Background Paper 3b—Institutional Efforts for Green Building: 

Institutional Efforts for Green Building in Canada and the United States 1

Paper 3b: Institutional Efforts for Green Building:

Institutional Efforts for Green Building in Canada and the United States

Alex Wilson, Jennifer Atlee and Douglas Webber
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Table of Contents

Executive Summary.........................................................................................................................3

Introduction .....................................................................................................................................5

Performance Mandates....................................................................................................................5

National Plans..............................................................................................................................6

Building Codes............................................................................................................................6

Sidebar: Measures of Performance............................................................................................13

Urban Planning and Zoning Laws.............................................................................................14

Discussion and Recommendations............................................................................................16

Sidebar: Product Performance Laws and Standards..................................................................18

Voluntary Programs.......................................................................................................................21

Single-issue Energy-efficient Building Labeling Systems........................................................22

Comprehensive Green Building Assessment Programs............................................................26

Sidebar: The Elephant Is the Room—Tackling House Size......................................................32

Discussion and Recommendations............................................................................................33

Financial Mechanisms...................................................................................................................34

Direct Government Incentives for Green Building ...................................................................34

Sidebar: Performance-based vs. Cost-based Tax Credits..........................................................36

In-kind Incentives, Grants, and Special Funding ......................................................................36

Sidebar: Pulling It All Together—King County, WA, United States .......................................38

Tax Shifting and the Fiscal Steering Wheel ..............................................................................38

Emissions Trading and Green Building.....................................................................................40

Other Market-based Approaches...............................................................................................41

Sidebar: Labeling and Consumer Information ..........................................................................41

Sidebar: Getting Better Feedback..............................................................................................42

Discussion and Recommendations............................................................................................42

Government Purchasing ................................................................................................................44

Federal Approaches...................................................................................................................45

Provincial and Municipal Approaches in Canada .....................................................................49

Discussion and Recommendations............................................................................................49

Technology Development..............................................................................................................50

Education Programs.......................................................................................................................55

Making the Case for Green Building.........................................................................................55

Raising the Knowledge Base of Building Professionals...........................................................57

Motivating Occupants to Change Behavior...............................................................................60

International Agreements and Initiatives.......................................................................................60

Discussion and Recommendations............................................................................................62

Analysis and Recommendations....................................................................................................63

Principal Implementation Challenges and Solutions.................................................................64

2030 Vision for Integrated Green Building Policy....................................................................71

Final Considerations..................................................................................................................71
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Executive Summary

In the United States and Canada, green building is taking off. The continuing growth of an 

environmentally friendly market, proliferation of municipalities adopting green codes and 

requirements, and increased recognition of the Leadership in Energy and Environmental Design 

(LEED®) program and other voluntary green certification programs will go a long way toward 

transforming the building industry. It is significant that green building already makes good 

business sense, even without the support of an economic structure that takes much account of 

environmental factors.

However, it is important to recognize that the extent to which green building is being 

implemented now, or is likely to be implemented through the continued expansion of existing 

programs, is still far below the desired level. In championing the goals of The 2030 Challenge, 

we must recall that 2030 is only 23 years away. The green building movement has advanced 

considerably since 1984, 23 years in the past, but as it currently holds only roughly five percent 

of the market, with just a tiny percentage of buildings meeting the 2030 carbon-neutral goals, 

there is still much to be done. Green building needs to be rapidly implemented at an ambitious 

performance level and on a huge market scale. To speed up the pace of change, we need an 

integrated strategy to move the related trades through the learning curve as quickly as possible. It 

is in rapidly scaling up these efforts that institutional approaches can have the greatest benefit. In 

addition, a special effort must be made to improve existing buildings, address occupant behavior, 

and institutionalize effective feedback and continuous improvement. 

This report outlines the wide variety of institutional approaches available to advance green 

building in North America. Ideally, and in practice, these modes are used together to form wellrounded green building policies. An integrated approach—in policy, as in building design—can 

solve multiple problems at once, while lack of integration can create multiple problems at once. 

Within the body of this report are recommendations at all levels—from simple improvements of 

existing systems to more far-reaching, economy-wide shifts. The final chapter provides an 

overarching view of major barriers to rapid market transformation to building green, and key 

strategies to address those barriers (summarized in the table below). Given different priority 

issues, cultural and political norms, and existing levels of adoption of green building practices, 

the implementation strategies for these broader and more detailed recommendations may differ 

dramatically among the three countries. 

Green building has garnered much attention for its potential contribution to solving the climate 

problem. While it is critical to implement strategies along these lines, it is also critical to 

recognize climate as just one example of the kinds of problems that increasingly confront us. We 

need not just to take a strong stand to address climate change but also to learn our lessons from 

the climate problem and recognize the importance of addressing issues early. 
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Principal Implementation Challenges and Solutions

Barriers Solutions

1.INERTIA: Significant 

time and effort are required 

to implement change

Invest in strong, up-front measures to speed change

- Build capacity 

- Lower the cost of change 

- Implement government purchasing programs

2. LACK OF CREDIBLE 

DATA: Consumers and 

decision makers lack the 

data to make good 

decisions

Measure performance and require labeling

- Measure actual and real-time performance 

- Facilitate benchmarking

- Require labeling of product and building performance

- Develop national indicators

3. MARKET 

DISFUNCTIONS: There 

is a lack of full-cost 

accounting

Establish market signals that drive responsible decisions

- Tax carbon through politically palatable tax shifting

- Implement cap-and-trade programs for carbon

- Explore other market approaches

- Encourage innovative financing mechanisms

4. SHORT-TERMISM: 

Long-term risks and 

benefits are weak 

motivators for change

Set clear, aggressive, long-term targets, along with specific, 

incremental steps 

- Set ambitious national and international targets

- Regularly raise the bar 

- Support research to continually advance the state of the art

5. SILOS: Historical 

divisions and territoriality 

inhibit change

Take an integrated approach and learn from others

- Take an integrated approach to policy 

- Create teams and processes that cross traditional boundaries

- Consider a wider scope 

- Cooperate on goals, standards, and markets

- Ensure that broad agreements do not prevent stronger action at a 

smaller scale

- Learn from others, and facilitate the transfer of knowledge and 

technology 

These overarching recommendations could greatly aid green building in all three North 

American countries. If the recommendations were carefully and ambitiously implemented in a 

coordinated fashion, the resulting transformation would be unprecedented. While much can be 

done even in the absence of such coordination, working together would amplify the gains. 

Actions to advance green building can be part of ambitious national and trinational energy and 

environmental programs. There are tremendous opportunities for increased coordination and 

learning among Canada, Mexico and the United States.
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Introduction

A wide variety of institutional approaches is available to advance green building in North 

America. This report does not attempt to be comprehensive. Rather, the objective is to review a 

sampling of initiatives that have been implemented in the three countries, and then draw lessons 

from these to develop recommendations for moving forward. As with some of the other 

background papers on green building that have been developed as part of the Commission for 

Environmental Cooperation (CEC) Secretariat’s green building report, this paper explores 

policies in the context of what would be required to meet the goals of The 2030 Challenge, 

which were proposed by the founder of the nonprofit group Architecture 2030 and embraced by 

the American Institute of Architects (AIA) and the Royal Architectural Institute of Canada

(RAIC). 

This report is divided into seven sections, representing different modes of intervention in which 

government agencies and other institutions can engage. Each section concludes with sectionspecific recommendations. Ideally and in practice, these modes would be used together to create 

well-rounded green building policies. Effort is made in this report to clarify the best uses for 

each approach in an integrated policy system. For example, an integrated approach to swiftly 

ramping up green building would need systems that:

(A) encourage top performers to continually raise the bar for green design and 

practice and encourage advancement of the state of the art;

(B) ensure that even the worst performers achieve an adequate level of performance;

(C) continually move the majority of the new and existing building stock to higher 

levels of performance; and

(D) support A through C in a way that is flexible, economically beneficial, 

continuously evolving, and regionally and globally appropriate. 

Each of these recommendations requires a unique set of strategies. Mandated performance 

requirements can ensure adequate performance across -the-board. Well-designed incentives, 

market-based adjustments, and consumer and trade education can shift practices of the majority. 

And well-designed and properly implemented voluntary standards and cutting-edge competitions 

continually raise the bar for top performers. Education is a critical component of market 

transformation, and adequate research and development is a necessary component of continual 

improvement. The final chapter provides an overarching view of major barriers to rapid market 

transformation to building green, and key strategies to address those barriers.

Performance Mandates

This section explores how mandating specific actions to achieve a minimum acceptable level of 

performance (through building codes, zoning laws, and product performance regulations) has 

both helped and hindered green building. We discuss lessons learned and how the process of 

developing, implementing, enforcing, and updating these mandates could be improved (for 

instance, through agency coordination). This section also explores what needs to be in place for 

mandated standards to be effective. 
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National Plans

Every newly elected president of Mexico is required to develop a comprehensive national 

development plan in the first six months after taking office that includes more than 30 sector 

programs. There is no equivalent in the United States or Canada. While the United States does 

have some broad measures that address energy use nationally, such as the Energy Policy Act 

(discussed in following sections), there is a need for an ambitious coordinated vision and action 

plans in both the United States and Canada. Citizens are motivated by clear and ambitious 

challenges. A real vision, with clearly articulated goals and endpoints, can energize residents, 

spur competition, expand markets, justify new policies, and chart a course for previously 

inconceivable actions and allocations of resources. Sweden’s goal to be carbon-neutral by 2050 

is an example of such a broad and far-reaching vision and action plan. The United States has 

risen to such challenges in the past—witness the Manhattan Project in World War II and the 

Apollo Project in the 1960s, both of which involved major investment around a rallying endgoal. 

Energy security would be greatly enhanced through the implementation of national energy 

programs that establish specific, ambitious targets for each major sector, then develop strategies 

that create synergies through the interconnection of sectors such as building, transportation, land 

use, and energy supply. This would involve a massive, but not unprecedented, investment in 

research and development (R&D), training, and direct purchasing. Stretch-goal projects have 

proven to be major drivers of technological innovation and national pride in the past—and could 

be again. An initial step would be to develop national energy plans that clearly address sector 

strategies and interconnections.

To tackle climate change and meet ambitious emission reduction goals, building-sector plans 

need to focus not just on new buildings but also on the existing building stock. For example, a 

“Rebuilding America” program for existing homes could seek to halve energy use in a quarter of 

existing homes in the United States over the next ten years through a combination of direct 

grants, low-interest loans, and tax incentives. 

Ideally, a more comprehensive national plan dealing with environmental and health issues would 

follow a national energy plan. Energy touches a wide variety of environmental issues, but there 

are other concerns, such as hazardous chemicals, resource extraction impacts, land degradation, 

and human health. These issues deserve the level of attention and coordination that is just 

starting to be granted to energy. Implementation of such a plan, like that for energy, would 

require a variety of policies, including a combination of mandatory and voluntary initiatives.

While there is clear benefit to nationally coordinated and adequately funded initiatives, the 

policies and recommendations that follow below do not require national coordination, and their 

implementation should not await effective national planning. 

Building Codes

Building codes regulate how buildings are built, in order to protect the safety and health of 

occupants and to hold practitioners accountable for their work. Building codes can hinder or help 

the spread of environmentally friendly building practices, and sometimes they do both at once. 

On the down side, some existing prescriptive codes prevent or discourage the use of alternative 
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building materials and innovative design strategies, or even unintentionally require 

environmentally harmful practices. On the up side, building codes addressing energy, water, and 

indoor air quality can protect the environment, and occupant health. This section provides a brief 

history of building codes, discusses lessons learned, and explores how developing, 

implementing, enforcing, and updating these codes can facilitate green building.

A Brief History of Building Codes 

The first known building code was included in Hammurabi’s code of laws, around the 1700s 

B.C. The Babylonian king of Mesopotamia ruled that the builder of a house should be put to 

death if a building he constructed fell and killed its owner. Building codes became less draconian 

but far more specific as they responded to damage and loss of life from fires, earthquakes, and 

other building failures. Steps along the way included London regulations in 1189 A.D. for the 

construction of common walls and for rights to light access, drainage, and safe egress in case of 

fire; US Colonial-period bans on wood chimneys and thatch roofs; and the New York City 

Tenement House Act of 1867, covering such things as fire escapes, ventilation, water supply, 

toilets, and stair railings. In 1905, the National Board of Fire Underwriters, an insurance industry 

group, wrote the first National Building Code for the United States. Seismic codes were adopted 

in many geologically active areas following the San Francisco earthquake in 1906.

By 1940, three different code organizations had been established in the United States, with 

model codes that reflected regional variations and made it difficult to work across different codeenforcement areas. Decades of efforts to harmonize the three codes ultimately resulted in the 

creation of the International Code Council (ICC) family of codes, the first full edition of which 

was published in 2000. Included in the 11 codes making up the ICC family were the 

International Building Code, International Residential Code, and “International” versions of the 

Mechanical, Plumbing, Fire, and Energy Conservation codes (the National Fire Protection 

Association [NFPA] later split from the ICC process and began developing its own building code 

to compete with the ICC). 

In Canada, responsibility for building regulation lies with the provinces and territories. 

Originally this responsibility was delegated to municipalities, but this resulted in increasing 

variation in requirements across the country, which created problems for designers and product 

suppliers. In response to this, in 1941 the National Research Council developed the first National 

Building Code (NBC) of Canada, a code model for adoption. Since then the code has been 

updated about every five years. The provinces and territories have also since limited the 

influence of municipalities by adopting a provincial or territorial standard code (either the NBC 

in its entirety or the NBC with modifications) for use by respective local municipalities.

Code developers have only recently begun developing model codes to comprehensively address 

the broader impacts of the built environment. However, there has been a gradual shift from a sole 

life-safety focus to use of codes as a mechanism to improve environmental performance, with 

code language addressing the efficient use of energy and water as well as the design of sewage 

systems to limit contamination of water supplies and protect surface waters and aquifers. 

Interestingly, these attempts have proven to hinder as well as help the environment. Most 

building codes in the United States prohibit the use of gray water (wastewater from a building, 

excluding that from toilets, dishwashers, and kitchen sinks), even though that use offers more 

environmentally responsible wastewater disposal for people in rural areas with onsite treatment 

systems.
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Following the energy crisis of the 1970s, some US states developed their own energy codes 

before the first Council of American Building Officials (CABO) Model Energy Code (MEC) 

was created in 1977, which used the voluntary American Society of Heating, Refrigerating and 

Air-conditioning Engineers (ASHRAE) Standard 90-75 as its basis. During the 1980s many 

states adopted the MEC or specific ASHRAE standards (90-Series standards) to reduce energy 

consumption in residential and commercial buildings. The MEC has been referenced in various 

laws, such as the National Affordable Housing Act of 1990 and the Energy Policy Act of 1992. 

The 2000 International Energy Conservation Code (IECC) superseded the MEC, though some 

building codes still reference various editions of the MEC.

In Canada the first Model National Energy Code for Buildings (MNECB) was published in 1997. 

The MNECB was developed by the same Code Commission responsible for developing the 

NBC. The MNECB provides both a prescriptive path and a performance path, allowing designers 

to prove that their buildings comply with an acceptable level of energy efficiency. The 

acceptable levels, which are different for different climatic regions in the country, were 

determined using regional construction and heating energy costs in a life-cycle cost analysis. The 

National Code Commission has just been given the authority to update the Model (MNECB), 

which is long overdue. This renewal should create new interest in the energy code and increase 

its influence.

Energy and Environmental Codes Today

United States

 As of January 2007, according to the Building Codes Assistance Project (BCAP), eight states 

had adopted a residential state code that meets or exceeds the 2006 IECC, and 14 more had 

adopted a code that meets or exceeds the 2003 IECC. For commercial buildings, 14 states had 

adopted the equivalent of the 2006 IECC code, and 14 more had adopted the equivalent of the 

2003 IECC code. Only four states have not adopted any energy code, but many more states still 

lag significantly behind the 2006 code (see Figures 1 and 2). Adoption is significant, but by no 

means uniform or complete.

Figure 1: Residential State Energy Code Status, as of January 2007
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Source: Building Code Assistance Project, <www.bcap.org>.

Figure 2: Commercial State Energy Code Status, as of January 2007

Source: Building Code Assistance Project, <www.bcap.org>.

More recently, a few jurisdictions have moved beyond energy and implemented, or begun to 

consider implementation of, mandatory comprehensive green building standards, usually after 

working for a time with voluntary standards or preferred purchasing requirements. Among these 

are Austin, TX; Battery Park City, NYC, NY; Frisco, TX; Novato, CA; Santa Cruz, CA; 

Sebastopol, CA; Seattle, WA; and Telluride, CO. The District of Columbia, after gradually 

instituting requirements for buildings that are in some way connected to the government, recently

ruled that, by 2012, all privately owned commercial projects larger than 50,000 ft2 (5,000 m2) 

will be required to achieve LEED certification. Boston has also instituted mandatory green 

building requirements for all buildings, public and private, over 50,000 ft2 in size. The Boulder, 

CO, Green Points program and the City of Frisco, TX, Green Building program are examples of 

locally developed programs whose requirements are enshrined in the local building codes.

LEED was not designed to be a building code and so, in 2006, The United States Green Building 

Council (USGBC) began working with ASHRAE, the Illuminating Engineering Society of North 

America (IESNA) and AIA on the creation of Standard 189, Standard for the Design of Highperformance Green Buildings Except Low-rise Residential Buildings, intended to be completed 

in 2007. The standard resulting from this consensus of members of the American National 

Standards Institute (ANSI) has scope and recommendations that have much in common with 

LEED. However, instead of a rating system, Standard 189 is written in enforceable language that 

could be incorporated into building codes much the way ASHRAE 90.1 and the IECC standards 

are today. 

Standard 189 has also directly tackled three major challenges for standards and rating systems. 

Unlike LEED and other point-based rating systems, most of the standard is made up of criteria 

that cannot be traded off, so that a building cannot pass unless it shows strong performance in 

each of the categories. Standard 189 also provides both simple prescriptive and innovation-
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enabling, performance-based options for all categories, in recognition that neither method is 

inherently better but each serves a different need (see sidebar below, on Measures of 

Performance). Lastly, Standard 189 was designed to address the bothersome gap between 

modeled and actual performance by requiring measurement and verification for 12 to 18 months 

after occupancy and requiring commissioning if the building fails to achieve an efficiency target 

benchmarked to the US EPA’s Portfolio Manager. While such requirements would be difficult or 

impossible to implement in the current code enforcement structure, the inclusion of this language 

in the standard begins the much-needed process of assessing and requiring actual performance 

improvements, and of using that information to improve building design and modeling tools to 

reduce the performance gap.

Canada

The National Building Code (NBC), which forms the basis for all provincial codes, does not 

specifically address energy efficiency. This omission has left it to the provinces to consider 

MNECB or other energy-related requirements for reference in their own building codes. 

Currently the use of energy codes is largely voluntary across the country, with municipalities 

enforcing compliance to different degrees, as described below.

The Ontario Building Code (OBC) 1997 required that large buildings (over 600 m2) be designed 

using good engineering judgment, as is defined in a number of standards, including the MNECB 

and ASHRAE 90.1. 1989. For smaller buildings (less than 600 m2), this Code defined specific 

energy efficiency requirements, such as minimum levels of insulation for above-grade and 

below-grade walls. The minimum insulation levels required in the 1997 Code were lower than 

those required in the previous version, OBC 1990. The OBC has been detached from the 

objectives of green construction, and its changes in terms of energy performance have been 

driven more by energy prices than environmental performance.

The OBC 2006 similarly relies on reference to best practices that address large-building energy 

performance, such as ASHRAE 90.1 2004, MNEBC, and the supplementary standard SB-10 

included in the OBC. However, this 2006 version has a new section on resource efficiency, 

Section 12, that includes specific requirements for increasing energy and water efficiency in 

housing and buildings of less than 600 m2. 

In British Columbia, code requirements specifying minimum thermal resistance values for 

insulation were introduced into the BC Building Code in 1992, and then only for houses. The 

current BC Code (2006) refers to best practices such as ASHRAE to design heating, ventilation 

and air-conditioning (HVAC) systems and, as in the 1992 version, establishes minimum 

requirements for thermal resistance values for housing and small buildings. A new code modeled 

on the National Building Code is in development, and it is expected to have objective base 

requirement similar to the Ontario Building Code.

Large Canadian municipalities, notably Toronto and Vancouver, have led the field in requiring 

energy conservation through building design. However, given their distinctive regulatory 

regimes, the cities have approached this differently. Vancouver is unusual in its ability to 

establish its own building performance requirements, and it has used this to create requirements 

for energy efficiency and other aspects of green building. In 1993, Vancouver mandated the use 
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of toilets using six liters of water or less per flush, two years ahead of the province. As of 2004, 

all new large buildings must meet ASHRAE 90.1-1999 requirements. Vancouver has also moved 

beyond energy to comprehensive green building requirements. The City is currently rewriting a 

number of municipal bylaws which, when complete, will result in all new buildings meeting the 

majority of credits required for certification through LEED-NC Canada simply by meeting local 

regulations.

In Ontario, municipalities are not permitted to set any performance requirements above those 

mandated by the Ontario Building Code. As a result, they have extremely limited regulatory 

control. Toronto has relied on leading by example (retrofitting municipal buildings), incentives 

(the Better Building Partnership, and the Toronto Atmospheric Fund), and voluntary standards 

(the Toronto Green Development Standard). These are discussed in other sections of this paper.

