ROI: Why Cities Are Pushing Building Efficiency

Cities across the country are investing in energy efficiency building projects that include new developments and retrofitting with upgrades


What Happened?

Cities across the country are investing in energy efficiency building projects that include new developments and retrofitting with upgrades. Research indicates these initiatives offer significant payouts in the long term at minimal costs in the short term.

The Research

The U.S. Environmental Protection Agency reports buildings in the United States account for:

  • 39 percent of total energy use
  • 12 percent of total water consumption
  • 68 percent of total electricity consumption
  • 38 percent of carbon dioxide emissions

A study conducted by Deutsche Bank and the Rockefeller Foundation found retrofitting buildings for energy conservation could save the United States more than $1 trillion over a 10-year period while simultaneously reducing greenhouse gas emissions by 10 percent and creating clean jobs nationwide.

The U.S. Green Building Council estimates just under 50 percent of new nonresidential construction this year will be using green materials and energy efficient designs, creating up to a $145 billion opportunity in the market.

By 2018, 84 percent of new single-family home projects will energy efficient, and the surge in green residential construction will have an outsized impact on an estimated 18 percent of the domestic economy over the next decade.

Furthermore, McGraw Hill Construction expects the green home building market to be worth up to $114 billion by 2016, driven by consumer demand for higher quality buildings and lower utility costs. This demand for green construction is spurring job growth.

The Sustainable Endowments Institute, which offers institutions with access to green revolving funds, reported a 28 percent median annual return on investment for all green revolving fund projects in 2012.

The Projects

To further accelerate the implementation of green building standards to improve energy efficiency, many municipalities are launching programs and policies with smart energy use in mind.


Philadelphia recently passed a law that requires owners of large office buildings and apartment buildings to keep track of energy usage. The goal of the energy benchmarking initiative is to provide the city with a baseline for energy consumption from which efficiency programs can be launched to cut down on greenhouse gas emissions and lower utility costs, CBS Local reported.

Under the requirement, building owners must keep track of their facilities’ energy usage via the EPA’s website and report their numbers directly to the city. The owners can use the EPA website to compare their buildings’ energy performance to other measurements and benchmarks, as well as learn of opportunities to reduce consumption and lower costs. Throughout Philadelphia, the law applies to about 2,000 large office buildings and 800 apartment buildings, CBS Local reported.

New York

The state of New York is offering New York City with a $3.5 million grant for its Building Energy Exchange nonprofit organization created to educate building owners on how to reduce consumption and improve long-term sustainability, Capital New York reported.

The Building Energy Exchange is working with the city council to reduce New York City’s greenhouse gas emissions by 80 percent by 2050 through increased efficiency standards and extensive outreach to assist building owners in making changes. The exchange offers landlords, architects and others in the industry with training on how to reduce building energy consumption with easy upgrades or long-term investments.


Sydney recently announced its Energy Efficiency Master Plan which calls for $400 million in energy efficiency improvements throughout the city. The goal is to double energy productivity while reducing energy costs by $600 million by 2030.

According to a recent assessment of the city’s efficiency performance, Sydney’s built environment has ample opportunity to hack away at 80 percent of its total greenhouse gas emissions that are attributed to building electricity and gas consumption. If the city can stick to the plan, Sydney stands to cut energy costs by $220 million annually by 2030, with additional $70 million saved each year due to reductions in electricity infrastructure costs. This can translate to return on investment of $506 million.

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