You've read it many times before in these pages...

Despite the environmental benefits of green building, it is primarily the proven economic benefits that are moving the industry from niche to mainstream.

Here's a perfect example of what I'm talking about:

The California EPA Headquarters Building in Sacramento—with systems calibration, monitoring, and maintenance for energy performance—delivers annual savings of nearly $200,000. And after-hours heating and lighting controls as well as the building's exterior lighting systems add another $110,000 of yearly savings.

Just these few efficiency and conservation upgrades have resulted in a savings of more than a quarter of a million dollars per year for that one building!

And those don't even include the annual savings from:

• Grounds management
• Water-efficient landscaping
• Elimination of garbage can liners
• Collection of recyclables
• Occupant recycling

Overall, $500,000 was invested in efficiency upgrades, operations, and employee practices.  A total of $610,000 is now generated in annual savings. 

The initial investment was recovered in less than one year!

Granted, this is just one example.  But no matter how you slice it, whether it's $610,000 in annual savings or $6,100 in annual savings, investing in green building pays off.

In fact, just in energy costs alone, green buildings average a 33 percent energy savings compared to conventional buildings.

So while our bloated bureaucrats in Washington argue over how to deal with high energy prices (while trying to preserve their jobs and those huge campaign contributions), we're focusing much of our attention these days on one of the most obvious solutions — green building.

Green Gets Aggressive

Commercial and residential buildings in the United States used 40 quadrillion Btus (quads) of energy in 2005, at a cost of $300 billion.  That number is now expected to increase to 50 quads at a cost of $430 billion by 2025.

So it's no surprise that California—a state with a desperate need to beef up its energy infrastructure without crippling its economy—is once again taking the appropriate steps to ensure the state's energy security.

To date, California has adopted the most aggressive energy conservation and efficiency policies in the U.S.  Combined with robust investment, the Golden state now saves enough electricity every year to avoid building 24 large power plants (i.e. - 500 MW or more). 

In fact, according to a report issued by the California Public Utilities Commission, the average cost of energy efficiency programs is roughly half the cost of baseload power generation.

Back in 2004, California also instituted Governor Arnold Schwarzenegger's Green Building Initiative, which mandates a 20 percent reduction in electricity consumption in state buildings by 2015.

And now, California's at it again.

A few weeks ago, the California Building Standards Commission adopted a green building standards code for all new construction statewide. 

The new code takes effect in 180 days.  It will be voluntary until 2010, when the code is expected to become mandatory.   Essentially they allowed the voluntary period so builders and local governments have time to adapt to the new rules.

The new standards code covers residential and commercial construction.  It also includes schools, hospitals and other public institutions. 

Some of the code's targets include:

·        Energy efficiency

·        Water consumption

·        Dual plumbing systems for potable and recyclable water

·        Diversion of construction waste from landfills

·        Use of environmentally sensitive materials, including eco-friendly flooring, paint, and insulation.

Three Green Building Stocks to Watch

Certainly consumers benefit from the implementation of aggressive green building standards because they eventually help stabilize energy costs.

But investors can also benefit, as these standards will provide a flood of contracts for those publicly-traded companies operating in the green building sector.

Just a few include:

·        Interface, Inc. (NASDAQ:IFSIA) - Green carpet products for both residential and commercial markets.

·        Energy Focus Inc. (NASDAQ:EFOI) - Ultra-efficient fiber optic lighting systems that reduce energy consumption

·        Comverge, Inc. (NASDAQ:COMV) - Smart Thermostats that cut heating and cooling bills by 15%

There are also solar installation companies that are going to benefit from all of this. 

After all, solar will play a major role in power generation for many of these new buildings.  And somebody has to install these systems.

All in all, California continues to set the standard for the nation when it comes to transitioning our energy economy.  But will the rest of the country catch on? 

Absolutely!

The economic benefits of green building are too appealing to ignore.  And the next President, regardless of who takes the election, is likely going to institute some kind of federal incentive program that will almost certainly give the green building industry a serious shot of steroids.

It's never been a better time to be a renewable energy investor!

To a new way of life, and a new generation of wealth...

Jeff