NREL is a national laboratory of the U.S. Department of Energy, Office of Energy 

Efficiency & Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.

Contract No. DE-AC36-08GO28308

Green Building Policy Options 

for New Orleans 

Elizabeth Doris

Technical Report

NREL/TP-7A30-52576

September 2011
NREL is a national laboratory of the U.S. Department of Energy, Office of Energy 

Efficiency & Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.

National Renewable Energy Laboratory

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303-275-3000 • www.nrel.gov

Contract No. DE-AC36-08GO28308

Green Building Policy Options 

for New Orleans 

Elizabeth Doris

Prepared under Task No(s). IDNO.1030

Technical Report

NREL/TP-7A30-52576

September 2011
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iii

Acknowledgements 

This work is made possible through support from the U.S. Department of Energy, Office 

of Energy Efficiency and Renewable Energy. The author would like to thank Phil Voss, 

the National Renewable Energy Laboratory (NREL) New Orleans project lead for 

identification of and support for this effort. In addition, the clean energy community and 

local government agencies in New Orleans offered data and feedback throughout the 

development process. The author also appreciates the reviews of Marguerite Kelly, 

NREL. The technical editing and publication development is the excellent work of Devin 

Egan at NREL. Of course, any remaining errors are the fault of the author. 
iv

Purpose

This document is adapted from a memo and report delivered to the City Council of New 

Orleans, the office of the Mayor of New Orleans, the Chairperson of the Citizen 

Stakeholders Group (New Orleans Energy Task Force) and the U.S. Department of

Energy (DOE) Project Officer in 2008. The purpose of the report is to outline ideas for 

and potential impacts of various green building policies in New Orleans in the years 

following Hurricane Katrina. 

This report is one in a subset of documents created to assist the City of New Orleans to 

rebuild in a more energy-efficient way through policy and program development. The 

broader project included a wide variety of technical assistance in addition to the policy 

and program assistance, which was implemented by the National Renewable Energy 

Laboratory on behalf of DOE from 2006 to 2008. For more information, see the DOE 

website at: www.eere.energy.gov/deployment/new_orleans.html 
v 

Acronyms and Abbreviations

ASHRAE American Society of Heating, Refrigerating, and Air-Conditioning 

Engineers 

DOE U.S. Department of Energy 

GWh gigawatt hour 

IECC International Energy Conservation Code 

kWh kilowatt hour 

LEED Leadership in Energy and Environmental Design 

LEED-H Leadership in Energy Environmental Design for Homes 

NAHBGHG National Association of Home Builders Green Home Guidelines 

NREL National Renewable Energy Laboratory 

PNNL Pacific Northwest Laboratory
vi 

Table of Contents

Acknowledgements ............................................................................................................ iii

Purpose ............................................................................................................................... iv

Acronyms and Abbreviations ............................................................................................. v

Table of Contents ............................................................................................................... vi

List of Tables ..................................................................................................................... vi

1 Summary ....................................................................................................................... 1

1.1 Summary of Analyses Presented ..................................................................... 1

1.2 Primary Findings ............................................................................................. 1

2 Estimating the Impacts of Encouraging Green Building: Commercial and 

Residential..................................................................................................................... 3

2.1 Category 1: Commercial Buildings ................................................................. 4

2.1.1 Analysis Overview .......................................................................................... 4

2.1.2 Methodology and Results ................................................................................ 5

2.1.3 Encouraging Energy Efficiency in Building through Public Policy in New 

Orleans ............................................................................................................. 8

2.2 Category 2: Residential Buildings ................................................................. 10

2.2.1 Analysis Overview ........................................................................................ 10

2.2.2 Estimating the Impact of Green Home Building in New Orleans ................. 11

2.2.3 Creating Incentives for Green Home Building in New Orleans ................... 13

3 Conclusion .................................................................................................................. 16

List of Tables

Table 1. Analyses Presented on Program and Policy Suggestions ..................................... 1

Table 2. Summary of Commercial Building Code and Above Code Impacts .................... 7

Table 3. Range of Possible Benefits for Incentives to Promote Green Building .............. 10

Table 4. Summary of Possible Energy Efficiency Goals for Housing ............................. 11

Table 5. Results from Residential Rebuild Electricity Use Analysis ............................... 12
1 

1 Summary

The purpose of this report is to outline ideas for and potential impacts of various green 

building policies in New Orleans in the years following Hurricane Katrina. This report 

represents a compilation of analyses presented to various stakeholders throughout that 

effort, including the Office of the Mayor, the City Council, the citizen stakeholder group, 

“the Energy Policy Task Force” or “Task Force,” and the subset of the City Council 

utility regulatory committee. 

1.1 Summary of Analyses Presented

From 2006 to 2008, the National Renewable Energy Laboratory (NREL) team completed 

various evaluations and impact analyses of the policy and program suggestions from 

various parties, as described in Table 1. 

