Challenges in the built environment toward net-zero energy & water
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Energy and water are two most critical and necessary components of post-modern civilizations. They also have a co-dependent relationship, in which lack of reliable energy or water supplies disrupt the other. Quite a balancing act exists between energy and water resources behind the scenes and out-of-sight that is difficult and costly, which gets passed down from producers to consumers via utility bills, fees (maintenance & service), or otherwise that everyone needs to pay in one way or another.
Likewise, the ramifications of energy and water usage, as well as maintaining an optimal balance of their use at the building level, is key to responsible planning towards financial and sustainability goals of many individuals and organizations. However, tendencies to hide and/or refrain from assessing, understanding, and disclosing energy and water-related information of properties exist in the real estate market. Part to blame is the relatively cheap cost of energy and water for facilities and business operations* in the U.S. compared to other resource-constrained nations, which left such information practically meaningless in the eyes of most consumers, facilities operators, and corporate management. On the other hand, a concern towards privacy protection of tenants, operators, and owners exist, which comes at the cost of rare transparent communications with incoming tenants and/or buyers.
Recently, the Securities Exchange Commission (SEC) had proposed a requirement for public companies to disclose climate-related risks. Real estate sector is a key player in the fight against climate change, as it accounts for roughly 40% of U.S. energy consumption and greenhouse gas emissions**, as well as an appreciable chunk of water usage outside of the electricity generation and industrial uses. That said, many real estate companies are publicly-traded, and their disclosure of climate-related risks will be incredibly useful for customers, investors, management, operators, policymakers, and regulators to make informed decisions and improve their competitiveness across-the-board. Despite this benefit, challenges exist at the building level that make such disclosures difficult to perform, 3 of which (out of many) are listed here:
Ease of measurement & verification
Before electronic smart meters that automatically report readings were a thing, the collection process of buildings’ energy and water usage data was just too painful. It required manual labor, where someone had to check every meter in-person to get the readings, conduct QA/QC process to validate and verify the collected data, and enter them into a spreadsheet or other tracking tools. Quite obviously, the process was prone to human error from repetition of mindless work. Furthermore, this task was reserved for the utilities providing energy and water services for billing purposes, and the buildings’ tenants, operators, owners, and other stakeholders rarely bothered to keep track of them in-house. Smart meters removed the need for this manual process, which also greatly improved the efficiency and reliability of collected data, as well as the ability to track in real-time the usage in-house via building management systems (BMS). However, smart meters are still in the process of being implemented nation-wide; detailed breakdowns necessary for tenants to conduct their own assessment are rarely provided due to privacy reasons; and such data are often too complex for laypeople to understand (especially with complex rate structures such as Time of Use and other fees and incentives associated with household income, business type, etc). These are disincentives for home-brewed sustainability aficionados, which stresses…
Importance of awareness & education
Owing to the fact that energy and water are relatively cheap in the U.S., the concerns regarding their costs and subsequent importance of conservation and efficiency is minimal in the general public. Even in the architecture, planning, and engineering professions, I came across a very small group of professionals that really understand and stress their importance, even when the sensitivities surrounding sustainability take a deeper root in these professions on a daily basis. This is often the case because only a small number of clients in the real estate market pursue sustainability-driven developments, for the reason that many develop properties for immediate sell-off; rendering future utility costs largely irrelevant during the development process. Therefore, there is little practical need (or maybe even the desire) for most practicing professionals to learn, adopt, and advocate for new approaches, as is the case for sustainable design. Eventually, the only groups that deeply care about the buildings’ energy-water conservation and efficiency are the facilities’ personnel and tenants, who are left to face the realities of exorbitant utility bills due to under-optimized building design and systems, while being at a position of minimal influence to optimize the building’s energy-water usage. (This is especially the case for high-rise residential and commercial towers, where a good chunk of energy—and therefore the HOA/maintenance fees—are spent on pumping water against the natural force of gravity to feed rooftop gardens, pools, etc in arid regions). This points to a…
Need for stakeholder participation & demand
In any market, demand is a key driver of change. Buttressed by employees’ demands for implementation of meaningful Corporate Social Responsibility initiatives, investors and consumers are also demanding companies to disclose Environmental Social Governance data to aid in making their investment and purchasing decisions, which also help ensure that their investments and purchases are safe from climate-related risks or not doing further harm to the environment. These forces are sure to keep the management's eyes peeled for opportunities that build-in sustainability across all functional units including real estate assets, and empower the employees to provide productive input via participation in development processes of said assets. Likewise, customers will, and should, be empowered to demand public disclosure of buildings’ energy and water-related usage data, so that they can assess and align their financial and sustainability goals with the capabilities that the new office building purchase or apartment rental will provide.
According to multiple studies, conducting an assessment is usually enough to improve the energy and water efficiency measures of businesses even if they ultimately decide not to disclose the data.*** This “assessment” is not anything fancy. A simple monthly tracking of total kWh of electricity and gallons of water used should do enough to help understand one’s use patterns, and these are already shown on monthly bills. This is likely to get people to start ruminating on the factors that caused a change when fluctuations are observed, and provide them with opportunities to learn more as need arises. While the ultimate goal of changing peoples’ behaviors toward energy-water low-use takes much effort, developing a mindset through awareness and education to get there only requires curiosity. With that in mind, I recognize that not everyone has the time, resources, or capacity to keep track of these information on a monthly basis, and it is easy to forget in the hustle and bustle of modern life. Therefore, it is my hope that disclosures become so commonplace that it “comes” to everyone naturally as a matter of daily life.
* Prakash Rao, Developing a Corporate Water Management Strategy for Manufacturers, p. 5, Department of Energy, April 2016.
** Quadrennial Technology Review - An Assessment of Energy Technologies and Research Opportunities, Chapter 5: Increasing Efficiency of Building Systems and Technologies, Department of Energy, September 2015.
*** Christian Blanco, et al, An inside perspective on carbon disclosure, Business Horizons, 60(5), 2017.