I am starting to see more people consciously aware of environmental issues worldwide. There are more hybrid cars on the road, and the stores I shop at have “environmentally friendly” products widely displayed. How does this translate into the way we buy and live inside our homes? Marketing companies and developers are starting to advertise the fact that their buildings may be “green” or LEED certified. I believe that this trend will grow. As technology evolves, green living will become more efficient and become both environmentally and economically preferable. But, there are shades of green and it is not simply black or white. I was fortunate to sit down with Ashok Gupta who is Senior Energy Economist with the Natural Resources Defense Council. He is actively involved in all aspects of green buildings on a daily basis and is incredibly insightful on this subject.
Shaun: What role do you have in the NRDC as Chief Energy Economist?
Ashok: I’ve been with the NRDC for 15 years now. Right now I am the director of the air and energy program. All the work that we do on issues related to energy efficiency with Noble Energy, Green Building, and Smart Growth, are part of the program. We have about 40 people waking up everyday on a national basis trying to figure out how to make our buildings more efficient, our cars more efficient, and use cleaner fuels. Anything related to clean energy technologies in all the sectors, building, transportation, and industry is really what we do. NRDC was an early leader with this office space almost 20 years ago. We were part of the beginning of the modern Green Building movement.
Shaun: Is this the Green Building that we are in?
Ashok: The four floors that we occupy were built out to be both super energy efficient and have great indoor air quality. At that point, there weren’t many Green Building materials available, so our emphasis was on energy efficiency and our indoor air quality and water efficiency. Over the years, we built different buildings. Our new office in Santa Monica is LEED platinum. We’ve set the bar again for what people can and should be doing, so all of our offices are green and this was the first one of them. It’s still probably one of the most energy efficient in the city. We use 50 % less energy than a normal office space, mostly by having really efficient windows. During the summer time the heat stays out, we don’t have to cool it.
Shaun: How does this compare to the Conde Nast building?
Ashok: Well, the Conde Nast building was the first really big commercial scale Green Building (developed by Douglas Durst). The idea was to really have it take off in the market place. Now with the new Bank of America Building (also developed by Douglas Durst) we are always studying the new bench mark with the private sector in terms of building green. There are all different shades of green, and it’s ok for people to build as green as they can. In terms of the developers and the architects, Fox (architect) and Douglas Durst are leading the charge and the development of green buildings in the NYC market.
Shaun: On a personal note, what provoked you into working in this environment for the environment?
Ashok: I grew up in Washington DC in the late sixties/early seventies. I was in high school from ’68 – ’71 which was a really active political time and the environmental movement was just starting. I was a physics student in college and it was obvious to me in terms of using my science background to get involved in environmental issues and energy issues. I’ve been interested in energy issues from the beginning and this was the perfect place to come and use those skills and apply them. Right from college I’ve been interested in environmental issues.
Shaun: When I think back to the seventies I think of solar panels for heating swimming pools. I think of windmills on a very fundamental level. What would you say is the iconic image for the new millennium?
Ashok: I think that is a good question. The interesting challenge here is, if you walk into this office, there’s nothing that hits you about how energy efficient we are. The idea here was to have a very normal looking office space and many of the things that are done are quite hidden – basically better windows – lighting is a key part of the design. Some of this is about design and using off the shelf technologies and not really about a particular technology. It’s a combination of a lot of different technologies used in a smart way. It’s the integration of technology with design that really makes a green building.
Shaun: A collaboration of different things…
Ashok: Yes. It’s much more about the process of integration of design; the integration of the design and engineering teams working together. It’s much more about collaboration and integration than some fancy technology. It’s going to start first with things that really allow us to reduce the energy intensity of our economy by using a lot less energy to get the same things we want. A refrigerator that uses 400 kw hours a year compared to 750 kw hours a year is not going to look that much different. You can’t tell why it’s more efficient, but that’s where the big environmental benefits are.
Shaun: Here is the key question… does the one that is more efficient cost more?
Ashok: It costs a little bit more in the beginning, but the payback maybe one year, two years at most, and it is going to be around for ten years. So yes, the challenge from a consumer perspective is looking at the operating cost as well as the initial cost and in the context of the building, to look at your rental cost, or purchase cost and again the utility cost. If you combine the two, are you paying more or paying less? You may end up having to pay a little bit more for the housing but you pay less for the utilities.