Table 1. Analyses Presented on Program and Policy Suggestions

Program or Policy Suggestion Analyses Presented

Greening City Government: “Require all 

new City-owned nonresidential buildings 

larger than 5,000 square feet be designed, 

constructed, and certified at a minimum 

LEED new construction Silver rating or its 

equivalent at minimum 30% above code.”

1. An overview of the impact of greening 

all public and private new construction 

in the commercial and residential 

sectors in the city of New Orleans.

2. Estimates, based on the experience of 

other cities (as a result of limited data 

on the costs of green building for the 

city of New Orleans), of the impact of 

policies that encourage voluntary green 

building practices.

Establish incentives for all commercial and 

residential construction that achieves a life 

cycle cost neutral minimum 30% above 

code. 

Non-financial incentives could include 

waiving building permit fees, relaxing 

certain building restrictions and set-back 

requirements, approving a 30-day 

guaranteed building permit-plan-check 

process, and waiving city sales tax for 

green building products 

Discussion of a range of different policies 

that encourage voluntary adoption of green 

building practices, as well as current and 

future applicability and feasibility in the 

city. 

 

Develop a coherent incentives 

process/program for above-code 

construction that relies on rigorous 

analysis.

Streamlined permitting for green buildings.

1.2 Primary Findings

NREL’s analysis estimates that if all new commercial and residential construction is built 

above code, the energy savings relative to building to current code requirements would be 

155 to 281 Gigawatt hours (GWh) annually. Because adoption of beyond-code building 

activities will be voluntary, the extent to their uptake is determined by the cost of green 
2 

building attributes and the incentives offered for their inclusion. Based on other 

municipalities’ experiences, incentive programs tailored to the specific city can lead to 

about 20% of new construction built green. This would result in the following impacts: 

• Commercial sector savings of 16 to 33 GWh (GWh=10^6 kilowatt hours 

(kWh)) of electricity (over code). This translates into a reduction of costs to 

the rebuilt commercial sector of between $1 to $4 million dollars in annual 

energy savings over an equivalent rebuild to code standards, and an electricity

use per square foot reduction from 15 to 21 kWh to 12 to17 kWh. 

• Residential sector savings (in heating and cooling systems alone) of $150 

annually for green-built homeowners—over International Energy 

Conservation Code (IECC) 2006)—an overall sector savings of 15 to 22 GWh 

annually, and a per household reduction of 30%. 

Common incentives include expedited permitting, floor-to-area ratio incentives, direct 

capital cost reduction incentives, increasing the availability of energy-efficient 

mortgages, and education and outreach programs. 

In the city of New Orleans, many of these incentives will prove challenging as a result of 

lack of infrastructure or funding opportunities. In the current environment, the most 

feasible incentives appear to be increasing floor-to-area ratio incentives, as these promote 

economic growth, account for little cost to the city, and do not stress city infrastructure.

Further research is required to move beyond this preliminary analysis and begin 

implementation of a feasible and useful program for the city. That research includes 

increased data collection both in terms of the amount of new construction expected in the 

city as well as the costs of green building. The latter could be estimated by 

implementation of a pilot program in which data on builder’s choices for green attributes, 

as well as the cost of those energy improvements, is tracked. Increased data collection in 

both areas would lead to more accurate savings estimates. These estimates would then be 

compared to the relative cost to the city for implementing policies and programs that 

support green building. Determining these costs more accurately will require more 

detailed policy outlines as well as a compilation of other city experiences. 
3 

2 Estimating the Impacts of Encouraging Green Building: 

Commercial and Residential

The analysis presented in this section estimates the energy impacts of encouraging green 

building, as well as the likely savings to end-users (consumers, building owners, or 

government agencies). The analysis was split into two primary sectors, based on building 

size and use: 

• Commercial, multi-family, office, and public buildings (“commercial” from 

here on). These buildings are all larger scale and have different costs and 

energy needs than individual housing units. 

• Small-scale residential. This category includes single-family homes, duplexes, 

and town homes. 

For each building category, the analysis is divided into sections: 

1) Analysis Overview. Provides a brief overview of the analysis and an overview 

of the challenges and assumptions required. 

2) Methodology and Results. Provides a detailed outline of the assumptions 

made, as well as the method for developing a wide range of estimates on 

impact. Included in this section are possible methodological improvements 

and additional data needs to improve the preliminary analysis. 

3) Policy options for encouraging green building in the sector. Lays out possible 

policy options for encouraging the adoption of green building in the sector 

(commercial or small-scale residential buildings). This section also outlines 

the challenges and opportunities for each policy option given the context of 

New Orleans’ current situation.

The baseline and critical assumption for both analyses is that the required building codes 

in the city for both commercial and residential buildings are enforced. The distributed 

nature of buildings in addition to perceived and real permitting costs and time 

requirements for developers make it an especially hard sector to regulate; if the city of 

New Orleans has challenges enforcing building codes and permitting, it is not alone. 

