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Objectives and Challenges Associated with Federal High-Performance Green Buildings

OBJECTIVES FOR FEDERAL HIGH-PERFORMANCE GREEN BUILDINGS

The significance of federal buildings in terms of environmental impacts, worker health and productivity, and operating costs has been recognized in an array of federal legislation, executive orders, and guidance documents.

In 2007, the Energy Independence and Security Act (EISA) defined a high-performance green building as one that during its life cycle, as compared with similar buildings (as measured by Commercial Buildings Energy Consumption Survey data from the Energy Information Agency),

(A) reduces energy, water, and material resource use;

(B) improves indoor environmental quality, including reducing indoor pollution, improving thermal comfort, and improving lighting and acoustic environments that affect occupant health and productivity;

(C) reduces negative impacts on the environment throughout the life-cycle of the building, including air and water pollution and waste generation;

(D) increases the use of environmentally preferable products, including bio-based, recycled content, and nontoxic products with lower life-cycle impacts;

(E) increases reuse and recycling opportunities;

(F) integrates systems in the building;

(G) reduces the environmental and energy impacts of transportation through building location and site design that support a full range of transportation choices for users of the building; and

(H) considers indoor and outdoor effects of the building on human health and the environment, including improvements in worker productivity, the life-cycle impacts of building materials and operations, and other factors considered to be appropriate.

Among other provisions, EISA requires that federal agencies reduce their total energy consumption by 30 percent by 2015, relative to 2005 levels. For new federal buildings and major renovations, EISA requires that fossil-fuel energy use—relative to 2003 levels—be reduced 55 percent by 2010 and eliminated altogether (100 percent reduction) by 2030. The EISA standards apply to new construction, major renovations of existing structures, replacement of installed equipment or renovation, rehabilitation, expansion, or remodeling of existing space.



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2 Objectives and Challenges Associated with Federal High-Performance Green Buildings OBJECTIVES FOR FEDERAL HIGH-PERFORMANCE GREEN BUILDINGS The significance of federal buildings in terms of environmental impacts, worker health and produc- tivity, and operating costs has been recognized in an array of federal legislation, executive orders, and guidance documents. In 2007, the Energy Independence and Security Act (EISA) defined a high-performance green build- ing as one that during its life cycle, as compared with similar buildings (as measured by Commercial Buildings Energy Consumption Survey data from the Energy Information Agency), (A) reduces energy, water, and material resource use; (B) improves indoor environmental quality, including reducing indoor pollution, improving thermal comfort, and improving lighting and acoustic environments that affect occupant health and productivity; (C) reduces negative impacts on the environment throughout the life-cycle of the building, including air and water pollution and waste generation; (D) increases the use of environmentally preferable products, including bio-based, recycled content, and nontoxic products with lower life-cycle impacts; (E) increases reuse and recycling opportunities; (F) integrates systems in the building; (G) reduces the environmental and energy impacts of transportation through building location and site design that support a full range of transportation choices for users of the building; and (H) considers indoor and outdoor effects of the building on human health and the environment, including improve- ments in worker productivity, the life-cycle impacts of building materials and operations, and other factors considered to be appropriate. Among other provisions, EISA requires that federal agencies reduce their total energy consump- tion by 30 percent by 2015, relative to 2005 levels. For new federal buildings and major renovations, EISA requires that fossil-fuel energy use—relative to 2003 levels—be reduced 55 percent by 2010 and eliminated altogether (100 percent reduction) by 2030. The EISA standards apply to new construction, major renovations of existing structures, replacement of installed equipment or renovation, rehabilita- tion, expansion, or remodeling of existing space. 17

