It's Time for Major Innovation for Market Transformation | Steven Peck, GRP and Michael DiMezza, GRP

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Introduction

Innovation. All of human progress comes down to innovation in response to a problem or a need. Innovation is happening in traditional sectors, not the least of which are building science and economics. Buildings have been evolving dramatically to meet the rising climate challenges of this century; they are more efficient and more resilient than ever. Even still, our buildings have tremendous unrealized capacity to improve the health of our communities and address the climate crisis. In order to meet this moment, cities like Portland, Oregon, and elsewhere, need bold economic and policy innovations that change the green roof market itself: especially who pays, from what sources, and why. If we can innovate in these areas, we can speed-up the delivery of green roofs, and help realize the greatest of all higher-order promises of green roofs: contributing to the complete drawdown of atmospheric carbon by 2050.

Extensive green roof integrated with solar panels in Portland, Oregon. Photo: Tom Liptan.

Project Drawdown Background

In 2017, Project Drawdown was initially released by Paul Hawken as a strategy with 80 actions modeled to reduce greenhouse gas emissions significantly by 2050. Each action, even without the climate change benefits, is worthy of implementation due to its social, economic, and other environmental benefits. That initial report has since evolved into a US based non-profit with a mission to help the world stop climate change as quickly, safely, and equitably as possible using science based actions. The work of Project Drawdown is built on three pillars:

SCIENCE. Conducting cutting-edge research to identify the best possible climate solutions – and to design the most effective strategies to bring them to scale.
STAKEHOLDERS. Inform and inspire philanthropists, investors, business leaders, policymakers, community change-makers, and other stakeholders to take bold and active leadership positions and bring effective climate action to the world.
STORIES. Harness the power of storytelling to help shift the narrative on climate change – from problem to solution and from “doom and gloom” toward “opportunity and possibility.”

Green and reflective roofing were recognized as one of the initial 80 best strategies to address climate change - ranked number 73, with a goal to cover 9 percent of the world’s rooftops with green roofs by 2050. Applying this global goal to one jurisdiction gives us a better understanding of the policies and programs required to achieve this goal. At the Portland Grey to Green conference in 2024, a leading group of participants (this article’s authors included) began to discuss what it would take for Portland to achieve this goal.

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Portland Oregon - Green Roof History

*Portland ecoroof map showing the location of green roofs. Click* *here* *to access the interactive version. Curtesy of Portland State University*

The Rose City has been recognized as a leader in the implementation of green roofs and other forms of green infrastructure for decades. Since 1996 Portland has gone from 1 garage with a test plot green roof to a total of approximately 2,507,000 square feet (58 acres), installed across 723 projects, 570 of which are extensive green roofs. Financial incentives of $5 per square foot through the initial Eco-Roof Project were offered to building owners and developers, helping spur more than 288 projects by 2013, covering more than 14 acres of roofscape (American Rivers, 1). After a pause, the City reengaged with a mandate for green roofs on new buildings in the downtown core area, which continues to contribute to the expansion of green roof infrastructure today. Assuming an average cost of $20/SF installed, these policy efforts have generated a minimum of $50.1 million in local economic activity and created green industry jobs.

*Table 1. Green roof area required for the City of Portland to meet Drawdown targets of 9% by 2050.*

Portland’s Opportunity - Go Faster

But for all this progress, up to 500 million square feet of roof area in Portland Metro remain underutilized and we’re not moving anywhere near fast enough to reach the Project Drawdown goal. If we hope to reach Drawdown’s goals, what’s needed is a much higher level of implementation, each and every year. For Portland that means installing another 44.5 million square feet of extensive green roofs. That is roughly 1.75 million square feet per year. It took 25 years to install that much extensive green roof area, so what we’re talking about is installing an equivalent of everything we’ve taken 25 years to build, and doing that every year, for 25 years… It’s a gap we won’t close unless we bring real innovation to how we deliver new green roofs. (See table 1)

Portland’s Solution - Thinking Differently About Roofs - Economic Innovation

There’s a saying: ‘doing the same old things and expecting new results is proof of being crazy’. The market system for the past 25 years has positioned a building owner as the party responsible for paying the cost of a green roof, and/or offers some incentives, and promises some lowered operating costs. This approach has got us to where we are today, but if the market continues to function as it has, at Portland’s current rate, in the coming 25 years we’ll maybe double to triple our current coverage, rising up to approximately 5 to 7.5 million square feet of extensive coverage. Progress for sure, but also as much as 40 million square feet short of our portion of the Drawdown goal.

