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This is especially impressive as the US housing market has been decimated and new construction is at some of the lowest levels in decades. At the Green Build International Conference and Expo held in Phoenix, Arizona in November 2009 there were over 27,000 attendees and 1,100 exhibit booths. Compare that with the same conference in 2003 that had 5,000 attendees and 400 exhibit booths. There has been fast-paced growth in the industry in the last several years.

Where is the US green building market headed? Where are the new development and the needs of architects and designers? It is unlikely the US will fundamentally re-think the way it builds new homes or commercial spaces. US policy is leaning towards regulating the reduction of carbon dioxide and the continuing to subsidize renewable energy and energy efficiency measures for the next couple of years. This implies that the focus will be on building electricity use. Products that will achieve a reduction in the amount of energy use, or energy required for production, will be in the highest demand.

As of today, there are two main driving forces in the US market. First, is federal government investment in the form of grants and tax credits provided by the American Recovery and Reinvestment Act (ARRA). There are now billions of dollars available for energy efficiency retrofits and renewable energy installations. There is much heavier investment in the commercial sector, but there are large allocations for residential as well.

Second, influence of the green building sector by LEED (Leadership in Energy and Environmental Design) rating points. The US Green Building Council, that developed the LEED green building standards, has been the most popular and most used guidelines for green buildings in the US. Many products entering the market are strongly influenced by LEED and tailored to ensure obtaining a LEED credit. LEED is currently the most popular, but not the only green building codes being developed as will be discussed further in the report.

There are several pending pieces of potential legislation that may affect the green building, but if passed, they will only have an upward influence. The green building market has massive potential for growth.

An appliance that now uses less energy would be a good example here. Carpet that is now made from 40% recycled materials, up from 20% would be an improvement, but not an innovation.

Linoleum may be a good example here, as it hasn't changed much over the years but is now considered green because it comes from natural materials. Many companies are becoming very creative with the word "sustainable,” marketing products with conflicting environmental claims. For example, a product may help insulation, resulting in lower heating costs, but be full of toxics. With the risk of "green-washing,” or claiming environmental benefits without substantiated evidence, it is likely there will be more and more convergence to the third-party verification of sustainability. This includes LEED standards of course, but will also include the Energy Star certification for energy efficiency, the Forest Stewardship Council (FSC) for wood products. Third-party organizations will likely continue to be important for businesses and consumers to navigate legitimate environmental claims.

These would include innovations such as LED lighting, tankless water heaters, storm water management, green roofs, occupancy sensors, and control systems. Many of these product are shifting the actual design of the built environment.

Market Potential: The short answer is, ”the green building industry is wide-open.” There are endless possibilities entering the market. The types of products in the green building are far reaching, as every aspect of a building can be "greened.” Flooring, walls, windows, HVAC, lighting, paints, furnishing, fixtures, landscaping, sensors, controls are just a short list of categories that pertain to the design, construction or maintenance of a building.

Even though the industry is wide-open in terms of products, there are many large firms that present barriers to entry. Creating partnerships with established companies allows easier entrance into new markets. For example, companies with products that can reduce energy demand, like HVAC, lighting and controls may partner with Energy Service Companies (ESCOs) that could include products in their retrofit projects. Major ESCOs include companies such as Siemens, Johnson Controls, Chevron, and Schneider Electric. Green roofing and thin-film solar companies can partner with established roofing membrane companies. Linking with established firms allows for greater distribution channels and more opportunities to expand.

Market Potential: Renewable energy in the US is growing fast; solar PV installations have increased 68% nationwide in 2008 and 95% in California³, fueled by no cap on the 30% ITC. There are large opportunities for energy efficiency gains as buildings use 60% of their energy on heating, cooling and lighting, According to the Department of Energy.⁴

The amount of money coming from the federal government is staggering. The energy efficiency programs alone total more than $6 billion dollars, primarily for commercial and institutional buildings.

There are several paths to be a part of the energy efficiency retrofit programs. Directly applying to the grants is not recommended, as this is administratively burdensome and there are short application windows. However, partnering with the companies that are applying for the grants is recommended. Companies such as Emcore (emcore.com) and Energy Innovation Group (energyinnovation.net) apply for funds, and if awarded, manage the retrofit process of installing multiple energy saving technologies. Becoming a technology provider to one of these firms would enable easier access to institutional customers.