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18 ACHIEVING HIGH-PERFORMANCE FEDERAL FACILITIES Executive Order 13423, Strengthening Federal Environmental, Energy, and Transportation Management,1 also issued in 2007, requires federal agencies to conduct their environmental, transpor- tation, and energy-related activities under the law in support of their respective missions in an environ- mentally, economically and fiscally sound, integrated, continuously improving, efficient, and sustainable manner. Among its other provisions, Executive Order 13423 requires federal agencies to a. improve energy efficiency and reduce greenhouse gas emissions of the agency through reduction of energy inten - sity by i. 3 percent annually through the end of fiscal year (FY) 2015, or ii. 30 percent by the end of FY 2015, relative to the baseline of the agency’s energy use in fiscal year 2003; b. ensure that i. at least half of the statutorily required renewable energy consumed by the agency in a fiscal year comes from new renewable sources, and ii. to the extent feasible, the agency implements renewable energy generation plants on agency property for agency use. Agencies are also directed to reduce their water intensity (gallons per square foot) by 2 percent each year through FY 2015 for a total of 16 percent reduction below water consumption in FY 2007. Executive Order 13423 also requires federal agencies to ensure that 15 percent of the existing federal capital asset building inventory of each agency incorporate the sustainable practices outlined in “Guiding Principles for Federal Leadership in High Performance and Sustainable Buildings” (hereinafter called the Guiding Principles) by the end of FY 2015. The Guiding Principles are the following: (1) Employ Integrated Design Principles; (2) Optimize Energy Performance; (3) Protect and Conserve Water; (4) Enhance Indoor Environmental Quality; and (5) Reduce Environmental Impact of Materials.2 Executive Order 13514, Federal Leadership in Environmental, Energy, and Economic Performance, issued in October 2009, challenges federal agencies to lead by example to create a clean energy economy that will increase the nation’s prosperity, promote energy security, protect the interests of taxpayers, and safeguard the health of the environment. It states that it is the policy of the United States that federal agencies shall do the following: • Increase energy efficiency. • Measure, report, and reduce their greenhouse gas emissions from direct and indirect activities. • Conserve and protect water resources through efficiency, reuse, and stormwater management. • Eliminate waste, recycle, and prevent pollution. • everage agency acquisitions to foster markets for sustainable technologies and environmentally preferable ma- L terials, products, and services. • Design, construct, maintain, and operate high-performance sustainable buildings in sustainable locations. • Strengthen the vitality and livability of the communities in which federal facilities are located. • Inform federal employees about and involve them in the achievement of these goals. 1 The full text for Executive Order 13423 is available at http://edocket.access.gpo.gov/2007/pdf/07-374.pdf. 2 The full text for the Guiding Principles is available at http://www.energystar.gov/ia/business/Guiding_Principles.pdf.

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19 OBJECTIVES AND CHALLENGES Executive Order 13514 also establishes more than 20 facilities-related goals for agencies, among them the following: • stablishing a percentage reduction target for agency-wide reductions of scope 1 3 and 24 greenhouse gas emis- E sions in absolute terms by 2020, relative to a FY 2008 baseline of the agency’s scope 1 and scope 2 greenhouse gas emissions. • educing potable water consumption intensity5 by 2 percent annually through FY 2020, or 26 percent by the R end of FY 2020, relative to a baseline of the agency’s water consumption in FY 2007, by implementing water management strategies including water-efficient and low-flow fixtures and efficient cooling towers. • dentifying, promoting, and implementing, consistent with State law, water reuse strategies that reduce potable I water consumption. • inimizing the generation of waste and pollutants through source reduction. M • iverting at least 50 percent of construction and demolition materials and debris by the end of FY 2015. D • articipating in regional transportation planning and recognizing existing community transportation infrastructure. P • nsuring that planning for new federal facilities or new leases includes consideration of sites that are pedestrian E friendly, near existing employment centers, and accessible to public transit, and emphasizes existing central cities and, in rural communities, existing or planned town centers. • eginning in 2020 and thereafter, ensuring that all new federal buildings that enter the planning process are de- B signed to achieve zero-net-energy by 2030. • nsuring that at least 15 percent of the agency’s existing buildings (above 5,000 gross square feet) and building E leases (above 5,000 gross square feet) meet the Guiding Principles by FY 2015 and that the agency makes annual progress toward 100-percent conformance with the Guiding Principles for its building inventory. • ursuing cost-effective, innovative strategies, such as highly reflective and vegetated roofs, to minimize consump- P tion of energy, water, and materials. • dentifying opportunities to consolidate and dispose of existing assets, optimize the performance of the agency’s I real-property portfolio, and reduce associated environmental impacts, when adding assets to the agency’s real property inventory. • nsuring that rehabilitation of federally-owned historic buildings utilizes best practices and technologies in ret- E rofitting to promote long-term viability of the buildings. • dvancing sustainable acquisition to ensure that 95 percent of new contract actions including task and delivery A orders, for products and services with the exception of acquisition of weapon systems, are energy-efficient (Energy Star or Federal Energy Management Program (FEMP) designated), water-efficient, bio-based, environmentally preferable (e.g., Electronic Product Environmental Assessment Tool (EPEAT) certified), non-ozone depleting, contain recycled content, or are non-toxic or less-toxic alternatives, where such products and services meet agency performance requirements. • nsuring the procurement of Energy Star and FEMP-designated electronic equipment. E The executive order requires each agency to develop, implement, and annually update an integrated Strategic Sustainability Performance Plan that prioritizes agency actions based on life-cycle return on investment. The plans are to be integrated into the agency’s strategic plan and to meet additional require- ments, as specified.6 The June 2010 Presidential memorandum “Disposing of Unneeded Federal Real Estate—Increasing Sales Proceeds, Cutting Operating Costs, and Improving Energy Efficiency” 7 directs federal agencies to accelerate efforts to identify and eliminate excess properties in order to eliminate wasteful spending of taxpayer dollars, save energy and water, and further reduce greenhouse gas pollution. It also estab- 3 Scope 1 emissions are defined as direct greenhouse gas emissions from sources that are owned or controlled by the federal agency. 4 Scope 2 emissions are defined as direct greenhouse gas emissions resulting from the generation of electricity, heat, or steam purchased by a federal agency. 5 Water consumption intensity is defined as water consumption per square foot of building space. 6 A Crosswalk of Sustainability Goals and Targets is available at http://www1.eere.energy.gov/femp/pdfs/sustainabilitycrosswalk.pdf. 7 Available at http://www.fedcenter.gov/admin/itemattachment.cfm?attachmentid=307.

