The drive for a US code for green houses

The big news out of America last week was the announcement of the new national green home rating system from the National Association of Home Builders, representing more than 230,000 U.S. housebuilding companies. In making the announcement, NAHB officials called the program “voluntary, market-driven, flexible and affordable” and stressed that the certification paperwork would cost less than $500 per home.

The NAHB National Green Building Program, an education, verification and certification program, allows builders anywhere in the U.S. to certify a green home to bronze, silver or gold levels, using third-party verifiers furnished by the NAHB Research Center.

The new Code

The NAHB rating system features an online scoring tool, which shows builders how to accumulate points in seven categories: water, energy and resource efficiency; lot and site development; indoor environmental quality; global impact and homeowner education. To be eligible for certification, the NAHB program requires a builder to achieve a minimum score in each category.

While all of this an improvement on the current NAHB system, which does not provide for independent third-party verification of each home, using such tools as a “blower-door” air leakage test and a duct-pressurization test, the announced program has two shortcomings. First of all, it is not yet a national standard, since NAHB has yet to complete the requirements of the American National Standards Institute (ANSI). Second, the third-party verifiers have yet to be certified by the NAHB Research Center. So it will likely be the summer of 2008 before all the pieces are in place.

The somewhat premature launch of this program at the annual International Builders Show in Orlando, Florida, was an attempt to put the national homebuilders association back in charge of green home ratings and to reduce the burgeoning number of local government rating systems and green home mandates, based on climate change concerns.

Low take-up

I predict this effort to forestall or eliminate competition will fail, for several reasons. First of all, for all the fanfare, builders have certified (to NAHB or similar building industry standards) only about 100,000 homes the past five years across the country, compared with six million or so single-family homes that have been built. It’s hard to convince local government officials that the industry is serious about producing energy-efficient buildings when the actual track record of certifications is so deficient.

Other codes

Contrast for example, the federal government’s ENERGY STAR for homes program, a voluntary certification of energy performance, which certified about 700,000 homes from 2004 through 2007. It’s clear that many builders can do a good job of cutting energy use by 15% from the 2004 International Residential Code (IRC), the ENERGY STAR standard, but do much more poorly when held to a full “green” standard that includes water use reduction, alternative materials use, improved site impacts, and so on.

In my view, the real story behind the NAHB announcement results from the increasing pressure builders’ organizations are feeling from the competing (and more stringent) LEED for Homes standard promulgated by the 13,000-member U.S. Green Building Council. LEED for Homes is still in a pilot (test) phase, but in two years has already enrolled more than 12,000 residential units in its program.

For all the fanfare, builders have certified only about 100,000 homes the past five years across the country, compared with six million or so single-family homes that have been built.

If LEED becomes regarded as the “gold standard” of residential certification, the NAHB may have to accept local green home mandates in order to preserve some semblance of primacy as the leading authority for greening the housing industry. Home builders oppose local mandates with a singular passion, not wanting government authorities to regulate the housing choices they offer the marketplace.

As many of you may know, nothing is very centrally directed in the U.S. For example, beyond the three national programs mentioned, there are more than 60 local green home rating systems, some of them very well established, such as the City of Austin, Texas, and the EarthCraft Home rating system in Georgia (and three other southeastern states). There is also an Environments for Living standard supported by General Electric, one of the largest seller of Energy Star home appliances, and a Health House standard from the respected American Lung Association.

Crystal ball time

My own prediction is that it will take three or more years for the market to sort out the standards, absent further government involvement. My bet is on the finalists comprising a few of the local programs, LEED for Homes and the NAHB Green Home standard.

Interestingly, the NAHB’s own research shows that three-fourths of buyers would pay up to $9,000 (4 percent of the median new home price of $220,000) for various green home features that promise energy and water savings and healthier indoor air. However, there’s going to have to be a revolution in homebuilding techniques to achieve some of the more dramatic improvements that are clearly possible, such as a 50% reduction in home energy use.

In the midst of all this folderol about minimum green standards, many builders are moving ahead to demonstrate “net zero energy” homes using solar photovoltaics to make up the balance of energy demand. For about $15,000, or about 7 percent of a median new home price of $220,000, a builder can create a net-zero-energy home that will attract a growing number of buyers.

The U.S. Green Building Council’s announced goal is one million new certified green homes by the end of 2010. With the deep home building slump in the U.S., this would require nearly two-thirds of all new single-family homes built from 2008 through 2010 to be green certified. While this is unlikely to happen, my own prediction is that green homes will storm the market in the next three years and are likely to command a 20 percent market share by 2010.

If I were a seller of energy-efficient and resource-conserving products technologies and building systems, I would start investigating the U.S. green home market as a dynamic sales growth opportunity.