Pros and Cons of Investing in Energy-Efficient Buildings

What are the pros and cons of investing in energy-efficient buildings? With the popularity of going green,  green investing is a serious option. Both residential- and commercial-building investors seek out energy-efficient properties to save money and reduce their carbon footprint. Many people think of cars when they think about global warming because of the carbon dioxide emissions, but the U.S. Energy Information Administration estimates that 40% of total U.S. energy consumption is swallowed up by residential and commercial properties. 

Is It Worthwhile Investing in Energy-Efficient Buildings?

Whether your interest in green investing is moral, financial or, quite likely, both, the question from an investing perspective is whether following your environmental principles will hurt or help you financially. Let’s take a look at the pros and cons. (For more, see Building Green for Your House and Wallet.)

Costs

  • Pro: Green buildings in the right locations can realize zero utility bills as long as the sun and rain cooperate. You can even get significant tax credits of 30% on solar energy systems through Dec. 31, 2019. (This credit begins to decrease in 2020 and expires on Dec. 31, 2021.) A green building may have a higher appraised value, making resale easier. 
  • Con: Green home building is usually costlier upfront, though you may be able to get much of that back through tax credits, energy savings and reduced repair costs.You need to do the math and balance the increased construction costs with the potential long-term savings.

Living or Working in a Green Building

  • Pro: Green buildings are healthier for you, your family and your employees because they are built with natural products that have fewer dangerous chemicals. This can decrease allergies, asthma and other respiratory problems and save on health expenses. In addition, the higher-quality building materials used are more durable and should require fewer repairs. 
  • Con: Cooling components use natural resources that don’t give the homeowners full control over temperatures. It is also important to position the building for optimum use of these resources, which could mean that shades or blinds would have to be installed, and you might have to position the building on the lot in a way you would not prefer. 

Using Natural Resources

  • Pro: Green buildings depend on the sun, the wind and geothermal energy so there is reduced dependence on conventional sources of energy. This reduces the carbon footprint.
  • Con: You must build in a location that allows you to take advantage of these natural resources. For example, your preferred lot may not be a good choice, because nearby trees or buildings could excessively block the sun. (This also makes you vulnerable to changes in neighboring structures that produce unwanted shade.)  Also, your architectural design may not be conducive to solar panels. Buildings that intend to use wind or geothermal energy sources have other location and positioning limits. 

Return on Investment

  • Pro: Green buildings, because of the materials used, have an increased life span, providing a better return on investment. 
  • Con: The price tag for building can be quite expensive, requiring accurate figures on construction and long-term-usage costs. 

Materials

  • Pro: Green buildings use more efficient and renewable materials for construction, such as straw, recycled metal, concrete, sheep’s wool, compressed earth blocks, lumber and bamboo. All these are recyclable, reusable and nontoxic. This means that green construction produces 50% to 90% less waste than standard construction. 
  • Con: Building materials can be more expensive.

The Bottom Line

If you decide to construct a green building, it will cost you more initially. However, you could benefit from higher appraisal value, easier resale and savings in running costs for the life of the building, as well as helping to reduce global warming. (For more, see Should You Invest in a Green Home?)