Ed: Good morning, Rick . . . and thank you for the opportunity to discuss a topic very important to me as a Corporate Facilities Executive in a government science and research agency that creates and analyzes a significant amount of data related to climate science. We also own and operate a facilities portfolio of nearly nine million gross square feet of older facilities across the US and the Pacific Islands with a replacement value of more than $3 billion. Looking at this information as I do raises questions such as how can we reduce the impacts of the global built environment on the planet’s climate? The global perspective may be too large to visualize for most of us in the facilities business. So, I am looking at this question from the perspective of my facilities portfolio and what my experience tells me.
Rick: What keeps you up at night when you think about the portfolio you oversee?
Ed: As a facilities executive with a solid understanding of climate science and owning and operating this portfolio of older buildings, I am very interested in the relationship between the natural and built environments and how this relationship influences climate change. Much of today’s literature on this subject focuses on new construction and incorporating the latest practices in energy efficient design and construction practices to build highly efficient buildings to help address climate change.
This made me start thinking “what about all the existing buildings that will remain in use well beyond 2060”? My portfolio is dominated by older, inefficient buildings, but my organization is not unique. In the US experts estimate approximately 70% of all buildings are over 20-years old. What is the cumulative impact of all these older buildings on the environment and, for me, how can I reduce this impact using technology while remaining within my bottom line?
Rick: We don’t often think of climate change in financial terms, but as someone responsible for managing a large facilities portfolio in the US and overseas, where will asset owners really “feel” climate change?
Ed: Rick, that’s a great question. From my perspective, I am always looking for ideas to help me understand and manage the financial impacts of future climate events. I think it is pretty well documented that the earth is becoming hotter and dryer, as well as experiencing more extreme weather events. I see the rising number of extreme weather events combined with the cost to restore operations post event as an indicator that asset owners are already feeling climate change.
NOAA’s National Centers for Environmental Information (NCEI) tracks US weather and climate events with significant economic and/or social impact — typically those events with overall damage costs of one billion dollars or greater.
During 2018, the US experienced 14 separate billion-dollar disaster events. Over the past three years the average number of these billion-dollar disaster events is 15 compared with an average of 6.2 events from 1980 to 2018.
Climate science data suggests the frequency and intensity of these events will continue to increase and that damage costs will also increase as these extreme weather events become more frequent and intense. Asset managers will be hard pressed to find the resources needed to restore facilities and operations after one of these events. Preparing for and investing in resiliency projects is one approach to mitigating this fiscal risk.
For those asset managers who don’t experience one of these horrific events, some of the earliest impacts may be felt by those operating facilities along the east coast of the US. The east coast is projected to experience significant sea-level rise over the next 50-years. My portfolio has a large number of facilities along the east coast. In order to mitigate some of the financial and mission risk, I have developed business cases to understand the costs and constraints of relocating laboratory and administrative facilities away from the shore line in Miami, FL, Charleston, SC, and Norfolk, VA. All areas projected to experience significant sea-level rise in the coming years and the location of several important mission facilities for my organization.
Rick: Climate change is probably humanity’s single largest “change management” problem. Within your own organization, how can technology help mitigate or better manage climate change?
Ed: I think it is pretty well documented that the world is becoming hotter and dryer, as well as experiencing more extreme weather events.
One study I reviewed, indicates that improving efficiency by 30% in the pre-1980 building inventory could result in one trillion dollars of energy savings over 10-years at a cost of $279 billion for a return of 358% over the decade.
Working in a government organization as I do, we are continually asked to do more with less or become more efficient with the resources provided by the tax paying public.
Despite perceptions to the contrary, energy-efficient offices are not expensive, difficult to manage or inflexible. They don’t hamper productivity or comfort either. Energy conservation measures which work
I have implemented three key initiatives in my organization to reduce energy consumption as part of our effort to better manage climate change and to make additional resources available for other projects.
Smart meters, Demand response, and incorporating energy efficiency investments into lease renewals for our large corporate campuses.