Working directly with institutional customers is another method to be a part of the federal incentives. Educational facilities, especially in California, are a unique case. The budget deficit is so severe, public education is receiving some of the lowest funding in decades with California schools consistently ranking below the national average in education spending⁵. Public institutions, particularly schools, are looking for anywhere they can cut operating budgets, always seeking to reduce the facility and utility costs. Surprisingly, many school districts have passed bonds for new facility construction that make funds available for capital improvements, but not operating budgets. The Los Angeles Community College District has more than $6 billion in funds and LAUSD has seen $13 billion in bond funds over the last decade. Energy efficiency measures and retrofits that save money on energy costs that will allow increased spending on teaching is highly sought after. Schools are a good opportunity for the ARRA grant partners. Facility directors of school districts, or institutional facilities, are excellent contacts for project development.

Green Building Regulation

The wide adoption of LEED standards by city councils, state government and federal agencies assures that the US green building market will be led by these standards for years to come.

In response, many of the new products entering the market are shaped around the LEED certification points, or are being marketed to show what areas of LEED certification the product may be eligible for. The LEED categories are divided into the following areas:

• Sustainable sites
• Water efficiency
• Energy and Atmosphere
• Materials and Resources
• Indoor Environmental Quality
• Innovation in Design

In addition, policies that are specific to one topic are getting attention in some cities and counties. For example, the most notable policy in North America has been a new regulation passed in Toronto on May 26, 2009 that requires all new buildings (of a certain size) to have green roofs.⁸ This was a city-level ordinance and there is a chance it may be a trend for other city councils in the future.

Market Potential: Outlined in this section are two ways regulation can influence a market, and how to become involved. First, products can conform to the regulation trends. Analyzing the LEED rating system and all of the products that can earn points is one method to enter the market. LEED points are earned for innovations such as storm water management, green roofs, rapidly renewable materials, low-flow water devices. Companies can refer to the US Green Building Council guidebooks or hire LEED AP consultant to ensure products will meet the minimum requirements for certification.

The second method is actually form the regulations and be a part of the legislative process. The city of Toronto is an excellent example of how the industry association, Green Roofs for Healthy Cities, based in Toronto, was able to influence policy makers to adopt a mandatory green roof policy. It is quite remarkable how local level policy can be shaped so dramatically. Becoming a member of an industry association is one method to influence local level policy. For example, the California Solar Energy Industries Association (CalSEIA) is an influential group in lobbying for solar subsidies. Other non-profit organizations, such as the Tree People, have been influential in the Los Angeles City Low Impact Development Ordinance⁹ and the California Storm Water Resources Planning Act.¹⁰ There are industry associations and non-profits that are applicable to all technology types and part of the policy making process. Find and partner with the groups that are most appropriate.

Although this bill may change substantially, and risks not passing the senate, it will likely include some new regulations on building and appliance efficiency. This bill will be important to monitor as it moves to the senate. If it does, it is almost certain that President Obama would sign it into law.

Most US feed-in-tariff programs tend to focus on solar PV. There are some incentives for small-scale wind and fuel cells such at the 30% federal investment tax credit, but it is definitely not a large focus of US policy.¹²

Market Potential: When looking at how the market can change in the coming years, there is the possibility of ground-breaking regulation by limiting carbon emissions, potentially large incentives for renewable energy, and simply traditional market growth as new technology saves money on energy bills. It is still too early to act on these policies, because the specifics will be very important. For example, the market potential for feed-in-tariffs is highly dependent on the rate structure. It could create a large market for residential rooftop, or it could create a demand for mid-sized ground mounted systems, or commercial rooftop thin film. There would be large demand for solar, but it is unclear what specific types of systems will be in demand.

Long-term US policy is leaning towards a carbon-constrained future. It is likely there will be continued demand for energy efficiency products and continued support of renewable energy. However, at some point green building products will need to show a cost-savings and reasonable payback length for long-term growth.

It is important to view the US market regionally, as green building policy adoption is currently piecemeal. Every state, county and city is creating their own incentives and adopting new policies. Each region may have its own set of initiatives and regulations. Fortunately, this may make sense as each region has its own climate. However, as the US comes closer to adopting carbon regulations, this may shift the market somewhat to materials that are less carbon intensive. The market potential for the US will continue to be focused on energy efficiency and LEED standards for the next several years.

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