In Alberta, both Edmonton and Calgary have adopted a Sustainable Building Policy that requires 

large, new, publicly funded buildings to achieve LEED Silver certification.

Standards referenced in Canadian building codes often originate in the United States or are 

influenced by US standards. ASHRAE 90.1, for example, is still used in many jurisdictions as an 

accepted energy code. Standard 189 is being watched with interest and will certainly influence 

the Canadian market.

Codes in Practice

While in many countries code adoption takes place at the national level, with all three North 

American countries code adoption and enforcement takes place at the local or regional (state or 

provincial) level. Codes derive their legal authority from their enactment as laws, ordinances, or 

statutes, and their effectiveness depends on enforcement of those laws. This creates a variety of 

challenges in the three countries.

United States

While it appears likely that most US jurisdictions will eventually employ the ICC system, in 

most cases each jurisdiction makes its own determination of which codes and which versions of 

those codes—if any—to adopt. Many jurisdictions amend the codes they adopt. Amendments 

may be in response to local or regional conditions, such as high winds, wildfires, or earthquakes, 

and additions often include appendix chapters for traditional or regional building approaches—

for example, use of adobe in the southwestern US states. Federal governments can, however, 

pass legislation or develop programs that either directly or indirectly supersedes local codes, 

such as the low-flow toilet requirements included in the 1992 Energy Policy Act. 

At the other end of the process, local building officials have the authority to approve alternative 

designs, materials, and methods of construction as long as these are deemed adequate to meet the 

intent of the building code. All codes have such provisions for dealing with building practices, 

materials and systems not specifically addressed in the code. The extent to which a building code 

hinders environmentally preferable alternatives may depend as much on code interpretation by 

the local building official as it does on the language of the code itself. 

Just as important as the process by which codes are adopted is the process by which they are 

developed, changed and enforced. Few people are aware that the building code development and 

change processes are open to the public. Anyone—a business, interest group, or individual—can 

propose changes to the codes. On an annual basis, all filed proposals go through the same 
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process—committee review, scheduled hearings, and voting. This process results in many 

changes to codes every year. Typically, supplements are published annually and then 

consolidated into a new edition of the code every three years. 

Canada

The National Building Code (NBC) provides considerable uniformity across the country. The 

provinces can, and in many cases do, modify the national code for their jurisdictions, but the 

similarities remain greater than the differences. The code is written by code users—designers, 

developers, builders, manufacturers, regulatory officials, owners, and managers—and it 

represents minimally acceptable construction practice. Code requirements do not necessarily 

reflect “best” practice—that is, they do not lead the market—but, because of their role as the 

minimum legal performance standard, they still have an enormous impact on the industry. 

The current NBC (released in 2006) is Canada’s first objective-based code. This means that, 

although a complete set of prescriptive and performance-based requirements remains, the 

objectives or intent for each are also included. This was done both to facilitate discussion 

regarding future code updates and to provide developers with a clear purpose for each clause, 

thereby clarifying the requirements for innovative technologies. 

The Code Objectives in the NBC are grouped under the categories of safety, health, and fire and 

structural protection. As an example, under “safety,” the NBC states: “An objective of this Code 

is to limit the probability that, as a result of the design or construction of the building, a person in 

or adjacent to the building will be exposed to an unacceptable risk of injury due to fire.” It then 

lists where these risks would originate (including “collapse of physical elements due to a fire or 

explosion”). Intended or not, the wording of the objectives leaves more room for subjectivity on 

the part of local building officials than does that of the prescriptive or performance clauses in the 

Code. 

The 2006 Ontario Building Code, which is based on the 2005 NBC, adds objectives in a broader 

range of categories, including specific environmental objectives:

• Under the energy conservation category, the Ontario Building Code states that “An 

objective of this Code is to limit the probability that, as a result of the design or 

construction of a building, a natural resource will be exposed to an unacceptable risk of 

depletion or the capacity of the infrastructure supporting the use of the resource will be 

exposed to an unacceptable risk of being exceeded, caused by the consumption of 

energy.”

• Under the environmental integrity category, the Ontario Building Code states that, “An 

objective of this Code is to limit the probability that, as a result of the design, 

construction, or operation of a building, the natural environment will be exposed to an 

unacceptable risk of degradation.”

These are worthy goals, but it could be argued that these objectives are not met by the 

prescriptive requirements.
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Sidebar: Measures of Performance 

Prescriptive vs. Performance-based Codes and Standards

Codes and standards can be based on method (prescriptive) or outcome (performance). Most ICC 

codes follow a prescriptive approach, describing in detail what to do and how to do it. In 

contrast, the ICC’s International Performance Code (IPC), and ASHRAE 90.x are performancebased, specifying the objective being sought but not how to get there. The prescriptive approach 

is often easier to administer and verify. It is straightforward and relatively easy to implement for 

both builder and code official, but it can stifle innovation or even require poorer-performing 

options. Performance-based approaches add a layer of complexity but increase the freedom of 

designers. The performance approach requires that the proposed designs, materials or methods be 

supported by calculation, test results or other demonstrations of adequate performance. Building 

officials must be able to analyze the project rather than just ensure that it conforms to common 

practices with which they are familiar. Ultimately, neither method is inherently better—each 

serves a different need. 

Modeled vs. Actual

So-called performance-based standards are usually based on modeled performance rather than 

actual performance. A body of evidence indicates that actual building performance has in many 

cases not met modeled performance. This gap needs to be addressed. Measurement and 

verification of performance is an area in need of much improvement.

Total vs. Normalized

Ultimately, the value of any approach—voluntary or mandatory, performance-based or 

prescriptive, large- or small-scale—lies in its impact on the issue it was originally designed to 

address. As with measurement of actual building performance, comprehensive review of the 

impact of policy decisions is often not completed, and there are few or no measures of absolute 

performance. Relative performance measures, such as “20 percent better than code,” or the 

number of new LEED buildings, are valuable indicators but should be considered in conjunction 

with measures of total consumption, total emissions, and other absolute measures. Measuring 

these absolute goals (such as country-level CO2 reductions) can improve policies by providing 

feedback or a way to check whether other regulatory or voluntary initiatives are achieving the 

aim for which they were originally developed. 

Barriers to Greening Building Codes

Most building codes were developed to protect the public from fire and other hazards attributed 

to the built environment. The cautious prescriptive approach of these codes has effectively 

minimized these risks to people and property. Unfortunately, however, such codes typically 

ignore the effects of buildings on human health and the environment, including the natural 

systems on which, many experts argue, everyone’s health, safety, and welfare depend. Narrow 

scope and prescriptive methods hinder environmentally friendly building in a number of ways:

1. By hindering the use of alternative building materials and innovative design 

strategies: Alternative materials and strategies are rarely specifically banned. Instead, 

they are excluded by default, because they are not included in the prescriptive code. 

Designers can, and often do, seek variances; however, the time and expense of doing so 

often discourage this approach. A survey by the Development Center for Appropriate 
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Technology (DCAT) explored the impact of perceived barriers and found that 65 percent 

of code users indicated that they have chosen not to include a green alternative because 

they expected it would not be approved. Code officials may not be knowledgeable about 

proven alternatives.

2. By unintentionally requiring environmentally harmful practices: Building codes 

often institutionalize modern, resource-intensive ways of building, while older, low-tech 

systems are excluded. Less common are instances in which the chosen strategy to 

mitigate a particular immediate safety issue is directly at odds with environmental or 

health objectives. For example, codes that require “plenum-rated” data cables in 

commercial buildings may effectively require the use of fluoropolymer cable insulation, 

and fluoropolymers have recently been shown to exhibit health risks. In another 

example, the code requirements for flame retardants in foam padding may protect 

building occupants from fire but cause long-term health problems as these brominated 

flame retardants escape from those materials into the air and are ingested.

3. By not imposing requirements for environmentally preferable practices: Until very 

recently, there were no requirements regarding a building’s use of energy or water or its 

production of waste. Like all building codes, such requirements would ensure that all 

buildings achieve a basic level of performance, safeguarding society from potential 

harm. 

Green building strategies that have historically been the most hindered by codes include the use 

of natural materials, green roofs, and gray water harvesting systems. Many natural materials and 

methods of construction, such as adobe or rammed earth, are well-established and proven; 

because they are less manufacturing-based, however, no company has pursued code-listing, so 

these materials are not automatically approved by codes. 

One organization that is tackling all sides of the problem is the Development Center for 

Appropriate Technology (DCAT) in the United States. DCAT is working to bring a context of 

sustainability into the codes by promoting the idea that the goals of green building and the goals 

of code officials are shared: we all want buildings that are safe for people and the environment. 

DCAT argues that we must find a better balance between the need to minimize risk to people in 

specific buildings and the need to minimize collective risks to the public that result from the 

cumulative environmental consequences of buildings and the building industry.

Urban Planning and Zoning Laws

The overall purpose of land-use planning and zoning regulations is to ensure that development 

conforms to acceptable standards as agreed to by the community or a relevant government body. 

Typically, municipal plans establish vision and intent, in relation to land use, while zoning 

codifies that intent into legal standards and regulations. Zoning regulations have been used in 

North America for many decades to regulate everything from the siting of power plants and 

landfills to setbacks from rivers and wetlands to protect these ecosystems.

Land-use Planning in North America

Variously referred to as town planning, urban planning, and urban design, municipal land-use 

planning in North America dates back to William Penn’s design for the city of Philadelphia, 

Pennsylvania, in 1682. A few other early examples of comprehensive city and town planning 
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include James Oglethorpe’s 1733 grid of Savannah, Georgia, Pierre L’Enfant’s 1791 design of 

Washington, DC, and Frederick Law Olmsted’s 1859 plan for New York City’s Central Park. 

These plans guided the development of their respective areas, generally starting with an open 

slate. 

The Canadian Institute of Planners defines planning as “the scientific, aesthetic, and orderly 

disposition of land, resources, facilities, and services with a view to securing the physical, 

economic, and social efficiency, health, and well-being of urban and rural communities.” Landuse planning involves a wide range of activities, from architecture and landscape architecture to 

zoning and transportation infrastructure planning to protection of open space and wetlands. 

Commonly, zoning regulations, including the delineation of land-use districts, evolve out of 

land-use planning. 

Many aspects of environmental protection and green development have land-use planning at 

their heart. Providing alternatives to automobile use, such as public transit, pedestrian pathways, 

and mixed-use development, is an important aspect of land-use planning. Zoning puts teeth into 

land-use planning.

History of Zoning in North America

The first zoning in North America was adopted in 1916 in New York City in response to the 

construction of the Equitable Building, which towered over existing buildings and blocked views 

from windows and access to sunlight. This zoning regulation became the basis for zoning 

throughout much of the United States. The Standard State Zoning Enabling Act, which grew out 

of the New York City zoning law, addressed such urban issues as floor-area ratio regulations and 

air rights.

Not long after New York pioneered zoning in the United States, in 1922 the town of Euclid (near 

Cleveland), Ohio, adopted a version of the New York City code that addressed the needs of 

smaller towns and what would soon be called suburbia. Euclidian zoning, as it is now known, 

was adopted to segregate different land uses—keeping industrial buildings away from residential 

areas, for example. As typically adopted, Euclidian zoning creates districts in which certain types 

of development are permitted and others are not and where allowable development density may 

vary.

The first zoning law in Canada was adopted in 1924 in Kitchener, Ontario. Early zoning 

regulations were implemented to ensure that undesirable land uses were prevented from being 

established in new neighborhoods. In early codes this included limiting access of various racial 

and ethnic groups. 

Zoning as a Benefit or Impediment to Green Building

While zoning regulations are typically adopted with the best of intentions—and some such 

regulations play an important role in protecting areas such as wetlands and open space—zoning 

can also be an impediment to environmentally responsible development. The Euclidian zoning 

found in much of the United States and Canada can make people significantly more dependent 

on automobiles, because the different land uses (such as residential, commercial, retail, and 

industrial) are typically kept separate. Establishing such zoning, with its separated land uses, 
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often makes it impossible to build a grocery store within walking distance of most residential 

development, and can make walking or bicycling to work more difficult.

In the United States and Canada a movement emerged in the 1990s to address the harm done by 

Euclidian zoning. This effort has been led by the Congress for the New Urbanism (CNU; online 

at <www.cnu.org>). The New Urbanism movement (also referred to as neotraditional 

development) seeks to encourage compact, “walkable” neighborhoods that incorporate diverse, 

mixed uses with defined greenspaces. This form of development, which is modeled on such prezoning cities as Charleston, South Carolina, and New Orleans, Louisiana, helps to build stronger, 

safer communities in which people get to know their neighbors. 

The New Urbanist projects are typically governed by specialized zoning adopted specifically for 

each project. Traditional neighborhood development (TND) districts are established through 

regulations designed to ensure compact, pedestrian-friendly development. In some areas, 

proponents of New Urbanism have succeeded in replacing the conventional (Euclidian) zoning 

with TND zoning more broadly—not just for specific development projects. This is the case in 

San Antonio, Texas, and Cornelius, North Carolina, for example.

Discussion and Recommendations

Building codes in the United States and Canada have historically focused on the safety of each 

building project while largely ignoring greater environmental and human health consequences. 

Similarly, zoning laws were frequently designed to address specific urban issues, without 

recognizing the larger implications of those measures. Solutions need to be both structural and 

educational: they need to educate decision makers about unintended consequences of old 

regulatory approaches; they need to incorporate these lessons into both the language and 

implementation of new codes and zoning laws; and they need to ensure that the updating process 

for zoning addresses new thinking about responsible land use. National plans have the potential 

to aid in this process, coordinating actions and providing a wider-view of consequences and 

ambitious goals.

Recommendations:

• Develop an ambitious national energy plan: Develop national energy plans at the scale 

of the US Manhattan Project or Apollo Project to motivate citizens and mobilize 

resources on the scale needed to address climate and other upcoming challenges. Include 

funding for high-priority building programs, such as a ”Rebuilding America” program for 

widespread energy retrofits of homes.

• Expand the scope of building codes: Shift the focus from solely immediate impacts 

(such as structural collapse and thermal comfort) to the long-term health and 

environmental impacts of construction. Increase the authority of municipalities to remove 

barriers to green development and to require better energy and environmental 

performance. Facilitate adoption and regular updating of energy codes and environmental 

building codes. Consider wider adoption of indoor air quality (IAQ) codes, integrating 

components of passive survivability, and requiring dependable ventilation.
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• Revise codes that are barriers to more responsible, green building: Fund a process 

for testing and adopting traditional as well as innovative new technologies and building 

systems into building codes, even when such technologies and systems are not being 

advanced by industries that can support code testing. Encourage performance compliance 

paths to reduce barriers to innovation.

• Facilitate both standardization and local adaptation of codes: Adopting national 

codes can reduce a municipality’s costs of administration and enforcement. However this 

streamlining should be balanced with appropriate regional customization to address 

climate-appropriate design, local culture, and local economies. Consider, and account for, 

to the extent possible, unintended consequences of code and zoning requirements. For 

instance, increasingly stringent and comprehensive international codes may restrict the 

supply of adequate housing in some low-income areas where traditional building systems 

are used. A two-tiered code, special financing, or other support may be needed to address 

this issue. 

• Support effective land-use planning: Provide funding for grant programs that can be 

used to carry out planning.

• Remove zoning regulations that hinder responsible, green building: Eliminate 

prohibitions on cluster development, requirements for outmoded and environmentally 

damaging stormwater management practices, prohibitions on gray water use and 

rainwater collection, requirements for wider-than-necessary streets and larger-thannecessary parking lots, and requirements for large building lots and even large houses in 

residential areas (most minimum-house-size regulations have been removed from public 

zoning as unconstitutional—but they are very common as covenants in private 

subdivisions or developments). Removing these obstacles to green development allows 

more progressive practices to be implemented.

• Promote zoning provisions that encourage responsible development: Encourage 

relatively new zoning ideas, such as traditional neighborhood development (TND) 

districts, which can help to create more pedestrian-friendly cities, protect open space, 

reduce dependence on automobiles, and foster stronger communities.

• Use an integrated and comprehensive approach: Address equipment, materials, codes, 

land uses, and zoning in a comprehensive manner. This may involve collaboration of 

federal, state or provincial, and local authorities, as well as independent agencies.

References for readers

• Development Center for Appropriate Technology (DCAT): <www.dcat.net>

• Department of Energy’s (DOE’s) Building Energy Codes Program, an information 

resource on national model energy codes: <www.energycodes.gov> 

• Building Codes Assistance Project, dedicated to assisting states in the adoption and 

implementation of statewide building energy codes: <www.bcap-energy.org/home.php>

• International Code Council (ICC): <www.iccsafe.org>
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• GreenTools for Suburban City Toolkit, a CD-ROM with resources for small cities, 

including a sample mission statement and examples of policies, incentives, and work 

programs: <www.greentools.usa>

• Developing Green Building Programs: A Step-By-Step Guide for Local Governments: 

<www.globalgreen.org/media/publications/StepByStep.pdf>

• UGSBC State and Local Government Toolkit: 

<www.usgbc.org/Docs/Member_Resource_Docs/toolkit_statelocal.pdf>

• CaGBC’s Policy development toolkit for municipalities 

<www.cagbc.org/green_resources/for_municipalities.php>

• National Research Council Canada, National Code Documents: 

<www.nationalcodes.ca/ncd_home_e.shtml>

• Cutting Green Tape, An Action Plan for Removing Regulatory Barriers to Green 

Innovations: <www.wcel.org/wcelpub/2002/13724.pdf>

Sidebar: Product Performance Laws and Standards

Building green goes far beyond the materials used, but selecting environmentally friendly 

products remains important. The availability and quality of green building products, like the 

buildings themselves, have improved dramatically in recent years, due to increased market 

demand, regulatory action, the development of voluntary standards, and other factors. Greening 

products and manufacturing would fill another report; this summary is meant only to highlight 

key comparisons and policies. 

For products, as with whole buildings, regulatory requirements and voluntary standards play 

overlapping and complementary roles in driving product improvements. Some efficiency 

improvements will happen without product requirements, particularly when clear consumer 

information such as Energy Star labeling (described later) is available to help drive consumer 

demand. However, as with building codes, minimum-efficiency standards are still needed to 

ensure a uniform level of basic performance. Efficiency requirements are also needed to 

overcome market failures, such as fast-replacement purchases, which don’t leave a consumer 

time to carefully review options, purchases by landlords and builders who don’t pay the 

operating costs of the products they purchase, and high first costs for equipment when efficiency 

features and non-energy features are both considered “extras” for only expensive "trade-up" 

models.

Laws

US states have frequently adopted stringent product requirements ahead of national standards, 

sometimes driving manufacturers to favor broader legislation that would create uniform 

requirements on which to base national product development and sales. Manufacturer aversion to 

an existing morass of state-level standards eased the way for federal appliance energy-efficiency 

requirements initially adopted in the National Appliance Energy Conservation Act of 1987, with 

updates in the 1992 and 2005 Energy Policy Acts. 

Also, in an increasingly globalized market, requirements from one country can influence 

manufacturing processes, product availability, and new standards in other countries. For 
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example, in 1972, Sweden established maximum flush requirements for toilets at 6 liters (1.6 

gallons), creating low-flow toilets that were imported into the United States and eventually 

prompting Massachusetts to adopt a similar requirement in 1987. The Massachusetts requirement 

was rapidly copied by other states, 17 of which had 1.6 gallon-per-flush (gpf) regulations in 

place before the Energy Policy Act of 1992, which took effect in January 1994, established 1.6 

gpf as a national requirement. 

Shower systems exhibit how the letter of the law can be met while the intent of the law is 

bypassed completely. The Energy Policy Act of 1992 also established a maximum flow rate for 

showerheads of 2.5 gallons per minute (gpm). Manufacturers of high-end custom homes have 

circumvented this limit by installing shower systems with multiple showerheads—some of which 

use as much as 20 gallons per minute. 

Standards

“The international language of commerce is standards.”—Former US Secretary of Commerce 

Donald Evans

As is the case with buildings, voluntary standards, certifications, and other screening methods for 

individual products have helped to drive market demand and to clarify for consumers and 

tradespeople which claims are substantiated and which are unfounded (“greenwash”). Today, 

product standards address issues such as recycled content, indoor air quality, energy efficiency, 

and forestry practices—providing a basis for third-party certification. In addition to singleattribute certification programs, new comprehensive certifications are appearing that cover all 

aspects of environmental and social responsibility. 

The best-known US government–run voluntary standard is Energy Star, which was introduced in 

1992 as a voluntary labeling program identifying and promoting energy-efficient products. The 

program now covers more than 50 product types. Standards are often written with the 

expectation that they will become more stringent over time. 