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20 ACHIEVING HIGH-PERFORMANCE FEDERAL FACILITIES lishes a target of saving $3 billion government-wide through the disposition of excess buildings, space consolidation, and other methods by the end of FY 2012. Most of these mandates have not been funded. The exception is the American Reinvestment and Recovery Act of 2009 which directed $5.5 billion to the General Services Administration to convert federal facilities into high-performance green buildings and to create jobs in the architecture-engineering- construction industry. Additional billions of dollars were allocated to the Department of Defense and other federal organizations to improve the energy efficiency and other characteristics of their facilities. All indications are that future funding for many federal agencies and their programs will decrease. CHALLENGES AND BARRIERS The development of high-performance federal facilities has the potential to result in substantial long- term cost savings and cost avoidances through more efficient use of energy, water, and other resources. Before this can happen, however, federal agencies will need to find ways to overcome a range of chal- lenges and barriers. Most of these are long-standing and well documented. All are interrelated. Embedding Sustainability into Everyday Decision Making In the federal government, those who directly influence federal facilities investments include depart- ment and agency senior executives, facilities program managers, budgeting and financial analysts, Congress, the President, other policy makers, and special interest constituencies (NRC, 2004). In this decision-making structure, the various government entities have diverse but overlapping objectives. As shown in Figure 2.1, some decision-making and operating groups, such as the Office of Management and Budget (OMB) and the Congressional Budget Office (CBO), focus on balancing the budget, while departments and agencies focus on issues related to their missions. U.S. Public Agency Management President OMB and CBO and Congress Programs Facility Managers Human Administration Building Operating Resources Budgetary Vision Condition Costs Goals Fiscal Mission Regulatory Policy Objectives Compliance Projects Facilities and Life-cycle Legislative Infrastructure Management Mandates New Initiatives Constituent Concerns FIGURE 2.1 The various stakeholders in federal facilities investments and their diverse and overlapping objectives. SOURCE: fig 2-1.eps NRC, 2004.

