The objective of this project was to demonstrate how to incorporate environmental costs and benefits into traditional life-cycle cost analyses (LCCAs) and total ownership cost (TOC) analyses for military construction projects using two key metrics: life-cycle greenhouse gas (GHG) emissions and the net present value (NPV) of life-cycle costs with monetized GHG emissions. The focus was buildings constructed before World War II (Pre-War Buildings).
As part of the specification of each project alternative, the team applied the following key design criteria:
The team used RSMeans CostWorks as the primary source for cost data but also reviewed project cost records for recently completed projects at each installation and interviewed local contractors that have had experience at the installation or surrounding market. Demolition and typical environmental remediation (lead paint and asbestos) costs were included in the cost estimates for the project alternatives.
The buildings selected for this demonstration have experienced modifications, damage, foundation movement, aging, and exposure to moisture. The team’s evaluation was based on an approach intended to consider the original structural design, the condition of materials, the effects of age and past usage, hurricane and other damage, and the requirements for continued service. The team made on-site observations to visually assess the condition of the structures, identify the structural system types, and obtain field measurements of primary structural elements.
Energy Consumption Estimates
After initial construction or modernization, GHG emissions are generated by energy consumed during ongoing building operations, including lighting, heating, and cooling. To estimate these emissions, the team’s mechanical engineering consultant determined the thermal insulation values (known as R- and U- values) of the door, window, roofing, sheathing, and exterior wall materials specified in each Project Alternative based on industry standards and professional judgment. These values were then input into Trane’s Trace 700 Building Energy and Economic Analysis Software Version 6.2 using the TETD-TA13 methodology for cooling load and the U-factor by area by temperature difference and instantaneous room load calculation method for heating load.
GHG Emissions and Calculation Tools
Scope 1 emissions refer to emissions generated by use of energy at the building or building site, such as natural gas for a boiler. Scope 2 emissions are for purchased energy not controlled at the site, such as electricity from a utility company. Scope 3 emissions are related to the production and transport of building materials as well as transportation of waste and demolition debris to an offsite disposal site. As of the date of this demonstration, there is not a single, widely accepted, publicly available GHG calculator that can provide estimates of Scope 1, 2, and 3 GHG emissions. To estimate GHG emissions, the team reviewed off-the-shelf calculation tools and ultimately utilized the following:
- Scope 1: World Resources Institute GHG Protocol, Emission Factors from Cross-Sector Tools, Version 1.3.
- Scope 2: EPA eGRID 2012, Version 1.0 Year 2009 GHG Annual Output Emission Rates.
- Scope 3: (1) Athena Institute EcoCalculator for Assemblies, Low Rise Structures; and (2) EIO-LCA: Economic Input-Output Life Cycle Assessment, US 2002 Purchaser Price Model, adjusted to 2012 dollars.
The team used the EPA analysis of the American Power Act as the source of per CO2e ton pricing data.
Life-Cycle Cost Analysis
To prepare the LCCA, the team adopted the standards set forth in the U.S. Army Corps of Engineers’ Manual for Preparation of Economic Analysis for Military Construction. Key assumptions included: (1) 30-year study period, excluding project lead time; (2) current dollar analysis, all in 2012 dollars (e.g., no CPI escalations); (3) Real 30-year discount rate from OMB Circular 94-A, Appendix C.
Based on the data from the LCCA analyses, overall findings included:
- Renovation of Pre-War Buildings can be cost effective compared to new construction on a life-cycle cost basis, both with and without factoring in the monetized value of GHG emissions.
- Leveraging existing building materials and original design intelligence, modernization of Pre-War Buildings can achieve comparable levels of energy consumption as new construction at a LEED Silver level.
- On a life-cycle cost basis, Pre-War Buildings generate less total GHG emissions compared to new construction. GHG savings from initial construction (Scope 3) is the driver of this result.
- While adding monetized GHG emissions to the project cost reflects the true economic cost, it does not have a significant impact on LLCA project NPV results. The absolute dollar values of GHG emission differences among Project Alternatives was extremely low.
- Incorporating the monetary value of GHG emissions raised the total project life-cycle costs across all project alternatives by approximately 2 to 3%.
Based on the findings and observations of the project team, the following recommendations were offered to the Department of Defense (DoD) for consideration:
- Incorporate life-cycle GHG emissions analysis into DoD MILCON and SRM programs with metrics, such as life-cycle CO2e per square foot, and report GHG metrics on D1391 forms to incentivize project planners to consider all options.
- Invest in formulation of an integrated GHG emission calculation carbon system of tools.
- Place more emphasis on existing buildings as viable project alternatives to meet mission requirements and DoD’s energy reduction targets.
- Evaluate GHG tradeoffs early in the project formulation process to identify both a design and mix of building materials (or retained materials) that result in the lowest Scope 3 emission envelope.
- Identify characteristic strengths and vulnerabilities by class of building rather than applying prescriptive, “one size fits all” treatments.
- Avoid modernization treatments that result in loss of original energy saving design features in Pre-War Buildings.
- Improve the MILCON procurement process to ensure that construction contractors and design and engineering professionals with historic preservation experience are engaged to ensure that DoD has capacity to effectively evaluate its inventory of historic and other older, existing buildings.