The Public Green

As the Obama administration pushes environmentally friendly building, it has the perfect place to start: the government's own properties
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more in World »By SARI KRIEGER
The U.S. government's huge inventory of properties is likely to be at the forefront of a national green-building push that will serve two aims of the Obama administration: promoting energy efficiency and boosting infrastructure spending as a way to revive the economy.

The Journal Report
See the complete ECO:nomics report.In a speech Jan. 8 at George Mason University in Fairfax, Va., then President-elect Barack Obama said he wanted to modernize 75% of existing federal buildings. Much of this modernization is likely to be energy-efficiency measures, and the stimulus package signed into law last month includes billions of dollars for such efforts. The government owns or leases more than 500,000 properties, according to the Department of Energy -- a number that could mean a big impact.

Green-building proponents are hoping that the government's effort will help spur more action in the private sector -- and that wider implementation of green practices will help drive down costs. While green building became increasingly popular in the private sector in recent years, the recession has made the upfront capital costs of both new green construction and renovations less attractive these days for some companies.

Green building refers practices such as the use of environmentally friendly materials in new construction and improvements in the energy efficiency of existing buildings through measures such as installing windows that retain or deflect heat as well as more-efficient heating and cooling systems and lighting.

The Obama administration's plans are being helped, in part, by the Energy Independence and Security Act of 2007, which requires the secretary of energy to revise efficiency standards for all new federal buildings as well as those undergoing major renovations to require the elimination of fossil-fuel energy use by 2030.

"It's not only at a time when the administration is strongly behind doing something, but also the regulations to do something are there," says Bob Dixon, head of the efficiency and sustainability business for Siemens Building Technologies, part of Germany's Siemens AG. "And certainly through some of the stimulus package, we should have some of the funds to support the implementation."


Min Jae HongThe U.S. Green Building Council, a nonprofit that promotes and certifies green building practices, estimates that green building measures could save the U.S. government billions of dollars in energy costs. "The federal government spends about $4 billion on energy each year for its affordable-housing stock alone," says Jason Hartke, director of advocacy and public policy for the council. "If [the government] were to make...federal affordable-housing stock more energy efficient by 25%, [it would] save $1 billion annually. In 10 years, the government would save $10 billion."

Quick Start
Efforts were under way even before President Obama arrived in Washington in January. At the end of last year, for instance, the Department of Energy gave 16 companies contracts of $5 billion each, a total of $80 billion, for measures such as improving the efficiency of heating and cooling systems and installing energy-efficient lighting for various government buildings across the country. The Army Corps of Engineers awarded $900 million in contracts to 16 companies for similar upgrades.

In January, as part of a major renovation project at the Pentagon, the Department of Defense purchased from Cree Inc. of Durham, N.C., more than 4,200 energy-efficient light-emitting-diode products -- which are 85% more energy-efficient than incandescent lights, as much as 50% more efficient than fluorescent lights and last many times longer than either of those. The cost: about $1.6 million.

Last year, Honeywell International Inc. was awarded a $27 million contract for an energy-efficiency renovation project at Luke Air Force Base in Phoenix -- including a new energy-management system, solar roof, and a chiller-replacement program to eliminate chlorofluorocarbon-based cooling applications, such as air conditioners. Paul Orzeske, president of Honeywell's building-solutions division, says the project should save the federal government $2.7 million a year in energy costs.

Mr. Orzeske says the Morris Township, N.J., company has seen a recent rise in its federal-government projects. "To the extent that capital is immediately available, especially for the longer-payback items, the government sector is by far the space that has the most investment right now," he says.

There already are more than 1,200 federal-government projects in the Green Building Council's Leadership in Energy and Environmental Design green-building program, which offers a point-based rating system for certifying buildings as being various levels of environmentally friendly. The number of federal buildings in the LEED program grew modestly in the early years of the program, which began in 2000. But the number jumped 73% in 2007 and nearly doubled in 2008.

"I think the federal government is committed to LEED, and I think you will see an increasing number of agencies and arms of the government mandating compliance [by contractors working on federal buildings] in some capacity," says Stephen Del Percio, a construction lawyer in New York for Arent Fox LLC, which is based in Washington, D.C.

The federal government also is following the Green Building Initiative's Green Globes rating system, a stamp of approval geared more toward existing buildings. The Green Building Initiative is a nonprofit that tries to accelerate the adoption of green building practices.

Pushing It Forward
Many experts say the federal government's green building activities could help spur greater adoption of green building techniques by cash-strapped private-sector companies.

Real-estate services company Jones Lang LaSalle and commercial real-estate trade group CoreNet Global released a study in November that found companies were less likely to spend more money in 2008 on green building upgrades compared with 2007.

The study, which surveyed 384 people who make real-estate decisions for a range of large companies, found that 69% of them think sustainable building construction and maintenance practices are a critical issue in corporate real-estate decision making. However, only 53% said they would pay a premium to retrofit property they own to gain sustainability benefits. That was down from 77% in 2007.

The federal government's green activities "will help proliferate the best practices and potentially push down prices on certain features," says Mr. Hartke of the Green Building Council. "I think it will help generate new jobs in this space and therefore strengthen the green-building marketplace in itself. There is a lot of multiplier effect."

—Ms. Krieger is a staff reporter for Dow Jones Clean Technology Insight, based in Jersey City, N.J. She can be reached at sari.krieger@dowjones.com.