Sustainability trends in 2012

Transparency, global consistency, public-private collaboration and solar energy are the four major sustainability trends for 2012, says Dan Probst, chairman of energy and sustainability services at Jones Lang LaSalle, a financial and professional services firm specialising in real estate

Transparency

Buildings, companies and cities are measuring and disclosing energy usage, carbon emissions and other information relating to sustainability. Commercial building owners don’t always have a choice: five major US cities and two states have enacted energy performance measurement and disclosure policies, and another nine cities and states have bills under consideration, to help tenants and investors make better-informed decisions. Buildings in Europe are required to display energy performance certificates, and Australia is implementing similar requirements.

Corporations don’t require legal mandates to encourage disclosure. In 2011, more than 3,000 companies, including 404 Global 500 firms, voluntarily reported their carbon emissions, water management and climate change policies to the Carbon Disclosure Project (CDP), perhaps swayed by CDP’s 551 investor members, who use the information in deciding where to place more than $71tr in investment capital.

Transparency is also on the rise at city level. CDP invited 58 cities worldwide to report sustainability related data for the first time in 2011, and 42 responded, with 38 of them making their responses public. This year, CDP Cities is expanding its request to 150 cities and continues to see a high response rate, as well as extraordinary awareness and commitment on climate change issues by city leaders. These leaders recognise that managing energy, water and waste not only helps attract residents and business growth but also enhances quality of life in a variety of ways.

Global consistency

Deeper sustainability reporting by cities and multi-national corporations has intensified the need for consistent ways to measure the effectiveness of energy, water and other sustainability strategies on a worldwide basis. Given the wide regional variation in environmental priorities around the world, the end goal may not be a single global standard, but rather a method to translate local government and business practices into a common global benchmark to measure effectiveness and recognise achievement.

LEED, the building sustainability rating system created in the US, is now frequently used in many countries with their own sustainable building certification systems, as owners seek to attract international tenants. Energy Star, the US Environmental Protection Agency’s energy benchmarking standard, will soon be able to provide accurate ratings across North America, thanks to a new cooperative agreement with Canada. And, in 2011, the International Organization for Standardization released the ISO 50001 standard for energy management systems, which includes specifications for measurement, documentation and reporting on energy consumption.

Consistent measurement is important to corporations as they focus on sustainability not only in their own operations but, increasingly, throughout their supply chain as well. And while CDP Cities is not attempting to rank the sustainability of cities, it is developing a globally cohesive framework for understanding the effectiveness of sustainability strategies pursued by different cities.

Public-private collaboration

2011 stood out as a year when government and business organisations explored their shared green goals and realised that public-private partnerships and collaborative initiatives are often the best way to overcome obstacles to sustainability. Some of these joint efforts will start to bear fruit in 2012.

A clear example is the December announcement of a $4bn energy retrofit commitment by the US federal government and 60 CEOs, mayors, university presidents, and trade union leaders. Called the Better Buildings Challenge, the eight-year initiative includes $2bn in energy upgrades of federal buildings and another $2bn of private capital to improve energy by 20% in buildings totaling 1.5bn sq ft.

The Better Buildings Challenge illustrates the alignment between business and government goals in seeking energy and carbon reduction. Achieving those goals also requires cooperation; for example, groups ranging from the World Economic Forum to Greenprint Foundation have called for changes to loan underwriting guidelines set by governmental bodies to facilitate financing of energy retrofits.

More directly, US states have found they can increase renewable energy installations in buildings by offering incentives that would make solar power cost-effective for owners within a relatively short period.

Jones Lang LaSalle sees tremendous untapped synergy between the two groups in achieving energy and sustainability goals, particularly in the area of public-private partnerships. As just one of many examples, airports and other government entities often have surplus land that’s unsuitable for commercial property development but could be leased to private companies for development as large solar energy installations.

Solar energy

2011 was a breakthrough year for new installations in the US, and continued growth is predicted for 2012, albeit at a slower pace. More than one gigawatt of photovoltaic solar energy capacity was installed across the US in the first three quarters of 2011, according to the Solar Energy Industries Association (SEIA). By comparison, 887Mw came online in 2010, which represented a doubling of the total installed base at the time.

Solar energy installations at commercial properties drove much of the market growth in 2011, but the pace of new installations dropped significantly in the third quarter, SEIA reported.

The big story going into 2012 is the unprecedented rise in utility-based installations, which jumped by 325% from the second to the third quarter.

The strength of the solar market in 2012 and beyond will be affected by several variables, including basic supply and demand economics, technological improvements, and the amount and type of available incentives. It is clear, however, that interest in solar energy continues to grow as payback periods grow shorter and fossil fuel costs continue to rise.

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