Mortgage Loans Still a Missing Link to Energy Efficiency Growth

By Cindy Zhu, DOE Fellow on Sep 19, 2017

Missing links don’t have to be missed opportunities. Within the commercial real estate space, a significant opportunity exists to incorporate energy into real estate transactions during the mortgage underwriting process.

The Commercial Mortgages project team, comprised of the Institute for Market Transformation (IMT) and the Lawrence Berkeley National Laboratory (LBNL), conducted a recent market analysis that sheds light on trailblazers in the financial and real estate communities that are successfully marrying mortgage underwriting with energy efficiency. The commercial real estate market in particular, which accounts for 16 percent of U.S. emissions, has historically looked at mortgage loans and energy efficiency as mutually exclusive factors. However, underwriting additional loan proceeds based directly off of energy efficiency savings represents one of the most-sound financing options lenders can take, and could help reduce property default risks. Research shows that buildings whose mortgages include underwriting for energy efficiency see increased net operating income, reduced energy consumption, or increased energy savings.

Read the analysis here.

The Better Buildings Alliance Market Solutions teams work to identify and overcome barriers for increasing energy efficiency in commercial buildings that are not technology related.