Road to Net Zero: Greenness of LEED and CAL-Green Properties

Jeonghyun Chung, Michael Cusumano, Dongshin Kim and Abraham Park

ERES from European Real Estate Society (ERES)

Abstract: According to the U.S. Energy Information Administration (EIA), the real estate sector is associated with about 39% of national total energy consumption, with an attendant share of energy-related greenhouse gas emissions. To support sustainability in the built environment, those certified under platforms such as LEED, BREEAM, Energy Star, Green Star, and CAL-Green, purport to promote responsible environmental design in reducing scarce resource consumption. In the past, lack of access to actual energy consumption data, especially in the multi-family housing sector, has hindered efforts to determine the true effectiveness of sustainability designs and certifications. This research investigates the effectiveness of LEED and CAL-Green certifications in California by analyzing actual energy consumption data from large scale sustainably designed housing developments that have been built under LEED and/or CAL-Green design criteria and comparing them to a benchmark set of non-sustainably designed housing projects in the same general geographic location. Under California Assembly Bill AB 802, California is the first state in the US with a benchmarking program that requires the reporting of energy consumption for certain large size multi-family housing projects starting in 2019. The benchmark energy data provides the total annual carbon dioxide associated with building operations on a square foot basis when the consumption of all fuel sources is accounted for. The benchmark data provides approximately 7,092 multifamily buildings’ energy emission information from 2019 to 2021 and the sum of gas and energy usage level per square footage of building size (total greenhouse gas (GHG) emission intensity) is our key variable of interest. We additionally use the United States Green Building Council (USGBC) data to identify whether or not a building is LEED-certified. USGBC provides the LEED certified building information such as LEED application date, LEED certified status (approved or not), LEED class (Platinum, Gold, Silver, Certified), building address, building type, building size, and built year. There are 670 LEED-certified multifamily and multifamily affordable housing projects in the state of California. However, 113 buildings are classified as confidential, which does not provide any property information other than LEED-certified status. While benchmark data provides data at a project level, USGBC provides data at the building level: one project can have multiple buildings (e.g., Building A, Building B). Thus, we sort the USGBC LEED data using building address and key property characteristics to bundle buildings to project level. Specifically, we assume that buildings are identified as the same project if building’s project name, zip code, and LEED-certified level (Platinum, Gold, Silver, Certified) are the same. After cleaning the data, we find 298 unique projects that are LEED certified, of which 101 projects are matched with the benchmark data using project name, address, and building characteristics. The results from our empirical examinations show that LEED buildings do not produce significantly lower levels of GHG emissions compared to non-LEED buildings. More interestingly, we find that LEED buildings generate 17.30 to 20.81% higher levels GHG emissions than non-LEED buildings during post-Cal-Green period (from year 2015). These results are robust even after considering the occupancy rates (stabilization period). We also propensity-score match the data between LEED and non-LEED and the results are still consistent. On the other hand, Cal-Green is effective in reducing the GHG emissions by 7.16% to 7.88% compared to pre Cal-Green period. In addition, we find that smaller buildings consume considerably more energy and emit more greenhouse gas per square foot than larger buildings. The final consideration from this research is that to achieve the Net–Zero greenhouse gas emissions that California and the world has targeted, the building industry and the regulators must reexamine and improve the design standards for built environments.

Keywords: Green House Gas; LEED; Multifamily; Sustainable Design (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2023-01-01
New Economics Papers: this item is included in nep-ene, nep-env, nep-ppm and nep-ure
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