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Effective Implementation of Green Leases

Green leases describe the rental agreements between the tenants and landlords whereby tenants and landlords commit to or gain incentives through their participation in energy and water conservation, adopting non-hazardous cleaning products, waste reduction, recycling, and other actions that promote sustainability in building setup (Brooks, 2008). Due to the rising environmental concerns and rising energy costs, green leases are becoming more and more popular. Here, the landlords and tenants commit to working together to save energy costs and promote environmental sustainability in their course of doing business, thus eventually achieving the desired building efficiency goals (Brooks, et al., 2008).

Normally, a green lease takes different shapes and inclinations in terms of commitment, depending on the needs of the tenants, landlords, or desired building efficiency. Therefore, to ensure effective implementation of these agreements, there is a need for a consensus between the landlord and tenants on the green lease standards, goals, and penalty implications on the party who go astray from the set commitment threshold (Collins, 2018). In this regard, there is a need for the involvement of wider scope of stakeholders with a thorough understanding of the green building principles in the planning and development of this document. Some of the key stakeholders who must be hooked in this conversation include engineers, contractors, architects, real estate attorneys, brokers or real estate management agencies, design professionals, and developers. Such inclusive stakeholder participation results in a document that would cause tenant-landlord negative relationships or poor retention of the tenants in the building.

In a practical sense, green lease incorporates various energy efficiency and sustainability measures. First, the green lease includes an initiative to shorten the operations time of the lighting and Heating, Ventilation, and Air-Conditioning (HVAC) equipment which leads to the reduction in the energy consumption within the building (Sayce, et al., 2009). Also, this initiative champions the use of energy-efficient equipment and does away from that old-age equipment that is energy efficient. Furthermore, the landlords should endeavor to do energy disclosure through sub-metering or main meter reading display to ensure that the tenants are aware of the current energy consumption levels within the building. This initiative serves to complement the initiative of setting energy consumption goals.

In addition, a green lease effectively reduces the costs of energy. It ensures overall building sustainability when there is a clear framework on monetary benefits accrued back on the involved parties. This could be achieved through a well-outlined cost recovery model which benefits both the building owner and occupants (Roussac, et al., 2008). This approach helps to boost the morale of both tenants and owners to invest in renewable upgrades and cost-saving initiatives.

Energy Efficiency and Sustainability Measures in Green Leases

Besides, the green lease should outline plans for buildings to under periodic recommissioning. This is a critical initiative that the building owners should undertake after some period of use to ensure that the building operates as anticipated. This move helps to identify and reconstruct any inefficient energy loopholes, which help reduce operating expenses and contribute to long-term energy performance (Ogunba, 2015).

Generally, a grease lease helps to bolster the energy performance of the building following the aforementioned actions and initiatives. As a result, the building realizes a significant reduction in energy costs, which benefits both the building owners and occupants. Additionally, the owners will get building certifications on energy-saving building performance (Janda, et al., 2017). Also, the building owners will easily follow statutory laws and regulations, which increasingly come up from day today. Such regulations and laws exist to ensure an overall reduction in the carbon footprint and greenhouse gas emissions coupled with various energy consumers' excessive and wasteful consumption of energy. Therefore, various building owners and tenants should implement the green lease to tackle environmental concerns and achieve energy efficiency and sustainability.  

Simple payback period (SPP) and Rate of Return on investment (ROR)

Simple payback period (SPP)

Energy Management And Efficiency

I would highly recommend the second option- investment of $150,000 with a return of 13.3% and payback period of 7.5 years. It has a short time of cost recovery and itself is a small capital investment needed.

Life Cycle Cost (LCC) describes the amount of energy costs that is characteristic to energy infrastructure from design and commissioning through its life time to the decommissioning stage. These analysis takes into consideration all the possible costs implications of the investment (Islam, et al., 2015). The following are what goes into the calculation of the life cycle cost;

  1. Capital Investment- This is the initial monetary expenditure that goes into improving energy efficiency infrastructure.
  2. Salvage Value- This is the net value of the capital investment after deducting the value of depreciation over time. It is normally tied to a certain period of time, normally after a certain useful life of the asset.
  3. Non-recurring energy costs- These are one-off costs related to the use of energy in a building. These ranges from costs of purchasing energy elements to one-off service or maintenance costs.
  4. Recurring energy costs- These are costs that are repetitive in nature and are integral part of the use energy infrastructure. These costs include routine and emergent service and maintenance costs of the energy equipment, fuel costs, carbon costs. amongst others.
  5. Recurring non-fuel costs- These are costs that are repetitive in nature and are integral part of the use energy infrastructure but are not related to fuel use. These costs include payment of energy bills, research and development costs, commissioning and decommissioning costs, among other.