Increasingly, manufacturers are working together to develop voluntary standards—with the 

incentives of pre-empting regulation, clarifying green value to consumers, and ensuring that 

certification systems reflect their products in a good light. To this end, some industries have 

developed their own standards, which may or may not be as stringent as third-party or 

government standards. While industry standards may be robust, it is important to recognize that 

conflicts of interest have the potential to influence the design of standards. The most robust 

standards are generally considered to be those developed through a formal, voluntary, consensus 

process, such as ANSI, characterized by openness and due process. However, many of the green 

product standards currently available are consortia standards, developed outside the formal 

process. Depending on the development group, these may be more or less stringent than 

consensus standards. Standards may be defined as first-party, second-party, or third-party, 

expressing increasing levels of separation between the standard developer and the company and 

product to be certified. These distinctions have trade implications as well. In the World Trade 

Organization Agreement on Technical Barriers to Trade (WTO/TBT), purchasing criteria 

developed in accordance with internationally accepted principles of standardization 

(transparency, due process, consensus, etc.) are not considered technical barriers to trade.
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Their voluntary nature makes the standards palatable to those who want less government 

interference, but it also means that marketing these programs to consumers must remain a key 

component so that demand will increase and participation will rise. One way that this is 

accomplished is through inclusion of these product standards in larger green-building programs 

and preferred purchasing requirements. Ultimately, the line between mandatory or voluntary 

programs for the environmental performance of products can become blurred. The Forest 

Stewardship Council’s voluntary standards for wood have made their way into purchasing 

specifications and mandated performance requirements, while chemical-emissions limits for 

California have become part of a voluntary industry standard for paint. By developing the 

technology-leading Energy Star standard and then requiring federal agencies to make their

purchases Energy Star–accredited, the EPA has been able to push development and rapid 

adoption of new technologies.

Consumer Information

While certification programs verify performance, they are not necessarily set up to provide 

consumers with comprehensive comparative information. The Energy Star label isn’t just a 

checkmark, but provides information on comparative energy use of a product. In addition to 

complying with the European Union’s required CE (Conformitée Européene) Marking, which 

ensures that a product meets all applicable standards and associated information requirements, 

many companies selling to European markets are also completing environmental product 

declarations (EPDs). EPDs provide standardized environmental information in the form of 

brochures that differ by country in appearance but always include: (1) a product description; (2) 

life-cycle indicators based on ISO 14040; and (3) additional information such as performance 

expectations, recycling or disposal, and details about risks and toxicity. In the United States, a 

number of voluntary systems in development (including Pharos and GreenFormat) are 

attempting to provide more comprehensive consumer information on building products, but full 

disclosure of environmental information remains the exception. 

Summary

In short, requirements eliminate the worst offenders, while both mandated requirements and 

voluntary standards can be—and have been—used to drive the development of new, greener 

products. Voluntary standards are often more politically feasible, but their effectiveness depends 

on clear market demand—which must be built through advertising and education. Mandates do 

not require the same level of outreach, and they work when market approaches don’t. 

Regardless, there may be industry winners and losers as new technologies supersede old ones—

in market share, or by mandate. Industry players may thus actively participate in defining the 

terms of the mandate or standard to ensure that it is favorable to their technology. As with 

buildings, whether mandatory or voluntary, the development of stringent performance-based 

standards that are technology-neutral can encourage innovation without defining market 

outcomes. However, it can be difficult to achieve an innovation-advancing level of stringency.

Recommendations

Support product efficiency requirements by adopting standards for a wider range of products 

and harmonizing product efficiency requirements for North America. Regularly re-examine and 

tighten these standards.
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Support development and use of robust third-party certifications, to provide standardization, 

transparency, and verification of claims, which facilitates comparisons and drives market 

demand. 

Support the process of agreement on voluntary standards, to clarify demands on 

manufacturers, facilitate trade, and reduce consumer confusion.

Support mandatory labeling, to provide easy-to-use and pervasive consumer information on 

product sustainability. 

References for Readers

<http://greenseal.org/> 

<http://www.greenguard.org/> 

<http://scscertified.com/> 

<http://www.mbdc.com/certified.html>

<http://www.astm.org/> 

<http://www.greenlabelspurchase.net/>

Voluntary Programs

Voluntary green building initiatives from both governmental and nongovernmental groups are 

transforming the building industry in the United States and Canada. This section describes and 

explores the effectiveness of such programs, offering recommendations for the future of such 

initiatives throughout North America. 

Voluntary programs that address the performance or quality of products have a long history in 

North America. For instance, Underwriters Laboratory (UL) was founded in Chicago in 1894 to 

test and certify products for safe performance. The UL stamp (ULC in Canada) has become a 

recognized indicator of quality in the manufacturing industry today—and as code bodies began 

requiring UL certifications on products, UL testing became a de facto standard in many 

industries. The Good Housekeeping Seal was established in 1912 by the Good Housekeeping 

Institute, which was an offshoot of Good Housekeeping magazine. Both of these were early, 

voluntary programs to recognize safe, healthy products, and they have served as models for 

programs aimed at green building.

Single-issue building programs pre-date comprehensive green building programs and are 

generally simpler to understand and administer. Some of these single-issue programs, such as 

Energy Star, continue to be important drivers of green building. However, buildings built solely 

to these standards inevitably ignore other environmental considerations. 

As more comprehensive programs were developed, they frequently incorporated existing and 

developing single-issue standards, while sometimes with different targets. While a number of 

issues and features distinguish major green-building standards—such as LEED, Building 

Research Establishment Environmental Assessment Method (BREEAM), and Green Globes—

there is also significant agreement over what constitutes best practice in green building. The 

differences stem more from the development process, philosophy on particular issues, and 

stringency than from the areas the rating systems consider. 
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Single-issue Energy-efficient Building Labeling Systems

United States

One of the first government-based voluntary programs to address issues that are now considered 

part of green building was the Green Lights Program of the US Environmental Protection 

Agency (EPA). Launched in January 1991, this program sought to encourage corporations to 

adopt energy-efficient lighting technologies. It was followed by the EPA’s Energy Star program, 

in mid-1992, which originally focused on the energy consumption of personal computers and 

computer monitors: models that used less than a defined amount of energy could carry an Energy 

Star logo. Many other products joined the Energy Star program in the following years. 

In 1995 the EPA Green Lights Program was merged into Energy Star and Energy Star was 

broadened to address residences. A recent update of the Energy Star Homes standard requires 

homes to be at least 15 percent more energy-efficient than demanded by the 2004 International 

Residential Code (IRC). Energy Star Homes are eligible for Energy-efficient Mortgages (EEMs) 

from participating lending institutions, allowing potential home-buyers to assume a higher 

mortgage because monthly energy costs will be lower. In 1999, EPA expanded Energy Star to 

recognize commercial buildings. To earn the label, a commercial building must score 75 or 

better—corresponding to the top 25th percentile—in EPA’s Portfolio Manager, a Web-based tool 

that compares the building’s energy use after at least one year of operation to that of similar, 

existing projects in its database. More than 3,200 commercial buildings have now earned the 

Energy Star label. EPA provides partners with both technical support and recognition. Energy 

Star, administered by the US EPA and the Department of Energy (DOE), has become the bestknown national, energy-performance rating program. 

Energy Star has generally opted, with success, for boosting participation in the program over 

making the standards for eligibility tighter. Lighting upgrades, at the least, have been conferred 

on more than three billion square feet of commercial space so far—an area equivalent to all the 

office space in the western third of the United States. Pulte Homes, the largest home builder in 

the nation, has committed hundreds of homes to the program; thirty plants across the United 

States are now producing Energy Star homes; and over 725,000 of the nation's new homes have 

earned the Energy Star label. This sort of market transformation is what the comprehensive green 

building programs still only aspire to achieve. 

Canada 

R-2000

The R-2000 program, launched in Canada in 1981, was one of the world’s first voluntary 

building-rating programs. The program was developed by a partnership between the Canadian 

Home Builders Association (CHBA) and Natural Resources Canada (NRCan). 

The R-2000 Standard uses performance targets for energy, with a particular emphasis on 

reducing heat loss and air leakage. Energy targets, calculated using an approved simulation 

software program (HOT2000), are tailored for each specific home, based on its size, fuel type, 

lot orientation, and geographic location. Air-leakage performance is confirmed for each house 
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through on-site testing. Modification pursuant to R-2000 targets results in about 30-percent 

energy reduction, compared with energy use in a conventional, minimally code-compliant home. 

In recent years the Standard was expanded to address design measures beyond energy, including 

higher-quality ventilation; products with low levels of harmful chemicals, dust, and other indoor 

air quality pollutants; and strategies to reduce potable water use. These issues were incorporated 

into the Standard by adding a prescriptive “pick list” of acceptable products and systems.

When first launched, R-2000 was combined with a significant incentive of $1,000 per house, and 

NRCan and CHBA actively marketed the program. It was most successful in the early years, 

likely due to these measures (see Figure 3). 

Figure 3: Number of Eligible R-2000 Housing Starts, 1990–1993

Source: Improving Energy Performance in Canada. Report to Parliament under the Energy Efficiency Act, 2003–

2004. Online at <http://oee.nrcan.gc.ca/corporate/statistics/neud/dpa/data_e/parliament03-04/chapter4.cfm?attr=0>.

The on-site air-tightness testing requirement remains unique to R-2000. Most buildingassessment programs rely on predicted, rather than actual, performance. The R-2000 program is 

likely responsible for the air-barrier expertise in the Canadian housing industry, which seems 

well ahead of the industrial, commercial, and institutional sectors. Compliance testing had a 

positive impact on the market. However, large builders complain about the risk of failure in 

some number of houses in a development, which creates problems for the marketing department 

(or potentially costly rework on the failed houses). 

Figure 4 shows national air-leakage trends for periods up to 2004, during which the air-tightness 

requirement for R-2000 was about 1.1 air changes per hour (ACH), at 50 Pascals (Pa) pressure 

difference.
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Figure 4: National Trends in Air Leakage, pre-1945 to 2000–2004

Source: Improving Energy Performance in Canada. Report to Parliament under the Energy Efficiency Act, 2003–

2004. Online at <http://oee.nrcan.gc.ca/corporate/statistics/neud/dpa/data_e/parliament03-04/chapter4.cfm?attr=0>.

Canada EnerGuide

EnerGuide is an energy-labeling program developed by Natural Resources Canada (NRCan) to 

communicate to consumers the impact their purchasing decisions have on energy consumption. 

EnerGuide programs have been developed for household appliances, heating and cooling 

equipment, houses, and cars (see <http://oee.nrcan.gc.ca/energuide/index.cfm>). EnerGuide 

labeling is mandatory for some products (primarily household appliances) but remains voluntary 

for houses (see Figure 5).

EnerGuide for new homes consists of an energy analysis of plans, proposed energy efficiency 

upgrades, and verification by inspection and testing before a rating between 0 and 100 is 

determined. The service is provided by evaluators who have been trained and licensed to practice 

with organizations listed by NRCan. EnerGuide for homes is being replaced by EcoEnergy for 

Buildings and Houses.

The 2006 Ontario Building Code requires that, by 2011, all new homes achieve an EnerGuide 

Rating of 80 or more. This is the energy performance requirement associated with achieving 

certifications for both R-2000 and Energy Star for New Construction. Other provinces may 
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consider similar upgrades in new codes being adopted across the country (subsequent to the 

release of the National Building Code 2005).

Figure 5: The Energuide for New Houses Label

Source: Natural Resources Canada, <http://oee.nrcan.gc.ca/residential/personal/new-homes/upgradepackages/label.cfm?attr=4>.

Canada Energy Star for New Homes

Energy Star is a certification mark originally developed in 1992 by the US EPA (see above). The 

certification was first applied to New Homes in Canada in 2001. The energy efficiency measures 

required for certification typically include upgrades from standard code requirements for 

insulation, windows, envelope, air barriers and air sealing, and efficiencies of heating, air 

conditioning, and domestic hot water as well as installation of certified Energy Star appliances. 

A new home constructed to an EnerGuide rating of 80 (2007), and incorporating certified 

appliances will achieve Energy Star for New Construction certification. The program was 

launched in Ontario in 2005. Since its inception the program has grown to hold an annual new 

construction market share of nine percent (Office of Energy Efficiency, 2006 Trades Report). 

Nationally in 2006, over 800 Energy Star–qualified homes were constructed, and the logo is very 

well known in the market place. 
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Recognizing a gap in the market, there have been discussions regarding creating an Energy Star 

program for multi-unit residential buildings, but this is still at a preliminary stage.

EcoEnergy, formerly Canada Commercial Building Incentive Program (CBIP)

CBIP was developed as an incentive program and, as such, it is discussed in more detail below in 

the section on financial mechanisms. However, it is important as a voluntary program in that it 

has defined a process for certifying the predicted energy performance of large buildings (it has 

been used for hospitals, schools, multi-unit residential buildings, and office buildings). CBIP, 

and now EcoEnergy, provides a detailed protocol for using the EE4 simulation software to 

compare a building as designed to a similar building designed in minimal compliance with the 

Model National Energy Code for Buildings (MNECB); 25 percent better than code has been the 

threshold for CBIP funding, although the funding was recently canceled.

Comprehensive Green Building Assessment Programs

US LEED

Anyone looking into green building in the United States will quickly discover the LEED® rating 

system. Leadership in Energy and Environmental Design (LEED) has transformed the US 

building industry. The program experienced exponential growth, expanded into Canada with a 

slightly modified version, and is now moving to other countries. The LEED rating system is a 

method for providing independent verification of environmental performance for buildings. At 

its core, LEED is a checklist of credits for green building attributes, developed through a 

consensus process.

LEED’s origins can be traced to an earlier environmental certification system for buildings, the 

Building Research Establishment Environmental Assessment Method (BREEAM), which was 

launched in 1990, and a Canadian version of BREEAM known as the Building Environmental 

Performance Assessment Criteria (BEPAC). BEPAC was launched in 1994 but never fully 

implemented due to its complexity. Inspired by BREEAM and the developing BEPAC, David 

Gottfried became a driving force for a rating system in the United States. Gottfried founded and 

chaired the American Society for Testing and Materials (ASTM) Green Building Subcommittee 

(ASTM E50.06) in 1992, then left to found the faster-moving US Green Building Council 

(USGBC) in 1993, drafting a proposal for a green building rating system that was one of five 

initial issue papers presented at the Council’s first meeting. When work on a US rating system 

began in 1994, the Council initially considered the idea of working with BREEAM to create a 

US version, but instead began developing a new rating system, which acquired the LEED name 

in 1996. Rob Watson, then with the Natural Resources Defense Council and on the board of 

USGBC, took the lead with this development.

The Committee generated several drafts for review, but even after version 1.0 was officially 

adopted by the Council there were lingering concerns. Also, the Council lacked the resources to 

roll out a full program, so pilot projects to test the system were solicited at the Council’s August 

1998 meeting. The first twelve buildings were certified to LEED 1.0 on 30 March 2000, before 

the USGBC formally released version 2.0 in May 2000. The latter has been followed over the 

years by a number of further revisions in the continuously evolving system. 
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During this time, USGBC has also developed a suite of other rating systems for different 

building types, in addition to the original LEED (now LEED for New Construction, or LEEDNC), and building type–specific Application Guides for: campuses, retail spaces, healthcare 

facilities, labs, lodging, volume-building programs (in which one design is used for many 

buildings), and multifamily residential buildings. These systems and guides are developed by 

volunteer committees along with help from USGBC staff and are informed by other systems. For 

example, the healthcare initiative is being informed by the “Green Guidelines for Healthcare 

Construction,” which is being developed by a consortium convened by the Center for Maximum 

Potential Building Systems, of Austin, Texas. The Application Guide for Labs has strong 

participation from the Labs for the 21st Century program of the DOE and EPA. Meanwhile, 

other organizations are building on the LEED system as they reference it for their own purposes. 

The World Green Building Council supports national green building councils around the world, 

many of which have developed locally appropriate versions of LEED. 

LEED development in practice

As LEED began gaining traction in the marketplace, the policies it contained became subject to 

more scrutiny and criticism from stakeholders. Complaints ranged from controversy over 

specific issues and concern that the accreditation process for LEED professionals was lax to 

concerns over excessive paperwork requirements. As a volunteer-based and consensus- driven 

organization, USGBC’s response has been to develop committees to address concerns and bring 

large decisions to member ballot. The consensus process means that USGBC, a nonprofit 

organization of architects, construction companies, product manufacturers, engineers, 

consultants, and many others, is required to address all member concerns. For example, before 

version 2.0 was accepted, LEED was revised to address the California Energy Commission’s 

concern that any building built to code in California would meet the energy prerequisite for 

LEED certification because that prerequisite was no better than California’s Title 24 

requirement.

USGBC has also adjusted the LEED process to reflect member and user feedback. In response to 

charges that people with limited knowledge of and experience in green design were gaining 

LEED accreditation, the Curriculum and Accreditation Committee developed a new exam to 

meet third-party standards for professional accreditation. Feedback about burdensome 

documentation requirements prompted the revisal of the application method in 2002 and a major 

software development effort aimed at accepting and processing applications online. 

As LEED continued to grow, so did the scrutiny. In October 2005, two members of the LEED 

community, Auden Schendler and Randy Udall, wrote an article entitled “LEED Is Broken; Let's 

Fix It,” which put into words a number of complaints within the building industry. These 

included the program's cost, complexity, and bureaucratic requirements, as well as a 

disconnection between point allocation and actual environmental benefit, which is exhibited 

through “point mongering” and inadequate prerequisites for credit in fundamental areas like 

energy efficiency.
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Many of the concerns about LEED have been addressed. At USGBC’s November 2006 

Greenbuild conference, CEO Rick Fedrizzi announced that, provided it was approved by 

member ballot, all new commercial LEED projects would be required to reduce emissions by 50 

percent compared to current emissions levels, and that all projects would have to achieve at least 

two out of a possible ten points for the building’s energy efficiency. There are great hopes that 

LEED version 3.0 will address a number of other concerns. 

LEED was not, and is still not, perfect. One of LEED’s great strengths, however, is its means for 

addressing complaints. LEED is continually improved through member effort. Still, some 

problems are difficult to overcome because of the nature of the rating system or the development 

process used. Streamlining LEED has proven consistently difficult. While, in general, members 

want to keep LEED simple, when choosing the best solution for any particular issue, they tend to 

vote in favor of the more technically robust and complicated solution. The cost of certification 

and the time required to prepare an application will continue to be barriers for many—creating 

the so-called “shadow-LEED” of design teams using the system as a guide or internal 

requirement without going through formal certification. While the use of LEED in this manner is 

still advancing green building, it confuses the market, and the lack of verification may limit the 

success of green strategies. At the other end of the spectrum, some developers wishing to 

capitalize on market demand for LEED may direct funds toward ensuring LEED certification at 

the expense of additional green features, and cherry-pick credits based on the cost to achieve 

them rather than on design appropriateness. The rating system allows a design-by-checklist

approach. For example, once a design team has determined that they will not pursue a certain 

credit, the system provides no incentive to the team to at least do what they can in that direction. 

Similarly, once the threshold for a credit is met, there is no incentive to do even better. 

As checklists go, however, LEED is remarkably sophisticated, having benefited from countless 

hours of work (mostly volunteer) from leading green architects, engineers, contractors, and other 

professionals. LEED includes a few open credits for innovation, which, while adding work for 

application reviewers, greatly enhance its flexibility. 

BREEAM Canada and Green Globes

BREEAM was developed and launched in the UK in 1993 and has been successfully 

administrated by the Building Research Establishment (BRE) there since. It is one of the original 

whole-building assessment systems and has influenced the development of other systems across 

the world. Some countries, including several in the Asian Pacific, have adopted it for use in their 

jurisdictions. 

The development and administration of BREEAM Canada, and its evolution into Green Globes, 

have been led by Jiri Skopek, of ECD Energy. In 1996, Environment Canada and ECD Energy 

modified BREEAM for Canadian use as a Canadian Standards Association (CSA) standard. The 

CSA publication was a valuable introduction in Canada to green building assessment, but the use 

of the document in assessing buildings was limited. The process proved to be too complicated, 

and too early for the market. To address the complexity concern, ECD Energy and Environment 

Canada worked with TerraChoice to develop a more streamlined, question-based tool, which was 

introduced as the BREEAM Green Leaf eco-rating program. This program was used more 
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actively by government agencies such as Public Works Government Services and the 

Department of National Defense.

In 2000, BREEAM Green Leaf took another step in simplifying the certification process by 

launching an online process under the new name Green Globes. The original Green Globes was a 

very effective tool in that it was easy to work with; it allowed design teams to work individually 

online, focusing on their areas of influence on the issues relevant for each phase of the project. 

However, given that the program was managed by a private consulting firm and was missing a 

well-developed verification process, the system lacked credibility in the market.

In its latest iterations, Green Globes has addressed the credibility concerns. Its existing-buildings 

system has been adopted by BOMA Canada (Business Owners and Managers Association), 

giving it improved marketing and credibility. The Green Building Initiative (GBI) acquired the 

rights to distribute Green Globes in the United States and, as part of this, has begun the process 

of establishing Green Globes as an official ANSI standard. BOMA Go Green has been offered 

for just over a year, and almost 500 buildings have been certified.

BEPAC

The Building Environmental Performance Assessment Criteria (BEPAC) is a method developed 

to evaluate environmental performance of new and existing buildings. It was developed in the 

UK in 1987, for researching energy performance of buildings, as well as for developing 

modeling and education tools to improve environmental building performance. In 1993, Ray 

Cole and others developed and launched a Canadian version. 

BEPAC laid the groundwork for many of the subsequent green building assessment tools, 

including LEED. BEPAC was conceived as a set of environmental criteria to assess building 

performance. These criteria were frames in five categories: Ozone Layer Protection, 

Environmental Impacts of Energy Use, Indoor Environmental Quality, Resource Conservation, 

and Site and Transportation. The credits were organized within four modules differentiating the 

base building from the future use and the modifications performed by tenants: base building 

design, base building management, tenancy design, and tenancy management. 

