Arlene On Energy

I am a student of the game “telephone.” I try to understand how information travels from person to person, trying to gauge what people merely find interesting versus what they ultimately act upon. Recently I received an informational posting from a bank president in my area with the subject “Federal Trade Commission.” This was guaranteed to get my attention since I’ve been a student of this too for a couple years now. When I read the information, I was appalled.

The email took me to a link to a green marketer, with thanks from the sender to the blogger for providing some valuable insight.

The key word here is SOME because very simply, the blogger is wrong on the most important point to be made. She says “Known as the ‘Green Guides,’ these rules are strictly voluntary and are not enforceable by law. (Yet.).” She goes on to say “I’d encourage anyone making claims of sustainability or eco-friendliness in their advertising to familiarize themselves with the Green Guides. But there’s no need to sweat.”

Oh. My. God. There are going to be people out there reading this. And they’re going to believe it. Simply because she’s a self proclaimed “green marketer” with a blog.

I know it made me think twice. Did I have it wrong? Was I guilty of preaching gloom and doom and the sky is falling, when I really didn’t know what I was talking about? I know half my audiences usually think that tell them about Section 5.

So I fired off an email to the FTC contacts for the Green Guides. I was done playing “telephone;” I headed back to the original source. Here’s what I found out.

Are the Green Guides legal language? No.

Has the FTC used non-compliance with the Green Guides as evidence in action to enforce Section 5? Yes.

The reporter’s notes are pretty clear about it too: “The Commission has brought law enforcement actions targeting allegedly false or unsubstantiated environmental claims. Because the Guides are administrative interpretations of the law, they do not have the force and effect of law and they are not independently enforceable. However, if a marketer makes claims that are inconsistent with the Guides, the FTC can take action under Section 5 of the FTC Act, which prohibits unfair or deceptive practices.”

In my mind, “not independently enforceable” is a long way from being “voluntary.” So I’d say that while the Green Guides are not enforceable AS law, they are certainly enforceable BY law. And it’s not just that they “can’” take action. They have already done so on a number of occasions.

What I wonder is how many other people equate “guidance” with voluntary? How many didn’t think to find out for themselves what the real deal is? I think there are a lot and that’s a shame. I agree with the blogger that following the guides “just makes good sense.” There is enough liability in this world without courting more that is easy enough to avoid. The resources are out there and available.

Which is why I’m flying to Chicago next Tuesday to catch Steven Baker’s talk at Glass Expo Midwest. Because I don’t know it, I know I don’t know it and I’m a long way from even being close. I want to hear what Baker (who is from the FTC’s Chicago office) says about what the FTC is actually watching, so that I can get more accurate information for my clients.  So the sky isn’t falling quite so much. I’m actually quite jealous of everyone within driving distance of this event who can get to it easily.

The next question is, are your marketing people going to be there? Do they realize that they need to be? Or have they assumed they understand? Is that a chance worth taking?

RESNET^® rocked my world this week. I learned about a lot of things happening in the world of energy and buildings which will no doubt dominate my thoughts and actions in the next weeks and months, but there is one bit that just can’t wait.”

Do you remember in my very first blog where I talked about the ramifications of the building energy rating program that was announced as part of October 2009 DOE/EPA agreement?  I promised I would dig into this more – well, I hit a geyser at RESNET.

What is RESNET, you ask?  Short for Residential Energy Services Network, the 501(c)3 promulgates the standards for modeling, inspecting and testing houses along with certifying and credentialing all the pieces and people that go into that process. RESNET functions in much the same way that NFRC does:  It provides the yardstick for measuring [insert window or home] performance that EPA would use to identify and subsequently qualify ENERGY STAR [insert window or home].

Last week, the RESNET Board of Directors agreed to COMNET’s request to use their framework for developing and deploying a consensus standard, certification and credentialing program. According to their website, COMNET is “a new project intended to create a unified technical protocol for comparing the energy efficiency of, and calculating an energy rating for, commercial buildings.  COMNET seeks to fill an important void by creating clear, consistent, rigorous and easy-to use methods for demonstrating compliance with tax deduction provisions for energy-efficient commercial buildings and building systems, as created by the Energy Policy Act of 2005 and extended to December 31, 2013 … New Buildings Institute  is managing the project team with initial support from the Energy Foundation.”  The technical lead is Architectural Energy and the institutional lead is the Institute for Market Transformation.

I know a lot of the readers have either tuned out or are groaning because it’s yet another group thinking that residential is the same as commercial. I’m actually very hopeful about this one though. 