The global energy, especially electricity, is favorably high in the building sector. This is due to the increasing urbanization hence ballooned numbers and sizes of buildings in the urban areas. Furthermore, it is undeniable fact that people spend more time indoors, either in house or office; hence high consumption of electricity. Hence, the demand for electricity keep increase from time to time (Madlener & Sunak, 2011). Thus, investments on energy efficient technologies and programs is a viable priority as compared to continuous investments on more supply infrastructure to meet the peak demands (Lin & Hongxun, 2015).

The term National Construction Code (NCC) refers to a collection of Australian standard construction technical rules that apply to the design, construction, and performance of buildings and plumbing and drainage systems and other related systems and structures (Board, A.B.C., 2018). NCC provisions have outright provisions in the design and building of building infrastructure to ensure the attainment of energy efficiency requirements. Some of these provisions take into account the need to adequately seal a building when complying with energy efficiency requirements, including but are not limited to following stated designs.

Cost Reduction and Recovery in Green Leases

In any conditioned area, the entry to the building must be equipped with a self-closing door, a rotating door, or an air airlock in order to avoid any potential of air penetration into the building. There must be a draft prevention mechanism installed on the bottom edge of the door to prevent air from entering. Additionally, the outside windows should be sealed in order to limit the possibility of air intrusion into the sealed space (Ambrose & Mike, 2017). 

An exhaust system placed in a kitchen, bathroom, sanitary compartment, or laundry must have a minimum flow rate of 25 litres per second for a sanitary compartment or bathroom and 40 litres per second for a kitchen or laundry, depending on the application. In order to be properly vented, the exhaust from a bathroom, sanitary compartment, or laundry must be released in one of three ways: directly to external air, via a shaft or duct, or to a ventilated roof area.

A sealed room is characterized by a sealed roof light in all the climatic conditions in which the building sits. Notably, non-sealed roof light can be the conduit through which cold air get to the conditioned building. Therefore, to achieve this, NCC provides the following outlines and features that should characterize a roof light in a sealed room. First, an imperforate ceiling diffuser should be installed at the ceiling or internal lining level or roof light should be constructed using a weatherproof seal or the room occupant can employ the use of a shutter system readily operated either manually, mechanically or electronically.

The challenge with the use of sealing buildings to comply with energy efficiency requirements in relation to NCC provisions is that there is a possibility of indoor air pollution (Nath, et al., 2020). Indoor air pollution refers to the release of gases, dust and dirt in the air inside a room or enclosed structures at excessive levels that becomes inhabitable for human health. Notably, people spend more of their indoors hence are prone to respiratory related illnesses such as asthmatic conditions. This is a common experience in those buildings with poor ventilation, that is, buildings that are completely sealed in the bid to ensure energy efficiency (Nath, et al., 2018). Hence, there is should be balance between energy efficiency and compromise of health of room occupants due to consequent indoor air pollution. 

The Nationwide House Energy Rating Scheme (NatHERS) is a measurement system that was introduced in 1993 and it measures a home’s energy efficiency to generate a star rating. The higher the star rating, the less energy is used to heat and cool the house in order to maintain a suitable temperature. Currently, assessors under NatHERS employ plans and building specifications of a home to input data into the accredited software tool. The tools of NatHERS help to estimate the amount of heat required to be removed or added into the room so as the make the indoor environment more comfortable (Berry & Tony, 2015). The NatHERS tools then generate a star rating out of 10 and then a certification is offered for assessed building. This star rating is a measure of thermal performance in a room in relation to its structure, design and materials.

Importance of Periodic Recommissioning in Green Leases

However, there are some recent claims on poor star ratings labeled against NatHERS. These claims are begged on grounds poor and unprofessional assessment carried out by this agency (Kordjamshidi & Steve, 2009). One of the key downfall of the NatHERS is public concerns on increase in the number of unaccredited assessors carrying out shoddy assessments of the various buildings. This has led to misleading star rating of the various buildings. Thus, there are several instances of wrong profiling of building’s energy efficiency. This has led to the lack of consistency in the manner in which NatHERS is applied across the Australia. This has highly contributed to the endemic challenge all over Australia where several buildings are still not compliant to the building performance requirements. 