Smart meters enable building managers to monitor energy consumption more precisely so they can make more informed energy choices. Depending on the feature, the meter may also notify the utility of a power outage or allow the utility to remotely switch electricity service on or off.
Demand response offers customers a rebate or lower energy costs for reducing energy use during specified hours or allowing the utility provider to cycle their air-conditioning systems when needed.
Incorporating energy efficiency technology requirements into lease proposals and renewals. This just makes good business sense and provides a reasonable return on investment. On one of our larger east coast campuses (exceeding one million gross square feet), we required the lessor to invest in a variety of energy saving technology as a condition during lease negotiations for a 15-year lease. This resulted in approximately $500,000 in energy cost reductions annually.
Rick: What do you see as “low-hanging fruit” to help us get more quickly to a carbon neutral built environment?
Ed: Most of the buildings constructed during the second half of the 20th Century were built with little regard for energy use or impact on the environment. I think it is fair to say that older buildings waste hundreds of thousands, if not billions of dollars in energy due to inefficient design, non-optimized controls, deferred maintenance and outdated equipment.
In my mind, this presents an opportunity by improving building performance through updated technologies.
Energy efficiency in not only about preserving the environment; it also represents possibly billions of dollars in reduced waste and potential profit.
Despite perceptions to the contrary, energy-efficient offices are not expensive, difficult to manage or inflexible. They don’t hamper productivity or comfort either. Energy conservation measures which work well are reliable, straightforward, and compatible with both management and employee needs.
A modern building automation system can provide a return on investment over many years. Ensure that the automation system is programmable to take advantage of the various control strategies available from most vendors.
Historical Usage Data Analysis: Analyzing your facility’s energy usage patterns is critical to understanding how a business consumes energy. Knowing how and where energy is consumed can lead to reduced costs and lower consumption.
Demand Reduction Strategies: Asset owners can save on utility costs in two primary ways:
By reducing peak demand with more efficient lighting, more efficient HVAC systems and other strategic solutions, businesses can change habits and save on electricity bills. Here is an example of how I implemented this concept – we used to turn on our heating/AC systems at 6:30 am for day operations in administrative buildings. We surveyed the workforce for start time and found the majority of our workforce starts at 8:30. We now change to day temperatures at 7:30 am a.m. daily — reducing consumption and demand. The lower the peak demand/capacity, the less you pay for power.
Sustainable Energy Products: Partner with you purchasing organization to buy sustainable products and energy-star rated equipment. Commercial managers can also purchase renewable energy certificates (REC’s) or earn revenue generating white tags by reducing demand and increasing efficiency.
Demand Response Programs: By participating in demand response programs with your local utility provider commercial asset owners and managers can generate sizable income by lowering energy consumption during times when supply is low and demand is high on the grid.
In other words, when demand is high for energy, utilities tend to increase prices and the need for power becomes worth paying consumers for. A business can offset the rising fees by giving power back to the grid to help prevent brown-outs and black-outs. An analysis of your energy load can determine how much is available for you to return. In some instances, revenues for participation can be as high as $200,000 per year or more. By way of example, data centers, hospitals and many large manufacturers are great candidates for these revenue generating programs with the capability to switch to back-up generators and curtail load while pocketing tens to hundreds of thousands of dollars in revenue in the process.
New technologies have progressed well beyond solar panels and green roofs. Energy efficiency now happens behind the scenes, with automatic building management systems detecting usage patterns of lighting, heating and air conditioning. Lighting technology is another opportunity area, as are innovations in window insulation designed to trap heat in winter and keep out the sun in summer.
Rick: If you could suggest a single KPI to measure our progress toward a more sustainable world, what would that be?
The effects of climate change cannot be addressed without changing the way our older buildings are operated and maintained.
Ed: Another great question. The effects of climate change cannot be addressed without changing the way our older buildings are operated and maintained. With this in mind, I would focus on reducing the percent of facilities in a portfolio over 35-years that have not undergone a significant retrofit within the past five years.
Rick: Ed, thank you for your insights this morning.
Ed: Rick, thank you for allowing me an opportunity today to provide my opinion on a topic that is very important to me.