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21 OBJECTIVES AND CHALLENGES A primary challenge for the federal government and its agencies is to find ways to embed sustainable thinking into all processes such that sustainability becomes the preferred choice of decision makers at all levels, across a number of organizations with different objectives. Excess Facilities That Siphon Off Resources The fact that federal agencies own more facilities than required to support their current and future missions is a long-standing and well-documented issue (NRC, 1998, 2004; GSA, 2010; GAO, 2011), most recently recognized in the June 2010 Presidential memorandum “Disposing of Unneeded Federal Real Estate.” This issue takes on a new urgency in an era of constrained resources: Unneeded facilities use energy and water, materials, and staff time, and siphon off funding that could be better used to retrofit buildings that directly support agencies’ missions and programs. That agencies have found it difficult to dispose of unneeded facilities is well documented. The reasons for this include myriad regulations for transferring title to nonfederal entities, disincentives created by the budget structure, security issues related to the location of some excess facilities, and the condition of some facilities (NRC, 1998). Additional issues include the “numerous stakeholders that have an interest in how the federal government carries out its real property acquisition, management, and disposal practices” and a “complex legal environment that has a significant impact on real property decision making and may not lead to economically rational outcomes” (GAO, 2011, p. 5). The most visible and far-reaching effort to dispose of unneeded federal facilities has been the Base Realignment and Closure (BRAC) process. Through BRAC, the Department of Defense, in conjunc- tion with an independent commission, first determined which facilities were needed to support current and future missions (alignment) and then identified which facilities were excess and should be closed. This process was not without controversy. Any future activities to dispose of excess federal facilities on a large scale will also raise many issues and concerns on the part of the public, Congress, federal agencies, and other stakeholders. Federal Budget Process Each of the mandates related to federal high-performance green buildings specifically calls for the use of a life-cycle perspective or life-cycle costing. A life-cycle perspective involves consideration of all phases of a building’s life cycle: programming/planning, design, construction, operations, maintenance and repair, retrofit, and demolition or deconstruction. Life-cycle costing for buildings involves looking at the interactions, costs, and performance of all of its components, from planning through operations, through disposal. The phases in a building’s life cycle vary widely in time, costs, and use of resources. So, while it may take 1 to 7 years to plan, design, and construct a building, once built it will be used for 30 years or longer. During the time a building is used, the costs to operate, maintain, and repair it will be six to eight times greater than the initial cost of design and construction (NRC, 2004). For that reason alone, a focus on the life-cycle costs of buildings, not just the first costs of design and construction, is important for effective decision making and the long-term economic health of the organizations that own them. One significant barrier to effective implementation of a life-cycle perspective and for life-cycle costing is the federal budget process, which is structured to focus only on the first costs (design and construction) of new buildings and major retrofits. During the budget process, agencies’ funding requests for the design and construction of new buildings and major retrofits are considered on a case-by-case

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22 ACHIEVING HIGH-PERFORMANCE FEDERAL FACILITIES basis under separate line items. In contrast, funding requests to operate, maintain, repair, or demolish facilities are lumped together in a different line item that collectively applies to all existing facilities. As a result, up to 85 percent of the total life-cycle costs of buildings are not transparent to or routinely considered by executive decision makers (NRC, 2004). The focus on first costs is reinforced by the budget “scorekeeping” procedures mandated as part of the Budget Enforcement Act of 1990. Scorekeeping is a process for estimating the budgetary effects of pending and enacted legislation. Scoring a proposal for funding a new facility or major retrofit is intended to provide the transparency needed for effective congressional and public oversight. In fact, the scoring of major facilities proposals discloses only the projected design and construction costs, not the full life-cycle costs (NRC, 2004). Scorekeeping procedures also hinder energy supply and technology provisions in funding autho- rization bills (PCAST, 2010). A recent report of the President’s Council of Advisors on Science and Technology (PCAST) recommended that OMB “should develop criteria for determining the life-cycle costs and for including social costs in evaluating energy purchases, and should incorporate this method- ology into agency procurements so that the federal government maximizes its influence on clean energy development that is most economical in the long run” (PCAST, 2010, p. 20). Scorekeeping procedures create incentives for agencies to drive down the first costs of facilities, even if doing so drives up operation and maintenance costs, in order to lessen the impact on the current-year budget (NRC, 2004). In this way, the scorekeeping procedures can indirectly increase the long-term costs of facilities operations and maintenance. Another budget-related challenge is the lag between the time when an agency identifies the need for a new building or major retrofit and the time when funding is received to construct it. In the federal government, this time period can last as long as 5 to 7 years (Figure 2.2). In the interim, new approaches, technologies, and evidence-based knowledge for high-performance buildings can be developed, and Need identified Design Funding Authorization (by Construction Funding Agency or Congress) Authorization (typ. by Congress) Conceptual Planning Scope Definition/ Schematic Design Detailed Design Construction FIGURE 2.2 Generic process map for federal building projects. SOURCE: FFC, 2003. fig 2-2.eps