I had the opportunity to sit down on Tuesday night with the executive director of IMT, Cliff Majersik.  My intent was to get a few minutes so I could get a quote for the blog and go on my merry way.  Instead, the tables were turned. I spent two hours answering deep and probing questions about the windows industry, especially how commercial was different from residential.  I was really impressed.  If there is one thing I’ve heard over and over and over, it’s that the commercial industry is different than residential and NFRC has just ignored that.  While I don’t really want to debate whether that’s what NFRC actually did, what I can say here, at least on this first impression if Mr. Majersik is any indicator, COMNET knows it’s different. 

In the next few weeks, their first “standard” will be out.  They’re actually starting with computer standard for computer modeling programs that calculate whole buildings.  Wow, imagine that – a published set of assumptions and baselines that computer programs can meet so that the overall energy usage calculated would fall into an establish margin of error. 

Another really important and favorable indicator is that a lot of my rater follows feel this is an important step toward addressing the wide difference between modeled energy performance and actual energy performance, citing Henry Gifford’s analysis of the NBI study.  Wait a minute?? NBI?  Aren’t they the project manager?  Could it be that rather than running away from criticisms, NBI has heard the concerns and is participating in the solution?  Nah, that couldn’t be?

Lastly, the real big shocker was when Mr. Majersik told me about the recent SEC ruling that all investor own companies had to disclose their energy and carbon liabilities.   According the New York Times coverage of the announcement, “The guidance doesn’t carry the same force of law as a formal regulation, but public companies consider it binding.”

Why is this such a big deal anyway?  Because when it gets cold, the utility bills goes up and your profits go down.  Which brings me back to my very first blog. Except now, we’re not just talking about being able to sell a building that is an energy dog.  We’re talking about even questioning being able to RENT space in an energy-efficient building, because investors will be looking to see what the possibilities are that their profits are going to fluctuate with the weather – versus a new or improved building that doesn’t fluctuate anywhere are much.

Remember, buildings are the United State’s biggest polluter and windows drive the heating and cooling load. Will you see this as another attack on your business or as a driver of your biggest opportunity for value added products in years?

Want to know more?  Check out the IMT website.  They have a lot of information. I think it’s really clear and very pertinent.

During the International Builders Show, new marketing materials ricocheted around the Internet, bringing product news to you whether or not you were at the show. What followed, for me, was a flurry of questions and exclamations: Did you see that? Can they do that? How can that be green? How do I get my product certified? What certification should that be? How do I get points? 

My answers tended to add to the frustration in many cases because green is an emerging sector that has had such exponential growth that rules simply aren’t as far along as we expect or want them to be. So I thought I’d offer some basic facts, and myths, about the program with the most air time: LEED.

Myth 1:  My company offers product X that is LEED-certified.

This is probably the most common offense out there. “USGBC certifies buildings, not materials, products or services,” says Ashley Katz, communications manager for the U.S. Green Building Council (which offers the LEED certification). “People are accredited.”

Myth 2:  Product X gets these LEED points.

The second biggest offense, in my opinion, is the way companies will replicate the LEED checklist criteria, indicating that their product MAY contribute to a point. In general, single products cannot obtain a LEED point. The system is designed to reward designers for integrating good design with appropriate materials. Therefore, unless there is an overwhelming amount of material in a building, it’s just about impossible to so. “When you look through the rating system you’ll notice that credits aren’t achieved by just using one type of product within the building,” Katz says. 

Myth 3:  My product has the X seal/certification/report, so it’ll contribute to a point.

Entirely possible. The certified wood credit and some of the indoor environmental quality credits do require or encourage third-party certification. But it’s also entirely possible that your cut sheet will do the same thing with a lot less cost and maybe less liability. “In the recycled content and rapidly renewable materials credits in latest (LEED 2009) system, you have to upload documentation to verify 20% of the materials that you’re using to claim a credit,” says Nadav Malin, founding chair of the Materials & Resources Technical Advisory Group for LEED and president of BuildingGreen LLC. “That documentation can just be a cut-sheet—doesn’t even have to be an affidavit. And for the remaining 80%, there is no verification required—though, in theory, suspicious claims can be questioned and documentation would help in responding to those questions. Verification of these claims through a third-party program does not currently make a difference, [though] it has been discussed extensively in committees…”

Myth 4:  Our product is X% recycled:  5% post consumer and X-5% from our production process.

This is a big no no, and not just from the US Green Building Council. “Float glass manufacturers, for example, have always recycled off-spec glass back into their product, and it’s recycled right back into the same production line,” said Malin from his blog at buildinggreen.com back in 2008. “Those conditions clearly violate LEED’s definitions of what constitute recycled content, even under the older guidelines which were based on Federal Trade Commission rules. LEED for New Construction has updated its citation to reference ISO 14021, which is clearer on these matters—but nothing is clear enough, apparently, to survive wishful reinterpretations.” So while it’s good to tell your customers that your company has responsible production practices, make sure it’s a separate statistic. 

