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The Cost of Building Decarbonization

June 17, 2022
New Buildings Institute study looks at the comparative costs of approaches to putting new structures on carbon-neutral footing.

Constructing new buildings and single-family homes to be all-electric out of the gate, as opposed to merely “electric-ready”, is likely an economically preferable route to building decarbonization, a recent analysis finds.

New Buildings Institute’s findings put meat on the bones of a code the advocacy group crafted Building Decarbonization Code – New Buildings Institute for developers interested in designing and building structures with smaller or non-existent carbon footprints. Portland, Ore.-based NBI designed the code as a blueprint for layering a stronger focus on decarbonization onto the widely followed and recently updated 2021 International Energy Conservation Code (IECC) and ASHRAE Standard 90.1.  

Its report, Cost Study of the Building Decarbonization Code, which drills down into the full spectrum of costs involved in positioning a prototypical new house and new office building to be fossil fuels-free, concludes that biting the bullet and building fully electric would prove more cost effective than taking half measures, which, in turn, is superior to the worst option: building a structure that would require a cumbersome electric retrofit down the road.

“Overall, electrifying new construction is far more cost effective than implementing electrification readiness,” the report states. “Still, electrification readiness will reduce lifecycle costs for a typical mixed-fuel building by future-proofing electrification retrofit costs as on-site fossil fuels are phased out.”

For a three-story, 53,000-sq-ft office building, building for all-electric added $11 to $12 in incremental first costs per square foot, over and above costs for building the same structure to conform to the baseline energy savings-focused IECC. But the bulk of that added cost – about 97%  was attributable to adding in electric vehicle charging infrastructure (EVCI) that nonetheless is seen as critical for future buildings. Without that, incremental first cost was in the range of 33 to 50 cents per square foot. Making the same structure electric-ready with mixed fuels brought the cost up to between $1.03 and $1.20, not including EVCI.

In the all-electric ground up building scenario, NBI figures there are overall net savings of between 7 and 24 cents per square foot in the broad equipment and infrastructure component. An electric heat pump system saves 49 cents per square foot; a central heat pump water heater adds 48 cents; eliminating gas piping infrastructure saves 23 cents; and doubling the size of the electrical panel to 800A could tack on 17 cents if needed. Other possible added costs for going all-electric up front are tied to lighting controls; on-site renewable energy; and demand-responsive controls.

While the report focuses on the costs of an aggressive decarbonization approach, its underlying message is that those are really an investment that will likely provide a multi-faceted payoff over time. The proposition is that abandoning fossil fuel reliance in buildings would prove more climate-friendly and could deliver cheaper energy over time.

But a full and honest examination of those costs is vital given the uphill challenge of changing building practices, says Lauren Urbanek, deputy director of the clean buildings program at Natural Resources Defense Council, which assisted NBI on the study.

“When you’re talking about new construction, builders generally are hesitant to do anything that’s too different,” she says. “But electrification is not really a new concept; about 40% of homes use electric for heating. So, it’s not really that this is something new and different. What is new that technologies and products like heat pumps that can replace gas furnaces and water heaters have gotten better and more efficient.”

The full examination of the costs of implementing NBI’s new decarbonization code is primarily aimed at jurisdictions across the country considering the adoption of greener building codes, Urbanek says. As those ranks continue to grow, she says, the emphasis will likely be on new construction, where the cost of improved energy efficiency is typically lower than in energy-efficiency improvements to existing buildings. Still, quantifying those costs, particularly when the goal line becomes full decarbonization, is essential if building practices and conventions are to be changed.

“There’s more recognition with builders and property owners of the advantages of decarbonizing homes and buildings, but we’re definitely not there yet,” says Urbanek. “It’s the way it’s trending, but currently, it’s not the way most new buildings are built. We didn’t look at the cost of doing nothing, but that is definitely something that has to be taken into account.”

Tom Zind is a freelance writer based in Lees Summit, Mo. He can be reached at [email protected].  

About the Author

Tom Zind | Freelance Writer

Zind is a freelance writer based in Lee’s Summit, Mo. He can be reached at [email protected].

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