However, enforcement of building codes is critical to achieving optimal energy use in the 

city. Without it, there is no way to estimate the impact of the optional green building code 

nor to assure that the incentives offered by the city are leading to optimized energy use 

and the public benefits associated with it. 

Finally, a note on the complications of encouraging green buildings: Allowing for 

multiple certification programs creates both implementation and achievement challenges. 

The city must be able to certify and process incentives (or enforcements, depending on 

the voluntary or required nature of the program), and builders must be able to understand 

and implement specifications to multiple certification styles. This increased transaction 

cost may decrease participation in the program overall. While no specific certification 

program is recommended in this report—although Leadership in Energy and 

Environmental Design (LEED) certification has the largest library of impact analysis, and 
4 

is therefore relied heavily upon— the city may be best served by streamlining and using a 

single certification program for each sector. 

2.1 Category 1: Commercial Buildings

2.1.1 Analysis Overview

The policy recommendations identified for this analysis include: 

• Greening City Government: Require all new city-owned nonresidential 

buildings larger than 5,000 square feet be designed, and constructed at 

minimum 30% above code 

• Establish incentives for all commercial and residential construction that 

achieves a minimum 30% above code. 

These policy recommendations are analyzed in this section, with the following 

clarifications based on the intention that this work presents the impacts of a broad range 

of options to inform decision makers. 

1) Impacts over a range of 10% to 50% above code are reviewed. The current 

code for commercial construction in New Orleans is the American Society of 

Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) 90 

(2004), for which the LEED 21% above code rating is equal to the 30% 

improvement that most cities use, as a result of an older baseline code in those 

locations. 

2) The 5,000 square foot cut-off was suggested by multiple policymaking parties, 

but was not analyzed due to data limitations. However, because the program is 

voluntary, there may be no reason to have such an arbitrary cutoff, as it may 

discourage smaller builders’ participation. 

3) New Orleans Specific Green Building Costs are NOT estimated here. The 

choice of credits for achieving certification impacts the incremental cost of 

green buildings, and therefore impacts the builder’s choices. The cost of the 

building is a major component of the decision of whether or not to achieve the 

rating in a voluntary program. In addition, knowing the incremental cost of 

certification is critical for creating an incentive that adequately encourages 

builders to build green buildings.1 The incremental cost of achieving a 

certification depends on the change required from the typical building 

construction guidelines, location-specific impacts (e.g. supply procurement 

costs), other building codes (e.g. plumbing codes), and which credits are 

selected by builders, among other variables. This specific data is not currently 

available for New Orleans, but a pilot program could be used to collect it. For 

the purposes of this analysis, several case studies and reports were reviewed 

 

1 There are multiple non-direct cost reasons that a builder may be interested in green building. In this 

preliminary analysis, these are not addressed. 
5 

that estimate the incremental cost of LEED-certified buildings and those are 

assumed to be reasonable estimates for green building certification.2

As building efficiency targets and incentive levels are narrowed down, more detailed 

analysis can refine the assumptions used here and reduce the range of possible outcomes 

and results. 

The LEED Certification System for New Commercial Construction

LEED certification is a green building rating system designed by the U.S. Green Building 

Council. The builder is awarded “points” for improvements to buildings covering a broad 

range of interested. These include water efficiency, sustainable siting, efficient use of 

materials and resources, indoor air quality, and innovation in the building process, in 

addition to energy and atmospheric improvements. In order to be LEED certified, a 

project must achieve 26 of a total of 69 points; 33 to gain a Silver rating; 39 for a Gold 

rating, and 52 for Platinum. Because of the large number of possible points, it is possible 

for a building to achieve basic LEED certification without being awarded any points in 

the Energy and Atmospheric category. In short, this means that there is the potential for 

no energy impact through a policy that encourages LEED certification. In order for 

energy savings to be realized within the City of New Orleans through encouragement of 

LEED Certification, the policy must also encourage achievement specifically of Energy 

and Atmospheric points within the certification system.

2.1.2 Methodology and Results

This analysis is largely based on work completed by the Pacific Northwest National 

Laboratory (PNNL) on improving the commercial building codes in the Gulf Coast area.3

That report contains a simulation of energy improvements from possible green building 

codes on four different buildings types in the climate area of New Orleans. These 

building types were estimated to be average in size, makeup, and use for office, retail, 

hospital, and school buildings. 

Acknowledging that predicting the choices of the builder in terms of meeting the LEED 

certification requirements was challenging, the analysts ran two scenarios using specific 

improvements. 

The first scenario, called Level 1, included three likely improvements for increasing 

energy efficiency beyond ASHRAE 90.1 (2004) code: a 10% reduction in lighting power 

density, a reduction in glazing solar heat gain coefficient to 0.2, and the addition of one 

inch of insulation around the outside of the building. Level 2 included these 

improvements and an increase in cooling efficiency to a 6.1 coefficient of performance.