Besides, there is introduction of new training requirements for assessors which are expensive and making the whole process complex. This has led to NatHERS using untrained assessors in most of their recent assessments (Illankoon, et al., 2019). On the other hand, some of the professionals working with NatHERS are perceived are been to be arrogant, and specifically the administrator, and this has made them changes regarding their model and criteria of assessment without doing consultations with the relevant stakeholders. This agency seems to enjoy unnecessary monopoly of assessment and issue of certification of building’s performance and energy use.

Furthermore, NatHERS scheme is highly incapacitated and overwhelmed with the assessment role in that it lacks the ability and capacity to check the As-built and currently under use buildings for their ongoing performance. This is attributed to the fact that buildings keep growing each day in Australia, and NatHERS scheme has failed to enhance their assessment tools and processes through innovation and development. Finally, this scheme is limited to heating and cooling loads of the building and it has failed to assess energy, water and building sustainability issues. All these are factors of sustainable building design that needs to be considered to achieve the overall sustainability of the building. 


Ambrose, M. & Mike, S., 2017. Air tightness of new Australian residential buildings. Procedia Engineering, Issue 180, pp. 33-40.

Berry, S. & Tony, M., 2015. Australia's nationwide house energy rating scheme: the scientific basis for the next generation of tools. International Journal of Sustainable Building Technology and Urban Development , Issue 6(2), pp. 90-102.

Board, A.B.C., 2018. Energy efficiency provisions. In: NCC Volume one. s.l.:s.n.

Brooks, S., 2008. Green leases and green buildings. Prob. & Prop., Volume 22, p. 23.

Brooks, S., Counsel, A. & Berlis, L., 2008. Green leases: The next step in greening commercial buildings. The Green Real Estate Summit 2008. What Attorneys, Developers, Bankers and Regulators Need to Know.

Collins, D., 2018. Green leases and green leasing in theory and in practice: a state of the art review. Facilities, p. n.d..

Illankoon, I., Tam, V., Le, K. & Tran, C., 2019. Review on green building rating tools used in Australia. INNOVATIVE PRODUCTION AND CONSTRUCTION: Transforming Construction Through Emerging Technologies, pp. 165-184.

Islam, H., Margaret, J. & Sujeeva, S., 2015. Life cycle assessment and life cycle cost implication of residential buildings—A review. Renewable and Sustainable Energy Reviews , Issue 42, pp. 129-140.

Janda, K., Rotmann, S., Bulut, M. & Lenannder, S., 2017. Advances in green leases and green leasing: Evidence from Sweden, Australia, and the UK. In Proceedings of ECEEE Summer Study, Volume II, pp. 349-358.

Kordjamshidi, M. & Steve, K., 2009. Overcoming problems in house energy ratings in temperate climates: A proposed new rating framework. Energy and Buildings , Issue 41(1), pp. 125-132.

Lin, B. & Hongxun, L., 2015. China's building energy efficiency and urbanization. Energy and Buildings, Issue 86, pp. 356-365.

Madlener, R. & Sunak, Y., 2011. Impacts of urbanization on urban structures and energy demand: What can we learn for urban energy planning and urbanization management?. Sustainable Cities and Society, Issue 1(1), pp. 45-53.

Nath, S., Mark, D. & Jeroen, D., 2020. Has a singular focus of building regulations created unhealthy homes?. Architectural Science Review, Issue 63(5), pp. 387-401.

Nath, S., Mark, D. & Kirsten, O., 2018. Is new housing a health hazard?." Engaging Architectural Science. Meeting the Challenges of Higher Density, 52nd International Conference of the Architectural Science Association . , pp. 71-78.

Ogunba, O., 2015. Towards Green Leases and Sustainable Property Management Practice in Africa (No. afres2015_130). African Real Estate Society (AfRES).

Roussac, C., McGee, C. & Milne, G., 2008. Changing the culture of commercial buildings in Australia: the role of green leases.. In World Sustainable Building Conference, p. n.d..

Sayce, S., Sundberg, A., Parnell, P. & Cowling, E., 2009. Greening leases: Do tenants in the United Kingdom want green leases?. Journal of Retail & Leisure Property, Volume 8(4), pp. 273-284.

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