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When it comes to fossil fuels, almost all of the externalities are damaging costs (from causing cancers to leaks polluting local waters to driving climate chaos). When it comes to ‘green’ action, almost all of the externalities are positive (improved health, ecosystem resiliency, productivity). Assessing these co-benefits and including them in decision-making should drive faster and more aggressive ‘greening’ efforts.

The office as example … focus on productivity payoffs, not utility costs

For example, when it comes to office buildings, it is often easy to layout energy efficiency and renewable energy projects to cut building emissions by a third with annual financial returns above 15 percent (and, often, well above 30 percent). An under five year payback might seem reasonable but might not really catch the CFO’s attention in terms of the total resources required (not just financial but, for example, also management/staff time and attention as an opportunity cost) relative to what might be a pretty small return on investment.

Now, in a North American office building, a reasonable back-of-the-envelope has people costs ballpark 100 times the building’s utility costs. In other words, efforts to reduce energy and water costs by half provide financial return of perhaps 0.5% of the payroll cost. However, greening offices drives greater productivity. In brief, people are healthier and perform better with cleaner air, quieter spaces, better lighting, and more consistent/comfortable temperatures. One (limited, conservative, likely understating benefits) study, for example, found a 3 percent decline in sick leave and 5 percent bump in productivity in green vs ‘non-green’ office buildings. A five percent productivity bump is worth perhaps five times the total utility bill.

Considering co-benefits in localities …

This post is sparked due to a correspondent seeking some thoughts and support with local discussions for a community to develop a “net zero” plan. One, somewhat sympathetic, government official expressed concerns about potential approaches, laying out that he owed it to the taxpayers to assure that projects have a reasonable return on investment. My response email:

“Fully-burdened cost-benefit analysis” seems like something you might wish to try to introduce into the conversation.  In essence, governance structures (public and private) often have stove-piped decision-making processes.  For example, the “facilities” team concerns itself with the costs of energy services but doesn’t calculate in the decisions secondary/tertiary (co-)benefits (nor, well, costs).  Smart clean energy/climate/environmentally friendly facility investments and management can have huge co-benefits that often are not included into the conversation.  This is something that a smart (local) government can do and thus be ready to address more aggressive climate-friendly actions due to the co-benefit value.  Here are some examples speaking specifically to local governance opportunities:

• Greening building boost productivity: Better lightning, cleaner air, quieter spaces, etc all lead to higher human performance — this is true in industry, commercial, office, and school environments.  If one can do a ‘cost-neutral’ upgrade in energy efficiency with quieter HVAC systems, for example, that leads to higher student test scores and improved graduation rates, there is a huge economic and social value.  Some thoughts as to the power of Greening School infrastructure.  (Note that there is analysis that suggests the top predictor of a community’s economic performance 15-25 years from now is the HS graduation rate — greening will boost graduation rates.)
• Electric Buses: While electric buses are now at a lower life-cycle price point in a stove-piped calculation, broader analysis of electric buses shows huge co-benefits: reduced local pollution (air and noise); better performance; potential for V2G to provide utility grid services (and thus earn revenue) when busses aren’t operating; improved driver health (lower noise, diesel pollution, more comfortable ride); and the potential for increased ridership due to better performance.
• Solar on Schools as Educational Tool:  If solar is put on school roofs (thus providing clean electrons), it can be integrated throughout the K-12 curriculum. That educational value, in financial terms, likely is far higher than financials of the electrons. (Some school systems do incorporate solar in the curriculum but it is unclear whether a financial value has ever been associated with that.) 

Enhancing decision-making with understanding/incorporating co-benefits and intersectionality can foster more aggressive action since (almost always) the ‘cleaner’ option has significant co-benefits that should be of value to a government investment.