Buildings account for a significant part of the worldwide energy consumption. In numbers, this is about 29%. With the ongoing climate crisis and the need to save resources, it is important to make necessary improvements to commercial and residential real estate. The problem that arises when planning to do so is, that it is hard to actually determine the “level” of sustainability of a building. This is where green building certificates come in handy, as they allow quantifying the upgrades. Additionally, they will bring many benefits from a financial perspective which we will highlight in the following article.
What is Green Building Certification?
Green building certification is a rating system that allows to quantify and compare the degree of sustainability of a building.
What are the Benefits of Green Building Certification?
When applying for certain green building certifications, there are costs associated with the rating process. They can range from one to two thousand, to several ten thousand Euros. This depends on the size and complexity of the building which will receive the certificate. Nonetheless, the initial investment will have a large, positive impact on the profitability of real estate. A study conducted by Jerry Jackson, for the Journal of Sustainable Real Estate, found the following results: Energy Star and LEED certifications impact the occupancy and rent to such an extent, that it can pay for the initial investment in new technologies and also provide a high IRR (Internal Rate of Return). As a result of the overall increase in a building’s income, the resale value will also become significantly higher.
Another financial benefit of green building certification is that some countries or cities offer incentives. This includes tax exemptions, deductions and credits for existing sustainable buildings or new projects. Furthermore, there are also allowances for zoning or reduced administrative fees. Lastly, also insurance companies and banks offer financial incentives for the implementation of certain green or innovative solutions.
One benefit that green building certification brings to the real estate market in general, is the opportunity to quantify a building’s level of sustainability. By using standardized rating systems it will be easier to understand and evaluate any type of building in terms of its impact on the environment.
There are more than 100 different green building certification systems. The following ones are the most popular ones around the world.
The certification “LEED” stands for “Leadership in Energy and Environmental Design”. It was founded by the US Green Building Council in 1993 and certified more than 80,000 buildings worldwide. There are 4 different levels of certification: Certified (40 – 49 points), Silver (50 – 59 points), Gold (60 – 79 points) and Platinum (80+ points).
Another popular system, developed in the US, is called “Energy Star”. It specifies different Categories for the rating such as: Energy efficiency, Heating, Cooling, Water management, lighting and appliances. More than 2.2 million homes have been certified with this green building certification.
“BREEAM” stands for “Building Research Establishment Environmental Assessment Method” and was founded in the UK in 1990. The certification system operates for different scopes that are called: “New Construction”, “International New Construction”, “In-Use”, “Refurbishment”, and “Communities”.
Green Building Certification is a process that aims to standardize and quantify the sustainability rating of buildings. There are many different types of these systems such as LEED, Energy Star, and BREEAM. Even though it can become quite costly to attain one of these certificates, the financial return on this investment is higher and it also comes with a positive impact on the environment.
If you want to learn more about how buildings can become more efficient and smart, feel free to take a look at our other articles.