Each one of the criteria could obtain from 0 to 10 points. The points in the categories of Ozone 

Layer Protection and Environmental Impacts of Energy Use were awarded over a continuous 

performance assessment, and in the remaining categories the points were given if the required 

features were present in the building. A weighting factor was assigned to the different points 

assessed to highlight their relevance within each category or the effort required to achieve the 

credit. 

The system of assessment categories incorporated in BEPAC reflects the urgency there was to 

address problems that were critical at the time it was created (in the 1990s), such as ozone layer 

depletion. The system also added an extra level of rating complexity by differentiating between 

the different stages in the life span of the building: base building construction, and long-term 

tenant use. This extra level of assessment is being incorporated in the recently released LEED 
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Rating System for Commercial Interiors, and also in LEED Core & Shell, a rating system 

focusing on the cores and shells of buildings. 

BEPAC has had significant impact on subsequent programs but it did not see wide use as an 

assessment tool. Handicaps that were subsequently identified included the complexity of the 

messaging (there was not a simple indicator such as LEED’s Silver or Gold classes), and 

allowing evaluation by proprietors.

Canada LEED

The USGBC version of LEED has been in use in Canada since 2002. Since that time nearly 400 

buildings have been registered. In 2004, the Canada Green Building Council launched LEED 

Canada NC v1.0 under license from the US Green Building Council. LEED Canada was very 

similar to LEED-NC in the US. Canadian Standards were referenced where possible and some 

minor changes in performance thresholds were made.

The Canada Green Building Council (CaGBC) has negotiated a new arrangement with the 

USGBC that allows much greater autonomy regarding the development of LEED Canada. 

Canada’s LEED Complete is now in development and expected to be launched, in pilot, in 2008. 

This system will provide a more interactive process, providing assessment at completion of 

design and construction, as well as after a one-year post-occupancy evaluation.

What Is Next?

Issues that all systems will be dealing with in upcoming years are (1) improving the link between 

rating system scores and actual environmental benefits, (2) making the system simpler and less 

costly to administer, and (3) increasing market penetration. 

With regard to improving the link between rating system scores and actual environmental 

benefits, two main areas of future work are: incorporating life-cycle assessment (LCA) into 

rating systems, and increasing the extent to which rating systems are performance-based. 

Both USGBC and GBI are considering how to integrate LCA into their systems. A likely 

approach, being championed in both rating systems by Wayne Trusty, president of the AthenaTM 

Sustainable Materials Institute, is to allow designers to select commercial and residential 

building assemblies from a library of assemblies that have been rated using LCA software, and 

earn points based on the LCA results for those assemblies. In February 2007, GBI announced 

completion of a library of 400 assemblies rated with Athena’s Environmental Impact Estimator 

(EIE) software. 

With regard to performance-based systems, it may be a contest that shows the way to a radically 

different approach. The US EPA’s Lifecycle Building Challenge seeks to encourage innovation 

in buildings designed for adaptation and disassembly, with the aim of eventual full recovery of 

systems, components, and materials. The Living Building Challenge put out by the USGBC 

Cascadia Chapter attempts to raise the bar to define a true measure of sustainability in the built 

environment. Instead of a point-based system, the Living Building Challenge consists of 16 
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performance requirements, all of which must be met for a building to earn certification. This 

means that, according to the Cascadia Chapter, while the challenge is difficult to achieve, 

understanding and documenting compliance is inherently easy. Some of the requirements in 

version 1.0 of the Challenge are indeed both simple and ambitious. Examples include: “Net Zero 

Energy: 100 percent of the building’s energy needs supplied by on-site renewable energy on a 

net annual basis;” “Net Zero Water: 100 percent of occupants’ water use must come from 

captured precipitation or reused water that is appropriately purified without the use of 

chemicals;” and “Sustainable Water Discharge: 100 percent of storm water and building water 

discharge must be handled on-site.” However, other, more complicated requirements involve 

materials selection and use; these include indoor air quality requirements, transport limitations, 

and construction waste management, and some feel that the Challenge could go even further. 

Simplifying and reducing the cost of rating systems is complex. While this is everyone’s goal, in 

practice it can mean unacceptable compromises, such as choosing less robust procedures, 

lowering the comprehensiveness of third-party review, or eliminating criteria that some consider 

critical. Alternately, the development of streamlined tools and the continued education of users 

can make a complex process faster and easier. In addition, there may be a role for more and less 

complex systems, provided it is clear they serve different niches and the market is not confused 

by efforts to make them commensurate.

Each major system attempts in its own way to address these concerns. It may be that these 

programs ultimately serve different niches in the marketplace, some serving a wider market, or 

different concerns, while others provide the most rigorous and trusted program. The existence of 

multiple systems could increase competition, thus driving improvements to the systems, but 

without sufficient differentiation it could also confound the market, preventing the apples-toapples comparison that comprehensive systems were intended to provide. 

Residential Green Building Programs

In 1991, the City of Austin, Texas, developed and launched the first residential green building 

program. Today, there are more than 40 local programs,1 a handful of regional ones, and two 

national residential green building programs. 

In general, the most successful voluntary programs have been those developed with input from a 

wide variety of vested interest groups—builders, government agencies, nongovernmental 

organizations, and product manufacturers. The groups have learned the language and challenges 

of each other’s approaches to resource efficiency and conservation in the built environment. The 

result has been consensus-based programs that have broad-based credibility with the general 

public.

Most programs have benefited from seed funding during their program development and early 

implementation, with program fees for registered homes covering only a portion of a program’s 

ongoing operation. Either private- or public-sector sponsorships (or public-private partnerships) 

remain essential to the sustainability of most if not all residential green building programs. 

 1

 The United States Green Building Council maintains a list of residential local green building programs 

online at <http://www.usgbc.org/DisplayPage.aspx?CMSPageID=147>. 
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Programs vary widely in their structure (single-level or multi-tiered, with prerequisites or not), 

the nature of their criteria (prescriptive or performance-based, or both), and their certification 

process (builder self-certification, random spot checking by program technical staff, or thirdparty independent verification). The simpler programs—single-level, prescriptive criteria, and 

self-certification—are naturally the least expensive to implement. 

Market penetration of green building programs also varies widely, but it is clear that green 

building has experienced not only rapid growth in several markets but staying power as well. 

This burgeoning growth of local green building programs over the last ten years has spurred the 

development of two national residential green building efforts—USGBC’s LEED for Homes 

program and the National Association of Home Builders’ (NAHB’s) Green Building Guidelines 

(being promulgated by GBI). While the former effort is largely being championed by the 

architectural design community, the latter process is primarily driven by homebuilder 

associations and their builder members. 

In a February 2007, NAHB and the International Code Council (ICC) announced an initiative to 

standardize the residential green building process nationwide. These two organizations are 

partnering to develop an American National Standards Institute (ANSI)–approved residential 

green building standard slated for completion by the end of 2008. While USGBC has gone to 

great lengths to reassure the residential building community that its LEED for Homes program is 

not intended or designed for codification, the typically standards-shy NAHB has opted to lead an 

effort with ICC that will accomplish exactly that. 

Sidebar: The Elephant Is the Room—Tackling House Size 

In the United States and Canada the average energy consumption per square foot of residential 

building space has significantly decreased in recent decades. However, overall energy 

consumption has continued to increase as efficiency improvements are eclipsed by increases in 

average home size. Since 1950, the average house size in the United States has more than 

doubled, even while the average family size has steadily shrunk. A 2007 NAHB survey on the 

“Home of the Future” suggests that this trend may be turning around,2 but it remains a concern 

worthy of much greater attention than it typically gets—in itself, and also as an example of how 

relying solely on normalized measures like energy use per square foot can be problematic, as it is 

the totals that tell of the real environmental impact. 

Historically, zoning regulations, restrictive covenants, and design standards for specific 

subdivisions have been more likely to discourage than encourage small housing. In the La 

Marche Place neighborhood in the 3,400-acre (1,400 ha) Wooded Hills subdivision in Little 

Rock, Arkansas, for example, single-level homes must be at least 2,600 square feet (242 m2) and 

multilevel homes at least 3,000 square feet (279 m2). Mortgage bankers can also in effect specify 

a minimum size for new homes by mandating ratios of house value to land value, or simply 

because the appraiser can’t find small comparable houses. Prior to 1998, US capital-gains tax 

 2

 National Association of Home Builders, <www.nahb.org/news_details.aspx?newsID=4143>. 
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policy encouraged larger houses by requiring a family selling a home to buy a new home of 

equal or greater value within two years to avoid a capital-gains tax on appreciated value.

There are also examples, however, of both zoning regulations and restrictive covenants on 

subdivisions that specify maximum house size. Older restrictions tended to address stormwater 

management, but more recent restrictions have been implemented by communities to limit the 

trend toward so-called McMansions or starter castles.

The most radical strides in accounting for house size were taken with the Vermont Built Green 

(VBG) certification program piloted in 2003. In VBG a matrix listed the average size of houses 

by the number of bedrooms, with points awarded for smaller-than-average houses, and 

subtracted for larger-than-average houses. In the pilot version, one could gain VBG certification 

solely by meeting the minimum requirements of the program and building a very small house, 

whereas a home that was twice the average size might have to earn twice the number of points 

for VBG certification. More recently, recognizing the value of LEED’s name recognition and 

greater resources, the developers of VBG worked with USGBC to incorporate features from 

VBG into the LEED for Homes program. Among these changes, LEED for Homes now 

considers house size, with some differences. The LEED program provides less benefit or penalty 

at the extremes of small and large house size, but uses a smaller neutral point, thus requiring the 

currently oversized average house to make more green improvements for certification. 

According to Jeff Gephart at Efficiency Vermont, the LEED system also makes it impossible for 

an extremely large home to achieve a Platinum rating. 

Discussion and Recommendations

• Expand the reach of green building rating systems: Require the certification of 

government-owned buildings (see the section on government purchasing).

• Support the continuous improvement of rating systems: Improve the direct link 

between rating system scores and their tangible environmental impacts by using lifecycle analysis and performance-based assessment. Simplify the certification process, to 

increase market penetration, while maintaining credible results.

• Fund research that will improve future versions of green building rating systems:

(see Technology Development). Needed research includes the development of robust

LCA databases for North America.

• Target residential remodeling: Place a high priority on reaching the residential 

remodeling market. Existing houses in North America account for a large percentage of 

total energy used by buildings, and significantly reducing energy use in existing buildings 

is a considerable challenge.

References for Readers

• <www.breeam.org>

• <www.energystar.gov>

• <www.usgbc.org>
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• <www.lifecyclebuilding.org>

• <www.cascadiagbc.org/resources/living-buildings>

• <www.globalgreen.org> 

Financial Mechanisms 

While financial and market issues are the topic of different background papers (Background 

Papers 2a, b, and c, on “Towards Sustainable Financing and Strong Markets for Green Building,” 

expanded reports based on presentations at the Green Building in North America International 

Symposium, Seattle, May 2007 ), governments can influence the economics of green building in 

major ways. Broadly categorized, these include providing direct monetary or in-kind incentives, 

using the fiscal “steering wheel” of taxes and subsidies, and providing the targets and structure to 

create new markets, such as a carbon-trading system. Direct incentives and subsidies can provide 

a swifter boost to green building and be put in place at smaller levels of government. However, 

the larger actions of tax shifting and developing emissions-trading markets have the greatest 

potential for ensuring that green building and associated environmental technologies and 

practices increasingly become the norm. 

Direct Government Incentives for Green Building

In the United States, various federal tax credits encourage certain aspects of green building. The 

Energy Policy Act of 2005 includes both tax deductions and tax credits to spur investment in 

energy conservation and renewable energy sources. Commercial building owners may obtain tax 

deductions up to $1.80 per square foot for investments in energy improvements to the building 

envelope, lighting, and mechanical systems that result in 50-percent energy savings compared 

with ASHRAE 90.1-2001. 

More valuable are the Energy Policy Act’s various tax credits. For commercial buildings, these 

include a 30-percent tax credit on solar energy and fuel cell equipment and a 10-percent tax 

credit on microturbine power plants. Builders of new homes that use less than 50 percent of the 

energy of a standard house are eligible for a tax credit. For homeowners, the law provides tax 

credits of up to $500 for various energy-conserving building components and appliances 

(including windows, roofing, insulation, mechanical equipment, water heaters, and circulation 

fans). The law also provides homeowners with tax credits equal to 30 percent of the cost of 

certain solar energy systems, up to a maximum credit of $2,000 per household. The law’s tax 

deductions and tax credits expire at the end of 2007, though the renewable energy tax credits 

have been extended through 2008. 

Different legislations in the United States provide production tax credits for businesses that build 

renewable energy systems. Technologies covered include wind, photovoltaics, geothermal, 

biomass, landfill gas, and trash-to-energy. This production tax credit currently extends through 

the end of 2008, and many observers consider further extensions likely. The law currently 

provides a tax credit of 1.8¢/kWh on electricity generated. 

At a state level, about 15 states offer tax breaks of various types for renewable energy 

equipment. A number of states offer attractive renewable energy tax credits and rebates. The 

federal tax credits apply only to costs after state rebates or credits have been subtracted. While 
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most tax incentives are fairly specific, some state and local tax incentives are broader and based 

on the LEED rating system of the US Green Building Council. 

In Canada, government-initiated financial incentives for reducing environmental impacts are 

poorly coordinated. Provinces provide rebates, grants, or sales tax exemptions on a variety of 

different products, and most of the provincial energy producers have programs that will help 

customers upgrade to more efficient systems in their homes. Federally, commercial interests are 

supported by initiatives towards more new-home building or retrofit, but there is not in place a 

comprehensive federal act directed at individuals, like the Energy Policy Act in the United 

States.

While governments in Canada have not typically used tax credits to promote green development, 

there is increasing interest and some existing programs. The federal government allows an 

accelerated capital cost allowance at a rate of 50 percent to encourage businesses to conserve 

energy and to use renewable energy. Eligible investments include cogeneration and alternative 

fuel generation as well as active solar, micro-hydro, wind, and geothermal systems. The 

Canadian Renewable and Conservation Expenses program allows the write-off of renewable or 

energy-conservation feasibility studies.

Incentives and grants are the most common financial mechanisms implemented by Canadian 

governments and utilities. Canada has defined incentives as monetary compensation in cases 

where value increases as higher standards (typically in energy) are achieved. Often, local 

jurisdictions attach additional incentives to existing voluntary performance programs.

In 1998, Natural Resources Canada (NRCan) launched the Commercial Building Incentive 

Program (CBIP), which provided financial assistance of up to $60,000 for the design and 

construction of each energy-efficient building. The CBIP incentive was awarded as a single 

payment equal to twice the predicted annual energy savings of the building as designed, 

compared with the estimated annual energy costs if the building were constructed to simply 

comply with the Model National Energy Code for Buildings (MNECB). In order to be eligible, a 

project had to demonstrate a minimum performance advantage of 25 percent over that of the 

MNECB reference building. Designs were evaluated using EE4, a simulation software package 

based on DOE-2.

CBIP has increased the expertise in energy-efficient design of industrial, commercial, and 

institutional buildings in Canada. It has also almost exclusively created an energy simulation 

industry. The CBIP program has provided more than $40 million in incentives to more than 900 

projects nationwide. In 2005, CBIP buildings accounted for 18 percent of new commercial and 

institutional floor space (Office of Energy Efficiency, 2006 Trades Report). 

Similar to the R-2000 program, other agencies added incentives to the national program. 

Toronto’s Better Buildings Partnership contributed an incentive for projects in its jurisdiction. 

The Canada Green Building Council adopted the CBIP simulation and verification process for 

confirming energy performance. The program was discontinued as of 31 March 2007, but is 

being replaced by EcoEnergy.
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Sidebar: Performance-based vs. Cost-based Tax Credits

Experience with solar tax credits in the United States has exposed problems with incentives 

based on the cost of a renewable energy system rather than on the energy that system delivers. 

The solar program in the 1970s and 1980s provided a 40-percent solar tax credit, up to $4,000 

per household. Many unscrupulous companies dramatically inflated the costs of solar systems, 

charging $10,000 so that homeowners could earn the maximum tax credit of $4,000. Some 

companies even provided special kickbacks to homeowners, such as expense-paid vacations 

worth several thousand dollars, as incentives to get them to sign up. These solar systems 

performed poorly and should have been priced at $2,000 to $3,000. Everybody ended up losing, 

except the solar companies that made off with large short-tem profits. This sort of fraud gave 

solar energy a bad name and nearly destroyed the industry.

Far better are tax credits or other incentives based on the energy that a system actually delivers 

(or saves). This is how the US renewable energy production tax credit of 1.8¢/kWh works, and it 

is how all tax credits for renewable-energy systems should work. Such a credit design 

encourages systems that produce maximum energy at a minimum cost. It encourages highperformance systems while weeding out sales-only companies that lack good technologies. 

In-kind Incentives, Grants, and Special Funding

Non-tax monetary incentives include direct grants and rebates as well as lower building permit 

and zoning fees, and permit fee rebates for green projects. Grants and special funding are 

typically used for initial demonstration projects; however, Cincinnati, Ohio, and Santa Monica, 

California, provide funding to a range of projects achieving LEED certification. Governments 

can also work with local institutions to provide more attractive lending rates, preferential 

insurance rates, or the waiver of certain requirements when financing green projects (these 

programs are discussed in detail in the Financial Mechanisms section, above).

In addition to offering direct financial incentives and tax credits, many state and local 

governments have begun to include non-monetary benefits in their green building programs. 

Incentives that speed project completion or allow a higher build-out than is normally accepted 

can significantly increase the value to the developer of building green at a minimal cost to 

government. Incentives that provide technical green building training, support, and education, or 

that provide free advertising for projects that achieve a set level of performance, can play an 

integral educational role in a government green building program.

Expedited permits or priority plan review for projects achieving a certain level of LEED 

certification are part of green building programs in San Francisco, California; Santa Monica, 

California; Sarasota County, Florida; and Issaquah, Washington. King County, Washington (see 

sidebar), Scottsdale, Arizona, and other municipalities include similar benefits for projects 

reaching locally defined green building targets. With up-front incentives like priority review, 

there must be a way to ensure that a building achieves the performance for which the incentive 

was given. With Scottsdale’s original expedited permit process, some developers enrolled in the 

voluntary green building program got their plans approved, got the expedited permits, and then 
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pulled out of the program or simply failed to follow through on the green aspects of the building. 

To give more enforceability to the inspector, Scottsdale amended the building code so that once a 

building was enrolled in the program, the green building program requirements became an 

enforceable part of the building requirements and a required part of construction documents—

thus mandating follow-through. To get out of the program, a builder would have to revise and 

resubmit the plans, which would be re-reviewed at an hourly fee.

Density bonuses, awarded according to criteria which can include number of buildings per acre, 

increased height, or number of floor limits for certain levels of LEED certification, are part of 

programs in Acton, Massachusetts; Arlington, Virginia; Seattle, Washington; and others. 

Providing density bonuses can make sense for cities, while serving as a significant incentive to 

the developer; green buildings use less water and energy than typical constructions, so the 

demands on city infrastructure may be reduced relative to typical development. Some cities for 

which water scarcity is an acute problem have made water conservation an explicit part of 

negotiating for permits or awarding density bonuses. 

States, cities, and counties have developed a range of incentive packages for private green 

building, often including a variety of benefits and support, and requiring greatly differing levels 

of stringency. Cranford, New Jersey, has gone so far as to allow developers to request a 

particularly desired incentive, such as a density bonus, for achieving LEED certification. The 

introduction of such packages is typically the second step in a government’s green building 

efforts, following the establishment of rulings that government buildings meet green standards 

like LEED. States and municipalities that include green requirements in their building codes 

have typically preceded those requirements with education and benefits packages, to help local 

developers and tradespeople gain interest and expertise in green building. 

In Canada, as with financial incentives, in-kind incentives and grants are often linked to existing 

programs. Calgary and Strathcona, Alberta, offer permit-fee reductions linked to Built Green and 

R-20003, from 10-percent reduction for Built Green Bronze certification, to 30-percent reduction 

for Built Green Gold certification or, in Strathcona only, for R-2000 certification. The R-2000 

Home program was initially supported by an incentive of $1,000 per house, with other 

organizations providing linked, in-kind incentives and grants soon after its launch: Manitoba 

provides free filing for R-2000 certification; Strathcona County provides a 30-percent rebate on 

building permit fees for R-2000-certified homes; Newfoundland Power provides CA$10,000 in 

financing for R-2000 homeowners, to aid in the construction of their home, which is repayable 

over time, with interest, through their utility bill. Over time, rebates have been discontinued, and 

there has been a significant drop in the number of certified homes.

In 2002, the federal government implemented the Pilot Emission Removals, Reductions, and 

Learnings Initiative (PERRL) to buy verified greenhouse gas reductions at a fixed price. This is a 

relatively small fund (C$15 million), with the objectives of providing incentives for reducing 

greenhouse gas emissions and increasing awareness and understanding of emissions trading.

Lending programs include the Canada Mortgage and Housing Corporation’s Mortgage Loan 

Insurance premium “green refund,” introduced in 2005. The refund is 10 percent of the loan 

 3

 See Strathcona County website, at <http://www.strathcona.ab.ca/Strathcona/default.htm>.
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insurance for homeowners who buy or build energy-efficient homes or who make energy-saving 

renovations to existing homes4. BC Hydro, Manitoba Hydro, and Gaz Metro provided similar 

programs promoting energy efficiency. Linking agencies with similar objectives can simplify the 

application process for developers and increase the reward.

