As we approach Earth Day on April 22nd, it is a good time to consider the state of Green Building in Maryland.

Global Warming is the Issue of the Day

It is hip to be green. The phrase ‘global warming’ first appeared in print in 1969 in a back page story in The New York Times. Now, with unprecedented media attention, including cover stories in the New York Times Magazine and in nearly every national news magazine in the last month, global warming is the issue of the day.

The turning point in the debate over climate change may well have been the decision of the U.S. Supreme Court, two weeks ago in Massachusetts, et al v. EPA, et al, when for the first time in a decision, the highest court used the phrase global warming. That word choice, in and of itself, is significant because the Court went much farther than required to narrowly decide the issues before it, including recognizing that global warming exists, and compelling the federal government to begin to regulate greenhouse gases across varied sectors of the economy, including auto manufacturing, electricity production, real estate, etc.

Significantly, the decision identifies, approvingly, the work of the U.N. Intergovernmental Panel on Climate Change, the world’s authoritative voice on global warming, that some weeks before the decision, first concluded with “90 percent certainty” that humans had caused the rise in atmospheric temperatures over the last half-century.

Environmental Impacts of Buildings

The U.S. Environmental Protection Agency Green Building Workgroup has concluded buildings in the United States contribute 38.1% of the nation’s total carbon dioxide emissions. (Cars and light trucks together produce only 20.5% of U.S. carbon dioxide pollution.) 20.6% of all carbon dioxide emitted in the U.S. comes from housing and 17.5% from commercial buildings.

Buildings account for 67.9% of total U.S. electricity consumption. 51.2% of that total is attributed to residential building use, while 48.8% is attributed to commercial building usage.

U.S. buildings account for 39.4% of the country’s total energy consumption. Residential buildings account for 54.6% of that total and commercial buildings accounted for the other 45.4%.

Building occupants use 12.2% of the total water consumed in the United States per day. Of that total, 25.6% is used by commercial building occupants and 74.4% by homeowners. Water quality is also impacted when buildings and the transportation infrastructure that serves them replace natural surfaces with impermeable materials.

Green Building

Green Building is the practice of creating more resource-efficient buildings and their sites through the use of materials, energy, and water, reducing building impacts on human health and the environment, through better design, siting, construction, operation, maintenance, renovation, and demolition – the complete building life cycle.

While there is no single acceptable definition of Green Building, the more efficient building practice is also sometimes known as sustainable building or environmental building.

Green Building is key to the effort to tackle global warming as well as the nation’s dependence on precarious supplies of foreign oil, while creating job growth in the emerging clean-tech sector.

Green Building is using the power of technology and free markets to redefine green in slowing global warming, as in Arnold Schwarzenegger’s California reduction in greenhouse emissions. It is a world away from the former next President Al Gore’s alarming climate lecture in the Oscar winning documentary “An Inconvenient Truth,” and his call for a government ban on light bulbs in favor of compact fluorescent bulbs.

Green Buildings are becoming environmentally sound investments as government provides the necessary incentives to advance the wider use of green methods, buying down higher up front construction costs that are often, over time, recouped in reduced operating costs and increasingly set-off by premium rents.

LEED Certification

While there is no single accepted standard, the U.S. Green Building Council established the Leadership in Energy and Environmental Design (LEED) Green Building rating system as a non-governmental national standard for measuring Green Building. LEED recognizes water and energy savings, materials selection, indoor environmental quality, and environmental protection (for example, using less energy and water, Brownfields redevelopment, using locally harvested materials, providing for daylight, etc.). Points are given for green practices and based upon a building’s total number of points, it will receive one of the four LEED levels of certification: 26 to 32 points for Certified, 33 to 38 points for Silver, 39 to 51 points for Gold or 52 to 69 points for Platinum.

Beyond that certification, LEED also recognizes distinct rating systems for different types of construction projects, including: LEED-NC (version 2.2) is applicable to new commercial construction and major renovations. LEED-EB is a benchmark rating system for measuring efficiency upgrades, maintenance programs, and systems upgrades to existing buildings. LEED-H is a pilot project for residential construction (but, there are no registered home builders in Maryland). And LEED-CS is a pilot project for new “core and shell” commercial construction.

Incentives Offered By Government

Voluntary incentives offered by government, whether as expedited permitting, density bonuses, tax breaks, direct grants or below market loans for Green Buildings are a non-prescriptive non-regulatory approach to environmental protection that responds to the overwhelming public sentiment that government has not done enough to protect the environment while not burdening owners and operators of the land with another mandate.

In light of the Supreme Court decision in Massachusetts, et al v. EPA, et al, that all but ordered the federal government to reduce greenhouse gases and in particular carbon dioxide, the Green Building philosophy of voluntary industry-friendly, results oriented environmental policy that portend a future for broader environmental policy.