 5

Results for cost-per-square-foot savings and energy improvements over the ASHRAE 

2004 baseline are re-created below for office buildings and hospitals. 

 

2 http://www.wbdg.org/ccb/GSAMAN/gsaleed.pdf, www.cleanaircoolplanet.org/for_communities/LEED_links/AnalyzingtheCostofLEED.pdf. 3 Halverson, M.A.;Gowri, K.; Richman, EE. Analysis of Energy Savings Impacts of New Commercial 

Energy Codes for the Gulf Coast. PNNL - 16282. Richland, WA: Pacific Northwest National Laboratory. 

2006. 
6 

The results of these scenarios provide detailed simulation estimates for savings in average 

building types along the Gulf Coast. To determine the overall energy benefit for the city 

of New Orleans would require estimating the amount of square footage likely to be built 

in the city in coming years. No current estimate of the square footage was discovered in 

the literature search for this analysis.4 To estimate the square footage, electricity use per 

square foot in high-energy use and lower energy use buildings5 was divided by total 

electricity sold to the electricity sector in New Orleans in 2004 and 2006.6 This resulted 

in a differential in square footage between 2004 and 2006. Assuming that the loss of 

square footage was the result of the hurricane, and that all square footage would be 

rebuilt, this calculation estimated between 26 and 38 million square feet of new 

commercial construction, depending on the mix of building types.7

 

To create a baseline for estimating the energy use in rebuilt commercial construction, the 

total square footage (26 to 38 million) was multiplied by the calculated improvement 

between the original code and current code as estimated by Halverson. 5 That 

improvement ranges from 13% to 18% depending on building type energy intensity. To 

bound the baseline, it is assumed that the improvement between the old construction and 

rebuilding to the current code would be the average improvement, or 15 %.8 Rebuilding 

to the current code would result in annual energy use of 15 kWh to 21 kWh per square 

foot of 384 kWh to794 million kWh for the commercial sector. These results, and the 

results for the scenarios described below are summarized in Table 2. 

Three scenarios were modeled to estimate the impact of increasing the energy efficiency 

of commercial buildings: 10%, 21%, and 50% improvements over code. A 10% 

improvement represents a basic LEED certification level (in coordination with other nonenergy green building points). The 21% level reflects either LEED certification gaining 

two Energy and Atmospheric points or a 30% improvement over ASHRAE 90.1 (2001). 

This improvement over ASHRAE 2001 standards is included because it is a common 

goal for other cities and because there are available guidebooks for prescriptive measures 

to meet it available to builders, reducing the potential increased capital cost of optimizing 

energy use. The upper bound energy improvement scenario, 50% over code is to identify 

the level of savings at which the federal incentive for green buildings is available.

9

 

4 Area for analytic improvement that will have a large impact on accuracy of estimates. 5 Halverson et al (see note 3 for full reference) estimated for the four average type commercial buildings, 

typical energy use ranged from 17 kWh to 25 kWh per square foot (sf), assuming that most buildings 

damaged or destroyed by the hurricane were built previous to 1992, when the building code was ASHRAE 

75. 

6 2006 Entergy Annual Report. 2007. URL: 

http://www.google.com/url?sa=t&source=web&cd=2&ved=0CBwQFjAB&url=http%3A%2F%2Fwww.ent

ergy.com%2Fcontent%2Finvestor_relations%2Fhtml%2F2006_ar%2Fletter_main.html&ei=tSlUTtvwJqm

usQK93eWoBw&usg=AFQjCNGlQKvkidEccnQvrcMSs2JKHwSBrw

7 Note that this calculation depends on the type of buildings rebuilt in terms of their energy intensity, 

kWh/sf. 8 This is a rough estimation and would be improved if the building use improvements were weighted 

against the possible improvements. However, at this high level, the impact of this estimation is negligible. 9 EPACT 2005. Energy Policy Act of 2005. 
7 

Reductions in energy use for each of the scenarios (Table 2) stem directly from the goals 

posed. The total energy use in the commercial sector is a multiplier of the square footage 

to be rebuilt and the range of energy intensities listed. Decreased utility revenue applies 

only to decreases in income to the utility resulting from the reduced sales of energy to the 

commercial sector. There is a possibility that supply costs will be reduced, lessening the 

net impact on the utility, but more detailed analysis is necessary to determine those 

potential reductions. The benefit to the end user is measured in reductions of utility 

payments per square foot. If cost estimates were more certain (see following discussion) 

they could be used to estimate payback for increasing energy efficiency. 

