do their job.
So, what does all of this mean for the effective role of public policy? Roundtable participants generally agreed that energy benchmarking and disclosure programs, which are becoming more widespread in cities throughout U.S., are an important first step—as they provide market transparency and are helping people of all types become more aware of how much energy buildings are actually using.
However, this is only a starting point. Jurisdictions need to develop complementary policies to build on this foundation and further motivate/support building owners to make the investments and operational changes that will actually lead to improved energy performance. These need to be part of an integrated approach, and they need to be clear and consistent.
Policy uncertainty and inconsistent policies at the local, state, and federal levels is contributing to the lack of broader adoption of energy efficiency in buildings. As our roundtable participants observed, the more confused the market is, the less likely people are to act, highlighting the need for clear, predictable, and decisive leadership with energy efficiency policies.
To learn more about the roundtable and these experts' views on the future of energy efficiency, see the GBPN's new video (above), Achieving Scale in the U.S., featuring attendees including Maria Vargas (U.S. Department of Energy) and Alex Dews (Philadelphia Mayor's Office of Sustainability), or read the complete dialogue summary.