The U.S. Market for Green Building Materials

Report Highlights

• BCC estimates the value of the U.S. green building materials market at $21.1 billion in 2005. This figure is expected to rise to $21.9 billion in 2006 and to $27.9 billion by 2011, an AAGR of 4.9% over the next five years.
• Structural building materials accounted for nearly three-quarters of the U.S. green building materials market in 2005, followed by interior materials (13.8%), exterior materials (11.2%) and plumbing/wiring/fixtures (0.1%). Exterior building materials are growing at a faster rate (i.e., an AAGR of 10% through 2011) than any other product segment, and as a result are expected to increase their market share to 15.7% by 2011.
• Turning to individual products, oriented strand board (OSBO) had by far the largest sales of any green building product in 2005 and is expected to remain in first place through 2011, despite price erosion, which will reduce the value of sales over time. Other top-selling green building materials included i-joists, glue laminated timber and fiber cement.

INTRODUCTION

The built environment has a great impact on the natural environment, human health, and the economy. According to the Environmental Protection Agency, buildings in the U.S. account for

• 39% of the nation's total energy use
• 12% of its total water consumption
• 68% of total electricity consumption
• 38% of the carbon dioxide emissions

In addition, a growing body of research has established the connection between indoor air quality (IAQ) and the health of building occupants. While most of the problems associated with poor IAQ are the result of inadequate ventilation, some are also caused by various types of airborne contaminants or toxins.

The presence of some of these contaminants, such as formaldehyde, is traceable to the use of certain building materials. Overexposure to formaldehyde may result in nose irritation, sneezing, dry throat, eye irritation, headache, and nausea. Formaldehyde is used extensively in the manufacture of certain building products (e.g., as bonding/laminating agents, adhesives, paper and textile products, and foam insulation), from which formaldehyde gas may be released in the course of normal use.

"Green" or "sustainable" building involves the use of building practices and materials that use resources as efficiently as possible, while constructing healthier, more energy-efficient, and environmentally friendly buildings. A related objective of some green building projects is creating esthetic harmony between a building and its environment.

The market for green building materials has been growing rapidly. As of the beginning of 2005, 177 million square feet of buildings have been certified by the U.S. "Green" Building Council's Leadership in Energy and Environmental Design (LEED) Program. An article in the June 2006 issue of the Harvard Business Review predicts that green construction will become a mainstream technology in the next 5 to 10 years, as a growing market helps to drive down the cost of green building products, and building owners become increasingly aware of the economic, health, and environmental advantages of green building. The impact of green building going mainstream will be as profound on commercial real estate as the invention of central air conditioning in the 1950s and 1960s, or elevators in the 19th century, according to the article.

Over 500 U.S. companies, including a number of Fortune 500 companies, are involved in the production of green building materials and the design and construction of green buildings. This number is likely to grow rapidly as more building owners and investors wake up to the potential of green building.

SCOPE OF STUDY

This report contains:

• An in-depth discussion of building materials defined as green
• The definition of green building materials and the criteria these materials must meet in order to be called green
• A detailed overview of the green materials market
• Global trends in the market, including a 5-year forecast to 2011
• A review of recent and upcoming technology as well as a detailed analysis of patents
• Profiles for the top companies in the green building materials market

METHODOLOGY

The methodologies and assumptions used to develop the market projections in this report are discussed at length in the section on U.S. Market for "Green" Building Technologies, 2006 through 2011/Detailed Market Estimates and Projections. In general, BCC used the following approach:

• Identified commercial as well as promising developmental green building technologies and their target markets through a literature review and interviews with industry experts.
• Estimated baseline (2005) market penetration ratio for each technology/target market.
• Developed forecasts of growth trends in each target market.
• Analyzed technical, economic and other factors that will influence the ability of different green building technologies to compete for a share of their respective market(s) and estimated future consumption of each technology on this basis.

The report carefully documents data sources and assumptions. This way, readers can see how the market estimates were developed and, if they so desire, test the impact on the final numbers of changing assumptions such as price.

AUTHOR CREDENTIALS

Andrew McWilliams, the author of this report, is a partner in the Boston-based international technology and marketing consulting firm, 43rd Parallel, LLC. He is the author of numerous other BCC Research business opportunity analyses, including several analyses of markets related to green building technologies. Two of his most recent reports for BCC are U.S. Indoor Air Quality Markets and Trends, ENV003B and Petroleum Fuel Optimization Technologies, EGY051A.