By 2020 we will be on our way to reducing greenhouse gas (GHG) emissions by up to 80% by addressing the demand side of energy use. As many markets are already proving, we will place a premium on housing located within transit-oriented, walkable urban communities and shift away from developing drivable, suburban, low-density communities that rely on car trips for work and almost every other activity.
In the 1984 classic movie “The Karate Kid,” Daniel-san asked his karate mentor, Mr. Miyagi, how he could stop the school toughs from beating him up. Mr. Miyagi’s response was “best defense, no be there.”
In the same manner, the best way to minimize the GHG emissions that cause climate change is to live a lifestyle that by its very nature reduces energy usage and GHG emissions. And it just so happens, that lifestyle is what the market wants even though the market generally could care less about environmental issues. The challenge is to encourage the real estate industry and public policy to produce what the market is demanding.
The climate change debate has two sides. The first is supply efficiency: how to increase the energy efficiency of our cars, houses, and office buildings while increasing the use of renewable energy sources. This is a technology-based approach. Environmentalists are hoping that science and technology will save the day—literally.
And there is much that can, is, and will be done through supply efficiency to lower energy usage and reduce GHG emissions through technology— though there is the issue of “Jevons’ paradox,” or rebound effects. This is the theory, proposed by a 19th-century British economist, that as the efficiency of energy production is improved, it leads to the increase in the use of energy, not a decrease. As electricity efficiency increases, the price drops and we buy a second refrigerator to store our burgeoning Costco purchases. An energy tax would possibly preclude the Jevons’ paradox from occurring, but few politicians are standing in line to propose this in Congress.
As David Owen, author of The Conundrum, says, “Beginning in 2008, the world’s energy and carbon footprints shrank, and by significant amounts.” Why? The Great Recession. Reduced wealth leads to reduced consumption. Increased wealth, partially resulting from increased energy efficiency such as the recent collapse in natural gas prices as a result of fracking technology, has always led to increased GHG emissions. Cheap natural gas replaces coal to generate electricity, which is a positive result of supply efficiency. As a result, the price of electricity falls and we can afford, for example, more energy-consumptive electronics and the server farms needed to run the Web. We end up using more electricity than before. Obviously the ideal answer to climate change is not a permanent reduction in economic well-being—though that might happen if mankind does not address the climate challenge soon. The necessary complementary solution to supply efficiency technology is demand mitigation. The best defense—“no be there.”
TOWARD 2020: DEMAND MITIGATION
Recent research by the Center for Clean Air Policy, the Center for Neighborhood Technology, and Peter Calthorpe’s most recent book, Urbanism in the Age of Climate Change, point out the benefits of the demand mitigation approach. The built environment (real estate and infrastructure) and the transportation systems we use to get between our buildings consume about two-thirds of all energy in the United States and produce about the same percentage of GHG emissions. Mathematically, the built environment is the largest U.S. source of GHG emissions.
Households living a conventional low-density, drivable, suburban lifestyle have large houses fully exposed to weather and drive for nearly all household trips. In contrast, a walkable urban lifestyle generally includes a smaller house or attached unit, shared common walls, and walking, biking, and transit for most trips. The difference in energy consumption and GHG emissions is significant. A household moving from a drivable suburban house to a walkable urban place can drop its energy usage and GHG emissions by between 50% and 80%.
Achieving this reduction from the largest category of GHG emissions makes the demand mitigation approach the most effective solution for climate change.
Fortunately, there is a structural shift under way in real estate. For the first time in three generations, consumers are demanding walkable urban lifestyles, and businesses are beginning to locate in walkable urban places, known as WalkUPs.
In my recent report, “DC: The WalkUP Wake Up Call” (http://business.gwu.edu/WalkUPWakeUpCall.pdf), I examined how development has shifted in the Washington, D.C., metro area over the past three real estate cycles dating back to 1992. I looked at how much of the new real estate development was occurring in an increasing number of WalkUPs, located in suburbs and within the city, rather than in more sprawling areas of the region. From 1992 to 2000, only 24% of income property (offices, retail, hotel, and rental apartments) was developed in WalkUPs. By the next real estate cycle (2001-2008), WalkUPs were capturing 34% of new development. During the current cycle (2009-present), 48% of new income real estate development is occurring in WalkUPs. Occupying less than 1% of the land area of the region, nearly half of new development is occurring in WalkUPs. And this ignores the WalkUPs that are bedroom communities where most people live. It is possible when local-serving WalkUPs are included, the new walkable urban development since 2009 would be 60% to 70% of all new development in the metro area. What was a niche market 20 years ago is now the market.