USGBC’s update to LEED rating could be built on stronger foundations

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Posted 30 September 2011

In the U.S., as across most of the developed world, the building sector is responsible for more GHG emissions than any other sector of the economy, contributing upwards of 40% of all greenhouse gas (GHG) emissions.  No surprise then that improving the energy performance of buildings attracts attention from many quarters – owners, occupiers, engineers and architects and of course industry regulators.  This summer has seen a flurry of news: some of which has been positive for the industry, some negative and others mixed. 

On the positive side, there is news that Richard Branson’s Carbon War Room plans to unlock billions of dollars of private capital for GHG-reducing retrofits in U.S. commercial real-estate. On the negative side, the U.S. Energy Information Agency may have to suspend its Commercial Buildings Energy Consumption Survey – the data backbone of important programs such as ENERGY STAR – due to budget constraints. 

 

Increased focus on climate change - but offsets could do more

In more mixed news, the U.S. Green Building Council (USGBC) has proposed an update to its LEED rating system, the internationally recognized standard for green building certification. Admittedly, news of this sort should be generally positive for the green building industry as it represents the evolution of knowledge and practices around green buildings. While this is certainly true at some level, closer inspection of the USGBC’s newly proposed LEED standard, LEED 2012, reveals a mixed bag of improvements as well as room for improvement. 

This is no truer than in LEED 2012’s Energy and Atmosphere (EA) provisions. The USGBC is increasing its focus on climate change by including Scope 1 emissions and market-based instruments, such as carbon offsets, in the EA Credit provisions. For this the USGBC should be applauded. 

Unfortunately, owing perhaps to offsets’ relatively new entrance to the green building industry, USGBC seems to still be working out the appropriate role and use of carbon offsets vis-a-vis Renewable Energy Credits (RECs) to attain EA credits. This is illustrated by a set of newly proposed provisions that would segregate the application of RECs to Scope 2 emissions and carbon offsets to Scope 1 emissions while at the same time limit U.S. LEED projects to U.S.-based carbon offsets.  

While these may be common practice for some companies, they don’t necessarily reflect the best use of offsets. 

Firstly, given that it is irrelevant from the point of view of mitigating climate change where greenhouse gas emissions are reduced/avoided/sequestered, it makes little sense to limit the application of carbon offsets to just Scope 1 emissions. This is recognized throughout the voluntary carbon market – as evidenced by thousands of companies that offset their scope 2 emissions with carbon offsets - and even in the context of LEED, as demonstrated by numerous cases1 where USGBC has permitted, through the alternative compliance path, companies to use certain carbon offsets against Scope 2 emissions to earn Green Power points. 

Additionally, RECs are not well known outside the U.S. and are not a global tradable environmental instrument. This may make their use among international LEED projects difficult. 

 

Offsets could encourage renewable energy technologies

If the USGBC’s desire is to promote grid-connected renewable energy through its Green Power and Carbon provisions, it may be better off allowing the use of carbon offsets against Scope 2 emissions, however limiting the type of offsets used to those generated by grid-connected renewable energy, regardless of their location. This is in line with the intent of Green Power credits, as such offsets would encourage the development and use of grid-connected, renewable energy technologies on a net zero pollution basis. They would also have the added benefit of ensuring an incremental and fully additional increase in renewable energy capacity and greenhouse gas emissions reductions - something not guaranteed by RECs. Lastly, such a provision would allow U.S. projects that prefer to use offsets over RECs to do so – while supporting grid-connected renewable energy – and provide international projects an option for using an instrument that is more global in nature. 

By no means is this meant to be an indictment of the USGBC. After all, USGBC is trying to address an admittedly complex issue – the role of carbon offsets vis-a-vis RECs - for the first time. This bit of news is most welcome. 

I just hope the USGBC continues to incorporate carbon offsets in LEED 2012 in a way that is consistent with their purpose and use in the broader market. That would be nothing but great news for everyone. 

 

Note
1 Examples include: (i) Haworth Corporate Headquarters; (ii) Herman Miller Shanghai M. Moser Singapore

 

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Jem Porcaro

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