Breaking Down Financial Barriers Towards a More Sustainable Commercial Real Estate Market

摘要

Approximately 40% of the US energy [1] and nearly 16% of the world energy [2] is consumed within the existing building stock. It is estimated that over 2 quadrillion Btus of site energy could be avoided by simply engaging in an energy efficiency project [3]. These energy savings projects could carry with them an average internal rate of return (IRR) of 17% and save up to $900 billion in estimated energy costs by the year 2020 [4]. Why, then, are private building owners not investing in their buildings? Why are investors and banks unwilling to engage building owners to provide capital for these projects? The simple answer is they can't. Current lease and accounting structures give rise to issues such as the split incentive and leverage barrier, which frequently make these investments financially irrational for commercial building owners. Many financial structures have been developed to successfully fund energy projects in our public buildings. Unfortunately, most of these structures fail to address the needs of private building owners. This article (and a subsequent WEEC presentation titled Breaking Down Financial Barriers towards a more Sustainable Commercial Real Estate Market) looks at the current obstacles holding back energy retrofit projects in the private building market today. We will explain the main barriers to investment in private building energy projects, examine the currently available funding options, and review the pros and cons of each.