Table 2. Summary of Commercial Building Code and Above Code Impacts

Code Improvement over Code

10% 21% 50% 

Square Footage Replaced 26-37 million square feet

Annual Energy Use (kwh/sf) 15-21 13-19 12-17 7-11

Annual Energy Use Total Rebuild 

(GWHhyear)

384-794 346-714 304-627 192-397

Decreased Utility Revenue (%)1 0% 2-5% 4-11% 9-25%

Annual Commercial End User 

Savings ($M)

0 3-8 6-18 15-43

End User Energy Savings (cents/sf) --- $0.12-0.23 $0.25-0.49 $0.59-1.16

Incremental Cost Increase 0% -0.4-11% over code, see text

1

Revenue loss relative entire commercial rebuild (NOT ENTIRE SECTOR) at ASHRAE 

90.1(2004)

Estimates of the additional costs of building an above-code building vary widely. The 

range is large because the methods for achieving above-code energy savings are not 

prescriptive. While this allows for maximum flexibility in determining the best energy 

saving practices for the specific building, it creates a challenge for generalizing the 

incremental cost of improvement. For this analysis, the literature was reviewed with 

respect to incremental cost of energy improvements, primarily related to LEED minimum 

certification, as most of the cost literature surrounds those guidelines. Note that LEED 

certification includes a large range of energy and non-energy related improvements to 

buildings, and that no study found directly answers the questions of how much achieving 

a certain percentage improvement would cost. 

The American Chemistry Council determined LEED certification costs to be 4% to 11% 

over standard practice.10 On the opposite side of the spectrum, the General Services 

Administration ranked possible LEED credits for new construction from “no cost” to 

“high cost” and, assuming builders will prioritize lower cost items, estimated the 

following percentages over standard government practice: 

 

10 Northbridge Environmental Management Consultants. 2003. Analyzing the Cost of Obtaining LEED 

Certification. Prepared for the American Chemistry Council. Arlington, VA.
8 

• LEED certification could cost between -0.4% and 1% (a possible decrease in 

project cost)

• LEED Silver certification could cost between -0.03% and 4.4% 

• LEED Gold certification could cost between 1.4% and 8.1%. 

These two studies represent the range of likely costs for varying levels of certification. 

Because of the variation in builder choice for meeting percentage improvements and 

other challenges in estimating costs, only the range of -0.4% to 11% cost change are 

estimated for this analysis. Because of the large uncertainty associated with cost 

estimates, no further analysis is done on cost impacts on builders or cost benefit of 

increasing energy efficiency in new construction. In order to improve these estimates, a 

better understanding of the likely improvements builders would choose in New Orleans, 

as well as the costs of those improvements (also specific to New Orleans), would be 

required. 

Critical assumptions associated with this commercial buildings analysis include: 

1) All damaged and destroyed energy demand (in the form of square footage) 

will be rebuilt as new construction 

2) Baseline energy use of new buildings assumes that all buildings will be built 

to current code of ASHRAE 90.1 (2004) 

3) Commercial electricity costs range between $0.08 and $0.11 per kilowatt 

hour. 

2.1.3 Encouraging Energy Efficiency in Building through Public Policy in 

New Orleans

This section provides a review of possible policy options and the levels of effort and 

investment required by the city to implement them. 

This analysis of commercial building rebuilds indicates that at the lowest level of 

improvement there is an energy savings of minimum 40 GWh per year for the business 

owners of New Orleans, or a cost savings of over $3 million annually. There is evidence 

that this improvement could occur at little or no additional cost to the builder, indicating 

that an education program offered by the city on the costs and benefits of increasing 

building energy efficiency through low- and no-cost efforts may be adequate to 

encourage builders to take advantage of possible savings. Training a staff member on 

opportunities for builders or developing a centralized information dissemination station is 

a basic and inexpensive step that can encourage the implementation of low- and no-cost 

improvements. Furthermore, the city could offer expedited permitting for builders that 

increase the efficiency of their buildings. At the higher end of energy savings, a financial 

incentive may be required to offset potentially high initial costs of the technology. These 

policy types have been applied successfully in other cities. 
9 

The extent of public policy in encouraging green building depends largely on the 

incremental costs of green building for the builder, the ancillary motivations of the 

builder to build green, and the ability of the city to develop an incentive that is fiscally 

sustainable. Cities across the United States have implemented programs to encourage 

green building. Those models are used in this analysis to estimate the potential impact of 

incentives in New Orleans. 

• The primary incentive offered to builders for green building in these cities is 

expedited permitting. The incentive is favored because it is revenue-neutral 

for the city and a benefit to the builders, who may reduce permitting time by 

weeks or, in some cases, months. However, limited permitting infrastructure 

in the city of New Orleans limits the immediate implementation of this policy 

type. 

• Financial incentives are also applied in the form of permit fee reductions and 

direct grants. In the city of New Orleans, the use of permit fee reductions is 

unlikely, as the fees generally represent approximately 40% of revenue.11 This 

is a more aggressive approach. This program type attempts to ensure 

compliance by requiring that builders present the approved building permit 

and/or LEED registration and checklist before delivery of the grant monies. 

The money is still delivered in time to help defray some of the incremental 

costs of green buildings. Although some cities acquire the grant funding out of 

tax revenue, there are some innovative programs under pilot study that 

incorporate a nominal per-square-foot charge to builders that do not build 

green buildings in the area and use that funding to support a grant or education 

program (e.g. Marin County, California). 