The Regional Greenhouse Gas Initiative, or RGGI, is a cooperative effort by Northeastern and Mid-Atlantic states to reduce carbon dioxide emissions with a mandatory emissions cap on the electric generating sector beginning in 2009. Of note, “natural gas, heating oil & propane energy efficiency” in buildings can serve as one of the offsets for this first mandatory cap and trade program in the U.S. Energy efficiency in Green Building may have the lowest possible compliance cost, spurring Green Building to offset power plant emissions.

To date tax credits have proved a popular vehicle for government to spur voluntary action.

Federal Tax Credits

The Energy Policy Act of 2005 includes several categories of federal tax credits for Green Building.

A tax deduction of up to $1.80 per square foot is available to owners of new or existing commercial buildings that save at least 50% of the heating and cooling energy of a building that meets ASHRAE Standard 90.1-2001. Partial deductions of up to $.60 per square foot can be taken for measures affecting any one of three building systems: the building envelope, lighting, or heating and cooling systems. The credits are available for systems placed in service through December 31, 2008.

Home builders are eligible for a $2,000 tax credit for a new energy efficient home that achieves 50% energy savings for heating and cooling over the 2004 International Energy Conservation Code. At least 20% of the energy savings must come from building envelope improvements. These tax credits apply to new homes sold through December 31, 2008.

Tax credits of up to $500 are available for many types of home improvements including adding insulation, replacement windows, and certain high efficiency heating and cooling equipment, and there are more generous credits available for solar water heating and photovoltaic systems.

Maryland Tax Credits All Allocated

The State of Maryland offers a Green Building Tax Credit against a taxpayer’s personal or corporate income tax. But capped at $25 Million, all credits have been allocated and with the legislature declining to raise that cap in 2007, the State Energy Administration is no longer accepting applications. The credit varies from 6% to 8% of total allowable construction costs for a building of at least 20,000 square feet that meets specified Green Building standards. The current program is LEED based. Should the program ever be funded again and as new standards become available, the state will accept those alternatives.

The 2007 General Assembly did nothing for Green Building, but did enact HB 942, codifying the Green Building Council that was created by Executive Order in 2001, requiring that by September 30, 2007, the council must evaluate current Green Building technologies and recommend cost-effective Green Building technologies that the State may consider incorporating into the construction of new State facilities.

Baltimore County

Baltimore County Code, Section 11-2-111, provides that a commercial building achieving at least a Silver certification in the LEED-NC Green Building system is eligible for the ten year 100% property tax credit.

There is a $5 Million cap on the cumulative amount of tax credits to be granted in Baltimore County. Applications are accepted annually, in advance of June 1st, in a streamlined process administered by the Director of Budget and Finance.

Howard County

Howard County offers a three-year property tax credit for an energy conservation device that receives a LEED credit and is used in a LEED certified structure. The County tax credit ranges from 14% of eligible costs for LEED Certified building through 20% for LEED Platinum certification. Howard County Code, Section 20.119, specifies the tax credit allowance and process for the annual April 1st application. The County is in the process of proposing an aggressive mandatory Green Building law.

Montgomery County

Montgomery County has imposed mandatory Green Building standards, effective September 1, 2008, for all newly constructed or “extensively modified” non-residential and multi-family residential buildings 10,000 square feet or greater. Private construction must achieve LEED certification. Public buildings are required to achieve a LEED Silver rating. The County is to issue regulations that provide an alternative to LEED 2.2 ratings. Many have argued this mandatory program, Montgomery County Code, Section 8-26, is a misuse of the voluntary LEED ratings.

Baltimore City

Baltimore City has pending Ordinance 07-0602 that would amend the Building Code requiring certain non-residential buildings and certain multi-family residential buildings to achieve certain standards for energy efficiency and environmental design, as a condition of certain building permits and occupancy permits. The bill with mandatory Green Building requirements goes much further than the recommendations of the City’s Green Building Task Force, April 2006 report, but at this time has only had its first reading and has not yet had a hearing.

Also pending in the Baltimore City Council is Ordinance 06-0507, which has yet to have a public hearing, that would create a 100% property tax credit for LEED certified Silver building.

City of Bowie

The City of Bowie, by Resolution R-15-03 of the City Council, requires all municipal projects to follow Green Building criteria and to use LEED guidelines on a project by project basis.

City of Annapolis

Annapolis promotes Green Building design by providing a checklist and Green Building fact sheet for all private building permit applications and has adopted LEED building standards for all new public facilities and renovations of existing public buildings with a minimum standard of Silver Certification, by City Council R-38-06.

Conclusion

Given that buildings contribute over 38% of the U.S.’s total carbon dioxide emissions, Green Buildings are an important part of the solution to slowing global warming. But accepting that the marketplace, generally, can not yet support the increased up front construction costs of Green Building without incentives offered by government, it is unfortunate that there are not more incentives currently available in Maryland.

Green Building is key to the effort to tackle global warming as well as the nation’s dependence on precarious supplies of foreign oil, while creating job growth in the emerging clean-tech sector. It is hip to be green, and the real estate industry needs more Green Buildings developed through a non-prescriptive non-regulatory approach or, it is all but certain, the federal government will enact traditional environmental laws to reduce carbon dioxide from buildings.