What we’d like you to consider is that this shortfall isn’t a bottleneck on the supply side, as if we don’t have enough sedum mats or gardeners, or that the bottleneck is on the demand side, many more people want green roofs than have them. The bottleneck is the market itself. Owners-as-buyers of green roofs are only ever going to purchase a limited amount. Their capital is limited. Not until we provide more capital to the green roof market, and not until we bring in stakeholders besides owners, are we going to provide enough momentum to change how much the market can produce. These are needed economic innovations in who pays, from what sources and why.

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Innovation #1 - Owners: You Are Not Alone. Infrastructure in the Public Interest.

Cities, states and even federal governments will be the most cost burdened by macro level effects of climate change: floods and storm surges with enormous property damage costs and damaged public infrastructure, heat domes with their related hospitalizations and deaths. The public sector also administers and pays for programs to help the poor and vulnerable among us, for those seeking work, and they pay for cops and courts and jails for those who don’t find their way. The financial exposure from the climate crisis defies calculation and our capacity to pay.

So then, what if the public sector invested in a large-scale roll out of green roofs, the same way they invest in roads, bridges, flood controls, disaster clean up and energy? What if they actually provided significant grants for installing green roofs on private property? What we need to be funding is climate forward thinking investments in resilient infrastructure like green roofs, urban forests, and bioswales to name a few. We need to consider what we are already spending, what we anticipate having to spend, and then shift some of this investment into fortifying our cities so we can actually move the needle, create resilience, and buffer against the worst of the costs to come.

Widespread public private partnering has worked in other sectors, and its use for green roof delivery is a market innovation that is long overdue. And green roofs are a proven solution that can help mitigate climate change and enable cities to become more resilient. Green roof installation and maintenance also creates many new entry level jobs with room for advancement, and their return of value to the public is significant.

*Table 2. The value of producing incarceration through green roof job creation.*

Innovation Financing #2 - Providing Employment With Dignity

Public investment in green roofs for new and existing buildings would generate a lot of jobs in Portland, Oregon. Most of these would be local jobs in areas such as contracting, growing, blending, design, installation and maintenance. We can create programs to meet this new demand for labor that is accessible to vulnerable populations, those who desperately need a way back into the mainstream economy: those that have been incarcerated, those experiencing homelessness, at-risk youth and those who have completed recovery programs. By doing so we can shift a tremendous amount of public funding that now goes to social services or incarcerating these same people, about $79,000 annually per prisoner in Oregon. (USAFacts)

Consider the following table, where we extrapolate the number of jobs created from our scaled up green roof implementation, and then ask, what if all those people ended up in prison instead. What would that cost the state? This is the stuff of amateur economists, but it also drives home the point that if we don’t create jobs, and people find themselves instead turning away from the economy, the cost society bears is much, much higher.

It is not realistic to expect that all of the jobs created through widespread green roof implementation would be filled by prison inmates, but what if 5 percent, or 10 percent were. Ten percent or 712 people, liberated from jail for only one year represents a savings of $56,295,400. Philadelphia has already developed a green infrastructure training program for at-risk youth and apprenticeships that have provided many participants with a way out of poverty.

In 2018 Portland voters approved the Portland Clean Energy Community Benefits Fund (PCEF). The fund provides a consistent, long-term funding source ensuring climate action efforts support all Portlanders. Unique to Portland, it is one of the reasons we have an opportunity to scale our workforce equitably for the kind of green roof implementation we are proposing. These programs succeed by giving people whose lives would otherwise be ruined a job, and with that job dignity, the dignity inherent in work.

