Depending on what your thoughts are about climate change and how to face the future, the Green New Deal may conjure either fear or excitement, or maybe even a bit of both. Based on research that shows climate change is imminent and potentially disastrous, the bill aims for net-zero emissions in the United States by 2050 and, as part of the plan to get there, calls for every building in the country to be upgraded for maximum energy efficiency.
The ambitious plan to combat climate change means overhauling the way we use energy, the way we get from place to place and the way we live in the built environment. For real estate investors, the bill outlines expectations for owners of residential and commercial properties to cut energy use and carbon emissions significantly, or face the consequences in the form of steep fines. The bill calls for “maximal energy efficiency, water efficiency, safety, affordability, comfort and durability.”
Currently, commercial and residential buildings account for 40% of the United States’ carbon monoxide emissions. The Green New Deal warns that up to $1 trillion of infrastructure and coastal real estate could be damaged by global warming by 2050, so it’s in the best interest of investors to take note and consider options. These can take the form of changes to current properties and certainly building improvements into new construction.
There are roughly 5.6 million commercial buildings in the U.S., according to the Energy Information Administration. In New York City, due to recent legislation passed as part of the movement toward climate action, buildings more than 25,000 square feet are required to make the alterations necessary for them to be energy efficient, with the goal of cutting greenhouse gas emissions 40% by 2030 and 80% by 2050. In the Green New Deal, all other buildings would have to be retrofitted to be more energy efficient. Improving energy efficiency of the 95 million homes in the U.S. alone is estimated to cost in excess of $400 billion.
While the Green New Deal is unlikely to pass in its current form, it does show that there is serious thought being given to what changes must be made to positively impact the environment. Given this, smart real estate investors should consider how to be proactive and prepared for what’s on the horizon. Doing nothing now means falling behind in terms of technology and being behind the eight ball when changes are regulated or retrofits are made mandatory.
High-Tech And Climate-Resilient
One place to start is a technological overview, which measures how operations are currently running in your properties and makes it easy to spot places where changes make the most sense. Switching out lightbulbs, upgrading HVAC systems, installing window shades, painting roofs with light-reflecting paint, planting trees and installing photovoltaics are immediate fixes to consider.
Another area to assess is how ready your property is for weather — both current and future. Weatherization is key to a more efficient property; windows, doors and insulation can all be switched out, and part of the deal includes different types of incentives to make these changes. For inspiration, look at the Netherlands, which has funded a program called Energiesprong to focus on adding insulation and solar panels to older buildings. Upgrades to service systems such as electricity and plumbing and the addition of solar panels can all make homes more marketable as these changes become more prevalent and necessary.
The move toward using electricity in favor of other energy sources requires a grid that is able to handle the extra load, so investors need to identify where their local community is in terms of power availability. Installing an electric-powered heating system can help with emissions, but it can also cause energy needs to spike. Appliances are another area for consideration — gas stoves and water heaters could eventually be replaced by induction cooktops and electric or geothermal heat.
Geothermal heat pumps are significantly more efficient than gas or oil furnaces, cut up to 65% from residents’ overall energy bills and emit no greenhouse gases. Rebates and tax incentives are an added encouragement in many markets, making the initial financial investment in the system worth it in the long run, both for a home’s resale value and for the environment.
Green Spaces And Gardens
Another feature to consider is green spaces. Covering over 40 million acres of land in the U.S., lawns limit biodiversity and encourage pesticide usage and emissions from lawnmowers. The Green New Deal encourages the conversion of these spaces to victory gardens and the expansion of green landscape architecture practices. An example of this is xeriscaping, or sustainable, easy-to-maintain landscaping first used in arid regions, which uses native plants and limits turf areas. This can reduce outdoor water use by as much as 50%, saving water as well as the environment.
Though the Green New Deal is not expected to pass in Congress and the changes it outlines would face many challenges before becoming practice, it has sparked a great deal of debate about what the future of real estate looks like. The cost in dollars of executing the plan would certainly pose a challenge for commercial real estate investors. One thing is for sure: The conversation will continue, and being prepared for change is the best way to save the environment — and your own future.