U.S. Department of Energy - Energy Efficiency and Renewable Energy
Building Technologies Office
Market Transformation Project Team: Leasing and the Split-Incentive
The Market Transformation Project Team is developing resources for commercial building stakeholders to overcome the "split-incentive" barrier to energy efficiency. This barrier occurs when building leases are not structured in a way that promotes energy savings.
- Under most gross leases, for example, tenants have no incentive to save energy in their leased space because energy expenses are paid by the building owner.
- Under most net leases, building owners have no incentive to invest in efficiency for their building systems because the operating expenses are passed through to tenants, who therefore receive all the energy cost savings. In this structure, energy costs may be allocated based on tenant square footage, which does not always accurately reflect actual energy usage.
Green leases (also known as energy-aligned leases, high-performance leases, or energy-efficient leases) align the financial and energy incentives of building owners and tenants so they can work together to save money, conserve resources, and ensure the efficient operation of buildings.
Green Lease Library
The Green Lease Library is the result of collaboration between the Department of Energy's Better Buildings Alliance-Commercial Real Estate and other organizations, including:
- The U.S. General Services Administration
- Rocky Mountain Institute
- Natural Resources Defense Council
- The Institute for Market Transformation
- NYU Schack Institute of Real Estate
- Building Owners and Managers Association International
The Green Lease Library was created to help overcome the split-incentive barrier and is a one-stop shop to improve access to green leasing resources. This website aggregates and organizes green leasing resources for all audience types—from building owners and tenants to lawyers and building raters.
The library offers guidance, best practices, and toolkits for developing and implementing green leases. These materials are organized by category, audience, and building type. They offer sample lease language and case studies where green leasing has been successfully adopted. By taking advantage of these resources, stakeholders can unlock the potential of innovative green leasing strategies to maximize energy efficiency in buildings.
Webinar: Tools and Practices for Implementing Green Leasing
On March 26, 2012, the Department of Energy's Building Technologies Office hosted a webinar to discuss tools and best practices for implementing green leasing in commercial buildings. The webinar targeted a broad audience—from building owners and tenant organizations to lawyers and building raters—and showcased the Green Lease Library.
The webinar provided an overview of strategies to promote energy efficiency through green leasing and demonstrated how to use the resources in the Green Lease Library. Additional webinar materials—including slides, a transcribed Q&A session, and clips—can be accessed online at the Green Lease Library.
Webinar speakers included Adam Sledd (from the Institute for Market Transformation), Steve Teitelbaum (author of the BOMA Green Lease Guide), and representatives from the U.S. General Services Administration, who discussed their agency's efforts to implement green leasing in federal buildings.
Green Leasing Case Studies
The Market Transformation team is coordinating with members to identify examples of successful green leases in the marketplace, and to capture these best practices in case studies for stakeholders to reference as they develop their own green leasing language. Additional case studies will be added as they become available. If your organization would like to showcase their success using green leasing language as a part of a BBA case study, please email the BBA coordinator at BBA@ee.doe.gov.