Sidebar: Pulling It All Together—King County, WA, United States

King County, Washington, home to Seattle, provides both a model of integrated green building 

policy and a goldmine in practical tools and lessons learned. King County today accounts for 

more than 60 percent of the LEED-certified and LEED-registered buildings in Washington State 

and was the first US county to sell carbon credits. King County’s programs include a variety of 

incentives, such as technical assistance, and educational initiatives to support green building. 

Incentives include priority processing; ten hours of free project management assistance by the 

dedicated Green Tract Team for any home that receives a five-star rating in Built Green, King 

County’s voluntary standard for residential green buildings; density bonus incentives; and two 

grant incentives, one for Built Green homes and one for LEED commercial buildings. The permit 

office is filled with educational placards, educational brochures, and product examples 

explaining different aspects of green building, and the grounds provide an example of droughttolerant and native landscaping. Informational bulletins on green building are circulated to 

customers and staff at the permitting agency and on the agency’s website. King County’s green 

programs benefit from an urban growth boundary, which has designated the western third of the 

county “urban” and the eastern two-thirds “rural.” Today over 95 percent of permitted housing 

units are within the urban boundary; the rural area is mostly forest and farmland. 

The admirable level of integration achieved today took time to develop. As Katie Spataro, from 

the Solid Waste Division (SWD) of the Department of Natural Resources and Parks, tells it, 

about five years ago a frustrated customer spurred the agency in charge of permitting, the 

Department of Development and Environmental Services (DDES), and the SWD to coordinate. 

SWD was promoting green roofs, but at that time the DDES permitting agency wasn’t accepting 

them. As Cynthia Moffitt, of the DDES tells it, at about the same time, she was looking to SWD 

for assistance in developing King County’s new green demonstration ordinance, requested by 

King County executive Ron Sims. Whoever tells the story, it is clear that coordinating the 

programs took individual initiative from both agencies. King County is now spreading its 

knowledge and lessons learned through its GreenTools for Suburban City Toolkit, a resource for 

midsized municipalities in Washington and elsewhere. A new website, at 

<www.greentools.usa>, will launch in July 2008. Until then, this resource kit for suburban green 

building can be found online at <http://www.metrokc.gov/dnrp/swd/greenbuilding/index.asp>. 

Tax Shifting and the Fiscal Steering Wheel

A fundamental issue affecting green building economics is that our current economic structure 

fails to take into account the full wealth of services provided by the environment (such as 

 4

 See Canada Mortgage and Housing Corporation website, at <http://www.cmhcschl.gc.ca/en/corp/about/hi/index.cfm>.
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stormwater management, water purification, and climate control) and thus systematically 

engages in activities that disrupt those services. Neither the benefits of activities that strengthen 

these services nor the harms from activities that damage them show up in the existing economic 

system. Economists label these hidden harms and benefits “externalities.”

Fiscal policy can be used to correct these market signals so that the prices of energy, materials, 

and activities reflect their true cost or value to society. Removing subsidies and imposing 

significant additional taxes on any or all of fossil-fuel use, nuclear- electricity use, raw-material 

extraction, pollution, and solid-waste production would release market forces encouraging the 

use of more benign, efficient, and renewable materials and technologies. As no particular action 

would be specified, innovative responses could flourish.

With ecological tax reform (ETR), or tax shifting, these new taxes would be offset by reductions 

in taxes on things we like to encourage, such as labor and savings—so that the total tax doesn’t 

change. Instead taxation is shifted to help the market reward things we want—employment and a 

healthy environment—rather than things we don’t want—unemployment and environmental 

degradation.

While this strategy has yet to be applied in North America, the European Union and a few other 

regions have implemented many, albeit small, tax shifts since Sweden’s first efforts in 1990. In 

Europe, much of the incentive for tax shifting arose from a desire to increase employment, 

typically by replacing a small portion of payroll taxes with a small additional tax on petroleum 

products or related emissions. ETR has been used in at least eight European countries since the 

mid-1990s. Debate over the potential impacts and value of ETR is far from resolution, and 

empirical studies on environmental and economic impact are difficult because of the small scope 

of existing ETR. However, the weight of research and evidence suggests that large-scale, 

revenue-neutral tax shifting would have a positive environmental impact and, if well designed, a 

positive economic and employment impact.

Efforts to institute ETR in North America face a number of barriers, including the general lack of 

familiarity of regulators and the public with the concept, organized special interests, the political 

untenability of raising taxes (even if revenue-neutral, this remains a conceptual barrier), and the 

1993 failure of a Btu tax in the US Congress. According to The Pembina Institute, Canada 

emphasizes regulatory reform, federal/provincial policy harmonization and voluntary initiatives 

rather than fiscal measures.5 Additional confounding issues are potential international trade 

issues from asymmetric taxation, the need to create supplementary policies and provide 

appropriate information to realize maximum benefits, and the potential regressive qualities of a 

simple ETR if efforts are not made to provide compensational benefits to lower-income people. 

One recommended approach for the United States is to begin developing ETR at the state level, 

to deal with pressing local problems and rectify unpopular local taxation schemes. As has been 

shown throughout this report, state-level innovation is often a model for national legislation, and 

successful initiatives could increase public support for and understanding of the concept, as state 

and local governments have shown with carbon trading and the climate change agenda. 

 5

 Amy Taylor, Environmental Tax Shifting in Canada: Theory and Application. A summary of 

opportunities, prepared for The Pembina Institute. Online at <http://www.pembina.org/pub/155>.
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Successful state-level ETR could shift national political climates toward ETR and provide 

models for a national program. 

Emissions Trading and Green Building

Carbon taxes and cap-and-trade systems are two approaches to achieving the same objective: 

reducing the emissions of greenhouse gases, which contribute to climate change. With a carbon 

tax, the government sets the price for the right to emit carbon dioxide, and the market determines 

how much carbon is emitted. With a cap-and-trade system, the government sets the allowable 

amount of carbon dioxide emissions, and the market determines the price of those emissions. In 

either case the point is to align market and environmental goals and provide flexibility in 

meeting environmental objectives. While voluntary markets exist, the system is most effective if 

mandated carbon caps are in place, initial caps are low enough to encourage investment, and 

caps are lowered at regular, predefined intervals. Initial credits can be gifted—or 

“grandfathered”—to existing industries, or auctioned off, or a combination of these approaches 

can be used. Auctioning makes better economic and environmental sense, but grandfathering is 

generally more politically feasible.

Most emissions trading schemes have focused on large emitters like power plants and industrial 

facilities, because for smaller emitters (like businesses, residences, and developers) the 

complication, administrative expense, and difficulty of monitoring and enforcement have been 

considered too great, at least initially. However, large-emitter markets still have a significant if 

not direct impact on the emissions resulting from buildings and pave the way for more 

comprehensive markets that include small emitters. If and when such a comprehensive scheme is 

developed, building owners and developers could have access to a new revenue stream from 

carbon reductions, which would increase adoption of advanced green building practice. 

While the world’s first greenhouse gas emissions trading system was actually the US’s Chicago 

Climate Exchange (CCX), the European Climate Exchange (ECX) is the most widely known. 

The CCX, launched in 2003, is an increasingly active, voluntary, legally binding system for 

North America and Brazil. However, the lack of nationally instituted mandatory targets limits its 

potential. In contrast, the ECX is a mechanism for trading European Union Allowances (EUAs) 

under the legally binding and mandatory EU Emissions Trading Scheme (EU ETS). This trading 

scheme was planned as a keystone in the EU’s bid to comply with the Kyoto Protocol, and was 

launched in a pilot phase for 2005 to 2007, with national allocations now being renegotiated for 

the next phase, from 2008 to 2012.

The US Regional Greenhouse Gas Initiative (RGGI) will be based, like the EU market, on 

mandatory emissions limits for certain emitters in the committed northeast and mid-Atlantic 

states. Seven states initiated the RGGI through a memorandum of understanding (MOU) on 20 

December 2005, and in 2006 issued a model set of regulations, which was significantly revised 

pursuant to public comment. In February 2007, five western states initiated the Western Regional 

Climate Action Initiative, agreeing to set a regional emissions reduction goal in six months, 

develop a design for a regional market-based cap-and-trade program in 18 months, and 

participate in the GHG registry. They have been joined by Utah and British Columbia, and they 

encourage observers from around North America. 
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The National Climate Registry, also under development in 2007, is a major boon to both marketbased and regulatory approaches to climate action. Based on the existing reporting requirements 

of the California Registry and the Eastern Climate Registry, the National Registry supports both 

mandatory and voluntary programs that involve the reporting of all greenhouse gas emissions 

source categories. Meanwhile, the Clinton Foundation and Microsoft Corporation are partnering 

with ICLEI–Local Governments for Sustainability (International Council for Local 

Environmental Initiatives) and the Center for Neighborhood Technology (CNT) to develop a 

suite of technology tools that will enable cities to accurately monitor, compare, and reduce their 

greenhouse gas emissions. 

Other Market-based Approaches

Public institutions use other market tools to correct market signals and influence business 

decisions. These include providing Standard Offer contracts for renewable energy from small 

suppliers (under Ontario’s Renewable Energy Standard Offer Program), instituting utility 

demand-side management programs, ensuring that consumers receive the appropriate level and 

timing of price signals through the design of energy tariffs, and simply switching electricity from 

average-cost pricing to marginal-cost pricing. Standard Offer contracts provide fixed pricing for

renewable energy, providing clarity and confidence for small-scale energy producers. Typically 

the Standard Offer rates for solar electric are equivalent to peak demand rates. These are close to 

revenue-neutral, given that most photovoltaic (PV)-generated power is created during peak 

cooling periods. Utilities can also implement cost-shifting by offering utility-cost rebates for 

permanent demand reductions or for peak-shifting on demand. A more fundamental change 

would be for a utility to shift from a monopoly average-cost pricing regime for electricity to a 

regime that embodies marginal cost pricing. In practice, a marginal-cost policy instrument could 

be manifested in a number of ways; regulators could require this for electricity pricing, or 

utilities could offer some form of time-of-use pricing measured and reported on a real-time basis. 

“Background Paper 2c: Towards Sustainable Financing and Strong Markets for Green Building: 

Valuing Sustainability” discusses in detail the building valuation process, which is intended to 

allow the value of green buildings to be accurately captured in accepted valuation protocols. This 

is an important driver of innovation in financing, as higher value will mean greater security and 

greater access to capital. However, in the current market, public institutions can act by offering 

revolving loan programs for energy retrofits or other additions to the public good. These have a 

positive impact on the market without requiring direct investment. They provide a level of public 

oversight, which increases consumer confidence, and financing guarantees, giving confidence to 

service providers and accelerating uptake. Private financing can be influenced by organizations 

such as the Canadian and US Green Building Councils, who provide credible measures of green 

building performance. This facilitates the implementation of low-interest “green” loans offered 

by private financial institutions.

Sidebar: Labeling and Consumer Information

Reporting requirements (such as efficiency labeling) improve the feedback of the market by 

providing information to consumers and citizens making decisions on purchasing and political 
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priorities. Strong disclosure and labeling requirements for products—including homes—such as 

clear information about how much more it costs to operate an inefficient model than an efficient 

one, can change both buying habits and producer habits. In the same way that the USDArequired nutrition labels on packaged foods have made consumers more conscious of fat and 

sugar content, the voluntary Energy Star labels have increased consumer awareness of energy 

use and life-cycle costs of appliances and other products. In some EU countries, such as France, 

the energy use of homes must be stated during sale, and there are increasingly comprehensive 

labeling requirements for products throughout Europe. The government plays an important role 

by identifying standards and, instead of requiring companies to meet the standards, evaluating 

for the public how the companies’ products match up. 

Ensuring that information is available would rapidly form a foundation for preferred purchasing, 

certifications, financing and other programs. Requiring reporting of a building’s energy 

consumption when it is sold would affect purchaser decisions and could form the basis for 

effective energy-efficient mortgages as well as a host of related activities. Requiring that all sales 

and rental advertising and all sales and lease agreements clearly display the label communicating 

building performance would create a level playing field for both vendors and consumers. 

Labeling could be initiated from the local to the national level and be mandatory or voluntary. As 

a ramp-up to eventually mandating consistent reporting, a program could provide an incentive 

for reporting the energy consumption of a building on resale. However, standardizing this 

information and making it easy to access it would enable both markets and policies to adjust 

appropriately. Thus government should develop a nationally consistent performance indicator for 

labeling, preferably in conjunction with the organizations managing existing voluntary programs. 

Labeling must be simple to implement, be credible, and provide a simple message.

Sidebar: Getting Better Feedback

The more information is available, the easier it is to make appropriate decisions. As the 

calculation of gross domestic product (GDP) does now, indicators valuing environmental 

services (such as water and air purification and temperature management), could help guide 

North American policies. While not directly targeting green building, the development, 

measurement and use of indicators that better reflect the ecological, economic and social 

wellbeing of nations and states would help decision makers and the public assess priorities. 

There is a large body of work on alternative indicators. 

Discussion and Recommendations

Incentives should be designed and used judiciously. Some financial mechanisms are appropriate 

for long-term market correction, while others are meant to spur development and investment. 

The continuation of incentives appropriate for transitional use as long-term subsidies creates 

more problems than it solves. These incentives should have sunset clauses and be designed so 

that innovation and adoption continue beyond attainment of the credit they promote. At the same 

time, there is a great need for institutionalizing well-designed, long-term market corrections. 
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While work to accurately capture the business value of green buildings in the valuation process 

(discussed in Background Paper 2c) should greatly benefit green building, better market-wide 

accounting for environmental and human health impacts would support green building at a 

deeper level. 

• Make liberal use of low-cost, high-value incentives: Non-tax incentives—such as 

expedited permits or priority plan review, density bonuses for certain levels of LEED 

certification, attractive lending rates, preferential insurance rates, and the waiver of 

certain requirements when financing green projects—should be widely implemented. 

• Use financial incentives and disincentives with care: Make judicious and coordinated 

use of financial incentives and disincentives for change management and small-scale 

market correction. While ultimately the market must reward green building for the latter 

to become mainstream, a variety of incentives can bridge the gap as the market adjusts. 

Incentives should be designed specifically to reward performance and stimulate the 

market in such a way that the benefits continue beyond the life of the incentive. For 

example, energy tax credits should be based on how much energy a system delivers (or 

saves), not how much a system costs, in order to encourage innovation and prevent fraud. 

Innovative solutions, such as demand-offset programs that fund retrofits as a condition of 

development permits, can be used to address local-scale issues. The coordination of 

incentive programs, a "one-window approach," with a plan to transition from incentive to 

compliance as the market matures should be encouraged.

• Research, explore, and implement means to make prices reflect environmental 

impact: A variety of mechanisms are available to correct the market and enable the 

ingenuity of the market to be guided toward more environmentally friendly building 

practices. Their political feasibility and implementation details differ. These include tax 

shifting, cap and trade, standard-offer contracts for renewable energy, and utility demandside management programs. All deserve serious consideration and coordinated 

implementation. 

• Set ambitious targets and enable the market to find the best means of meeting those 

targets: Correcting the market is a critical large-scale shift that will aid green building. 

However, it may or may not be sufficient to create the desired behavioral changes. It is 

also important to clearly define the emissions reduction goal or other objectives and 

consider approaches to specifically aid in meeting those objectives while maximizing 

innovation and market creativity. In particular, mechanisms to facilitate technology 

transfer should be encouraged. 

• Encourage innovative financing mechanisms: In the current market, public institutions 

can act by offering revolving loan programs for energy retrofit or other additions to the 

public good. These have a positive impact on the market without requiring direct 

investment. They provide a level of public oversight, which increases consumer 

confidence, and financing guarantees, giving confidence to service providers accelerating 

uptake. Private financing can be influenced by organizations such as the Canada and US 

Green Building Councils, who provide credible measures of green building performance. 
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This facilitates the implementation of low-interest “green” loans offered by private 

financial institutions. 

• Require labeling: Requiring reporting of a building’s energy consumption when selling 

a building will affect purchaser decisions and could form the basis for effective energyefficient mortgages as well as a host of related activities. Furthermore, to create a level 

playing field for both vendors and consumers, it should be mandatory that all sales and 

rental advertising and all sales and lease agreements clearly display the label 

communicating building performance. 

References for Readers

• For incentive packages, see references in the section on performance mandates 

• Centre for Ecological Economics: <www.ecological-economics.org> 

• Pembina Institute website dedicated to Ecological Fiscal Reform: 

<www.fiscallygreen.ca/about.html> 

• Regional Greenhouse Gas Initiative: <www.rggi.org> 

• Western Regional Climate Action Initiative: 

<www.ecy.wa.gov/climatechange/docs/07Mar_WesternRegionalClimateActionInitiative.

pdf> 

• The Climate Registry: <www.theclimateregistry.org> 

• International Emissions Trading Association: <www.ieta.org> 

Government Purchasing

Government agencies at all levels are increasingly greening their own operations and including 

environmental and social considerations in their purchasing decisions. These preferredpurchasing policies can have three major effects:

• Direct Reduction: The specifying of high-performance, green buildings and the 

purchasing of more environmentally preferable products to outfit them directly reduce the 

impacts of consumption. 

• Market Pull: A big-enough consumer can single-handedly influence manufacturers to 

make available and reduce the costs of green products. Specifically, if a large consumer 

guarantees demand for green buildings and products that meet certain criteria, it creates 

an incentive for tradespeople and manufacturers to meet that niche. 

• Replication through Education: By acting as models and by providing standards, tools 

and expertise to other purchasers, governments engaged in preferred purchasing educate 

other consumers and expand the market base for environmentally preferable buildings 

and products. 

The US federal government has the largest real estate portfolio in the world, owning 

approximately 445,000 buildings and leasing an additional 57,000 buildings. The General 

Services Administration (GSA) acts as the landlord for more than 340 million square feet in 

existing building space and an additional 90 million square feet under construction. As of 

February 2007, 320 US federal buildings are registered for LEEDTM certification, and 51 
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have been certified (representing 6.4 million square feet of building space). The federal 

government of Canada has one of the country’s largest real estate portfolios. Its Real Property 

Branch coordinates the office accommodation needs of approximately 105 federal departments 

and agencies on a city, regional and national scale. The federal government of Canada occupies 

6.8 million square metres (m2) of space, of which 57 percent is owned and 43 percent is leased. It

owns 380 buildings and, at a cost of around CA$800 million, holds 2,000 leases. 

While the potential direct impact of greening this existing and new building stock in the United 

States and Canada is substantial, it is dwarfed by the potential impact of using the government’s 

purchasing power to strategically influence the availability of green alternatives in the market, 

and applying government experience to the development of educational resources and tools that 

other groups can use. 

While this section focuses on government activities, many educational institutions and 

companies have also begun to exercise their purchasing power by requiring green features and 

whole green buildings. University efforts are particularly important for their educational role, 

while large corporations can drive the market through fast, coordinated action across facilities by 

volume purchasing and through sales offered over a defined period of time. 

Federal Approaches

The United States

The Energy Policy Act of 1992, which required federal agencies to reduce their energy use by 35 

percent by 2010 (compared with 1985) began a long series of legislation and executive orders 

that have, either directly or indirectly, affected government procurement and operation of 

buildings. Among them, Executive Order 13123, “Greening the Government Through Efficient 

Energy Management,” signed by President Clinton in 1999, both reaffirmed EPACT 1992 targets 

and required federal agencies to “apply [sustainable design] principles to the siting, design, and 

construction of new facilities.” In response to EO 13123, the Interagency Sustainability Working 

Group (ISWG) was established in 2001 to foster, encourage, and troubleshoot the adoption of 

green design in federal buildings. 

From a small group of interested staff, ISWG grew to a 180-person interagency task force that, 

among other activities, authored the Federal Leadership in High Performance and Sustainable 

Buildings memorandum of understanding (MOU). The MOU represented interagency consensus 

on a set of performance-based guiding principles for the design, construction, and operation of 

high-performance and green buildings. In 2006, the MOU was signed by 17 federal agencies. 

The MOU had been signed by 19 agencies, representing 95 percent of federal buildings, when, in 

January 2007, President Bush signed Executive Order (EO) 13423, “Strengthening Federal 

Environmental, Energy, and Transportation Management.” EO 13423 made mandatory the 

MOU’s five guiding principles for all new construction and major renovations; it also addresses 

existing and leased buildings and consolidates and supersedes a number of prior orders, 

including EO 13123 and EO 13148.

The effectiveness of this order cannot yet be determined; however, the overall move toward 

greater interagency communication, more integrated policy, and an infrastructure to verify 
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achievement has clearly helped government greening efforts and green building in general. 

Recommendations from a 2003 Office of the Federal Environmental Executive (OFEE) report

that, for the first time, assessed federal policies and practices for making its own buildings 

environmentally responsible have for the most part been met. Along with encouraging more 

integrated policy, the federal government is also moving toward more integrated education and 

implementation. Many now use LEED or a similar tool for their new projects. Many agencies, 

including the Department of Defense, previously maintained their own websites and information 

sources, but they are now consolidating building criteria and information into the Whole 

Building Design Guide (<www.wbdg.org>), which now includes a plethora of additional 

resources for government departments and agencies as well as the general public.

