Building Performance Standards Are de Rigueur for the Future

American Council for an Energy-Efficient Economy's new white paper analyzes the most at-hand approaches to combat climate change.

There aren’t many options left: to slow down and eventually stop climate change, significant energy savings and reductions of greenhouse gas emissions must be achieved. Studies show that buildings consume 36 percent of the energy produced and are responsible for 39 percent of global carbon emissions. These numbers make the building and construction sector the largest contributing sector to climate change.

In addition to applying strict building standards to new developments, the existing buildings stock needs a complete overhaul: EIA 2020 estimates that in 2050, about 44 percent of the commercial buildings stock and 67 percent of the housing inventory will be in buildings that were built in 2019 or earlier. Even though an increasing number of programs have sprung all over the world encouraging energy efficiency upgrades to existing buildings, at current rates, the U.S. residential market will need about 500 years to complete whole-building retrofits, while the commercial sector will require roughly 60 years.

Pros and cons of the two major performance standard approaches. Visual courtesy of ACEEE

These mandatory building performance standards require existing buildings to meet some performance benchmark, such as energy or carbon intensity, performance ratings. Currently, mandatory building performance standards apply in some parts of the U.S. and only apply to commercial and rental buildings. Specifically, the ACEEE white paper outlines that such policies apply to rental buildings in Boulder, Colo., and the U.K., as well as to high-energy use commercial buildings in Tokyo, and office assets in the Netherlands. Moreover, commercial building policies have been adopted in Reno, Nev., New York City, Washington, D.C., and St. Louis. In comparison, Europe and Canada have been applying mandatory performance standards to single-family owner-occupied homes, too.

Boulder, Colorado

A decade ago, the city adopted the SmartRegs program, which requires all rental housing to show that every property is as efficient as buildings built to the 1999 Energy Code. The program builds on an existing City of Boulder rental license program that requires rental properties to obtain and renew their licenses every four years. The renewal means that each property must undergo an inspection for health and safety measures, as well as additional energy efficiency requirements. It applies to all long-term licensed rental housing, single-family homes to apartment communities.

Specifically, rentals in Boulder have two ways of proving compliance. Score at least 120 points through the Home Energy Rating System or achieve at least 100 points on the city’s scoring checklist that is based on energy and carbon savings for specific measures. Boulder also requires two water efficiency points.

In addition to SmartRegs, the city offers Energy Smart, a program financed mostly by Boulder County that provides technical assistance and support with selecting contractors for energy efficiency improvements and financial incentives, in addition to those offered by the local utility.

Results at the end of 2019 show that of the 23,000 licensed rental units, about 22,500 units gained SmartRegs compliance. Furthermore, throughout the eight-year compliance timeline, about half of the rental units were found to be compliant at first inspection, 17 percent were exempted and most of the remaining ones required upgrades to reach compliance.

In addition, at the end of 2018, the city estimated the program had saved about 1.9 million kilowatt-hours of electricity, 460,000 therms of natural gas, $520,000 in energy costs and 3,900 million of metric tons of carbon dioxide, following an investment of roughly $8 million, including nearly $1 million in rebates.

Reno, Nevada

At the start of 2019, the city enacted the Energy and Water Efficiency Program, which targets both commercial and multifamily building benchmarking and building performance standards for properties of 30,000 square feet and larger. The policy covers about 71 percent of commercial buildings and 90 percent of multifamily buildings in the city.

To obtain the energy targets, a building owner has four options to choose from:

  • ENERGY STAR score of 50 points or higher
  • The property’s energy-use intensity (EUI) equivalent to or better than the performance of 50 percent of all covered properties of its type
  • The property achieved an ENERGY STAR score at least 15 points higher than the score it received during its baseline year
  • The property’s weather-normalized source EUI was reduced by at least 10 percent relative to its performance in the baseline year

To obtain the water targets, a building owner has three options to choose from:

  • ENERGY STAR water score of 50 or higher
  • The property’s water-use intensity (WUI) equivalent of better than the performance of 50 percent of all covered properties of its type
  • The property achieved an ENERGY STAR water score at least 15 points higher than the score it received during its baseline year

Buildings unable to meet the above performance criteria have options too:

  • Complete retuning or an energy and water audit
  • Receive a LEED Certification for Existing Buildings
  • Participate and complete a utility-sponsored retuning incentive program within the past seven years
  • Perform ongoing commissioning of electrical and mechanical systems
  • Receive a net-zero energy certification

In Reno, the buildings that don’t have a central cooling system can also meet the performance standard criteria by completing three prescriptive measures involving common-area exterior lighting, pipe insulation, a cool roof, a solar water-heating system or a new water heater; participate in a demand response program; or attend at least three locally offered trainings or professional certification programs in energy conservation or energy code compliance.

Compliance must be demonstrated every seven years and with implementation just beginning, there are no results available yet. The first results will be measured in 2026.

The city also created a voluntary initiative dubbed ReEnergize Reno, aimed at improving building energy and water efficiency 20 percent by 2025, and has a Commercial Property Assessed Clean Energy (C-PACE) loan program for commercial buildings and multifamily buildings with five or more units.

Washington, D.C.

The Council of the District of Columbia adopted the Clean Energy DC Omnibus Amendment Act in 2018. The legislation requires buildings with a floor area of 50,000 square feet or more to meet the energy performance standards or take other required actions by January 1, 2026, with the standards extending to larger buildings until 2031.