• A third incentive includes increasing the floor-to-area ratio for efficient 

buildings. 

• Finally, many cities implement multiple programs to capture a larger portion 

of the market and drive economically sound green building development. The 

city of Santa Monica, California, for instance, offers both expedited 

permitting for buildings with proof of LEED registration and submittal of the 

LEED checklist, as well as a $20,000 grant program for green buildings 

(distributed after the city building permit is issued).12 

Measuring the impact of policies on the market uptake of green building codes is 

challenging as well, as it involves estimating the importance of time to builders. 

Anecdotal evidence suggests that offering incentives, such as expedited permitting 

services, is of high value to builders, but program implementers report that uptake of the 

option is as low as 10%.13 This analysis would benefit from determining the value of an 

incentive program for those builders in the New Orleans area. 

 

11 Nance, Fisher personal communication. 12 http://greenbuildings.santa-monica.org/mainpages/whatsnew.htm. 13 Note that Susan Munves with the Santa Monica incentive program suggests based on anecdotal evidence 

that their incentive program triggers around 10% of planned square footage to be built green. 
10 

To develop a range of estimates, this analysis provides a range of possible values for 

builders that participate in green building. The analysis uses the mid range above code 

goal of 21% improvement over code and estimates the energy benefits if 10%, 20%, 

50%, and 70% of buildings were built green as the result of the incentives. Table 3 

summarizes the results. 

Table 3. Range of Possible Benefits for Incentives to Promote Green Building 

Percent of square footage built to 21% 

beyond code resulting from incentives

Energy Savings for Total Commercial 

Rebuild (GWh)

10% 30-87

20% 61-126

50% 152-314

70% 213-439

2.2 Category 2: Residential Buildings

2.2.1 Analysis Overview

Another option is to implement incentives for increasing the efficiency of new home 

development over the current IECC 2006 code requirement in the city.14 Efficiency 

targets available for the residential sector include LEED for Homes (LEED-H) and the 

National Association of Home Builders Green Home Guidelines (NAHBGHG). This 

section briefly describes the two systems and outlines the analytic assumptions for 

estimating the energy benefits to encourage these goals for implementation into New 

Orleans public policy. As in the introduction, it is noted that the improvements above 

code may be better served by a single ratings system to reduce the burden on the 

developer, or that specific levels of a given guideline and its certification are chosen to 

ease measurement and verification burdens on the city. 

LEED-H was released in January 2008.15 Like the current LEED for New Commercial 

Construction guidelines, the inclusion of energy efficiency improvements is not required 

to meet certification levels for homes. However, a typical home will require 40 points out 

of 130 to be certified, and with 38 of those possible points energy efficiency related, 

homes builders may find it more cost effective to pursue some or all of the energy 

options. 

There are two ways to achieve energy points in the LEED-H system. The first is to use a 

prescriptive method throughout the house as described in the LEED-H guidebook. The 

alternative method is to achieve an ENERGY STAR® Homes rating. ENERGY STAR

Homes require a 15% energy improvement over 2006 IECC guidelines. In this analysis, it 

is assumed that those two methods create similar results, and the 15% above code goal 

can be assumed, with minimum other non-energy related points, to meet LEED-H lowest 

level of certification. 

 

14 http://bcap-energy.org/state_status.php?state_ab=LA. 15 Note that the LEED-H system was not available at the original time of delivery to the city of New 

Orleans, but the pilot was referenced in this part of the report. 
11 

The NAHBGHG is a voluntary use guidebook that is used by many local homebuilder 

associations across the United States. There is a rating system associated with the 

guidebook. For the energy efficiency section the improvements are 15% (bronze), 30% 

(silver) and 40% (gold) over IECC 2003 energy efficiency standards. This analysis 

assumes IECC 2003 and 2006 to be approximately equivalent. 16

The upper end of the possible energy savings in this analysis is associated with the 2005 

Energy Policy Act federal incentive. This incentive is $2,000 for homes that reach 50% 

over IECC 2003. Table 4 presents an overview of the improvements over the current 

code and their relation to different green home building guidelines and provides the 

percentage improvements used in this analysis to estimate the energy and cost impacts of 

building beyond code. The estimates made here are in no way recommending a particular 

method for certification. The table is intended as a reference guideline only. 

Table 4. Summary of Possible Energy Efficiency Goals for 

Housing 

Percentage 

Improvement 

over IECC 

2006

Rating System Equivalency

0% IECC 2006

15% ENERGY STAR Homes, LEED-H 

certification*, NAHBGHG Bronze

30% NAHBGHG Silver

40% NAHBGHG Gold

50% EPAct Tax Credit 

2.2.2 Estimating the Impact of Green Home Building in New Orleans

Housing energy data is limited for New Orleans. A PNNL study found that for electricity 

use in space conditioning only in IECC 2006 housing in the city, about 4,000 kWh is 

used annually.17 Because space conditioning is the primary energy use in a home, this 

analysis uses that estimate as baseline energy use for homes. Future analysis could 

benefit from more detailed energy data for IECC 2006 homes in New Orleans, including 

expansion to understand natural gas use, rebuilt house sizes, and dweller energy use 

habits. 