One challenge has been the lack of guidance in soliciting bids for contracts that define green 

beyond an agency’s general environmental goals. When solicitations and project specifications 

don’t have specific goals and requirements spelled out, agencies have no means of ensuring the 

performance they seek. Developing those specifics is a gargantuan task for specifiers and one 

that is outside their usual area of expertise. To address this, EPA, OFEE, and the multi-agencysponsored Whole Building Design Guide (WBDG) developed the Federal Green Construction 

Guide for Specifiers (<http://fedgreenspecs.wbdg.org>), which provides precise language and 

targets to include in project specifications. 

A barrier to full utilization of the strategic power of preferred purchasing is the difficulty of 

coordinating agencies to act swiftly with one voice. A large firm may more easily bargain for a 

new product with certain green features at volume prices by a certain time, thus driving the 

market. The federal government faces other unique structural challenges to green building. The 

length of some contracts can discourage continuous improvement or utilization of new 

technologies. For example, a contract for military housing may be 50 years long and include not 

only design and construction but also operations and maintenance. Also, the US government 

must put projects up to open bid and cannot write specifications requiring specific products. 

A barrier for all sectors, including governments, is the belief or actuality that green buildings 

have higher initial capital costs. As discussed in “Background Paper 2b: Towards Sustainable 

Financing and Strong Markets for Green Building: US Green Building Finance,” and 

“Background Paper 2c: Towards Sustainable Financing and Strong Markets for Green Building: 

Valuing Sustainability,” although research has increasingly shown these up-front costs to be 

minor and rapidly recovered through lower operating costs, they remain a barrier because of 

budget and financing structures that do not consider operating and capital costs together. The 

federal government is slowly correcting this by suggesting agencies use life-cycle costing in 

decision-making and make other adjustments to financial structures.

Canada

Through amendments to the Auditor General Act, the Office of the Commissioner of the 

Environment and Sustainable Development was created. The amended Act requires federal 

departments to table sustainable development strategies in Parliament every three years (starting 

in 1997). Department representatives must also address Parliament annually to report their 

progress toward meeting the goals stated in the sustainable development strategies. 
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The federal government’s policy initiatives for sustainable building practice have focused 

primarily on energy consumption. The Federal House in Order initiative has identified the eleven 

government departments that consume the most energy and set reduction targets for each of 

them. The Federal Building Initiative was implemented to monitor the reduction of energy 

consumption in federal buildings.

Federal Green Building Projects in Canada 

In July 2006, the federal government of Canada established for all federal building projects a 

certification standard that uses a range of environmental assessment and certification tools, based 

on building type. The standard requires that all Crown-owned office buildings and new longterm lease office buildings achieve LEED Gold certification and that all new non-office facilities 

achieve LEED Silver or the Green Globes equivalent. It also requires that all newly leased 

federal facilities and existing-lease office space use Green Lease initiatives. Since the standard’s 

induction in April 2004, more than 70 new lease renewals have applied the Green Lease 

provisions. These provisions include environmental concerns such as wastewater management, 

indoor air quality, recycling, energy-efficient lighting, and greenhouse gas reduction. 

The Canada Green Building Council website currently lists 258 LEED-registered Canadian 

projects, 12 of which are federal projects. These federal building initiatives align well with the 

government’s Policy on Green Procurement, which aims to advance environmental protection 

and support green development by integrating environmental-performance considerations into 

the procurement decision-making process. The policy requires that all departments and agencies 

incorporate environmental performance considerations in procurement decisions occurring 

throughout the life-cycle of assets and acquired services. The policy, as well as supporting 

guidelines and tools, is accessible at: <www.pwgsc.gc.ca/greening/text/proc/pol-e.html>. 

The government, throughout Canada, has undertaken a number of high-profile capital building 

projects that have set high standards for green construction, including: the East Memorial Block 

renovation in Ottawa, Ontario, presented at the Green Building Challenge in 1998; The 

Greenstone Building in Yellowknife, Northwest Territories, and the Jean Canfield Building in 

Charlottetown, Prince Edward Island, which are expected to achieve LEED Gold; the Toronto 

Military Family Resource Centre in Downsview, Ontario, which achieved Four Green Globes; 

and the Gulf Islands National Park Reserve in Sydney, British Columbia, which achieved LEED 

Platinum.

State and Local Approaches in the United States

Numerous states, counties, cities, and towns have also made commitments to greening their 

public facilities—and both the number of initiatives and depth of commitment are rapidly 

expanding. Many of these programs operate in conjunction with voluntary or mandatory 

programs and policies directed toward greening private development practice, but no 

comprehensive list exists. At least 19 states have green building initiatives with a public-sector 

component, many of which were established, at least in part, by executive orders and many of 

which explicitly reference LEED standards. According to the USGBC, various LEED initiatives, 

including legislation, executive orders, resolutions, ordinances, policies, and incentives, are 
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found in 53 cities, 10 counties, 17 states, 33 school districts and 11 federal agencies across the 

United States and Canada. Of the more than 50 municipalities requiring LEED certification for 

public buildings, most require LEED-Certified or LEED Silver ratings. LEED Gold is required 

for certain public buildings in Scottsdale, Arizona; Fort Collins, Colorado; Portland Oregon; and 

Vancouver, British Columbia, Canada.

The caveat for Fort Collins illustrates one means for pushing the envelope while providing an 

out: “. . . all new city-owned buildings over 5,000 square feet must achieve LEED Gold 

certification,” the legislation reads, “unless it is not technically or economically feasible to do so. 

If the incremental cost of achieving LEED Gold relative to LEED Silver has a payback period of 

greater than ten years for a particular building, then the City would opt to seek the LEED Silver 

certification for that building.”

As in the federal sector, local and state governments are, with increasing frequency, sharing 

resources and making joint commitments to green building. Most notably, in June 2006, the US 

Conference of Mayors, which represents the 1,183 US cities with populations of 30,000 or more, 

unanimously adopted Resolution 50, “Adopting the ‘2030 Challenge’ for All Buildings,” which 

calls for all new buildings and major renovation projects to be climate-neutral by 2030. It calls 

for reducing fossil fuel use by 50 percent in today’s buildings, 60 percent by 2010, 70 percent by 

2015, 80 percent by 2020, and 90 percent by 2025, and it urges mayors everywhere to join the 

effort. The mayors also unanimously adopted Resolution 83, “Establishing a New Municipal 

Energy Agenda to Help Address the Nation’s Energy and Environmental Challenges and 

Improve Local Communities.” 

Resolution 83 sets ten broad goals related to energy use in cities: 

• Reducing energy use in municipal facilities; 

• Promoting green buildings; 

• Ensuring residential energy assistance; 

• Addressing climate change; 

• Encouraging diversity in energy generation; 

• Improving municipal vehicle fleets; 

• Encouraging incentives to improve vehicle fuel efficiency; 

• Investing in transit and walkable communities; 

• Sharing best energy practices among cities; and 

• Encouraging private-sector initiatives.

State and local governments considering implementing green requirements for government 

buildings now have many examples and public resources to help them. Often these programs are 

the first step toward, or one part of, a more comprehensive green-building program. 

Individual state and local green building purchasing programs have a direct positive effect on the 

environment, and showcase buildings can form the foundation of educational outreach to both 

the public and the private sector. Individual state and local governments may also encourage 

local building professionals to acquire green capabilities but rarely have sufficient market size to 
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influence the availability of green building technologies. If state and local governments make 

shared agreements regarding purchasing decisions, they may together exert a much stronger 

influence.

Provincial and Municipal Approaches in Canada

In 1995 the Canadian Standard Association published the document Environmentally 

Responsible Procurement to provide a guide for organizations wishing to adjust their protocols 

for purchasing products, services and activities in order to minimize adverse impacts on the 

environment. Since then, several municipalities across Canada have incorporated green 

procurement policies, including standards for green building. The city of Toronto started on this 

path by focusing on energy performance. In the report The Sustainable Use Directory, released 

in 2000, the city indicated measures to reduce energy consumption and its associated GHG 

emissions. The city committed to track and monitor energy consumption and costs of all City of 

Toronto facilities and operations, investigate and recommend energy efficiency improvements in 

city buildings, as well as carry out energy efficiency improvements in city facilities. The city of 

Toronto has also adopted the Guide to Environmental Purchasing as a tool to assist city staff to 

incorporate environmentally preferred products into the procurement process. It describes a 

number of methods for assisting the selection processes, such as the application of environmental 

criteria to target product and service categories.

British Columbia is also showing leadership in terms of eco-procurement commitment. The city 

of Richmond developed in 2000 the Environmental Purchasing Guide to provide assistance to 

municipal staff across British Columbia, in the form of information and resources about how to 

integrate environmental considerations in their purchasing decisions. Vancouver, with the 

perspective of staging the Olympic Winter games in 2010, is preparing a plan for ecoprocurement to ensure that the contracts the games will bring into the city meet the city’s 

environmental standards.

Discussion and Recommendations 

Widespread government activities undertaken to ”walk the talk” of sustainability, by specifying 

high-performance, green buildings and by purchasing more environmentally preferable products, 

have created a plethora of resources from the local to the global level (through the UNEP 

Sustainable Consumption production group). These activities lower costs and improve 

government building stock while helping the environment, driving the market to supply green 

building solutions, and educating other consumers. There is no need to re-invent, but rather to 

increase implementation and effectiveness of such programs by utilizing and contributing to the 

existing knowledge base.

Recommendations to improve programs and increase impact

• Work in coalitions to increase the market clout of local and state initiatives.

• Create interagency working groups to improve communication and collaboration.

• Apply government expertise to the evolution of voluntary consensus standards and rating 

systems, which establish definitions of “green” for the marketplace.
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Recommendations for implementing a “walking-the-talk” program

• Have a program champion.

• Identify and address budget and financing structures that might hinder projects.

• Educate staff involved in building projects, maintenance, and finances.

• Integrate greening-government initiatives with other green-building programs.

• Use government green buildings and efforts for showcasing and education.

• Utilize existing resources from related efforts—there is no need to re-invent (see 

<www.wbdg.org>).

References for Readers 

• US EPA Environmentally Preferable Purchasing website: <www.epa.gov/epp/>

• Whole Building Design Guide: <www.wbdg.org>

• See also section on Performance Mandates, in this paper

• Center for New American Dream’s Responsible Purchasing Network: 

<http://www.responsiblepurchasing.org> 

• The Federal Commitment to Green Building: Experiences and Expectations (2001): 

<http://www.ofee.gov/sb/fgb_report.html>

• FEMP The Business Case for Sustainable Design in Federal Facilities 2003: 

<http://www.eere.energy.gov/femp/technologies/sustainable_federalfacilities.cfm> 

• “Where we are... Reflecting on OFEE’s 2003 Recommendations,” Closing the Circle 

News, Winter 2007, Issue 42, OFEE 

• Public Works and Government Services Canada: 

<http://www.pwgsc.gc.ca/text/factsheets/real_property-e.html#portfolio>

• UN Department of Public Information: 

<http://www.un.org/News/Press/docs/2006/sgsm10620.doc.htm>

• UNEP Sustainable consumption production (SCP) assistance for governments: 

<http://www.uneptie.org/pc/sustain/initiatives/home.htm>

• UNEP SCP Resource Kit on Sustainable Consumption & Production: 

<http://www.uneptie.org/pc/sustain/10year/SCP_Resource_Kit.htm> 

Special thanks to Alison Kinn Bennett, Sustainable Building Projects Manager with the EPA, 

and to Margaret Boyce and Jean Caruthers, Sustainable Buildings and Communities, Policy 

Directorate, Office of Greening Government Operations (OGGO).

Technology Development 

Research plays a critical role in advancing technological developments throughout the 

economy—from computer science to materials engineering to pharmaceuticals. In some 

industries—particularly those in which patentable advances can be converted into high profits, 

such as pharmaceuticals and software—research and development is predominantly carried out 

by private companies. In industries with less opportunity for patentable products, such as the 

building industry, research is often limited to public (government) agencies.

Research and development (R&D) work that relates to green building falls into a number of 

categories, principally energy, water, environmental protection, and human health. Overall 
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budgets for these areas are large, especially in the United States, but only a very small subset of 

such work relates directly to green building.

In the United States, research on energy efficiency and energy alternatives became a high 

priority following the 1973 Arab oil embargo. President Gerald Ford formed the Energy 

Research and Development Administration (ERDA) in 1975, and this was merged into the US 

Department of Energy (DOE) when the latter was created in 1977. Billions of dollars have been 

spent in the ensuing decades, in developing a wide array of innovations, from solar technologies 

to low-emissivity coatings for window glazings. 

In Canada, several institutions at both private and government levels have addressed the need for 

R&D aimed at reducing energy consumption. The CanMet Energy Technology Centre (CETC), a 

department within Natural Resources Canada, works on a consulting service–oriented basis with 

private firms, the public sector, trade and professional associations, utilities, universities, and 

other levels of government to develop leading-edge technologies in the areas of building energy 

efficiency and renewable and transportation energy technologies. The CETC has played a key 

role in fostering the development and implementation of several successful projects dealing with 

distributed-energy technologies and community energy planning; energy-efficient building 

technologies; wind, solar, and small-hydro technologies; transportation energy technologies; and

hydrogen and fuel-cell technologies.

The Canadian government also created Sustainable Development Technology Canada (SDTC), 

in 2001. Its mission is to act as a catalyst in building a sustainable development technology 

infrastructure in Canada. The SDTC works with stakeholders to build capacity in Canadian 

clean-technology entrepreneurs. It bridges the gap in the innovation chain by speeding 

groundbreaking, clean technologies through development and demonstration and through 

preparing products for commercialization, and by helping with strategic relationships and 

business planning.

To date, SDTC has completed nine funding rounds and allocated a total of $241 million to 109 

projects. That amount has been leveraged with an additional $617 million in funding from other 

project partners, for a total project value of $858 million. Since April 2002, SDTC has conducted 

ten calls for statements of interest (SOIs) and received 1,249 SOIs from across the country—

representing some $10.1 billion in project potential from more than 3,100 companies and 

institutions.

Adequacy of Funding on Green Building

A recent report by the USGBC Research Committee, Green Building Research Funding: An 

Assessment of Current Activity in the United States (April 2007), points out that, in the United 

States, research and development (R&D) related to green building practices averaged $193 

million per year from 2002 to 2005. This represents only 0.02 percent of the estimated annual 

value of US building construction and 0.2 percent of all federal research (see Figure 6).
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Figure 6: Federal R&D Budget Authority, by Budget Function, for Years 2003–2005

Source: US Green Building Council report Green Building Research Funding: An Assessment of Current Activity in 

the United States (April 2007). Chart addresses US funding only.

Despite the low level of federal research, there have been many dramatic successes in the last 

few decades. In relation to energy research, the National Academy of Sciences carried out an indepth investigation of the costs and returns on dozens of research projects undertaken by the US 

Department of Energy (DOE) between 1978 and 2000 (Energy Research at DOE: Was it Worth 

it?, National Academy Press, 2001). DOE invested $4 million in research on low-emissivity 

glazings and the developments achieved cumulative consumer cost savings of $8 billion (through 

2000). DOE invested $6 million in research on electronic ballasts for fluorescent lighting and 

society realized cumulative savings of $15 billion (through 2000). 

USGBC argues that a significant increase in green building research funding is necessary. The 

organization proposes that this funding should increase to $1 billion per year, or 0.10 percent of 

the annual building construction value, which is approximately $1 trillion.

The USGBC Research Committee has been working to identify key research priorities, and a 

report on those priorities is expected in 2007. The findings from this body should be useful in 

identifying green building research priorities throughout North America. 
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Green Building R&D—Recommendations

Identify research priorities. Work with the USGBC Research Committee to identify research 

priorities. This committee hopes to issue a research priorities white paper every year or two; 

these documents should help the United States, Canadian, and Mexican governments identify 

needed research.

Support the scoping of a major research initiative on energy efficiency and renewable 

energy. Many experts believe that a massive R&D initiative, on the scale of the Apollo Project 

in the 1960s and ‘70s or the Manhattan Project in the 1940s, is required to achieve carbonneutral buildings in the United States. The logical first step in such an effort would be an indepth scoping project, probably managed by one of the national laboratories. 

Fund green building research federally. Certain aspects of green building research have been 

well-supported by industry (for example, advanced lighting products), but many research 

priorities have not been broadly funded—especially those that do not have a manufacturer 

“constituency.” Building science is not likely to be funded by industry, because these solutions 

are more related to design than to products. It is important for federal governments to support 

research efforts in green building that are unlikely to be funded by industry.

Develop specialized “centers of excellence” on various aspects of green building. Along with 

fully funding national laboratories, such as Lawrence Berkeley National Laboratory, Oak Ridge 

National Laboratory, and the National Renewable Energy Laboratory in the United States, set up 

and financially support national centers of excellence on such research areas as green roofs, 

batteries, life-cycle assessment, passive survivability, daylighting, and building science. Such 

research facilities could aggregate expertise in these topic areas and serve as important centers of 

investigation, education of practitioners, and technology transfer. They could be located at 

existing national laboratories or university laboratories, or developed as stand-alone facilities. 

Specific Research Priorities

There are dozens, if not hundreds, of research priorities relating to green building. Listing all of 

these is beyond the scope of this report. However, a few that are poorly understood or not widely 

recognized are described here:

• Passive survivability. Passive survivability is a design criterion that recognizes the 

vulnerability of most buildings to extended power outages or loss of heating fuel or 

water. Given the growing risk of such problems, houses, apartment buildings, schools, 

and other public buildings likely to be designated as emergency refuges should be 

designed and built to maintain livable conditions in the event of extended power outages 

or loss of heating fuel or water. Many well-known green building strategies, such as highperformance wall and roof systems, very high–performance windows and glazing 

systems, daylighting, passive solar heating, water conservation, and rainwater harvesting, 

are key components of passive survivability. Others, such as providing emergency-mode 
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DC operation of heating equipment (for operation with batteries or PV panels) are poorly 

understood and need to be researched.

• Transportation energy efficiency of buildings. A great deal of attention has been paid 

to the energy consumption of buildings and efforts to reduce that consumption. Little 

attention has been paid, however, to the transportation energy used in getting to and from 

buildings. Research is needed on metrics for the transportation energy efficiency of 

buildings as well as on the baseline energy use for transportation by homeowners, 

employees, and retail customers so that savings from changes in land-use and public 

transportation infrastructure can be measured.

• Combined heat and power (CHP) and district energy systems. Combined heat and 

power offers one of the most important options for significantly reducing energy 

consumption and net carbon emissions—by boosting the overall efficiency of sourceenergy utilization. A CHP plant generates electricity but captures the waste heat from that 

power generation that is typically vented into the air or into a nearby body of water. To 

be utilized, the thermal energy from CHP plants is typically distributed as hot water or 

steam; most new systems utilize hot water, because it is a better heat-transfer medium, 

results in lower heat loss, and is not as corrosive to piping and equipment. While widely 

used in northern Europe, CHP and district energy systems are rare in North America 

outside of university campuses, hospital complexes, and some highly urban downtown 

areas. Research needs include identifying areas with high enough building density for 

district energy systems to be cost-effective, developing low-cost hot-water piping 

systems, demonstrating renewable energy sources (such as waste wood chips and solar 

thermal plants) to power CHP plants, and developing affordable, easy-to-connect 

modules for plumbing connections from district energy systems.

• Daylighting and passive solar energy modeling tools. Compared with those of the early 

1990s, today’s computer modeling tools for daylighting and passive solar energy heating 

are highly sophisticated. But additional improvement is needed—especially in the 

integration of such tools into building information modeling (BIM) tools and the 

development of software able to benefit from today’s high-speed personal computers.

• Life-cycle assessment of building materials. Today’s most energy-efficient buildings 

use more energy in their construction than will be used in their operation over many 

decades. Thus, it is necessary to focus on the embodied energy in the materials used in 

constructing buildings. This is part of life-cycle assessment (LCA). LCA also considers 

the environmental impacts of resource extraction, the pollution emissions from 

manufacture, the health impacts associated with use of the materials, the impacts 

associated with maintaining those materials over their useful life, and ultimately the 

impacts of disposal. There is great need for a comprehensive database of building 

material LCAs, the development of which is both complex and expensive. 

• Human productivity and performance benefits of green buildings. There is a scant, 

but growing, body of knowledge about benefits of green buildings that accrue to the 

building occupants. Studies have shown that daylighting, natural ventilation, views of 

nature, and other features of green building speed recovery from surgery, boost worker 

productivity, improve test scores in classrooms, and even boost sales in retail 

establishments. Conclusively demonstrating and quantifying such benefits would increase 

incentives to build green and significantly speed up market penetration.
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• Moisture management and building science. Controlling moisture in buildings, 

especially homes, is critical for maintaining good indoor environmental quality and 

ensuring long building life (which keeps life-cycle environmental impacts low). 

Unfortunately, moisture dynamics in buildings remain poorly understood. There is 

significant need for in-depth research on moisture dynamics and building science in 

buildings. 

• Economically-viable superinsulation retrofit options for homes. Dramatically 

reducing carbon emissions will necessitate improving the energy efficiency of existing 

homes—of which there are roughly 120 million in the United States. In colder climates, 

homes should be extensively tightened up and superinsulated (boosting wall insulation 

values to R-30 or higher, for example), yet there is very little experience with such 

programs and little data on cost effectiveness of alternative approaches. 