The performance standards entail that GHG emissions are reduced by 50 percent by 2032 in addition to achieving carbon neutrality by 2050. These standards build on an annual energy benchmarking requirement adopted by the council in the Clean and Affordable Energy Act of 2008. It gradually phases in benchmarking, with D.C.-owned buildings with over 10,000 square feet of floor area starting in 2009, private buildings with 50,000 square feet floor area starting in 2013, buildings 25,000–49,999 square feet starting in 2022 using 2021 data, and buildings 10,000– 24,999 square feet starting in 2025 using 2024 data.

The legislation specifies that the building energy performance standards shall be no lower than the District median ENERGY STAR score for buildings of each property type. Moreover, multiple compliance pathways can be established, including a performance pathway under which a building demonstrates at least a 20 percent decrease in normalized site energy use intensity, a prescriptive pathway containing specific efficiency measures with savings comparable to the performance pathway and other compliance pathways established by the District of Columbia Department of Energy and Environment. Campuses owned by postsecondary educational institutions and hospitals will have campus-wide goals established.

These performance targets are to be revised every five years. DOEE also has the power to establish criteria for delaying the effective date for buildings that demonstrate financial distress, have a change of ownership, are vacant or receiving a major renovation, or are pending demolition.

The D.C. Council also increased funding support for energy efficiency in the same legislation establishing the standards. Specifically, it includes additional funding for the D.C. Sustainable Energy Utility—which already has a budget or more than $20 million per year—allocating $70 million over six years to the D.C. Green Bank, $3 million per year for affordable housing compliance with the standards starting in 2022, and allowing gas and electric utilities to offer energy efficiency and demand-reduction programs. Technical assistance will be provided through a “High-Performance Building Hub”.

New York City

Last April, the New York City Council passed the Climate Mobilization Act that has at core Local Law 97 of 2019, which requires buildings larger than 25,000 square feet to meet strict GHG emissions limits starting 2024.

The law will affect initially the most carbon-intensive 20 percent of all buildings. The second compliance period, from 2030 to 2034, will apply significantly more stringent limits and will affect about 75 percent of covered buildings. Many owners will need to make substantial upgrades to meet the limits, in some cases cutting emissions by as much as 50 percent or more from their 2018 levels. A third compliance period, beginning in 2035, will apply even more stringent limits.

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The legislation allows flexibility through alternative compliance paths, including up to 100 percent deduction from annual emissions limits for the purchase of credits for renewable energy generated in New York City of feeding directly into New York City. Also included is a deduction for up to 10 percent of the limits through the purchase of GHG offsets for the 2024-29 period. In addition, somewhat similar to air rights in the city, the law permits the possibility for a new trading system through which individual buildings could trade emissions reductions with other buildings.

Several building types are excluded from the law’s GHG limits. The largest sector excluded is multifamily with at least one rent-regulated unit or other low-income or subsidized housing. These buildings can either meet the emissions limits or follow a prescriptive path that requires a list of relatively low-cost energy savings measures.

The law was built on Greener, Greater Buildings, a package of laws passed in 2009. Other companion programs include The Building Energy Exchange, The New York City Energy Efficiency Corp., the Retrofit Accelerator, while substantial market support activities are funded by the New York State Energy Research & Development Authority, along with incentives from the local utilities ConEdison and National Grid.

Washington State

Last May, the Clean Buildings Bill was signed into law, which requires the Washington State Department of Commerce to develop and implement an energy performance standard for covered commercial buildings with a floor area of 50,000 square feet or more, as well as to provide incentives for early compliance. Until 2026, the standard will be used as a voluntary efficiency incentive program and beginning 2026 the standard will become mandatory for buildings with a floor area of 220,000 square feet or more. The following year the mandatory requirements will be applied to buildings of 90,000-219,999 square feet and an additional year later for buildings ranging from 50,000 to 89,999 square feet.

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By November, the Department of Commerce must set a state energy performance standard for covered commercial buildings as well as multifamily buildings seeking an incentive. This metric must include EUI targets by building type and methods of conditional compliance that include an energy management plan, operations and maintenance program, energy efficiency audits, and investment in energy efficiency measures designed to meet the targets. The law’s initial performance standards will be revisited in July 2029 and every five years thereafter.

St. Louis, Missouri

This April, legislation to establish performance standards for all buildings with a floor area of 50,000 square feet or more was enacted by the city council. The initial standards will be adopted by May 2021 and take effect four years later—six years later for affordable housing. Under the bill, the standards must be updated every four years and can be no lower than the 65 percentile of current buildings of each type—in other words, at least 65 percent of buildings must upgrade each cycle. Another provision in the bill allows buildings undergoing a deep retrofit to be deemed compliant for the next 15 years.   

Several other programs help implement these standards: the Missouri Gateway Chapter of the USGBC is working with the city on education programs connected with the current building benchmarking program. Moreover, the state has PACE financing available for both commercial and residential projects. Ameren and Spire, the local utilities, offers several energy efficiency programs, including incentives, especially generous for upgrades to affordable housing assets.

Key criteria for adopted building performance standards. Table courtesy of ACEEE

The list of localities worldwide adhering to green initiatives is growing. Tokyo, the U.K., France also already have in place initiatives helping change the built environment. Boston, Canada’s British Columbia, Cambridge, Mass., Colorado, Montgomery County, