The Blooming of Green Homes: An Opportunity Ripe for the Picking
The Blooming of Green Homes: An Opportunity Ripe for the Picking
In February, McGraw-Hill Construction released findings from a new Green Home Builders and Remodelers Study that found “green” homes comprised 17 percent of overall residential construction in 2011, or roughly $17 billion in the market. Even more astonishing, the builders surveyed indicated they expected green construction to grow to between 29 percent and 38 percent of the market by 2016. Based on current predictions on residential construction, this increase will represent $87-$114 billion of business in 2016 (see Chart 1, Source: Green Market Size: calculation McGraw-Hill Construction; base value of construction market from McGraw-Hill Construction Market Forecasting Service, as of February 2012.).
The increase in “green” home building provides an opportunity for component manufacturers to work with builders to arrive at a win-win scenario. In order to capitalize, it’s important to understand how green home standards work, why certified lumber is not a good answer/solution for either the component manufacturer or the builder, and ultimately, how the manufacturer can utilize the strengths of components to ensure builders capitalize on all their options to go “green.”
The Growth of Green
The McGraw-Hill study further indicates that by 2016, one out of every three builders anticipate they will be dedicated to green building work on over 90 percent of residential projects, up from 17 percent in 2011. Why are so many builders anticipating such a dramatic increase in green homes? The study results indicate builders see many business benefits afforded by green building, such as a competitive marketing advantage. Of those surveyed, 46 percent of all builders and remodelers find that building “green” makes it easier to market themselves in the present economy and 71 percent of dedicated green builders report the same.
As market differentiation is driving the builder, it appears the motivation for buyers is changing. While “green” homes may have originally been built and purchased by primarily environmentally conscious buyers, this recent study indicates the top factors driving “green” construction now are “higher quality” and “increases in energy costs.” This suggests that today’s and tomorrow’s home buyers are looking for lower energy bills due to higher building performance (see sidebar below).
Finally, the study points out that, while “green” is growing across the U.S., three regions are seeing higher than average growth. The West Coast has seen the highest green growth; the Midwest’s northern region, west of the Mississippi, is second highest; and New England ranks third. As “green” homes continue to sprout up, this growing market presents challenges and great opportunities for component manufacturers.
In a letter to the editor printed in the August 2011 issue of SBC, Norman Scheel , S.E., F SEAOC, F ASCE, LEED AP BD+C, LEED AP HOMES, made some predictions about the future of residential green building. Among his many prognostications, he anticipated that through the growth of “green” home construction, “successful fabricators will be involved in the design development phase.” Further, he guessed that, “energy ratings on homes will become the norm, much like the mpg sticker on a car.”
Scheel even went so far as to predict, “operating costs, such as energy and water costs that can be greatly reduced through proper design, will be part of the loan qualification process, along with taxes and insurance.” Given the changes driven through the model energy code and the Department of Energy’s research and funding for the development of “net-zero” homes, Scheel’s crystal ball may be more clear than most.
Over the coming months, SBC will be looking at this increasing demand for energy-efficiency performance and changes to the energy code that can and will be a significant opportunity for the structural components industry.
For more information about green building trends, go to SBC Industry News and click on the Green Building news feed.
The Application of Standards
There are two primary standards currently in the U.S. used by builders in residential construction to designate a home “green”: the U.S. Green Building Council’s LEED for Homes (LEED Standard), and the National Association of Homebuilder’s ANSI ICC 700-2008 National Green Building Standard (NAHB Standard). Both of these standards work by assigning point values to various aspects of the design and construction process.
The LEED Standard, for example, has eight categories, each with a maximum total point value, and, in some cases, a minimum required point total (see Chart 2). The NAHB Standard is very similar in its makeup with six categories for builders, and an additional category for site preparation (see Chart 3). However, while their arrangement is similar, each standard uses a very different system to allocate points and even the point criteria varies widely depending on the system.
One high-profile example where these two standards are very different is in the acceptance of certified wood programs. Currently, the LEED Standard only grants two points if 51 percent or more of the lumber used in the framing is certified by the FSC (Forest Stewardship Council) program. The NAHB Standard, on the other hand, grants up to four points for lumber certified by one of five international forest management systems (including FSC).
Unfortunately, because lumber certified by a forest management system appears to be a simple case of choosing a preferential source for a raw material, many builders have mistakenly seen these points as low hanging fruit. To further complicate matters, the LEED Standard has a mandatory stipulation that, in order to qualify for a LEED designation, the builder has to certify that none of the wood used in construction comes from a tropical source. This, too, has prompted many builders to make FSC-certified lumber a mandatory requirement.
The Challenge of Chain of Custody
The biggest problem with certified lumber, whether it is FSC, Sustainable Forestry Initiative (SFI), or some other system, is the chain of custody (CoC) requirements. In order to provide components made with certified lumber, a component manufacturer has to become a certified link in the CoC. The CoC is a bureaucratic process that, in this case, documents the voyage of a stick of lumber from the moment the tree is cut down to the time when it arrives on the jobsite as part of a component. It provides reasonable assurance to the builder/customer that the wood in that component is indeed from a forest managed by the approved certification process.
All of the major forest certification programs contract with approved third-party agencies to monitor and preserve their CoC. For example, FSC uses a company called SmartWood to inspect and certify manufacturers using FSC-certified wood. If you want to become part of the FSC CoC, you hire SmartWood. SFI is very similar, although its list of approved third-party agencies is considerably longer.
With any of the certification processes, you will be required to assess four main areas of your operations: proper identification of certified material, segregation of certified material, processing of certified material and thorough record-keeping. In other words, you will have to be able to adequately document how you will differentiate certified lumber from the rest of your stock from the time it arrives at your facility until it is delivered to the jobsite.
While these first two steps take considerable time, and potentially considerable financial investment, the most difficult hurdle may be actually finding a distributor or mill to provide the specific certified lumber requested for a particular job. In the case of FSC-certified Southern Pine, there is only one mill in North America that currently produces it.
The (Non)-Obvious Opportunity
For component manufacturers, one of the biggest challenges is getting builders to understand that they don’t need certified lumber to build “green” homes, they simply need components, and the design expertise the component industry brings to the table. This is not an opportunity to shy away from, but rather one to embrace, for it plays right into the strengths of this industry.
First, it’s important to remember that, regardless of the green standard used, there are many, many points that can be earned (see Charts 2 and 3 above). Second, each standard awards several points for the use of structural components, as opposed to conventional framing. Finally, most “green” homes are high performing buildings that tend to need a lot of design work on the front end of the project, and consequently, collaboration between the builder and the supplier.
Under the LEED Standard, wood components can qualify for up to 9 points under the Materials & Resources section (without certified lumber, which earns 1-2 points). With the NAHB Standard, wood components can earn up to 47 points (certified lumber can earn an additional 4 points). So even without certified lumber, componentized framing can get a builder one-fifth (20%) of the way to a “green” home designation under either system. For more information on how components earn points under these standards, visit the Green Building section on SBCA’s website.
As most well know, one of the greatest strengths of componentized framing is its design flexibility. Component manufacturers have the ability to work with builders to design a high performance home from the initial stages, allowing the builder to capture points beyond those attached to raw materials used on the project.
For example, components can be designed to handle additional loading for solar panels and solar water heating systems. In addition, roof and floor trusses can be designed in concert with the HVAC system to allow the home’s environmental ductwork to be placed in the “conditioned” space of the home (which earns points through the standards). Wall panels can also be designed using 2x6 studs at 24" on center to allow for additional insulation for a more energy efficient building envelope.
The “green” home trend appears to be gaining steam, and now is a perfect time for component manufacturers to take advantage. Regardless of the “green” home system used, components can earn a great deal of points without the burden of using certified wood. However, it is up to the component manufacturer to communicate with their builder customer on how a collaborative approach in design, and a creative use of components, can help them achieve a “green” home at the lowest cost.