How’s The Fit? Get To Know Deutsche Bank’s Plan To Study he Efficiency (and Monetary) Value of Green Retrofits

Not all green retrofits get as much attention as The Empire State Building’s. A new study dedicated to figuring out the green (and economic) worth of retrofits looks to change that.

For every quantifiable bit of green building goodness we discuss here at gbNYC — I’m thinking here, as I so often am, of insulation — there’s a lot that we take on faith. I’m not talking about the ineffable loveliness of a green roof in this case so much as I am on the sort of general optimism surrounding green building practices that seem, anecdotally at least, to be really good ideas. There’s a lot of data out there on the benefits of proper insulation, for instance, but many of the newer green building practices that may eventually emerge as game-changing innovations just haven’t been studied enough yet to win over a skeptical market. There is, for instance, every reason to think that green retrofits are a very good idea, and will eventually develop into a booming market — the energy savings are appealing enough, retrofits are paying for themselves more quickly, and so on. But there isn’t yet a single study that the green retrofit industry can point to and say, “Here is the proof that this works.” Yet. A promising new endeavor from Deutsche Bank Americas — the philanthropic arm of Deutsche Bank, which apparently has a philanthropic arm? — called the Living Cities Building Energy Efficiency Data Report may well wind up changing that. In so doing, it could also change the green retrofit market dramatically.

In the New York Time, Julie Saton has more on the LCBEEDR. The acronym obviously needs work, but the program, which began last fall and is centered around “the creation of a public database of several hundred retrofitted buildings in New York City and a companion report to determine the savings from such moves,” sounds pretty cool. “Developers agree that a lack of data has hampered the spread of green technologies,” Saton writes. “‘If you approach a lender now with a plan to spend more to implement a green technology with the idea you will save on operating costs, they are skeptical and want to know what kind of proof you have,’ said Kenneth S. Horn, the founder of the residential developer Alchemy Properties. ‘If you could be armed with an assortment of data, it would inevitably help you get financing and even increase your financing because your bottom line would go up…’ [Deutsche Bank Americas' Gary Hattem], who said Deutsche Bank would have no proprietary stake in the data, hopes that lenders will not only finance more retrofits as a result of the project, but also use the information to create a new securitizations market. ‘The idea here is that if underwriters can determine a predictable savings from retrofits,’ he said, ‘then they can create a financial instrument backed by these savings to sell on the open market.’”

Yes, the philanthropic arm is looking to create a new securities market. It’s the philanthropic arm of a bank, not the philanthropic arm of a philanthropic enterprise, so maybe that shouldn’t be a surprise. But speaking as someone who is not generally a huge fan of banks, I personally have no problem with Deutsche Bank eventually making some money off of what looks like a hugely valuable resource — a report that offers black-and-white proof, at last, of how well green retrofits work, and how much money they can save. It’s reasonable enough to take on faith that green retrofits — especially the sort of inexpensive boiler- and lighting-related retrofits that will be tested in the LCBEEDR study — work and save money. Once there’s proof for the industry to point to, though, we won’t need to. And that should be very good news for the green retrofit business indeed. (Provided they work)

Also, one last note: I’m going to be out of town for the next week or so — I’m going to Los Angeles to pick up sustainability tips attend a friend’s wedding — but Stephen will likely sub once or twice between now and next Thursday. Enjoy your week, gbNYCers.

about gbNYC

gbNYC is a multi-disciplinary consulting and real estate services firm. In addition to representing office tenants and commercial buyers in leasing and acquisitions, we also provide innovative consulting solutions from a unique, green building perspective. We advise on green building financial incentives, comment on proposed green building marketing strategies, author white papers, treatises, and market analyses, organize seminars on the LEED process and professional accreditation, and provide advice and analysis on green building risk management and the overall state of green real estate, leasing, and construction, in New York City and beyond.

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