Myth 5:  My product X qualifies for the locally manufactured credit.

It might have once, but chances are that unless it’s a replacement window in a commercial interiors project, it won’t qualify. Originally, the credit read that products that were manufactured within 500 miles of the building site qualified toward points. The 500 mile rule was adapted in later versions of LEED to include extraction and processing. So, for example, glass probably would not make this credit because the sand has to come from somewhere, plus there are a limited number of float plants that do glass that are then shipped to the fabrication location.  Even if the fabrication location was within 500 miles, in many cases the glass today is processed for coatings or tempering outside of that 500 mile area and then shipped back within that radius for fabrication. “The manufacturer would be expected to disclose if any stage in the extraction/manufacturing process happened out of the 500 mile radius,” says Malin. “Local materials content can be prorated (by mass fraction of the product), just like recycled materials content. A letter from the manufacturer documenting the calculations should suffice.”

Being the new year and all, there is a preponderance of top 10 lists.  I thought I’d go along with my green top 10 from 2009, listed in chronological order.

1. ASHRAE 189 reorganizes: Long hailed as the first green code, this standard had been stymied by 900 comments on its first drafts.  ASHRAE halted the development, assigned a new chair and responded to industry criticisms of unfair representation.  Slated to be published in 2010, this standard is ideally positioned for adoption, given that the U.S. Department of Energy determined that ASHRAE 90.1 is the energy code designated for commercial compliance according to various acts of legislation.

2. High-Performance Commercial Green Building Partnership (HPCGBP) is formed:  Eleven industry organizations jumped right in organize this group to meet the requirements of Section 421 of the Energy Independence and Security Act of 2007. Hoping to be funded by DOE Funding Opportunity “Net-Zero Energy Commercial Building Initiative Supporting Consortium”, more than 150 companies and associations are listed as either members or resource companies, likely in support of the grant.  Once again, not only has the fenestration industry been scooped again by the air conditioning industry, but it appears they have been left blowing in the wind:  No fenestration trade associations are listed. 

3. 30/30: An 11^th hour insertion by staffers and politicians sent the fenestration manufacturers into the first tailspin of the year.  Bypassing ENERGY STAR requirements, the tax credit thresholds left the industry scratching their heads for weeks.  Phones started ringing off the hook as fabricators bombarded suppliers to find out how they could possibly produce such products – yesterday.  While things have calmed somewhat, the criteria brought tomorrow to today a lot sooner than anyone expected.

4. ARRA focus on Recovery through Retrofit: Okay, I’m taking some literary license here since actual program “Recovery through Retrofit” wasn’t officially announced until October.  BUT, all over the recovery act, it was apparent that improvements to existing buildings would play a major role.  Where the Tennessee Valley Authority and the projects to the national parks helped get people back to work during the Green Depression, making the existing building stock more efficient is just as large a project, albeit far more diffuse.  Consequently, the work is diffuse too with state and city grants both addressing it in different ways on a regional basis.  Now, if they would only release the money…

5. Lloyds of London offers LEED insurance: Argo Insurance went to Lloyds of London to back its “exclusive” Green Architects & Engineer’s Professional Liability insurance program.  Intended to fill the gap in traditional E&O insurance, the fact that Argo had to go to Lloyds is telling.  There is a need, yet that need is an unknown and very risky – the very type of risk that is Lloyds’ niche.  Further, that architects and engineers need this insurance indicates just how far into the green paradigm shift we are – green is no longer the option it once was.

6. USGBC introduces the Green Associate designation: Getting your LEED AP was the credential of choice.  Every project seemed to need one.  Nevermind that the professional in question wasn’t actually functioning in a certification capacity (which is what the accreditation tests you on).  Nevermind that all these professionals walked out of the test wondering what they really gained other than a bunch of letters.  Nevermind that 75% (my statistic, no one else’s) of LEED APs never actually processed a LEED-certified building.  The Green Associate serves the purpose that the LEED AP came to mean – a basic understanding (and, hopefully, competency) of green principles.  Hopefully, this designation will be recognized as the meaningful – and more appropriate – credential that it is. 

7. ICC-AIA-ASTM develop green construction code: ASHRAE 189 has a competitor!  Just like in the energy code, ICC has opted to compete with ASHRAE  – after all, isn’t it the CODE COUNCIL’s responsibility to develop mandatory building provisions, not some air conditioning and refrigeration group?  Interestingly, the code is indeed commercial in nature – and has been fast-tracked to have a public draft out in Spring 2010.  Coincidence?  Maybe not.  But, more importantly, with choice comes a greater likelihood that something mandatory for everyone (and not just government buildings) will be here in 2011.