Estimates of the number of homes damaged by the hurricane and ensuing floods in the 

city of New Orleans are challenging to acquire because of the definitions of damage (“at 

what point does a home need to be rebuilt?”), lack of information dissemination, and 

inaccurate or non-existent census information on the current situation. Although several 

estimates were found in a literature search, none were specific to the city and the 

extensive level of damage. One report from Brown University used data from the Greater 

 

16 The PNNL study states that for energy purposes there is no significant difference between IECC 2003 

and IECC 2006. That assumption is used here as well. 

17 Lucas, R.G. New Residential Energy Codes for the Gulf Coast, Summary. PNNL – 16265. Richland, 

WA: Pacific Northwest National Laboratory. 2007.
12 

New Orleans Central Data Center (http://www.gnocdc.org) to estimate that 73% of the 

populations in neighborhoods in New Orleans suffered moderate or catastrophic damage 

to their homes.18 

In the 2005 American Community Survey, there were approximately 163,000 occupied 

housing units in the city of New Orleans. Because over 75% of those were duplex or 

single-family occupancy, this analysis assumes that most rebuilt housing will be duplex 

or single-family. Combined with the Brown University estimate, this results in 122,000 

homes damaged moderately or catastrophically. Because of the economic and social 

complexities of determining the number of houses that will be rebuilt, we assume that 

between 50% and 75% of the moderately and catastrophically destroyed homes will be 

rebuilt. Therefore, this analysis estimates that between 60,000 and 90,000 homes will be 

rebuilt in the city to the minimum IECC 2006 standard. 

Combining these housing estimates with the energy use estimates described above and 

the improvements over code leads to the possible energy impacts of green building 

described in Table 5. These ranged estimates provide the maximum amount of energy 

saved if all homes were built to the assumed improvement over current code. 

Table 5. Results from Residential Rebuild Electricity Use Analysis

IECC 

2006

Code Improved by

15% 30% 40% 50%

Homes Built 60,000-90,000

Average Annual Electricity Use 

(kWh)

4,153 3,534 2,911 2,287 1,663

End User Annual Electricity 

Cost (space heating and 

cooling)

$499 $424 $349 $274 $200

Total City savings (GWh) 0 37-56 75-112 112-168 150-225

Increased Energy Use (GWh) 249-374 212-318 175-262 137-206 100-150

For Sources and Assumptions, See Text. 

Data for estimating the costs of increasing the efficiency of new construction homes is 

limited. Because of the wide range of options for improvement (e.g. efficient windows, 

increased insulation) the range of incremental costs could be large. No studies were found 

estimating the incremental cost of building green in New Orleans or similar economic

and environmental climates. These types of studies have been carried out elsewhere 

however, such as one completed in the city of Denver, Colorado.19 This study found that 

the selling price of $150,000 home would be increased to $163,000 with the inclusion of 

energy-saving measures during the building. This $13,000 investment would save the 

dwellers within the building $70 to $100 per year. Since the primary focus of the study 

was to estimate the impact of low-income homeowners being capable of purchasing 

affordable housing, the study also found that a home with these features would qualify 

 

18 Logan, J.R. 2007. The Impact of Katrina: Race and Class in Storm-Damaged Neighborhoods. Brown 

University. Providence, RI. 19 Johnston, D. 2000. Building Green in a Black and White World. 
13 

for an energy-efficient mortgage (available in Colorado) that would allow for the same 

family to acquire an 8% fixed rate mortgage to purchase the house.20

The lack of city-specific data surrounding the choices that homebuilders would make 

when building green as well as the incremental costs of those choices makes the quality 

of cost estimates to builders too low for this effort. It should be noted, however, that the

ENERGY STAR Homes program touts a number of non-quantified green building 

benefits for builders, including increased purchase power of consumers with reduced 

energy costs and advantageous marketing in an increasingly energy-efficient consumer 

market.21 

Uncertainties in this preliminary housing energy potential could be minimized with 

improved data in the following areas (in rough order of largest to smallest reduction): 

• Housing expected to be rebuilt and in what form (e.g. single family, 

townhouse, etc.) 

• Energy use (expanding to total household energy use in IECC 2006 housing in 

New Orleans)

• Incremental cost to builders of building green in New Orleans 

• Expected energy costs. 

2.2.3 Creating Incentives for Green Home Building in New Orleans

Policy options for encouraging green residential building include: 

1) Floor area ratio improvements (also known as density bonuses). Would allow 

for a builder to increase the number of units in a given area if the units were 

energy efficient. 

