An incentive to build green

WHAT ARE these exotic animals we call "green buildings," and why should the state feed them with tax credits?

While environmental discussion often focuses on gas-guzzlers versus hybrids, it is the construction and operation of buildings that create s the single greatest environmental impact of any human activity. Buildings produce 48 percent of greenhouse gas emissions. Buildings consume one-third of all energy and two-thirds of all electricity used in the United States.

In addition, more than 25 percent of all material deposited in landfills comes from demolition and waste produced during the construction process. Twenty-five percent of potable water use is associated with building operations. If we really want to reduce pollution and promote energy conservation, we need to encourage the construction of better buildings.

At their core "green" or sustainably designed buildings out perform "conventional" buildings in their efficient use of resources such as energy, water, building materials, and land, addressing a host of environmental problems including ozone depletion, acid rain, toxins, and climate change. In addition, they provide environments that foster healthier living and higher productivity and learning through enhanced indoor air quality, day lighting, and connectedness to the world beyond.

So why don't we always design and build green? Conventional accounting practices tend to be narrow in focus, divorcing operating budgets, workforce productivity, and health benefits from the analysis of initial capital investment. We are trapped in a system that devalues natural capital while deferring payments on environmental cleanup and environmental catastrophes to the government and future generations.

Recognizing that the unaided market does not automatically support environmentally sensitive strategies, economic incentives offer an effective way to stimulate the development of green buildings. A bill in the Massachusetts Legislature would provide tax credits to building developers, owners, and tenants, who for commercial and multi-family residential buildings invest in measures to increase energy efficiency, improve indoor air quality, and reduce overall environmental impacts. The bill also identifies tax credits to help offset the initial cost premiums associated with the integration of photovoltaic and fuel cell technologies into these projects.

The proposed tax credits would begin in 2008 and apply to commercial construction larger than 20,000 square feet and residential projects of 12 units or more. The credits would be distributed over a five-year period once the project is underway. The green building tax credit subsidies would be capped at an annual cost to the state of $25 million with a per project maximum benefit of $2 million.

These building improvements would lead to increased employment, growth of emerging green industries, increased construction spending, and reduced health and environmental costs. All in all, this program is expected to generate a net public fiscal benefit. The credit would be available for only five years, after which it would have to be renewed by the Legislature if deemed still necessary.

The green building industry is currently in its infancy. It is essential to the economic strength and stability of this region that it develops at an accelerated pace. The Commonwealth is rich in intellectual capital. However, it has been slow to overcome an uneven playing field, characterized by traditional accounting practices that shortsightedly discount our natural capital.

Tax credit legislation such as this has been proven to provide the incentive to overcome real and perceived barriers to sustainable development. The bill being considered here in Massachusetts has the potential to achieve a great positive impact for a relatively modest upfront expenditure.

Other states have either approved or are pursuing similar environmentally progressive policies. A common factor has been the commitment of strong governmental support in creating public- private partnerships, focused on a common purpose to achieve a common good.

The question is often asked, what is the cost for developing sustainably? Estimates range from 2 percent to 10 percent on initial capital expenditures for building green. However, the real question is, what will it cost the state if we don't?

Kenneth I. Fisher is co-chairman of the environmental committee of the Boston Society of Architects.