Education Programs

Education is the key to convincing developers, builders, building owners, government officials, 

and others that green building is a good idea; to ensuring that these parties effectively carry out 

environmental goals; and to engaging building occupants in behavior that allows the potential of 

these goals to be realized. The first two priorities—making the case for green building and 

explaining how to do it—are carried out by nonprofit organizations focused on green building 

(such as the US Green Building Council, the Canada Green Building Council, and the 

Sustainable Buildings Industry Association), by established educational institutions (including 

architecture schools and vocational-technical programs in schools), and by publications and 

websites on green building. The third—informing occupant behavior—is also helped by these 

publications and programs, but is best actualized by labeling and real-time feedback. 

Making the Case for Green Building

To effectively make the case for green building requires communication and education programs 

targeted toward specific market segments. With homes, it is necessary to reach out to the general 

public (consumer markets) as well as those professions that influence home purchasing: lenders 

and financial institutions, real estate professionals, insurance providers, speculative home 

builders and developers, and municipal planners and zoning officials. With schools, it is 

necessary to reach out to municipal school boards, school administrator associations, and teacher 

organizations. With office buildings, it is necessary to reach out to commercial property–

management organizations, commercial developers, real estate investment trusts (REITs), and 

lenders.

The US Green Building Council (USGBC) has done a good job of advancing green building in 

the United States by communicating to these various market segments, especially through its 

publication Making the Business Case for High Performance Green Buildings, but far more 

activity in this area is needed. Particularly effective in making the case for green building will be 

collaborative efforts in which groups such as USGBC combine efforts with mainstream 

organizations, conferences, and publications to get the word out to those who have not already 

bought into the need for green building. In such communications, the specific arguments can be 

effectively tailored to the target audience by addressing the bottom line savings to lenders, lower 

risk to insurers, and productivity benefits to office building owners, for example.
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Along the same line, the Canada Green Building Council summarized the status of the green 

building industry in Canada in the report A Business Case for Green Buildings in Canada, 2005. 

This report was intended not only to define the status of the green building industry in Canada 

but also to highlight the benefits of green building technology and address the barriers facing the 

industry. Barriers identified include the lack of knowledge of green buildings by stakeholders, 

the youth of the industry, and the procurement (tender) processes, which are typically based on 

capital cost rather than value.

In general, the diffusion of green building and sustainability knowledge in Canada has been 

managed by the government and small or independent organizations, including the general 

public, single-industry associations, individual product manufacturers, professional associations, 

general and specialty trades, independent colleges and universities, and research institutions. 

There is a significant risk that the developing market for green building will, in the short term, 

outpace the availability of expertise in the workforce. Furthermore, the education of the market 

providers of green buildings or green building services is directly related to the success of the 

projects. Undereducated, misinformed, or under-skilled individuals may produce unsuccessful 

projects, creating a negative perception of green building in the marketplace and hindering 

growth. The development of educational programs in an uncoordinated manner does not address 

issues in the interdisciplinary nature of green building projects. It can also be counterproductive 

to the goal of overcoming inherent communicational challenges between project participants of 

different disciplines and expertise.

Specific Recommendations—Making the Case for Green Building

Described below are a number of specific recommendations for communicating the importance 

of green building to various audiences.

• Partner with appropriate organizations. Nonprofit green building organizations, 

including USGBC, CaGBC, chapters and affiliates of USGBC and CaGBC, the Green 

Building Initiative, Sustainable Buildings Canada, and residential green building 

programs, should establish or strengthen relationships with mainstream organizations, 

and proffer audience-appropriate presentations, articles, and other communications to 

make the case for green building.

• Support the display of case study information. Governments should support the 

collection and display of information about green buildings. One such initiative is the 

High Performance Buildings Case Studies Database, funded by the US Department of 

Energy. This database currently includes about 100 green buildings and displays 

consistently formatted information on these buildings to allow easy comparison. 

Additional funding could be used to collect actual energy performance information for 

buildings in the database, which is not currently available for most projects, and to 

support the inclusion of many more buildings.

• Walk the talk. Governments should integrate green features into all of their own 

buildings. Federal, state and provincial, and local governments can educate other building 

owners about green building by ensuring that their own buildings include state-of-the-art 
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energy and environmental features. In the United States, executive orders at federal and 

state government levels provide a good way to communicate such intents.

• Support education and technology transfer. Federal, state and provincial, and local 

agencies can accomplish a great deal by funding nonprofit and educational organizations 

to carry out green building education and technology transfer programs. The willingness 

of governments to support education and technology transfer has ebbed and flowed in 

recent decades, yet the benefits of such programs are clearly demonstrated; such efforts 

should be ramped up.

• Support labeling and full-disclosure laws. Various product labeling and reporting laws 

at the federal and state and provincial levels have been tremendously important in 

educating consumers. Proposition 65 in California requires that manufacturers label 

products that contain likely carcinogens, and energy labels on appliances and windows 

help buyers select energy-saving products. For whole buildings, requirements for the 

disclosure of energy consumption information would help potential buyers find greener 

buildings—and understand the benefits.

Raising the Knowledge Base of Building Professionals

Along with education programs that make the case for green building—to increase the adoption 

of these practices—education must also be directed at building professionals to ensure that they 

have the knowledge needed to successfully implement green building practices. Education 

directed toward the design and building trades can and should occur in several ways, each of 

which could benefit from federal and state or provincial support.

First and most important, architecture schools must integrate sustainability much more 

comprehensively into their curricula. Some architecture schools in North America still offer 

almost no instruction in green building, though most have been addressing these topics much 

more directly in recent years. Schools may offer separate courses focusing on aspects of green 

design, or they may integrate sustainability more integrally throughout their curricula; either 

option can work, though the more integrated approach ensures that graduates of the architecture 

school will be exposed to more green-building-related coursework—even if it is not identified as 

such.

Several architecture schools in the United States, including Boston Architectural College and the 

San Francisco Institute of Architecture, now offer specialized certificate programs in sustainable 

design, with courses that can be taken by degree students or continuing-education students. 

To address this issue in Canada, educational models based on the integrated design process are 

being implemented in academic programs such as the Environmental Design Graduate Program 

at British Columbia University and the Environmental Studies Collaborative Program at the 

University of Toronto. In these types of programs, students are placed on multidisciplinary teams 

and challenged to design mock green building or infrastructure projects. The assembled student 

team disciplines consist of, but are not limited to, architecture, engineering, trades, business and 

marketing, urban planning, ecology, law, and sociology.

Building-trades education, including vocational and technical (vo-tech) instruction, should also 

address aspects of sustainability more directly. Vo-tech instruction is especially important 
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because durability and performance are so closely linked to how buildings are constructed. If 

components are installed improperly, expected performance may not be achieved. Some 

Canadian colleges, such as Humber and Seneca, are responding to this need and developing 

cross-disciplinary technology programs to train green building operators. Organizations such as 

Sustainable Buildings Canada are developing joint trade training centers for building-trade 

apprenticeship programs and energy service companies.

Continuing education of architects, engineers, and others in the building industry is also critical. 

Because building design—and especially green building design—is so dynamic, designers 

cannot rely on what they learned when they went through architecture or engineering school if

they want to operate at the leading edge of the discipline. 

Fortunately, most design professions, including architecture, engineering, and landscape 

architecture, require members to complete continuing education unit (CEU) credits to maintain 

their professional registrations. The professional societies in these fields—the American Institute 

of Architects (AIA) and provincial architectural associations in Canada, the American Society of 

Heating, Refrigerating, and Air-conditioning Engineers (ASHRAE), the American Society of 

Landscape Architects (ASLA), and others—manage continuing education programs for their 

members. Many program offerings can help these design professionals obtain their needed CEU 

credits. Many CEU programs, offered by professional societies and others, are focused on 

aspects of green building. 

Numerous conferences, seminars, and workshops offered throughout North America address 

green building specifically (many of which offer CEU credits for professionals needing those 

credits). Among the providers of such programs are the United States and Canada Green 

Building Councils; the New Buildings Institute, the Sustainable Buildings Industry Association; 

Ecobuild; various magazines; and regional organizations such as Southface Institute, the 

Northeast Sustainable Energy Association, and West Coast Green. Increasingly, mainstream 

industry conferences—such as the National Association of Home Builders’ (NAHB’s) 

International Builders Show, the AIA National Convention, Construct Canada, and the ASHRAE 

Annual Meeting—offer a variety of green-building programs.

In Canada, new nonprofit organizations have successfully developed education programs filling 

niches not well served by existing institutions or organizations. Green Roofs for Healthy Cities is 

the most prominent of these. It focuses on increasing the awareness of the benefits of green roof 

infrastructure across North America. Sustainability Now focuses on green engineering practice in 

British Columbia. Sustainable Buildings Canada has implemented design charrettes (workshops) 

on real projects early in the process. These charrettes, chaired by experienced facilitators, are

open to all design professionals so they can learn firsthand about the integrated design process. 

An added benefit for the developer of the project is the wealth of design ideas that come out of 

the process. 

Trade publications offer another important place for practitioners to learn about green design. A 

handful of specialized publications focus specifically on green building (these include 

Environmental Building News, GreenSource, Environmental Design and Construction,
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EcoStructure, and Green Builder, to mention a few), and conventional publications are providing 

more and more coverage of green building topics.

In addition to these private-sector sources of information on green building are excellent public 

sources of information. In the United States, such resources include the US Department of 

Energy, the US Environmental Protection Agency, various national research laboratories 

(especially Lawrence Berkeley National Laboratory, the National Renewable Energy Laboratory, 

and Oak Ridge National Laboratory), the Partnership for Advancing Technology in Housing 

(PATH) program of the US Department of Housing and Urban Development (HUD), the 

National Center for Appropriate Technology (which focuses primarily on agricultural programs 

and low-income energy programs), and state energy research bodies (especially the California 

Energy Commission and the New York State Energy Research and Development Authority). In 

Canada, the primary public sources of green building information are, at the national level, 

NRCan, and Canada Mortgage and Housing Corporation (CMHC). At the local level, a leading 

example is the Greater Vancouver Regional District’s Build Smart program.

The Internet has revolutionized education on all levels and in all markets, including the building 

trades. Online resources for all of these organizations, publications and agencies have made it 

possible to research topics through online searches. Indeed, the bigger challenge with this 

information is sorting out the most reputable sources. 

Specific Recommendations—Raising the Knowledge Base of Building Professionals 

While a wealth of educational programs and information sources is available to building 

professionals, federal governments have a vital role to play in assuring continuing access to such 

information. Specific recommendations are provided below:

• Enhance building performance information. Expand the collection of building 

performance information on green buildings (see discussion above under 

recommendations for “Making the Case”). Providing actual performance information on 

buildings, along with “lessons learned,” is one of the best ways to educate building 

practitioners about green design and construction. The US DOE High Performance 

Buildings Database should be expanded to directly address carbon emission reductions, 

and funding should be provided to significantly expand the number of buildings included 

in the database. 

• Fund curriculum development. Significant improvement to architecture school and votech school instruction could be achieved through the funding of green design and 

construction curricula. With DOE support, a National Association of State Universities 

Land Grant Colleges (NASULGC) working group on developing curricula on energyefficient buildings has begun work, but significant additional development is needed.

• Support conferences and workshops. Federal, state, and provincial governments in 

North America have supported green building educational programs, including 

conferences, workshops, seminars, and lecture series. Agencies should provide continued 

(and increased) support of such programs, working, as appropriate, with organizations 

and educational institutions that are set up to effectively deliver such programs.
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Motivating Occupants to Change Behavior 

The environmental impacts of a building depend not just on technology but on the behavior of 

the occupant. For instance, a high-performance, energy-efficient building will not perform as 

expected if occupants don’t make use of energy-saving features. Real-time measures of energy 

use provide instantaneous feedback to occupants, which, especially if the occupants are 

financially responsible, can bring about changes in behavior. 

References for Readers

• US GBC education resources: <www.usgbc.com/education>

• High Performance Buildings Database: 

<http://www.eere.energy.gov/buildings/highperformance> 

• New Buildings Institute: <http://www.newbuildings.org/>

International Agreements and Initiatives

While much can be done through local and national initiatives dedicated to green building, wider 

international agreements and initiatives can captivate public attention and strengthen the 

foundation for action. With global environmental problems and a globalized market, 

international agreements are critical both to help prevent a widespread “tragedy of the commons” 

and to facilitate appropriate market responses. International green building initiatives are 

supported by and support broader initiatives to tackle global challenges, including climate 

change, persistent bioaccumulative toxins, deforestation, and extreme poverty. 

Ultimately, we need to set—and achieve—global goals for reducing environmentally damaging 

emissions and other harmful practices, while expanding the work to restore the damage that has 

already been done to ecosystems that provide critical services to humanity and the biosphere. 

The Montreal Protocol on Ozone-depleting Substances, signed, ratified, and implemented by 

both the United States and Canada, along with many other nations, provides an excellent 

example of the kind of international coordination that is needed around environmental issues. In 

particular, the need for widespread and substantial international action and coordination around 

climate change is becoming increasingly evident. In the same way that codes and standards have 

had to move from a limited, immediate life-safety focus to account for the broader impacts of 

buildings, nations must move from a limited view of national priorities to a wider, enlightened 

self-interest that recognizes the need for each and every nation to take responsibility for its 

global impacts. 

Many important initiatives are underway that take a variety of approaches to tackling climate 

change. The breadth and depth of new initiatives that have been launched over the course of the 

writing of this report are a clear indication that we have reached a tipping point on concern over

climate change, with buildings receiving a major focus. 

Directly addressing buildings, The United Nations Environment Programme’s (UNEP’s) 

Sustainable Buildings and Construction Initiative (SBCI), launched in April 2006, recently 

produced the report Buildings and Climate Change: Status, Challenges and Opportunities. 

Without dismissing the need to dramatically increase the energy efficiency of new and existing 

buildings in all countries, the report points to the different challenges among nations: it 
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encourages more developed nations to reduce the energy use of the existing building stock but 

encourages rapidly growing parts of the world to leapfrog directly to more energy-efficient 

building solutions for new construction.

Addressing the challenge of existing buildings, former US President Bill Clinton announced in 

May 2007 the launch of a global energy efficiency building retrofit program. Partnering with 

nonprofits ASHRAE and USGBC, the Clinton Climate Initiative’s (CCI’s) C40 Large Buildings 

Retrofit Program brings together four of the world's largest energy service companies (ESCos), 

five of the world's largest banks, and fifteen of the world's largest cities, including six from the 

Americas: New York City, Chicago, Houston, Mexico City, Sao Paulo, and Toronto. Each bank 

has agreed to arrange for $1 billion in financing for retrofits to cities and building owners who 

will pay back loans with interest from the energy cost savings. The ESCo providers have agreed 

to guarantee the energy savings of their retrofits—should the projects fail to reach the savings 

promised, the companies will either cover the shortfall of the capital loan or make whatever 

improvements are needed in the buildings to achieve the promised savings.

There are a number of reasons to focus on dramatic improvements in new construction for 

rapidly growing areas. New technologies are more likely to be cost-effective where older 

technologies and supporting infrastructure are not already established. Rapidly growing areas are 

the source of the greatest potential for growth in emissions. Also, in areas of extreme poverty, 

where food, shelter, and sanitation cannot be assumed, the environment is also directly at risk. 

Meeting this challenge requires dramatically increasing the flow of both capital and technology 

between regions. 

With global concerns such as climate change, it is in the best interest of all countries to ensure 

that international agreements are set up to enable technology-leapfrogging and regionally 

appropriate technology development. The Kyoto Protocol enables such transfers through the 

Clean Development Mechanism (CDM) and Joint Implementation (JI); however, details such as 

means to ensure “additionality” (that the project would not have otherwise been completed) have 

slowed the use of these mechanisms. The Asia-Pacific Partnership on Clean Development and 

Climate (APP), launched in January 2006 between the United States and six Asia-Pacific 

nations, also focuses on clean energy capacity building and market formation, but with no

enforcement mechanisms. Supporters have called it a flexible complement to the Kyoto Protocol, 

while critics have called it an effort to undermine Kyoto. A variety of other bilateral and 

multilateral negotiations are in progress in addition to the recent G8 summit meeting in Germany 

and the September 2007 Asia-Pacific Economic Cooperation meeting in Australia. 

The breadth of these negotiations is beyond the scope of this report and rapidly changing. If we 

are to succeed in tackling the climate challenge, however, we must insure that the details of 

whatever agreements are reached facilitate technology transfer at multiple scales (within and 

between countries) and the flow of capital toward building radically better buildings in all 

regions. We must move quickly from agreement to action—to which end, cooperation at any 

scale is beneficial, as is continually increasing the general knowledge base of what works and 

what doesn’t. To achieve transformation at the scale required will involve creative responses at 

the political, financial, social, and technological levels. As has been discussed in this report: at 

smaller scales, the more that international policy is tied to results and designed to be regularly 
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revisited, the more quickly we will arrive at effective, streamlined mechanisms to achieve twin 

environmental and developmental goals. The recognized benefits and already rapid advance of 

green building make it an ideal platform to work out these mechanisms.

It must be clearly acknowledged that full international agreement is not a prerequisite for 

significant market transformation. In the same way that state or provincial action can spur a 

national response, the decision of a country or coalition can alter the market wordwide. For 

example, the European Union’s ambitious new REACh legislation, which entered into force in 

June 2007, could have a widespread impact on product compositions and catalyze changes in 

chemicals policies in other countries. REACh stands for Registration, Evaluation, Authorisation, 

and Restriction of Chemicals. In the past it has generally been up to governments and watchdog 

groups to identify unsafe chemicals. REACh reverses the burden of proof and puts the 

responsibility on the producer and importer to show that substances are safe before they can be 

placed on the market. Canada has also recently launched a public database of 23,000 chemicals, 

searchable by chemical name and by toxic quality as part of the Canadian Environmental 

Protection Act (CEPA). CEPA regulates the use of hazardous materials, as well as dictates the 

use of environmental assessment for all projects that are undertaken or supported by the federal 

government. 

Discussion and Recommendations

• Cooperate on goals, standards, and markets: International agreements on emission 

reduction targets and other goals can mobilize resources and facilitate cooperation at 

other levels. Cooperation on standards can reduce each country’s required investment and 

ease the flow of trade. Balance this coordination with appropriate regional customization 

(such as climate-appropriate design and R&D as well as culturally appropriate 

regulations and standards). Develop and adopt, with locally appropriate modification, 

increasingly flexible and stringent international codes and standards. 

• Ensure that wider agreements do not prevent stronger action at a smaller scale: 

Environmental rulings at smaller levels of government frequently provide the impetus for 

change at a broader level. Ensure that trade agreements cannot be used to prevent 

countries from implementing higher environmental standards by calling them trade 

barriers. Remove country-specific barriers, such as those in some Canadian provinces 

restricting municipalities from requesting performance higher than code minimums, or 

those preventing states in the United States from raising product standards without 

adequate provisions for raising the bar on national standards. 

• Facilitate technology transfer via the following measures:

• Cross-border loaning of expertise: Each country has developed expertise that could 

be shared. For example, the United States could benefit from building-science 

expertise from Canada, while Mexico could benefit from heat-pump technologies in 

the United States, and the US Southwest, especially , could benefit from research into 

natural materials and bioclimatic building going on in Mexico.

• Development of climate-specific expertise: While each country in North America 

encompasses a wide range of climates, there are still general climatic differences that 
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warrant localized expertise. Most building technologies should not simply be adopted, 

but instead be adapted. 

• Include the building sector in CDM: While some large-scale building projects have 

been approved for CDM, buildings are typically considered small emitters, which are 

excluded in most trading schemes due to transactional difficulties. Finding ways to 

aggregate or otherwise incorporate building and other small-scale projects in trading 

mechanisms could release substantial energy and capital for these types of projects. 

References for Readers

• UNEP Sustainable Buildings and Construction Initiative (SBCI): <www.unepsbci.org>

• Agenda 21: 

<www.un.org/esa/sustdev/documents/agenda21/english/agenda21chapter7.htm>

• Asia-Pacific Partnership on Clean Development and Climate:

<www.asiapacificpartnership.org>

• C40 Cities Climate Leadership Group: <www.c40cities.org> 

• CEPA Environmental Registry: <www.ec.gc.ca/ceparegistry/>

• EU REACH program: <http://ecb.jrc.it/reach/rip/>

Analysis and Recommendations

Almost daily, new reports and agendas come out about the impacts of climate change and the 

actions needed to mitigate and adapt to it. There is now widespread attention and acceptance of 

the human influence on the Earth’s climate and the dangers of those impacts. It is significant that 

green building already makes good business sense, even without an economic structure that 

accounts for environmental factors. Even in the current market, the initial costs of most energysaving, green-building features can be recovered through operating cost savings. Also, the health 

and productivity benefits—which often dwarf the already substantial operational cost benefits—

are increasingly being recognized and quantified. The property development and management 

industry has begun to respond to the public demand for green buildings. Leading developers are 

investing in better, more efficient products. The market’s ability to develop and measure the 

successes of these projects is expanding. However, the business case for accelerating the creation 

of green buildings continues to be debated. 