2) A waiver of property tax over 5 years for efficient homes. Could offset in the 

first cost of any incremental costs that increase the cost of the home. This type 

of incentive is intended to drive demand for more efficient housing and is 

therefore considered an indirect builder incentive as well. 

3) Expedited permitting. A low incremental cost to the city program, and may 

provide enough of an incentive to builders to speed projects to market. 

4) Encouragement of energy-efficient mortgages may increase supply and 

demand of higher efficiency homes. 

These four incentives are discussed in more detail below, but because the incremental 

cost of building green homes is not estimated, analysis on the cost effectiveness of these 

 

20 This energy-efficient mortgage program allow a buyer to increase the debt-to-income ratio by 2% 

(offsetting the cost of the energy savings). Further discussion of this option in section 2.2.3: Creating 

Incentives for Green Home Building. 21http://www.energystar.gov/index.cfm?c=bldrs_lenders_raters.nh_features. 
14 

policy options was not performed.22 Further information, such as the incremental costs 

and detailed property tax information, and the importance of permit expedition to local 

builders, is critical to the development of policy impacts. These policies are also 

preliminarily evaluated for feasibility in the current New Orleans context.

Increased floor area ratio incentive. This no-cost-to-the-city (and possible tax revenue 

increase) policy would deliver a bonus to builders of green homes allowing them to 

recoup the investment in energy efficiency by increasing the number of residential units 

that can be built and sold. These density bonus programs are used extensively in cities 

and counties nationwide for a variety of reasons, most commonly, the integration of 

increased green space into a development. Anecdotal evidence from builders and 

program implementers indicates that these policies have a large impact on builder and 

design decisions, increasingly so as energy efficiency becomes a primary selling point for 

home purchasers. A quantitative analysis could be done by collecting data from builders 

in the area to determine how much of an impact this policy would have on their decisionmaking. Due to a lack of permitting infrastructure in the city, the feasibility of this policy 

in the near term is low. 

Property tax exemption. This incentive would apply to homeowners that purchase 

energy-efficient homes. The rate of this incentive depends on many factors, including the 

scale of property tax in relation to owner income and the ability of the homeowner to 

invest in possible up-front increased cost. The cost of the program to the city is also 

important. If homeowner property tax is a large portion of the annual city revenue, 

developing a program that would reduce revenue may not be fiscally sustainable. 

Especially during the recovery phase, New Orleans tax income could be low and 

stretched over a wide variety of programs, leading to the delay of this type of program. In 

addition, displaced homeowners may not be in a position to offset the first cost of the 

efficiency improvements, so uptake of the program could be low. However, if property 

tax is a small portion of city revenue, and a high proportion of the costs of home 

ownership, this type of incentive could create a large market for efficient homes. 

Expedited permitting for green homes. Measuring the impact of expedited permitting 

on the market uptake of green building codes is challenging because it involves 

estimating the importance of time for builders. If expedited permitting is valuable to 

builders in New Orleans, then the program could be popular and lead to significant 

energy savings. If there is no way to implement expedited permitting, however, the 

program will not create the time savings of value to builders. In addition, this type of 

program has a challenge of diminishing returns: the more people apply for expedited 

permitting, the less expedited the permitting becomes. This is an area of extensive 

continued research, however, as there is little–to-no quantitative evidence of the success 

of these programs due largely to the interconnectedness of incentives and other factors in 

building decision-making. 

 

22 Note that there are a number of resources for assisting builders in no- and low-cost building. While no 

specific guidelines for New Orleans are found in this analysis, completing such analysis with relatively 

little data collection and builder interviews would be largely feasible.
15 

Encouraging mortgage companies to offer energy-efficient mortgages. Energyefficient mortgages allow homebuyers to offset the first cost of an energy-efficient home 

by leveraging the potential annual savings to home upkeep. In addition to principal, 

interest, taxes, and insurance, the mortgage incorporates energy bills. This allows buyers 

to increase their debt-to-income ratio by a certain percentage that will allow them to 

attain a slightly larger mortgage—enough to cover the first capital costs of the building. 

In terms of public policy, recommending or requiring that mortgage offerers in the city 

have an energy-efficient mortgage available would ease builder concerns that the costs of 

green building would decrease sales, and would increase the ratio of affordable green 

home ownership in the city. 
16 

3 Conclusion

This document provides a preliminary analysis of the impact of potential policies and 

programs targeting green redevelopment of building in New Orleans. Rebuilding 26-37 

million square feet of buildings provides the opportunity to save between $0.12-$1.16 per 

square foot to the end user. Finding that there is a large potential for savings over the 

lifetime of buildings constructed beyond code, several policies are evaluated, including 

no- and low- cost voluntary efforts and higher cost higher impact mandatory efforts, 

including voluntary beyond code programs, certification programs, and non-financial 

incentives for encouraging developers to build more energy efficient buildings. While 

each of these types presents challenges and opportunities, this analysis is meant to 

provide the stakeholders and decision makers in New Orleans with a menu of options and 

their relative impacts.