LEED Costs

The following is a memo I wrote in response to a question asked by my boss (on behalf of one of the schools).


MEMO

From: Nathan Gauthier, Assistant Director, Harvard Office for Sustainability
Date: September 9, 2010
Re: Cost of LEED Gold at the Harvard _____ School

There have been a number of studies focused on identifying the cost of sustainability and the cost of LEED Certification. The consensus amongst these studies is that the cost premium varies from project to project, but if there is any premium, it is quickly recovered via the reduced operating costs of the building. Many studies, including a review of historic project costs at Harvard, indicate no statistical evidence of any added costs for LEED Certified projects compared to non-LEED projects. Published papers on the green premium tend to range between 0% and 2%; platinum projects with lots of renewable energy report as high as 15% above standard construction costs. All papers caveat their findings with warnings about the difficulty applying these findings to specific projects. An Office for Sustainability analysis of LEED for New Construction and Major Renovations at the _______ School indicates that all projects of this type can achieve LEED Certification without additional costs and can achieve LEED Gold with the addition of the specific LEED Credits required by the Green Building Standards and agreed upon by the Administrative Deans, the Greenhouse Gas Executive Committee, and the University Construction Management Council. The Harvard required LEED points are generally those that reduce energy consumption and greenhouse gas emissions such as energy efficiency, building commissioning, and energy conservation measure verification. These requirements are pragmatic and provide significant operating savings over time with guidance that only elements that are net present value positive (a simple payback of 12 years or less) be included. Details of these findings can be found below.


Published Studies

The most commonly sited cost studies come from either Davis Langdon or Gregory Kats, both of whom have published multiple studies. The most exhaustive study in terms of sample size is the Cost of Green Revisited by Davis Langdon in 2006, which builds upon an earlier study by them conducted in 2004. The summary of finding is, “The 2006 study shows essentially the same results as 2004: there is no significant difference in average costs for green buildings as compared to non-green buildings.” They go on to identify individual LEED credits that generally have additional costs associated with them such as purchasing green power, installing renewable technologies, specifying certified woods, etc., but note that none of these credits are required to achieve LEED certification.

The most recent whole building cost study is Greening Our Built World by Greg Kats in 2009, which is the culmination of series of green building cost papers dating back to his The Costs and Financial Benefits of Green Buildings from 2003. According to the most recent study, green buildings cost roughly 2% more to build than conventional buildings and provide a wide range of financial, health and social benefits. In addition, green buildings reduce energy use by an average of 33%, resulting in significant cost savings.

The most recent effort to quantify LEED costs was published by Building Green in 2010 and included a number of New England firms on the research team. The Cost of LEED report does not attempt to quantify the overall cost premium of green buildings or LEED Certification, but instead attempts to help estimate the potential cost premium of each of the LEED credits in the LEED 2009 rating system. As such, this paper is not helpful in predicting an overall cost premium unless it is applied credit-by-credit to a planned building. It does point out that the majority of credits can be achieved at little or no cost premium for most projects and that these costs can typically be identified and included in the discussions around Life Cycle Costing and Value Engineering.


OFS Analysis

In 2007, the Harvard Green Campus reviewed the last 50 construction projects at Harvard, and came to the same conclusions as the Davis Langdon reports that there is no statistical evidence of increased hard or soft costs associated with green buildings. Besides having a relatively small sample size, the costs per square foot varied tremendously from project to project even in like building types and the costs seemed to have no correlation to the level of greenness or LEED Certification.

A review of the current LEED New Construction rating system and the Harvard Green Building Standards indicates that all new construction and major renovation projects at the Harvard _______ School can achieve LEED Certification relying only on those credits that have no cost impact such as low emitting materials and construction waste recycling. This review also shows that the addition of enhanced commissioning, measurement and verification, and the 30 to 34% energy efficiency goals bring these projects to LEED Gold while quickly paying for themselves through reduced operating expenses. The Green Building Standards working group used similar analysis to come to consensus around the LEED Gold and specific performance requirements.


Summary

Beyond the 3¢ to 5¢ per square foot cost to register and certify a project, it is possible to certify a building at the Harvard _______ School at the LEED Gold level without added construction costs beyond those associated with meeting the agreed upon minimum energy and water performance targets of the Green Building Standards, again which quickly (within 12 years or less) pay back through reduced operating costs. Because of the Green Building Standards’ emphasis on Life Cycle Costing and Integrated Design, the intent is to only include those sustainable design elements that meet the University’s financial payback thresholds and are considered to be Net Present Value positive investments. To this point, LEED Gold certified buildings can be said to be consistently less expensive per square foot on a present value basis than their non-green counterparts. The Harvard _______ School and Harvard Office for Sustainability have a long history of green building leadership and have leveraged this experience to streamline the process and deliver projects that are continually improving over time and being delivered in a more cost effective manner. Clearly defined expectations of the design and construction teams help ensure selection of teams that consider delivery of green buildings to be standard practice and minimal additional fee.