When it comes to fossil fuels, almost all the externalities are damaging (from causing cancers to leaks polluting local waters to driving climate chaos). When it comes to ‘green’ action, almost all of the externalities are positive (improved health, ecosystem resiliency, productivity). Assessing these co-benefits and including them in decision-making should drive faster and more aggressive ‘greening’ efforts.
The office as example … focus on productivity payoffs, not utility costs
For example, when it comes to office buildings, it is often easy to lay out energy efficient and renewable energy projects to cut building emissions by a third with annual financial returns above 15 percent, and, often, well above 30 percent. An under five year payback may seem reasonable but might not really catch the CFO’s attention in terms of the total resources required (not just financial but, for example, also management/staff time and attention as an opportunity cost) relative to what might be a pretty small return on investment.
Now, in a North American office building, reasonable back-of-the-envelope efforts to reduce energy and water costs by half provide financial return of perhaps 0.5% of the payroll cost. However, greening offices drives greater productivity. In brief, people are healthier and perform better with cleaner air, quieter spaces, better lighting, and more consistent, comfortable temperatures. One limited study, for example, found a 3 percent decline in sick leave and 5 percent bump in productivity in green vs ‘non-green’ office buildings. A five percent productivity bump is worth perhaps five times the total utility bill.
Considering co-benefits in localities …
Other major concerns have to do with the trade-off between potential green projects, especially “net-zero” plans and expectations for reasonable returns on investment, particularly for government offices where tax dollars come into play. “Fully-burdened cost-benefit analysis” seems worth introducing here. In essence, governance structures (public and private) often have stove-piped decision-making processes. For example, the “facilities” team concerns itself with the costs of energy services but doesn’t calculate in its decisions secondary and tertiary co-benefits – or costs. Smart, clean energy and environmentally friendly facility investments and management can have huge co-benefits that often are not included into the conversation. This is something that a smart local government to address more aggressive climate-friendly actions due to the co-benefit value. Possible examples of doing this range the spectrum:
- Greening building to boost productivity: Better lightning, cleaner air, and quieter spaces all lead to higher human performance — this is true in industry, commercial, office, and school environments. If one can do a ‘cost-neutral’ upgrade in energy efficiency with quieter HVAC systems, for example, that leads to higher student test scores and improved graduation rates, something of huge economic and social value – some thoughts as to the power of Greening School infrastructure.
- Electric buses: While electric buses are now at a lower life-cycle price point in a stove-piped calculation, broader analysis of electric buses shows huge co-benefits: reduced local pollution (air and noise); better performance; potential for V2G to provide utility grid services (and thus earn revenue) when busses aren’t operating; improved driver health (lower noise, diesel pollution, more comfortable ride); and the potential for increased ridership due to better performance.
- Solar on schools as an educational tool: If solar is put on school roofs (thus providing clean electrons), it can be integrated throughout the K-12 curriculum. That educational value, in financial terms, likely is far higher than financials of the electrons. (Some school systems do incorporate solar in the curriculum but it is unclear whether a financial value has ever been associated with that.)
Finally, then, enhancing decision-making by understanding and incorporating co-benefits and intersectionality can foster more aggressive action, since (almost always) the ‘cleaner’ option has significant co-benefits that should be of value to a government investment.
Image courtesy of Flickr. Originally published by S&S on July 30, 2019.