Can we compare growth in the green building and green transportation sectors?
I’ve just been reading those Scientific American articles on energy and climate change. After rereading the stabilization wedges article (PDF) I began to think, “How likely is it that any particular wedges will take off?” This got me thinking about green building (almost everything does these days) and how much has happened to the building industry in recent years.
Green is booming” is an increasingly common story. But what is less often talked about is how and why it’s booming and how that growth compares to other sectors of the economy that impact the climate. The recent surge in green building activity has occurred with comparatively little effort on the part of government. It is in large part an organic phenomena and one that appears to be making real headway in changing the energy and environmental profile of our building stock. I read recently that 2 percent of new commercial construction last year was “green.” Comparatively hybrid cars (the most prominent form of “greener” transportation), according to Google, amounted to around 1 percent of new cars sold last year.
What I see is a very rough view of change happening in two sectors of the climate change pie. Basically, stabilization wedges to be. They are both in the nascent stages. But how did they get where they are and what does that mean for future growth?
One of them has happened without much coordinated effort, at an essentially grassroots level, surprisingly fast. It has been driven by a host of actors and consists of a wide range of solutions from the simple to the complex. The other has happened relatively slowly, with a lot of government regulatory interaction, from the top down. It consists of a couple of innovative companies and requires significant deployment of expensive new technologies.
The building sector has only had a “green” light for about a decade and in that time they have moved from almost zero penetration to 2 percent. Cars, on the other hand, have had much more attention on them for longer and are at about the same place. What accounts for the differences? Part of it certainly is the consolidated nature of the automobile industry and the technological investment needed to create new automotive systems. It’s much easier to implement technology in buildings because each product is a one-off and the individual investment is much less. But at the same time, the building industry has far less investment in research and development, much less turnaround time for new products, and much less product in play to learn from. Further, the lack of consolidation of the building industry has often been seen as a hindrance to innovation, as information is slow to penetrate and many building markets have been exceedingly localized.
Today, I see an industry that’s excited about its products, leaping forward in terms of innovation, and has taken a green price premium of 10-15 percent and slashed it ten-fold in about half a decade. Whereas a hybrid car still has pretty steep price premiums. Now if that isn’t fertile ground for every other sector of the economy that is grappling with environmental issues, I don’t know what is. Of course, the road is not entirely clear; there are barriers, and we don’t really know if the growth in green practices will level out in the near future. But the way green building has proliferated, and the pace of change in the construction mindset (widely regarded as conservative and risk averse) are notable. While it’s not clear what is making green building grow relatively fluidly, policy makers and environmentalists may want to try to figure this out. Instead of just touting the wonders of particular green buildings, we need to look closely at why they are happening and where they are happening in order to see if there are lessons that can be applied to other sectors of the energy/climate package.