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23 OBJECTIVES AND CHALLENGES project designs can become stale by sitting on a shelf. If an agency proceeds with construction but fails to update the design, a newly constructed or renovated building can be obsolete at initial occupancy. The time lag between funding for design and funding for construction also makes it difficult for agencies to use project delivery processes such as design-build, which undertake design and construction on concurrent paths, not as separate processes. Because funding for design and construction is often allocated in different years, agencies use bridging documents or other work-arounds that are inherently less efficient than design-build is intended to be. Segmented Processes That Fail to Optimize Resources Segmentation in all phases of building design and operation is pervasive, long-standing, and well documented (NRC, 2009). Today, most buildings are created and retrofitted through a series of phased, segmented processes: programming/funding, design, construction, operations, maintenance, retrofit, and disposal or demolition. Each phase involves different actors with different objectives, different processes, and differing incentives (Figure 2.3). This level of segmentation fails to optimize the resources invested in buildings—time, materials, staff expertise, technologies, funding—and also results in greater room for error, lost opportunities for innovation, and less than optimal building performance. Current federal practices treat the decision making and funding for building projects separately Maintenance & Repair Mfgr. of Raw Materials, Materials Component Contents & Systems Furnishings C O M Owner M Facility Operation Facility Renovation Demolition Needs/ I Design & Use Construction Planning S S I O N I N G Standards, Codes & Regulatory Approvals Recycle FIGURE 2.3 Phased, segmented processes used throughout a building’s life cycle. SOURCE: Originally adapted from a pre- fig 2-3.eps sentation by NIST. Published in NRC, 2009.

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24 ACHIEVING HIGH-PERFORMANCE FEDERAL FACILITIES from those for building furnishings, equipment, and operations. This is significant because over the life of a facility, computers, copy machines, lighting, and other equipment will use substantial amounts of energy, water, and other resources to operate. The fastest growing segment of energy use in buildings is, in fact, the energy used to power electronics, computers, and servers (DOE, 2008). Because the energy used by computers and servers, electronics, equipment, lighting, and appliances typically are not accounted for up front in the planning process, agencies are losing a significant oppor- tunity to reduce their total energy use and to meet their mandates. Lack of Alignment Between Reporting Requirements and Performance Measurement Systems Each mandate related to federal high-performance buildings sets goals and targets for meeting those goals, and it establishes baselines and performance indicators for measuring progress toward the goals. Although the overall intent of these mandates may be similar, the accretion of these mandates over time has resulted in several different obstacles for creating high-performance buildings. One obstacle is the multitude of reporting requirements and different baselines. Agencies are required to track and report total energy consumption, greenhouse gas emissions, total water consumption, reduc- tion of fossil fuel use, use of renewable energy, and so forth. To measure progress in meeting a variety of goals, agencies must use a variety of baselines: EISA, for example, requires agencies to measure the reduction of energy and fossil fuel use against a FY 2003 baseline. Executive Order 13423 requires federal agencies to reduce their total water use and to track progress against a FY 2007 baseline, and Executive Order 13514 sets a baseline year of FY 2008 for tracking greenhouse gas emissions. A good deal of staff time is spent in creating the various baselines and tracking and reporting the results. Unfor- tunately, effective, transparent communication with decision makers and the public about what is actually happening becomes problematic when a variety of resources and baselines are involved. The accretion of policies, guidelines, standards, and legislation over time has also led to a lack of alignment among performance measures. In some cases, the measures are in conflict or create disincen- tives for sustainable practices. For example, agencies have been directed to (1) reduce their energy use and (2) reduce the number of square feet they occupy. Reducing total square footage should, intuitively, reduce energy use. However, progress in reducing energy use is measured in terms of energy used per square foot. Even if an agency is successful in reducing its total square footage, its energy use per square foot may increase and it will appear that energy use is actually going up. This lack of alignment among performance measures undermines the achievement of what should be complementary objectives: reduc- ing energy consumption and reducing total building square footage. Some mandates establish interim goals with the intent of ensuring that federal agencies are making progress in meeting more ambitious, long-term goals. If agencies make significant capital investments focused only on interim goals, they risk long-term sub-optimization: Once major systems or components have been incorporated, it is difficult and expensive to change them again in less than 20 years. Perceived Higher Costs of Building Green A significant barrier to developing high-performance green buildings is the widespread perception that green buildings cost much more to design and construct than conventional buildings. A 2010 study documented that people thought green buildings cost 17 percent, on average, more up front. However, the same report gathered evidence-based data for 146 green buildings which showed that the actual cost premium was closer to 2 percent of total design and construction costs (Figure 2.4). Over the lifetime of

