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Musings of an Energy Nerd

Green Building in the Cheap Energy Era

In 2016, green builders will need to face the implications of low energy prices

Homeowners’ interest in energy efficiency measures waxes and wanes. During the 1970s, when oil prices repeatedly spiked upwards, everyone wanted to save energy. However, in the 1980s, when oil prices collapsed, Americans forgot about saving energy, and most of us reverted to our usual wasteful habits.

By 2008, oil prices were high again, and green builders were receiving lots of phone calls from homeowners who wanted lower energy bills. But between June 2014 and now, oil prices have collapsed again, tumbling from $115 to between $37 and $40 a barrel. This raises several questions:

New Year’s Day is a good time to make predictions for the year ahead. I’ll attempt to answer the questions I’ve posed with a list of ten points.

Before going through these ten points, though, it’s worth emphasizing the fact that the world oil market is fairly responsive to changes in supply and demand. When the demand for oil exceeds the supply, prices rise. When the supply of oil exceeds the demand, prices fall.

Right now, oil producers are pumping lots of oil out of the ground — at a time when efficiency improvements (for example, improvements in vehicle fuel efficiency) have slowed the rate at which demand is increasing. The predictable result: prices have fallen.

1. Interest in green building is down because energy is cheap

Let’s face it: most Americans don’t care too much about saving energy when energy is affordable. Compared to your cell phone bill, Internet bill, and cable TV bill, your electricity bill may seem reasonable. So why worry about it?

When energy prices drop, the payback period for energy-efficiency measures increases. Some homeowners are happy to spend $6,000 on attic insulation if the payback period for the investment is 10 years. Once the payback…

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9 Comments

  1. DAN VANDERMOLEN | | #1

    Middle East in decline
    As we become less dependent on the Middle East for energy you have to wonder what impact that will have on those countries that are almost solely dependent oil revenue. Is the "green revolution" in part what is responsible for all the unrest in the Middle East? I'm all for lower energy consumption and reducing pollution but I don't think we can ignore the impact that will have on the countries like Russia, Iran, And Saudi Arabia.

    Perhaps selling a "green home" as a high quality home that considers a home as a system would be another marketing approach. Beyond comfort a contractor could point out some specific problems that are prevented when a home is built airtight and well insulated like the benefits of having a home that won't have ice dams in the winter or pipes that freeze up because of drafts.

  2. User avater GBA Editor
    Martin Holladay | | #2

    Response to Dan Vandermol
    Dan,
    I think that your "Middle East in decline" theme is a stretch. This isn't a problem for Middle Eastern countries; this is a problem for all countries that export oil and depend on those oil revenues.

    My article mentioned Saudi Arabia because Saudi Arabia has huge oil reserves, huge foreign currency reserves, and the ability to ramp up or ramp down oil production. Saudi Arabia has traditionally played a role within OPEC that it no longer seems willing to play: in years past, Saudi Arabia was willing to curtail oil production when necessary to help raise oil prices. Saudi Arabia isn't doing that now.

    Getting back to this issue of whether current oil prices mean that "the Middle East is in decline": falling oil prices are a problem for Canada, Russia, Nigeria, Angola, Venezuela, and Mexico. This is a problem for almost all oil exporters, not a sign that "the Middle East is in decline."

    Your green marketing idea is a good one: "A house without any ice dams" is something many people might want.

  3. Malcolm Taylor | | #3

    Dan
    It's an interesting idea, and true that builders with an interest in green building tend to be conscientious about the quality of their work, but I'm not sure it's fair to say that the "green" part of their practice contributes to the resiliency or longevity of what they produce any more than conscientious builders aiming for more common levels of energy efficiency. Probably a good case could be made that some of the new building assemblies and materials being used are less resilient and more problematic than conventional construction. As they are modified and build up a track record over time the case for them will no doubt improve.

  4. User avater GBA Editor
    Martin Holladay | | #4

    Response to Malcolm Taylor
    Malcolm,
    The issue you raise is one reason that I hate the word "green."

    Some builders who call their homes "green" are probably choosing wall assemblies and roof assemblies that will have a short lifetime. Others (those who read GBA) are building excellent, long-lived buildings.

    The word "green" guarantees nothing.

  5. DAN VANDERMOLEN | | #5

    Green Building vs quality construction
    I don't care for the term "green" as well. Seems like it can be used to mean whatever one wants it to mean. Just ask the people At Chipotle how well marketing works if you don't follow through with quality practices.
    I have followed GBA for 6 years now and I have learned a few things along the way. When I built my own addition a few years ago I took extra care to air seal and insulate my attic well because of what I have learned here. The pay off is an ice dam free house.
    Recently I was asked to look at a home that had ice dam problems and it became apparent the fix would probably involve removing the existing attic insulation, air sealing the attic and then replacing the insulation. A fix that was beyond what the customer was interested in doing. Done right the first time is the way to go. Call it "green" or just high quality work but for some that word "green" seems to mean something special.
    I wouldn't call my own home "green" but I have taken steps to make it energy efficient and hopefully long lasting.

  6. Malcolm Taylor | | #6

    Green
    I agree entirely - about 'green" and the value of the techniques suggested here, or I wouldn't spend so much time on the site. But the point remains: Some of the new assemblies being used in an attempt to make buildings more energy efficient, like for example, the extensive use of foam, walls which move the sheathing further from the heated interior and unventilated roof assemblies may or may not be more resilient or have greater longevity than those used in conventional construction. Only time will tell.

  7. Nathan Kipnis, FAIA | | #7

    Great List!
    We have heard many times that we can solve the energy crisis in 20 years with no pain, 10 years with some pain, and huge problems if we refuse to act.

    We ignored warnings during previous crises, but here we have the opportunity to make (or finish) the huge transition to renewables while energy prices (and interest rates) are low. It gets a lot harder to do when the price of energy is high, as that makes the transition that much more difficult to do.

  8. Nathan Kipnis, FAIA | | #8

    Rationale for 'Sustainability'
    Beyond energy efficiency and CO2 reductions, the way sustainability can be 'sold' to certain clients can be one (or preferably more) of the following;

    1. Resilience - Having the knowledge that your home is set up to function efficiently and comfortably during a wide range of conditions can be a huge selling point. The confluence of lower PV prices, smart technology, electric vehicle and battery back up strategies are all making for very interesting possibilities.

    2. Comfort - no drafts, thermally balanced. This falls into the 'If I have cold beer and a warm shower, I'm happy' logic.

    3. Healthy interior - who doesn't want a healthy interior, especially if this is sold as for their children.

    These all should be very appealing to clients and can be for resale value as well. The added benefit that it lowers costs is icing on the cake.

  9. User avater GBA Editor
    Martin Holladay | | #9

    Response to Nathan Kipnis
    Nathan,
    Your three marketing points are resilience, comfort, and occupant health. I agree with you on Point #1 (resilience).

    Many green homes are, indeed, more comfortable than code-minimum homes -- but not all green homes are, and I'm not convinced that Americans need any more comfort than we already have. For more on this issue, see What is Comfort?

    As I wrote in my article, I think that builders who claim that their buildings will improve the health of occupants are skating on thin ice. I've never seen any evidence to support that claim. The factors that influence health mostly have to do with occupant behavior, not building specifications.

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