05/23/2012 05:33 pm ET | Updated Jul 23, 2012

Energy Transparency Key to Greening Buildings

Why isn't technology solving our energy problems? As venture capitalist Elton Sherwin discovered, you have to get people to buy the technology first.

Sherwin invested in energy efficiency devices that had huge potential, only to see them flounder in the market. That's why he got involved with Washington, DC-based Institute for Market Transformation (IMT), whose mission of "addressing market failures that inhibit investment in energy efficiency and sustainability in the building sector" is close to his heart.

One of IMT's efforts is to work with state and local agencies to introduce ordinances for building energy performance benchmarking and disclosure. This could mean installing energy control and measurement devices, which Sherwin invests in.

I head about IMT from Seattle building performance consultants Theresa Stroisch and Kevin Dingle of Sustaining Structures, which was recently featured in an IMT report on Energy Disclosure. Seattle is one of five urban centers that have established ordinances that require energy disclosure and reporting.

But which tool would be best for reporting and benchmarking? Turns out, it's an easy decision. Energy Star for Buildings is centralized, free and neutral. Better yet, it already has a blue-chip reputation. And Energy Star already has had accepted ratings for buildings in place since 1996. Lots of data. Lots of credibility.

And what about disclosure? Energy Star's labeling program for appliances was not successful until Energy Star began airing advertising to get the word out, then linking the brand to cost savings. (Full disclosure: I worked on Energy Star branding in the 1990s.) The environmentally friendly argument alone wasn't enough for consumers, and if consumers didn't care, why should manufacturers care? So Energy Star made consumers into activists by putting the energy savings on every appliance. In return, consumers rewarded Energy Star appliances by buying, often paying more for energy transparency.

What would it take for commercial building customers to do the same? This is what IMT has figured out. First, local building codes would have to include compliance with an Energy Star for Buildings minimum rating. Then these ratings would have to be made public. Three of IMTs trial cities -- New York, San Francisco and Washington, DC -- are doing just that, plus requiring that buildings publish their utility costs. Tenants and buyers are able to compare future utility expenses between buildings they are considering.

And just like with appliances, energy transparency makes all the difference. In New York, where the Energy Star for Buildings ratings are highly publicized, compliance is at 80 percent. In Seattle, where they're not, compliance is 30 percent.

The final argument for making buildings energy efficient is that it creates local jobs in construction, manufacturing and consulting. Dingle describes his experience this way:

Ordinances like the one in Seattle uncover opportunities for improving building performance. In turn jobs are created that have a focus on energy efficiency. I have worked with building owners who were initially reluctant to comply with the ordinance... ultimately earning an Energy Star Label for their building, leading to near 100 percent occupancy.

The appeal of renewable energy as an investment may dim with the decline of subsidies, as the New York Times and others predict. But Sherwin's existing and future investments in devices that measure and control energy are looking good. And once those devices are in commercial buildings, they might gain traction with consumers, also eager to reduce energy costs.

IMT and Energy Star are definitely on a roll, even if it feels like a rewind. Jimmy Carter tried to make conservation work in the 1970s through government regulation and guidelines. We lowered thermostats to 68 degrees and installed flow restrictors for showers. Not very appealing. IMT adds entrepreneurship and energy transparency to the mix. This time, it's working a lot better.