Shaun: Do you think this is why you see a lot more commercial buildings that are green? A property owner is going to benefit in ten years/twenty years significantly from building a building that’s this efficient. On the residential side, a rental property would be the same.
Ashok: Right
Shaun: However, a residential real estate developer sells his condominiums immediately and is not the beneficiary of this design, unless the end user identifies the return and feels that there is an associated benefit worth paying for upfront.
Ashok: I totally understand the problem and it is a challenge when the person who pays doesn’t get back what they’ve invested. The way to really deal with that issue is through a good financing mechanism. The banks need to step in and offer a mortgage product that says, if you buy an efficient home or building, you will get a higher mortgage for the same income.
Shaun: Or maybe a better rate?
Ashok: Yes, so you can qualify for a better mortgage.
Shaun: Why would a bank want to do that?
Ashok: Because they should be looking at your ability to afford the house based on the operating cost. If you are paying less for the utilities, you can afford to pay more of a mortgage. If your utility costs are lower, you can afford a higher mortgage, for the same income. This is something that actually Fannie Mae allows, but banks are not marketing it, so there is a product that is called an energy efficient mortgage and there is also actually a product that we helped work on called the Location Efficient Mortgage. The same is true if your house or building is close to mass transit and you don’t have to buy another car, you can also afford a higher mortgage.
Shaun: Another way would be to educate the buyer. You could help them understand the long term benefits, financially, even if it cost more upfront…
Ashok: People would focus more on energy costs if their banker was asking if they were buying in an efficient building or a non efficient building. That’s just another way to think about the barrier of this problem, which is we all know is there. Why should a developer build a more efficient house if the savings will all go the tenant or occupant? We just have to be creative and we can address that problem.
Shaun: What would you say, on a percentage basis, it will cost to build a green building as opposed to a non-green building?
Ashok: Again, because of different shades green it depends on what you are focusing on. If you want to put solar panels on your house, or if you just want to make it more energy efficient, it may only cost 1% to 5% more. It also depends on what you’re defining green to be.
Shaun: The benefit to cost ration is 10 to 1…
Ashok: Yes. That is saying you get a payback that’s pretty good. There has to be some way to create a labeling program. If you tell them this, will they even believe you? There has to be some independent way to label apartments and buildings and homes in terms of their efficiency. (There is a program it’s just not used).
Shaun: Why is it taking 35 years or more for these changes to come about? Even now, anyone that does this is considered a pioneer.
Ashok: Because energy costs are pretty low. Most people don’t think it really matters how much energy costs, and what the environmental impacts are. It comes down to what people value when they are buying homes and whether energy costs are a significant factor for them. Some of my friends who are solar architects say… “why do people always ask what a payback of a solar panel is, when they never ask what a payback for a marble lobby is?” Not everything should be sold on its payback or cost effectiveness. Some marketing has to be done on the basis of the values associated with a green building. This is a building that is going to be great for the planet. It is also going to be a building that is going to be great for your health.
Shaun: Why do you think this has become such a divisive issue?
Ashok: Some parts of the environmental agenda are more divisive than other parts of the environmental agenda. I think the question ends up being about trying to create change. There are winners and losers and some of the old technologies don’t come out as well as new technologies do. People who are trying to hold on to old technologies, and profits that come from old technologies are really not going to do well and may overuse their political clout to keep market share. In economic terms, it’s about market share, and losers and winners, and when we are talking about solutions to the environmental problems they are usually talking about new technologies and new ways or better ways to do something.
Shaun: Yes.
Ashok: So, you are trying to encourage clean bio fuels instead of petroleum; you are trying to encourage wind power instead of coal. You are trying to encourage solar energy instead of natural gas. There are in this equation, winners and losers, and the question is how to make that transition.
Shaun: I think evolution is inevitable, but unfortunately takes time.
Ashok: I’m not discouraged about divisiveness part of the educational process. You have to build the coalition and get people to agree.
Shaun: I can tell you are from Washington.
Ashok: (Laughs)…It’s something that everyday I look forward to finding: How to solve the problems for the business community.