Green roof job creation potential at a national scale is also impressive. American Rivers, an NGO which focuses largely on water quality and the health of American rivers, produced a report with the American Society of Landscape Architects and the Center for Neighborhood Technology on green infrastructure which states that:

Green roofs can also provide economic benefits to communities beyond stormwater management and energy savings. Wide-scale design, construction, and operation of green roofs can result in increased employment opportunities. Covering even 1 percent of large buildings in America’s medium to large-sized cities with vegetated roofs could create over 190,000 jobs and provide billions in revenue to suppliers and manufacturers that produce or distribute green-roof related materials. (American Rivers 1)

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Innovation # 3 -Finance - PPPI-s - Bringing New Capital to the Green Roof Market

Innovation in markets also means accessing or creating new funding sources. We’ve pointed earlier to public sources, at various levels, and noted Portland’s PCEF. Infrastructure projects - and green roofs at massive scale is most certainly an infrastructure project - get funded in a variety of ways beside just tax revenues. Public-Private Partnerships for Infrastructure, or PPPI-s, are agreements between private funders and government agencies to deliver public infrastructure: roads, water and sewer projects, energy projects and social infrastructure have been built with PPPI-s. There’s a trade off, of course, because the private funders need a return later on their investment today. What’s gained immediately is much needed capital that’s otherwise completely inaccessible. Repayment sources would need to be identified, like those from accrued carbon credits, but PPPI-s are a familiar concept in funding public works. PACE financing is now available in most states for green roof loans, and it covers a wide variety of items, including maintenance. This could be a source of PPP innovation. The innovation here is applying them to a new kind of infrastructure because the costs of inaction are so high. Using other financing methods like public loan guarantees, applied now to green infrastructure construction, could also bring lenders to the table that might otherwise remain in more traditional sectors like commercial real estate lending or municipal bonds.

Forecasted Good Outcomes: A Win for Building Owners

*Portland green roofs. A GSA Study on Green Roof Costs and Benefits found $39 per square foot of public benefits. Photo: Tom Liptan*

Green roofs save building owners money on heating, cooling and roof replacement costs which offsets maintenance costs. Green roofs can also help developers sell units, particularly as amenity spaces. When combined with solar panels, green roofs help to improve efficiency by 5 to 15 percent, and provide ballast for the racking. Widespread green roof implementation across the US, according to modeling by the National Oceanic and Atmospheric Administration, would yield impressive results nationwide for building owners:

Energy savings from green roofs can be significant not just at the local level, but on a national scale as well. By 2035 there will be 110 billion square feet of commercial real estate in the United States… Modeling these new roofs using National Oceanic and Atmospheric Agency (NOAA) heating and cooling data shows that if green roofs had been built on all of these new structures since 2003, business and property owners could save a total of approximately $95 billion dollars a year in avoided heating, cooling, and roof replacement costs… widespread implementation of green roofs, with their ability to reduce indoor energy consumption by 7–10 percent per year, could save the American economy $7–$10 billion per year. (American Rivers 2)

Forecasted Good Outcomes: A Win for Taxpayers: Tangible and Intangible Public Benefits

Direct public investment in green roofs will not only help building owners save money, it will also help the city deal with challenges such as combined sewer overflows which in Portland, imperil the quality of the Willamette River. Scaling up implementation will also help maintain livability as the urban heat island effect becomes more severe and costly, particularly in poore neighborhoods. An often cited study on green roofs and their financial performance was completed by ARUP for the General Services Administration (GSA) in 2011. The 2011 Study, entitled, The Benefits and Challenges of Green Roofs on Public and Commercial Buildings, looked at the costs and benefits of extensive green roofs from a nationwide perspective.

