• Small and Medium Buildings
  • Energy Efficiency
  • Project Financing
  • Incentive Programs

Supports for Small Businesses to Pursue Green Building Practices

Ellie Wood
Aug 25, 2023

Guidehouse Insights Sustainability

Approximately 99.9% of all US businesses are small businesses—yet the focus of the green building market is on large businesses and commercial buildings. Money, time, and resources are major barriers to all businesses pursuing green building practices, but especially to small businesses. Fortunately, monetary and technical support is available to help.

The U.S. Environmental Protection Agency defines green building as the practice of creating structures and using processes that are environmentally responsible and resource efficient throughout a building’s lifecycle. This broad definition allows federal funds to support a wide range of greening practices.

Green Building Benefits

Small businesses should consider investing in green building practices for a multitude of reasons. Installing energy efficient systems like LED lighting controls and smart HVAC technology can yield cost savings in the long term, which enables small businesses to better allocate resources and funds to achieve other goals. Businesses don’t need certifications like LEED, WELL, or BREEAM to achieve green building efficiency; however, such certifications can bolster a company’s image, leading to brand loyalty and new environmentally conscious customers.

Funding and Incentives

The upfront costs of green building construction and energy efficient systems can be higher than traditional approaches and may seem unattainable for a small business. However, the competitiveness of the green building market has increased demand for funding. For example, in August 2021, the U.S. Department of Energy (DOE) announced nearly $83 million in funding to 44 projects that lower energy bills by investing in energy efficient building technologies, green construction practices, and building-sector workforce development. Furthermore, the Bipartisan Infrastructure Law has offered $550 million to support community-based clean energy.

Federal tax incentives are also available to support green infrastructure projects. For instance, the Commercial Buildings Energy-Efficiency Tax Deduction allows commercial building owners to deduct up to $1.88 per square foot for qualifying energy efficiency improvements. Another example is the Business Energy Investment Tax Credit, which allows businesses to claim up to 30% of the installation of renewable energy technology.

Additionally, states, cities, and counties may have their own incentive programs and funding options, ranging from tax exemptions for renewable energy systems to grants for energy efficiency programs, based on local priorities and environmental goals. Small businesses can take advantage of these offerings alongside federal programs.

Technical Assistance

Multiple government agencies and nonprofit organizations offer expertise to small businesses interested in sustainably converting their buildings. DOE’s Office of Energy Efficiency and Renewable Energy, for instance, has a Building America Solution Center that provides information on high performance construction topics, including program checklists, building science advisory tools, and a compilation of guides. The U.S. Green Building Council offers technical guidance and discounts for certificates such as LEED, and energy efficiency programs like ENERGY STAR offer energy-saving tips, conduct energy audits, and suggest cost-effective upgrades. Expert consultants trained in green building practices can also be hired.

Looking Forward

Small businesses must adapt technologically and economically to keep up with the green building market. The initial investment can seem overwhelming, but help from the government and local agencies can make green building practices achievable for small businesses. In addition to this support, new business models such as energy as a service (EaaS) can defray some of the upfront and maintenance costs. See Guidehouse Insights’ Energy as a Service for Small and Medium Sized Buildings report for information on how EaaS can provide energy efficient technology installation, operations, and maintenance with no CAPEX.