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25 OBJECTIVES AND CHALLENGES Added Cost to Build Green FIGURE 2.4 Cost of building green: evidence from 146 green buildings. SOURCE: Kats, 2010, and Appendix I. fig 2-4.eps bitmap a green building, the savings in energy use alone will far outweigh the initial 2 percent premium (Kats, 2010; Appendix I of this report). The overall lack of evidence-based data to support the case for a premium up front in order to achieve life-cycle cost savings has made it difficult for federal agency managers to make a business case for high-performance buildings. Similarly, the cost of using renewable energy sources can be higher than the cost of fossil fuels, making it equally difficult for agencies to make a business case based solely on financial return on investment. Workforce Skills and Occupant Behavior Effective use of new technologies and new processes requires a workforce that is adequately trained to make decisions and implement them to maximum benefit. Facilities managers must also be adequately trained to operate systems at their optimal level of performance and to understand how things work so that they can fix problems. At the workshop, federal agency managers reported that they were unable to hire enough resource managers who understand new technologies or the interaction of complex building systems well enough to operate them effectively. One report (NRC, 2008) recognized that the skills of the federal workforce are not well aligned with the requirements of 21st century facilities asset manage- ment and that additional training is needed (NRC, 2008). The effective operation of high-performance facilities is also dependent, in part, on building occu- pants. Occupants can easily undermine effective building operations by bringing in additional appli- ances and equipment (e.g., heaters, fans, coffee pots), by leaving computers and lights on, and similar practices. Occupants need to understand how their behavior can affect effective facility operations and, in turn, how facility performance can affect their health and productivity.

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26 ACHIEVING HIGH-PERFORMANCE FEDERAL FACILITIES Widespread Deployment of Innovative Technologies for High-Performance Buildings Meeting mandates to reduce energy and water use in facilities, to reduce greenhouse gas emissions, and to use environmentally preferable products requires the use of new technologies and products. The barriers to deploying innovative technologies on a widespread basis are well known and well documented. The market for technologies for high-performance facilities consists of many different components designed to achieve different purposes, thousands of developers and suppliers, and poten- tially hundreds of millions of users (NAS-NAE-NRC, 2010). The size and complexity of this market, the lack of knowledge about the effects of some of these technologies, and risk-averse behavior on the part of suppliers and purchasers limits the adoption of new technologies and tools. Other factors that come into play include the following: • Limited supply and availability of some technologies; • Consumers’ lack of information and lack of time to do the necessary research; • Lack of capital for investment; • Fiscal or regulatory policies that discourage investment in high-performance technologies, even inadvertently; • Building codes and standards; and • Perceived risk of new technologies and concerns about legal claims and liability in the event of failure (NAS-NAE-NRC, 2010). Gaps in Knowledge Although much progress has been achieved in all facets of creating high-performance facilities, additional research is needed about processes, metrics, and evidence-based design, along with additional testing and development of new tools and technologies. The Federal Research and Development Agenda for Net-Zero Energy, High-Performance Green Buildings (NSTC, 2008) addresses a range of research and development needs related to • Effective performance measures and metrics; • Net-zero-energy building technologies and strategies; • A scientific and technical basis for significant reductions in water use and improved rainwater retention; • Processes, protocols, and products for building materials that minimize resource utilization, waste, and life-cycle environmental impacts; • A knowledge base and associated energy efficiency technologies and practices needed to promote occupant health, comfort, and productivity; and • Technology transfer. Additional areas require more research and development. For example, the interdependencies among systems are generally unknown, which creates uncertainty and reduces willingness to invest in the com- mercialization of promising technologies. Chapter 3 discusses the levers of change that can be used by federal agencies to overcome the identified challenges, barriers, and gaps in knowledge so that they can meet objectives related to high- performance facilities.