News Brief

Retrofits a Better Bet Than Stocks and Bonds, Says Analysis

With an estimated 28.6% return on revenue over 10 years, efficiency investments would bring $65 billion a year into the U.S. economy.

Building Efficiency’s Rate of Return

At a 7% Annual Discount Rate, energy-efficiency investments offer a rate of return four times better than corporate bonds and more than double that of high-performing venture capital stocks.

WBCSD, EIA and Rhodium Group

A 30% increase in existing building efficiency by 2030 could provide returns of $65 billion annually, according to a study commissioned by United Technologies Corporation, parent company of HVAC manufacturer Carrier.

The Rhodium Group, which prepared the report, Unlocking American Efficiency, found that investments in technology such as efficient lighting and HVAC systems and design practices such as passive solar design would provide a return rate better than that of corporate bonds, equities, or high-performing venture capital stocks.

With an initial investment of $275 billion nationwide, commercial building owners would realize savings of $34 billion per year, according to the report, with homeowners saving $23 billion and public-sector building owners pocketing $8 billion. The report argues that greater building efficiency would allow businesses to hire more employees and give governments extra funds to balance budgets or invest in other areas, such as education.

The report authors recommend a variety of policies they say would remove barriers and spur investment, such as making Energy Star mandatory for both commercial and residential buildings. Other recommendations focus on how government agencies could lead the way by retrofitting their own building stock or offering finance programs using public funds.

 

Published June 27, 2013

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