8. Forest Ethics and Sustainable Forestry Initiative call for Federal Trade Commission action: A revision of the FTC Green Guides began strong in Spring and Summer 2008, only to fizzle to apparent nothingness in 2009.  Forest Ethics forced the issue by filing a complaint, which SFI exacerbated by filing a counter-complaint.  However, it’s the counter-complaint that has larger ramifications because it questions the trade practices of the U.S. Green Building Council. This little sleeper throw-in has the potential to rock the commercial world, where LEED is the only game in town. What happens if FTC is forced to rule that LEED is a monopoly? This has the potential to be a huge headache for manufacturers and fabricators who will find themselves wondering which program needs what performance – just like the residential guys who have 70-odd green programs to track. 

9. EPA assumes ENERGY STAR products administration: For the second time in 2009, the window industry got turned on its ear.  Gone were those carefully crafted relationships and the closely guarded cell phone numbers of the key ENERGY STAR people at DOE.  Who is the new contact?  What’s going on?  Has all the stakeholder feedback so carefully written and submitted gone into the circular file?  EPA held a conference call in December to calm the participants but so much is still unknown that it’s got to be uncomfortable, especially since EPA is thought to more unyielding than DOE.

10. Vinyl recycling machinery offered at Glass Build: The vinyl industry’s response to the green community’s seeming hatred of the material has been a classic case of what to do right.  From arranging meetings, to having knowledgeable reps answer naysayer questions eye-to-eye, to doing and providing the research to the contrary, to reformulating and improving their content, every step takes them closer to acceptance, especially among the moderates.  One lingering criticism has been that while vinyl says that it can be recycled, it really isn’t because there is no vinyl recycling infrastructure.  Well, this little booth at Glass Build was just another way that the landscape is changing. Watch out commercial world, vinyl is on its way.

I’ll admit it – I’m an armchair attorney. Like the guys who yell at the NFL quarterback on TV because they played in high school, I’ve never completely gotten past that political science degree with the legal studies minor.  I’ve been snooping around law websites and discussion groups and LinkedIn pages for going on four years now, just waiting for the fair trade game to get started when it comes to this new, ubiquitous world of green we now live in.  I find it fascinating to see how the tenets of codes and standards have their roots in Section 5 of the Federal Trade Commission Act (FTC).  Whether it’s deliberate or coincidental doesn’t really matter, what does matter is realizing how far we have to go in creating, culling and recognizing acceptable industry standards of practice as they apply to sustainability and ‘green.’ No news here that everyone and their grandmother has an opinion as to what those practices should be. The more sure any particular entity is about that opinion, the more they portray said opinion as FACT.  Interestingly, the entity that has the authority to define how to develop said fact, the FTC, has been curiously silent and badly behind in the process of updating its criteria for environmental claims.  It’s been over a year since the last hearing on the topic and I admit I’m tired of waiting.

Apparently so was Forest Ethics, which forced the issue in September by filing a complaint with the FTC against the Sustainable Forestry Initiative.  Unsurprisingly, supporters of SFI called the challenge (if you’ll allow me to switch from football to poker metaphors) in October, seeing them a rebuttal to the original complaint coupled with a counter complaint against Forest Stewardship Council.  They raised the ante and brought the fight to the building industry by including a user of the certification program in the complaint – the US Green Building Council. Not to be outdone, Forest Ethics pulled SFI users Andersen, Jeld-Wen and Kolbe and Kolbe into the fray with an ad in USA Today concurrent with a banner at GreenBuild in November.

If Forest Ethics wanted to get the ball rolling, it certainly did – but this ball could turn into a boulder really fast and has the potential bowl Forest Ethics right over.

I think Forest Ethics went too far by taking their case to the court of public opinion in front of both professional audiences (the banner at Green Build) and consumers (the USA Today advertisement).  From my cheap seats in the peanut gallery, this seemed to be a classic example of stepping past the 1^st Amendment Right of Free Speech, right into libelous action.

The usual defense against the charge of libel is simply the Truth.  Here we come full circle back to the difference between fact and opinion.  Forest Ethics appears to have the utmost confidence that their assessment of logging practices approved by SFI, used by Sierra Pacific Industries to produce product for Andersen, Jeld-Wen and Kolbe and Kolbe are not green.  This is their truth.  Sierra Pacific Industries and SFI have a different truth – that their practices are grounded in science and are indeed environmental friendly. 