The cost benefit analysis of the report estimated that green roofs on commercial and public buildings provide a payback, based on 50 year average annual savings, of about 6.2 years nationally, an internal rate of return of 5.2 percent, and an ROI of 224 percent, based on a net present value of $2.7/square foot. The benefits in the study included things like energy savings from reduced cooling and heating, reduced stormwater infrastructure costs and/or stormwater fees.

*Table 3. Estimated green roof public benefits over 25 years.*

The public benefits incorporated into the analysis focused on reductions in the urban heat island effect, air quality improvements and biodiversity. These public benefits totaled a Net Present Value of almost $38 dollars per square foot over a 50 year period, without including things like flood reduction, employment benefits, helping vulnerable people out of poverty, carbon sequestration, and quality of life improvements. (GSA 2011) See Table 3 for an extrapolation of these benefits to Portland.

This does not include spin off economic benefits to the economy, investment attraction and overall quality of life.

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Forecasted Good Outcomes: Scaling Up Brings Costs Down

The GSA green roof study also looked at different sizes of green roof installations noting that the costs per square foot is driven down as projects increase in size, from $12.6 per square foot at 5,000 square feet, to $9.7 per square foot for an extensive green roof of 50,000 square feet in size. Direct investment in green roofing would scale up the industry, resulting in a further reduction of costs per square foot, by as much as 25 to 30 percent. We’ve already seen this in more mature green roof markets like Toronto and Chicago.

Within the green roof industry we know the benefits are many. Building owners benefit from reduced energy consumption and deferred waterproofing replacement costs. Taxpayers benefit from improved urban conditions and in Portland, a much cleaner river and cooler city. The industry gets more efficient as we scale up. We’ve been promoting these benefits to anyone who will listen for 25 years, at least. And we’ve accomplished so much. But we’re up against market limitations, and Project Drawdown shows us we’re up against the clock too. Innovation has never been needed more in order for us to reach higher.

Conclusion and Next Steps, Portland and Elsewhere

Innovation takes many forms but it almost always responds to a need, or a problem. Sometimes it is the problems not directly experienced or perceived that are the most in need of solutions. Recognizing the limitations on the green roof market is one of those behind the scenes problems. It’s the reason we cannot grow further and faster, and the reason why we are yet to unlock the higher-order benefits.

Project Drawdown is a lens that brings the current market limitations into focus. It is also a real call to action, and a reason for us to continue our work. We cannot solve the climate crisis we face through constant acts of incrementalism and the good will of building owners. It is time to recognize the myriad public and private benefits that green roofs provide, bring public stakeholders into the market and to establish a dedicated, twenty-five year program of green roof investment for a future where global carbon levels are drawn down. Let’s lead the way.

Imagine a future Portland with 9% Green Roof coverage - a thriving city amidst hanging gardens, among the greenest world-wide with 47 Million Square Feet of verdant, vegetated roof top gardens. It would be a living breathing city, cool in summers, insulated in winters, full of spring's blossoms and fragrance, an artist's canvas come autumn, and safe haven to those who chose it as their home.

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About the Authors

Michael DiMezza is a Green Roof Professional and Principal of Outside Design Build, Inc.

Steven Peck, GRP, is the founder and president of Green Roofs for Healthy Cities - North America Inc. speck@greenroofs.org

It’s Time for Major Innovation For Market Transformation

Introduction

Project Drawdown Background

Portland Oregon - Green Roof History

Portland’s Opportunity - Go Faster

Portland’s Solution - Thinking Differently About Roofs - Economic Innovation

Innovation #1 - Owners: You Are Not Alone. Infrastructure in the Public Interest.

Innovation Financing #2 - Providing Employment With Dignity

Innovation # 3 -Finance - PPPI-s - Bringing New Capital to the Green Roof Market

Forecasted Good Outcomes: A Win for Building Owners

Forecasted Good Outcomes: A Win for Taxpayers: Tangible and Intangible Public Benefits

Forecasted Good Outcomes: Scaling Up Brings Costs Down

Conclusion and Next Steps, Portland and Elsewhere

Introducing the New Pathfinder 3.0: A Climate + Biodiversity Positive Tool for Sites