INTRODUCTION
BACKGROUND
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:
- 36% of the nation’s total energy use
- 12% of its total water consumption
- 65% of total electricity consumption
- 30% 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 2009, 284 million sq. ft. of buildings had 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 Harvard Business Review predicts that green construction will become a mainstream technology in the next 5 years 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 1960st or elevators in the 19th century, according to the article.
More than 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.
The green building industry has not been immune to the recession that began in 2008. The market for all types of green building materials was down by nearly 40% in 2008 compared with 2009, reflecting the decline in construction activity. However, with housing and commercial construction set to begin a recovery in 2010 or 2011, the market for green building industry should experience above-average growth rates over the next 5 years due to suppressed demand.
These trends provide an opportunity for both existing players and new entrants into the green building materials market. This BCC Research report analyzes these new developments and their potential impact on industry participants.
GOALS AND OBJECTIVES
The overall goal of this report is to identify and prioritize the business opportunities for providers of green building materials that will arise over the next 5 years as green building technologies increase their market penetration. In support of this goal, specific objectives of the report include:
- Identifying the green building technologies with the greatest commercial potential over the next 5 years (2009 to 2014);
- Estimating the potential U.S. markets for these technologies;
- Analyzing the technical, commercial, and other prerequisites of success in these markets.
INTENDED AUDIENCE
The report is intended especially for providers of green building materials and other technologies. Although the report is structured around specific technologies, it is largely nontechnical in nature. That is, it is concerned less with theory and jargon than with what works, how much of the latter the market is likely to purchase, and at what price.
As such, the report’s main audience is executive management, marketing and financial analysts. It is not written specifically for scientists and technologists, although its findings concerned the market for their work, including the availability of government and corporate research funding for different technologies and applications should interest them as well.
Others who should find the report informative include government agencies, environmental and public policy interest groups with an interest in sustainable development, the environment, energy, and worker health.
SCOPE OF REPORT
The scope of this report includes the U.S. market for building products that meet its definition of green, that is, those that are:
- Made from salvaged, recycled, or agricultural waste content
- Manufactured with resource-efficient, environmentally friendly processes (e.g., conserve water/energy, minimize pollutants, and process wastes)
- Beneficial to the built environment (e.g., conserve energy, remove indoor pollutants)
- Recyclable at the end of their life
In general, coverage is limited to building products that meet one of these criteria and are at least neutral with respect to the other three. (For example, wood particle board is generally not included because it is made from recycled/waste materials but is subject to potentially harmful outgassing.)
The report format includes the following major elements:
- Executive summary
- Types of green building technologies
- End users and applications
- Manufactures and related service providers
- Patent analysis
- Public policy dimensions
- Market drivers
- Global trends in the market for green building technologies by technology, product type, application, and geographical region, 2008 to 2014.
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, 2009 to 2014/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 (2008) 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’S 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 Business Communications Co. business opportunity analyses, including the previous edition of this report on green building materials as well as other reports on related subjects such as ENV003B U.S. Indoor Air Quality Markets and Trends; EGY051A Petroleum Fuel Optimization Technologies; EGY065A Enabling Technologies for the Smart Grid; EGY053B Advanced Materials and Devices for Renewable Energy Systems; ENV011A The U.S. Market for Clean Technologies; and IAS031A Home Automation and Security Technologies, Products, and Markets.
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DISCLAIMER
The information developed in this report is intended to be as reliable as possible at the time of publication and of a professional nature. This information does not constitute managerial, legal, or accounting advice; nor should it serve as a corporate policy guide, laboratory manual, or an endorsement of any product, as much of the information is speculative in nature. The author assumes no responsibility for any loss or damage that might result from reliance on the reported information or its use.
Report Code: ENV007B, Published: January 2010, Analyst: Andrew McWilliams