Who’s right?  And who wins?  One would think that the answer would be the same, but not necessarily.  I would say that today, Sierra Pacific and SFI are right, if for no other reason than Sierra Pacific is in compliance with all California regulations on logging and has successfully defended nine lawsuits brought by various environmental groups. The legal ‘truth’ is that until the rules change, they can make a green claim.  It’s documented and it’s been held up in court. The Forest Ethics ad is even more damaging because nowhere in the ad do they call out SFI, so they can’t even hide behind the premise that a federal complaint has been filed. 

Who wins? Right now, Forest Ethics because these four companies have received a public ‘hit.’ How much damage has been done? How many competitors who don’t use certified wood, are going to haul out a copy of this ad and shove it under the nose of prospective clients? The impression has been made and the public charge will stick around because nothing ever complete disappears on the internet. 

I think this is a travesty. It gives every green advocate a bad name and makes every company question why they should even consider green certification. Why spend the time and effort when all it does is makes you a target for some environmental wacko who is convinced that his opinion is fact? Are there really enough consumers out there who will buy your product for its merits before you’re maligned because you didn’t do it the way the self-proclaimed expect thought you should?

I really hope one of the companies files a libel suit. I hope that consumer protection regulators are looking at reigning in these types of ‘false claims’ which are just as or more damaging as the claims they are purported to expose. And I hope that FTC gets its green guides out soon before any more companies get taken out back to the woodshed for doing their best to do the right thing.

My first blog – what an intimidating endeavor! However, recent events have given me a lot to write about.

October was an exciting month for anyone in the construction field. The month actually started out on September 30th when the U.S. Environmental Protection Agency announced new proposed thresholds for greenhouse gas emissions (GHG) to comply with the Supreme Court decision in Massachusetts v. EPA.  Near 70 percent of the nation’s largest stationary source GHG emitters-including power plants, refineries, and cement production facilities – would be affected.  The new EPA-DOE agreement transferring administration of the ENERGY STAR products program followed quickly the next day.  Later in the month, the White House released Recovery thru Retrofit. Last week was dominated by the International Codes Council hearings, specifically new proposed energy code provisions for the 2012 code. And the month ended with the fourth public comment period for ASHRAE 189.1, (Design of High-Performance Green Buildings Except Low-Rise Residential Buildings), due November 2.

There is a lot of really dense material here. I have skimmed most of it and I confess it’s going to take me a lot more time to really understand potential ramifications and how they will cascade into the marketplace.

That said, did you catch the references to the Building Energy Rating program and labeling?  I think it could be the most important tidbits I picked out of the din. I found references in three different documents authored by three different entities.

So, labels for buildings, huh?  Love ‘em or hate ‘em, everyone’s got an opinion. An unnecessary expensive or a critical piece of the market transformation puzzle? I can just see National Association of REALTORS and Building Owners and Managers Association gearing up to fight this one.  It’s going to put the controversy over NFRC CMA to shame.

Why?  A mandatory labeling scheme could make it really hard to unload a lot of the inefficient existing commercial real estate that is out there.  I’m told that real estate investors only look at a seven year period – anything that can’t be recouped in that time period doesn’t get done.  But what happens when you have up front data that not only shows what the operating costs will be on your proposed investment, but what the carbon liability is likely to be?  Remember, EPA is targeting power plants – and buildings are on average at least 50% of that load – and commercial business does not generally enjoy semi-regulated energy protection from costs that home-owners do.  I’m speculating that the extra permitting fees that utility will have to handle from the carbon emissions will get passed on to the commercial business sector.

It won’t be so bad for the first transaction.  Chances are there are a lot of easy improvements that can be done the first time a commodity building is sold. The second transaction is where it’s going to hurt.  Because the rating and labeling infrastructure will most likely be more mature – and the ‘easy’ improvements will be done.  No doubt, in order to be competitive against newer buildings, the owner will have to ‘future proof’, making the more difficult (and therefore more expensive) thermal envelope upgrades..

However, I think there is the potential that a lot of very influential entities will want labels very badly.  Just like labeling on food products, some people aren’t going to care.  They’re going to buy what they like no matter what the ingredients are.  Others will pour over the label, comparison shop until they get the best deal for the best price.  And if their investment doesn’t perform they way it should?  Well, I suppose that’s why Lloyd’s of London is now offering architects and engineering insurance against “LEED-agation.”

I’m very curious to see where this goes.  I think I’m one of the few raters that has a state certification to do commercial energy ratings.  I really want to know how this expanded building energy rating program will look, how it will interface with BIM and if anyone has thought about what it means for CMA.  Wish me luck as I dig through this!