LEED Certified buildings a leading indicator for SHARC
LEED Certified buildings a leading indicator for SHARC
SHARC International Systems (SHRC:CSE)
Are you new to the SHARC story? Read our introductory post here
SHARC International Systems Inc (SHRC:CSE)
There is a social push for greener buildings, both commercial and residential, which is unsurprising when considering that buildings generate nearly 30% of all greenhouse gases and 35% of landfill waste, while consuming up to 70% of municipal water.
However; it is hard to quantify the impact of this social sentiment. A delve into recent government policies reveals that most employ either a carrot or stick approach to improving the carbon footprint of buildings as well as the adoption rate of green building certifications such as LEED.
LEED, which stands for Leadership in Energy and Environmental Design, has emerged as one of the most recognizable green building certification systems worldwide. Developed by the U.S. Green Building Council (USGBC), LEED provides a framework for constructing efficient and sustainable buildings. One of its primary objectives is to promote the incorporation of energy-saving technologies in new building construction.
Government Policy
Governments around the world are recognizing the significance of sustainable construction and are actively supporting LEED projects in various ways. Many governmental bodies offer financial incentives such as tax breaks, grants, or reduced fees to developers and property owners who achieve LEED certification. In addition to financial incentives, some governments have incorporated LEED standards into their building codes and regulations, making certain levels of sustainability mandatory for new constructions or major renovations. Moreover, public projects, such as governmental office buildings or public schools, are increasingly being mandated to meet LEED standards, setting a benchmark for the private sector. SHARC is poised to benefit from a number of policies aimed at improving building efficiency, some of which are highlighted below.
National Resources Canada – Max funding $10 million
Under the Industrial Facility track, eligible projects include those that support the implementation of energy efficiency and energy management solutions. These activities are intended for industrial facilities that are engaged in energy consuming processes that involve the physical or chemical transformation of materials or substances into new products.
US Inflation Reduction Act
The inflation reduction act covers a lot of ground and is the largest federal investment to fight climate change with $370 billion in new programs as well as new and expanded tax incentives.
Below are some of the incentives that should push the adoption of green technologies aimed at reducing commercial building footprints.
Section 179D
Increasing deduction from $1.80/sq ft to $2.50-5.00/sq ft for buildings that reduce their carbon footprint >50%
Section 48 Investment Tax Credit (ITC)
The ITC can be used to offset taxable income, and eligible investments include such things as solar installations and geothermal heat pumps.
Climate Leadership and Community Protection Act (CLCPA)
The New York’s Climate Leadership and Community Protection Act (CLCPA) is one of the most ambitious climate laws in the U.S., aiming to make New York a leader in addressing climate change.
CLCPA Key Goals:
Emissions Reduction: Reduce greenhouse gas (GHG) emissions to 85% below 1990 levels by 2050.
Renewable Energy: Obtain 70% of New York's electricity from renewable sources by 2030 and transition to 100% carbon-free electricity by 2040.
Energy Efficiency: Increase energy efficiency efforts to reduce energy consumption in New York.
Impact on Commercial and Large Residential Buildings:
Building Emissions: Large buildings are responsible for a significant proportion of New York's GHG emissions. The CLCPA will require these buildings to drastically reduce their emissions. This may include retrofitting older buildings to improve insulation, replacing old heating systems, and more.
Energy Efficiency Standards: The act will push for stringent energy efficiency standards for new constructions and major renovations. This means that commercial and large residential buildings will need to incorporate state-of-the-art energy efficiency measures.
Renewable Energy Integration: The buildings will be encouraged or mandated to incorporate renewable energy sources, such as solar panels, where feasible.
Financial Incentives and Penalties: New York State may provide incentives for building owners to retrofit and make their buildings more energy efficient. Conversely, penalties might be imposed for non-compliance or if the buildings do not meet the established energy benchmarks.
The CLCPA sets a visionary path for New York to tackle climate change, and commercial and large residential buildings are at the forefront of this transition. These buildings will face stringent requirements to become more energy-efficient, reduce emissions, and possibly integrate renewable energy sources. Through this act, New York aims not only to mitigate climate change but also to ensure the move to a green economy is just and equitable.
LEED
So what is a LEED certification? LEED (Leadership in Energy and Environmental Design) is a globally recognized green building certification system developed by the U.S. Green Building Council (USGBC). It provides third-party verification that a building or community was designed and built using strategies aimed at improving environmental performance. It is the most widely used green building rating system, achieving the milestone of 100K certified buildings back in 2019
To achieve LEED certification, a project earns points by adhering to prerequisites and credits that address carbon, energy, water, waste, transportation, materials, health and indoor environmental quality. Projects go through a verification and review process by GBCI and are awarded points that correspond to a level of LEED certification.
There are a total of 110 points available for buildings broken down into 9 different categories as you can see below. When you look at the two categories where SHARC operates (Water Efficiency & Energy) you can see that there are 42 potential points, enough to get you a base level LEED certification.
Between January 2017 and December 2021, over 36,835 projects earned LEED certification while the average growth rate of LEED registrations has been 20% over the past 5 years with the majority of the registrants being in North America.
What is also encouraging for SHARC is that Canada, SHARC’s initial market, is 3rd in the world for certified LEED projects based on gross square meters and 2nd for the number of certified projects. With the number of new registrations being heavily weighted to North America we anticipate this trend to continue.
THE PUSH TOWARDS GREEN BUILDINGS SHOULD PROVE FAVORABLE FOR SHARC
All of these government programs provide a solid backdrop for the adoption of technologies that lower the carbon footprint of buildings, which is exactly what SHARC does. As demonstrated by the Lelam Village installation, as well as the Lake Louise Inn and False Creek, SHARC has proven on both small and large scale products that it can material impact the use of traditional heating and cooling systems, lowering building energy needs and in turn the carbon footprint.
One of SHARC’s key deliverables to shareholders is to execute on its growth plans, showing the capability to execute on a macro environment that is supportive of the company’s technology for implementation globally.
This is illustrated by the recent announcement from SHARC that its system is being included in a $1.2B redevelopment project in Brooklyn (Link HERE)
We think the recent addition of Michael Albertson to spearhead growth coupled with the growing demand for green housing could result in a perfect storm for SHARC adoption both domestically and south of the border.