High-performance buildings, although high in profile, remain the exception to conventional 

practice, spurred by developers and owners who wish to lead the market. While a green building 

agenda clearly makes economic, environmental and social sense, green buildings make up only 

about five percent of new construction. Those that have achieved the 2030 Challenge target of 

carbon-neutral comprise just a tiny fraction of that total. The extent to which green building is 

being implemented now, or is likely to be implemented through the continued expansion of 

existing programs, is still far below the desirable level.

Green building needs to be rapidly implemented at an ambitious performance level and on a 

huge market scale. It is in rapidly scaling up these efforts that institutional approaches can have 

the greatest benefit. In addition, a special effort must be made to improve existing buildings, 
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address occupant behavior, and institutionalize effective feedback and continuous improvement. 

Numerous suggestions for improvement are included throughout this report. This section first 

defines the major challenges to expanding the adoption of green building in Canada and the 

United States and then provides the most important strategies to address those barriers. 

Principal Implementation Challenges and Solutions

Barriers Solutions

1.INERTIA: Significant 

time and effort are required 

to implement change

Invest in strong, up-front investments to speed change

- Build capacity 

- Lower the cost of change 

- Implement government purchasing programs

2. LACK OF CREDIBLE 

DATA: Consumers and 

decision makers lack the 

data to make good 

decisions

Measure performance and require labeling

- Measure actual and real-time performance 

- Facilitate benchmarking

- Require labeling of product and building performance

- Develop national indicators

3. MARKET 

DISFUNCTIONS: There 

is a lack of full-cost 

accounting

Establish market signals that drive responsible decisions

- Tax carbon through politically palatable tax shifting

- Implement cap-and-trade programs for carbon

- Explore other market approaches

- Encourage innovative financing mechanisms

4. SHORT-TERMISM: 

Long-term risks and 

benefits are weak 

motivators for change

Set clear, aggressive, long-term targets, to be achieved by specific, 

incremental steps 

- Set ambitious national and international targets

- Regularly raise the bar 

- Support research to continually advance the state of the art

5. SILOS: Historical 

divisions and territoriality 

inhibit change

Take an integrated approach and learn from others

- Take an integrated approach to policy 

- Create teams and processes that cross traditional boundaries

- Consider a wider scope 

- Cooperate on goals, standards, and markets

- Ensure that broad agreements do not prevent stronger action at a 

smaller scale

- Learn from others, and facilitate the transfer of knowledge and 

technology 

Barrier 1: INERTIA—Significant time and effort are required to implement change

Despite an increasing array of cost-competitive, high-performance green building projects by 

experienced professionals, the perception that green buildings are more expensive than 

conventional ones remains, with some justification. For the multitude of architects, engineers, 

subcontractors, specifiers, and others who are new to green building, cost premiums may be an 

inevitable outcome of the learning process. In addition, the process of gaining awareness, 

learning, and developing approaches for green building takes time not only for the building 

professionals but also for developers, owners, financiers, code officials, and others. While the 

rewards are significant, the effort required by change can delay adoption. 
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Solution: Strong up-front investment

Green building will gain market share naturally as consumers and the trades become more 

familiar with its advantages and acquire the requisite skills. However, to ramp up green building 

to the level needed to meet today’s challenges, we need to accept that change takes time and 

costs money. In addition to continuing to show that green building does not have to cost more, 

we need to remind developers, professionals, and tradespeople that it may indeed cost more 

while they’re figuring it out, and we should provide targeted incentives to overcome this earlyadoption cost obstacle. To speed up the pace of change, we need an integrated strategy to move 

the related trades through the learning curve as quickly as possible. This will require strong upfront investment in the following:

• Capacity building: Significant focus and investment is needed to raise the knowledge base of 

building professionals across-the-board. Education directed toward the design and building 

trades should occur in a number of important ways, including architecture and vocationaltechnical instruction; conferences, seminars and workshops that offer continuing-education 

credits for professionals; specialized and conventional trade publications; and public 

information. Each of these could benefit from federal and state or provincial support.

• Lowering the cost of change: While ultimately the market must reward, or government must 

mandate, green building for it to become mainstream, a variety of incentives can bridge the gap 

as the market adjusts. Financial incentives should be designed to reward performance and 

stimulate the market so that the benefits continue beyond the life of the incentive. In addition to 

providing incentives for individual projects, funding for major programs—such as a “rebuilding 

America” program for widespread, comprehensive energy retrofits of homes—could provide 

significant and rapid energy savings while building long-term capacity.

• Government purchasing programs: In addition to directly reducing environmental impacts, 

purchasing policies that specify environmentally friendly buildings and products can encourage 

manufacturers and distributors to supply green offerings and expand the market base for 

environmentally preferable buildings and products. While the potential direct impact of greening 

existing and new government building stock is substantial, it is dwarfed by the potential impact 

of using the government’s purchasing power to strategically influence the availability of green 

alternatives in the market, and applying government experience to the development of 

educational resources and tools that other groups can use in exercising their purchasing power. 

Barrier 2: LACK OF CREDIBLE INFORMATION—Consumers and decision makers 

lack the data to make good decisions

A well-functioning market economy requires adequately informed consumers. LEED, BOMA, 

Go Green, Energy Star, and other programs have proven the value of market differentiation. 

However, while voluntary certification programs and case study databases have helped, there is 

still a long way to go in providing decision makers with the information they need to make 

informed decisions that will advance green building. To date, there is no readily accessible 

information on the energy and water consumption of products or buildings in use, or on the 

embodied energy in building materials. In addition, there is rarely real-time feedback to building 

occupants on the energy intensity of their activities in the building. Few building developers, 

purchasers, owners, or users think about these implications, and those who do often cannot find 
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the information they need to make informed decisions. Further hindering matters, the predicted 

energy savings of green buildings is often greater than actual savings. There is also inadequate 

information about the economic benefits of building green and, conversely, about the long-term 

economic costs of conventional practice. 

Solution: Measure performance and require labeling

If green building is to become the market norm, with competition providing the basis for 

continuous improvement, comparative performance information must be verifiable and 

persuasive. Additionally, to achieve the energy reductions called for, building occupants should 

be part of the loop—and they need feedback on how their behavior affects the energy 

performance of their buildings. Monitoring the results of actions is essential for quantifying 

results and achieving continuous improvement at any scale—from the behavior of one apartment 

dweller to the design of a building to the implementation of a government green-building 

program. Ideally, performance-based and real-time measures and monitoring processes will 

become standardized and integrated into a wide range of systems and programs. This can be 

aided by coordinated efforts on the part of government and voluntary standards developers. Such 

efforts should include the following: 

• Measure actual performance: Full reporting of performance information, such as energy and 

water use, should be widely encouraged. Requirements for proof of performance could be 

incorporated into voluntary, mandatory, and tax-incentive systems. Streamlined measurement 

and verification systems should be developed. This could require new models, such as providing 

partial credit for modeled or prescriptive performance and additional credit for measured results. 

• Measure real-time performance: Real-time measures of energy use provide instantaneous 

feedback to occupants, which, especially if they are financially responsible, can bring about 

changes in behavior.

• Facilitate benchmarking: Measured building performance information should be collected in a 

public database. This database can be used to inform research on building performance, to align 

modeled results with actual results, to instill confidence among building owners that green 

buildings work, and to establish benchmarks for labeling and incentive programs. In addition to 

normalized measures (energy use per spare foot or square meter), absolute measures are needed; 

without absolute measures of building energy consumption or emissions, it is difficult to notice 

and remedy the problem of increasingly large homes eclipsing energy efficiency improvements. 

• Require labeling: Requiring reporting of a building’s energy consumption when it is sold would 

affect purchaser decisions, and it could form the basis for energy-efficient mortgages and other 

incentives. Furthermore, to create a level playing field for both vendors and consumers, all sales 

and rental advertising and all sales and lease agreements should be required to display a label 

showing building performance. As with many of the recommendations presented here, this could 

be initiated on any scale—from local to national—and it could be mandatory or voluntary. As a 

ramp-up to eventually mandating consistent reporting, a program could provide an incentive for 

reporting energy consumption of a building on resale. However, if this information were 

standardized and easy to access—like the food nutrition labels required by the US Department of 

Agriculture—it would enable both markets and policies to adjust appropriately. Thus 
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government should develop a nationally consistent performance indicator for building 

performance labeling, preferably in conjunction with the organizations managing existing 

voluntary programs. To be effective, such labeling must be simple to implement, credible, and 

easy to understand. 

• Develop and use more comprehensive national indicators: Just as the GDP currently provides 

a metric of economic activity, indicators valuing natural services (such as water and air 

purification or resource depletion) could be used to guide North American policies. While not 

directly targeting green building, the development, measurement, and use of indicators that better 

reflect the ecological, economic and social wellbeing of nations and states would help decision 

makers and the public assess priorities. There exists a large body of work on alternative 

indicators. 

Barrier 3: MARKET DYSFUNCTIONS—There is a lack of full-cost accounting

Our economic system systematically overlooks many environmental costs and benefits. This 

happens on a variety of scales, from economy-wide undervaluing of ecosystem services to the 

separation between capital (first-cost) budgets and operating budgets. While some modest 

initiatives exist, there is currently no comprehensive process for calculating the environmental 

costs and benefits of products and practices and incorporating that information into the market. 

Solution: Establish market signals that drive responsible decisions

Making explicit the environmental costs and benefits of more products in the market could tip 

the balance away from harmful practices and add incentives to develop more benign building 

practices. Including these environmental costs and benefits in the price of products would have 

an even greater impact. Owners and building managers are successful when they can deliver 

what the market demands at a competitive price. A clear and consistent market signal would add 

unambiguous financial consequence to poor energy performance in buildings. This would 

encourage the building of better buildings by solidifying the case for energy efficiency. A variety 

of mechanisms to improve these market signals are worthy of further exploration and adoption:

• Tax shifting: While any policy involving taxes is frequently a political show-stopper, a 

strong selling point for ecological tax reform is that taxes need not be added; rather, they can 

be shifted from things we want to encourage to things we want to discourage. In particular, 

shifting taxes from payroll and income to resource consumption and carbon emissions would 

encourage the development of energy-efficient practices. This principle could be expanded to 

taxing materials and pollution as well, while removing other taxes. Including rebates or 

applying tiered taxes could minimize the impact on lower-income people. Small tax-shifting 

programs are in place in Europe, but much more significant shifts are recommended.

• Cap and trade: By putting a price on carbon, the ingenuity of the market can be realized to 

provide the carbon reduction desired. Carbon markets are gaining traction around the world. 

However, the implementation details determine whether hoped-for benefits are achieved. 

• Other market-based approaches: Public institutions use other market tools to influence 

business decisions. Standard Offer contracts, which provide fixed pricing for renewable 

energy, provide clarity and confidence for small-scale energy producers. Electric utilities can 
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also offer rebates for permanent demand reductions or for reducing electricity demand during 

peak hours.

• Encourage innovative financing mechanisms: Background Papers 2a, b and c, on 

”Towards Sustainable Financing and Strong Markets for Green Building,” describe a variety 

of innovative financing mechanisms and improvements to building valuation that could 

greatly increase access to capital for green building projects in the three countries. However, 

in the current market, public institutions can offer revolving loans for energy retrofits or 

other additions to the public good. Private financing can be influenced by organizations such 

as the Canada and US Green Building Councils, which provide credible measures of green 

building performance. This facilitates the implementation of low-interest “green” loans 

offered by private financial institutions. 

Barrier 4: SHORT-TERMISM—Long-term risks and benefits are weak motivators for 

change

Today’s environmental problems do not fit well within our political cycles or economic 

assumptions. In general, they are long-term, diffuse, and interconnected, with long time lags 

between cause and result and sometimes even longer delays until scientific agreement is 

achieved. In the meantime, politics and economics tend to be short-term and territorial. It has, to 

date, been difficult to muster political capital to implement short-term transitional hardship for 

long-term delayed benefit, however substantial. In addition, information systems, including the 

mainstream media, are often equally short-term-focused. Solving this impasse requires long-term 

thinking and leadership.

Solution: Set clear, aggressive, long-term targets, to be achieved by specific, incremental 

steps 

People are motivated by clear and ambitious challenges. A real vision, with well-articulated 

goals and endpoints, can energize citizens. These unambiguous goals, when supported by a 

framework (regulatory and voluntary) that consumers and companies believe will stand up to 

changing governments, will also spur competition, alter the market, and open the way for 

previously inconceivable allocation of resources. The Montreal Protocol to eliminate ozonedepleting substances is an example of such a successful process. Education created the political 

will to make change. The political will led to a long-term regulatory framework that companies 

were confident would remain in place, which led to investment in R&D, new product 

development, and changing building practices. Implementation of this sort of solution could 

include:

• Set ambitious national and international targets: Sweden’s goal to become carbonneutral by 2050 is challenging but also effecting dramatic change. In the United States, 

both the Manhattan Project in the 1940s and the Apollo Project in the 1960s created the 

collective desire for success that led to major investment around a rallying end-goal. The 

US Conference of Mayors, the AIA, the RAIC, and many others have already accepted 

the 2030 Challenge for producing carbon-neutral buildings, and such a goal is well suited 

to national adoption.
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• Regularly raise the bar: A series of clearly stated, incremental steps that include a 

coordinated set of voluntary programs, incentives, and mandatory requirements would 

establish a predictable path to success upon which businesses could develop strategies. 

Such a virtuous cycle of incentive to mandatory requirements could include:

• first, public investment in incentives to the private sector, leadership in the public 

sector, and education;

• second, market development (influenced by the above incentives as well as 

labeling and carbon taxes); and

• finally, increasingly stringent code requirements.

• Fund research to continually advance the state of the art: Many green building 

research priorities have not been broadly funded—especially those that do not have a 

manufacturer “constituency.” Fully funding national laboratories along with setup and 

support for new national centers of excellence on such research areas as green roofs, 

battery technology, life-cycle assessment of materials, passive survivability, daylighting, 

and building science would greatly advance green building in North America. These 

efforts would ideally be coordinated through an in-depth scoping project for a massive 

R&D initiative that would include rapid and widespread technology transfer as a 

fundamental component.

Barrier 5: SILOS—Historical divisions and territoriality 

Numerous historic divisions prevent significant progress. Historic divisions between sectors, 

agencies and disciplines hinder the integrated process required for green building to prosper. 

Different levels of government sometimes create conflicting policy. National divisions can 

impede needed transfer of technology and information. Strong allegiance to either market or 

government solutions can itself be a barrier to change. 

Solution: Take an integrated approach

One major benefit to green building is the many different sectors it touches—governments and 

business alike are finding that building green requires an integrated approach. Green building 

efforts have required changing financial structures, building new communication lines among 

agencies and functions, and learning a systems approach to design and problem solving. If 

attempted through a checklist process of simply adding environmental features, green building 

can be quite expensive; undertaking green building through an integrated approach, however, 

can result in lower cost than through conventional practice. The same goes for policy: an 

integrated approach—in policy, as in design—can solve multiple problems at once, while lack of 

integration can create multiple problems at once. The increasing interconnectedness of problems 

calls for interconnected solutions, as follows: 

• Take an integrated approach to policy: Policymakers and green building professionals 

alike need to recognize the complementary value of baseline-setting regulations, 

voluntary standards, national targets, and market-based policy. There are multiple ways 

to meet the same objectives, and they can be mutually enhancing. For instance, codes can 

continually raise the minimum acceptable energy performance of new buildings, while 

voluntary standards push the market toward a higher level. Meanwhile, efficiency-
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labeling requirements can inform the market, and “feebates,” carbon markets, and fiscal 

policy can improve the accuracy of pricing. Similarly, sprawl can be addressed through 

location-efficient mortgages, zoning regulation, and energy or carbon taxes. 

• Create teams or processes that cross traditional boundaries: Green building touches a 

wide range of agencies and offices in government—from code officials to environmental 

management. Green building can benefit from clear communication, coordination, and 

collaboration among these entities. 

• Consider a wider scope: The full potential of green building can be realized only by

considering such seemingly tangential issues as land use, product manufacturing, and 

economic development. Addressing health, productivity, and ecosystem services can 

change priorities and open up new opportunities. Green building adoption could be 

significantly hastened by non-sectoral regulations, such as tax shifting or emissions 

trading, that enable the economy to account for environmental gains and losses.

• Cooperate on goals, standards, and markets: International agreements on emission 

reduction targets and other goals can mobilize resources and facilitate cooperation at 

various levels. Cooperation on standards can reduce each country’s required investment 

and ease the flow of trade. This coordination should be balanced with appropriate 

regional customization (including climate-appropriate design and R&D, as well as 

culturally appropriate regulations and standards). Flexible yet stringent international 

codes and standards, with locally appropriate modifications, should be adopted. 

• Ensure that broad agreements do not prevent stronger action at a smaller scale: 

Environmental rulings at lower levels of government frequently provide the impetus for 

larger change. Policymakers should ensure that trade agreements are not used to prevent 

countries from implementing more stringent environmental standards by classifying those 

standards as trade barriers. Country-specific barriers—such as the restricting by 

provinces in Canada of municipalities from requesting performance higher than code 

minimums—should be prevented.

• Learn from others—facilitate knowledge and technology transfer: Much of the effort 

required for new programs, technologies, and practices has already been made 

somewhere. Facilitating knowledge sharing and technology transfer at many scales is 

critical to ensure that limited resources go toward implementation and new advances. 

From cross-border loaning of expertise to rapid commercialization of new technology to 

sharing of lessons learned between regional code officials, rapid and widespread sharing

of knowledge needs to be facilitated. With global issues such as climate change, it is in 

the best interest of all countries to ensure that international agreements, such as 

emissions-trading programs, enable regionally appropriate technology development and 

technology-leapfrogging. New technologies are more likely to be cost-effective where 

older technologies are not already established, especially if supporting infrastructure is 

involved. 
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2030 Vision for Integrated Green Building Policy 

In championing the 2030 goals, we must recall that 2030 is only 23 years away. The green 

building movement has advanced considerably since 1984, 23 years in the past, but the pace of 

that change since the mid-1980s has been far slower than what will be needed by 2030 to 

mitigate climate change; the faster we can rise to the challenge, the better. Each CEC 

background paper on green building explores the AIA/RAIC 2030 Challenge as a goal. Here we 

present a vision for the policy context that could be in place by 2030 if those goals were 

achieved. 

A vision to strive for is one in which today’s state-of-the-art green building has become the 

norm. Most, if not all, building codes include environmental considerations, provisions for 

natural building materials, and mechanisms to swiftly evaluate innovative designs. Building 

energy codes are regularly updated and used across North America, with modifications made to 

tune them to local climatic and cultural variations. Government green building programs are 

comprehensive; they include government purchasing requirements that regularly showcase best 

practice and an integrated set of incentives and disincentives to drive private-sector 

improvements. Voluntary standards and organizations continue to be important drivers, defining 

higher goals for green building, from net-energy-producing to toxic-free buildings. The way in 

which voluntary standards, codes, and other strategies work together to continuously improve the 

total stock is a widely recognized and consciously accelerated part of standard practice.

 It is common wisdom that the market is a good servant but a bad leader, and that government 

shouldn’t prescribe solutions but rather should establish targets—and set up systems to foster 

creative solutions. Along those lines, emissions trading—tied to international agreements that set 

ambitious and regularly reduced limits for carbon emissions—has become a normal part of 

business for large and small entities. Tax shifting is well underway throughout North America. 

Political frameworks embody the principle, agreed to at the United Nations Conference on 

Environment and Development in 1992, that countries have a common but differentiated 

responsibility to protect and manage the global commons. Environmental agreements thus 

include all countries in some form but also specifically encourage trading and leapfrogging in 

technology. There is also a better understanding of where local, national, and international 

solutions and approaches to problems are most appropriate and complementary.

Final Considerations

Green building has garnered much attention for its potential contribution to solving the climate 

problem. While it is critical to implement strategies along these lines, it is also critical to 

recognize climate as just one example of the kinds of problems that increasingly confront us. We 

need to not just take a strong stand to address climate change but also learn our lessons from the 

climate problem, and recognize the importance of addressing issues early. Increased focus on 

issues such as water, toxics, and material use will help to keep them from reaching the level of 

concern of the climate problem (if they haven't already). In addition, while the focus here has 

been on the 2030 Challenge and means to achieve significant reductions in greenhouse gas 

emissions for the building sector, green building and land use practices and policies must 

increasingly incorporate strategies to adapt to the impacts of changing climate. Thankfully, in 
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many cases the strategies are complementary—but due attention must be paid to ensure that 

these wider benefits are realized.

In the United States and Canada green building is taking off. The continuation of current 

activities, more municipalities adopting green codes and requirements, and increased recognition 

of LEED and other voluntary certifications could go a long way toward transforming the 

building industry. However, much more work will be required in order to achieve the goals of 

The 2030 Challenge. The overarching recommendations above could greatly aid green building 

in all three North American countries. If the recommendations were carefully and ambitiously 

implemented in a coordinated fashion, the resulting transformation would be unprecedented. 

Ideally, these action items would be part of ambitious and active national and trinational energy 

and environmental strategies. However, as has been shown already, much can be done even in 

the absence of such strategies. Within the body of this report are recommendations for all 

scales—from simple improvements to existing systems to radical, economy-wide shifts. Given 

different priority issues, cultural and political norms, and existing levels of adoption of green 

building practices, the implementation strategies for these broader and more detailed 

recommendations may differ dramatically among the three countries. Canada and the United 

States have experience with a number of these strategies, but have used none to its potential. 

There are many opportunities for increased coordination and learning among Canada, the United 

States and Mexico.