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THE BUSINESS CASE FOR GREEN BUILDINGS

By: Hashim Abuelgasim MBA, PMP,LEED AP BD+C

Chief Sustainability Officer – PeoPla Green Institute

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1. Introduction – The Triple Bottom Line

2. The Business Case For Green

3. The Cost Dilemma

4. Recommendations

AGENDA

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TRIPLE BOTTOM LINE

PLANET: Impact on air, water, land and global climate.

PEOPLE: Impact on a person happiness, health, and productivity

PROFIT: impact on a corporation’s bottom Line

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THE BUSINESS CASE FOR GREEN BUILDINGS

33 Green Buildings in California

$150-$250 Cost/ft2 20 years Life time

5% Discount rate

The Costs and Financial Benefits of Green Buildings

O&M SAVINGS

ENERGY SAVINGS

HEALTH & PRODUCTIVITY

EMISSIONS SAVINGS

WATER SAVINGS

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ENERGY SAVINGS

Integrated Design High performance lighting Increased ventilation effectiveness Commissioning Heat Island reduction measures

Supply optimization - optimized utility systems capacity

On-Site generation

DEMAND SIDE SUPPLY SIDE

$0.025/ft2/yr $0.44/ft2/yr

20yr PV OF ENERGY SAVINGS

$5.79/ft2

Key assumptions/limitations: • 10% peak demand reduction by

green buildings. • 30% energy use reduction in green

buildings. • Average Building energy use of 10

kWh/ft2 per year

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EMISSIONS SAVINGS

$0.044/ft2/yr

20yr PV OF EMISSIONS SAVINGS

$1.18/ft2

Key assumptions/limitations: • Average Building energy use of 10 kWh/ft2

per year • 36% emissions reduction in green buildings. • CO, ROCs, and VOCs are not evaluated. • Market values for traded emissions are used

in the calculations.

Air pollutants associated with energy and burning of fossil fuels

NOx

principal cause of smog.

PM10

principal cause of respiratory illness &

contributor to smog

SO2 or SOx principal cause

of acid rain

CO2

principal greenhouse gas

$0.005/ft2/yr $0.033/ft2/yr $0.013/ft2/yr

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WATER SAVINGS

Efficiency of potable water use through better design/technology.

Better leak detection. More efficient appliances. Aggressive audits

Gray water use Storm water use Recycled/reclaimed water

use

DEMAND SIDE SUPPLY SIDE

20yr PV OF WATER SAVINGS

$0.51/ft2

Key assumptions/limitations: • Water cost assumed to include: Fresh water price. Sewerage treatment price. Marginal costs associated with: Water supply expansion and treatment. wastewater capacity and treatment. Impact of climate change on the cost of

future water supplies.

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HEALTH & PRODUCTIVITY SAVINGS

Green buildings attributes correlated to increased productivity

20yr PV OF Health & Productivity SAVINGS

$36.89/ft2

Key assumptions/limitations: • Employee cost is 10 time the cost of

space per employee and therefore 1% productivity increase will reduce property costs by 10%

• Assumed employee cost is $66,478 and space cost $6.477

Increased

Ventilation

Increased

Temperature Control

+1.8%

Increased

Lighting Control

Increased

Daylighting

+1.2% +7.1% +4%

+1% or 5minutes/working day = 2.96 ft2/yr

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OPERATION & MAINTENANCE SAVINGS

20yr PV OF O & M SAVINGS

$8.47/ft2

Key assumptions/limitations: • Assumed O&M costs = 12.25/ft2/yr or

$3,039 per person per year

Commissioning

Metering

-5% O & M Costs

Buildings meet and maintain

performance targets.

better management of upgrades and

maintenance through anticipation of

equipment failure, leaks

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WHY SHOULD THE OWNER CARE?

+21%

+30% +27.7%

Re

nt

Pre

miu

ms

World Green Building Council

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THE BUSINESS CASE FOR GREEN

8.47

0.51

$52.84/ft2

ADDED GREEN PREMIUM

+2%

$5/ft2

GREEN BUILDINGS SAVINGS

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THE COST DILEMMA

-0.4 -12.5%

cost premiums of green buildings based on

various studies

0.9-29% estimated cost premiums of

green buildings based on design stage estimates and

surveys

The Perception gap

World Green Building Council

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GAP REASONS

People are still hooked to the historical data – Green Costs are coming down for 3 reasons

105 Suppliers and Manufacturers from 27 countries

Have Green characteristics in their products 70% Have products made of recycled

content and/or are non-toxic 50%

McGraw hill construction (2013)

1 Supply Chain is getting mature

Life Cycle data provided 30%

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GAP REASONS

Local standards and green standards are converging

Green Standards Local Standards

AD – May 2010

Dubai– March 2014

2016 2019

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GAP REASONS

3 Green Knowledge

60%

1%

11%

5%

4%

19%

LEED credentials holders in GCC by June 2015

UAE Oman KSA Kuwait Bahrain Qatar

Worldwide LEED credential holders

200,000

2,380 (1.1%)

GCC LEED credential holders

$172 billion

GCC projects value 2015 Deloitte

USGBC

USGBC

By June 2015

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RECOMMENDATIONS

1. A similar study to that of state of California should be done in the GCC region to confirm its findings within our local context.

2. Municipalities should encourage building green by passing 50% of the estimated 10 times ROI of building green to developers/owners in the form of incentive programs and subsidizing schemes.

3. EDUCATION..EDUCATION...EDUCATION…. the more people know about the benefits of building green, the more feasible it becomes: • Knowledgeable professionals = more efficient designs • Knowledgeable policy makers = More holistic green regulations • Knowledgeable suppliers = Green products benefits communication • Knowledgeable end users = better green buildings rental premiums

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THANK YOU

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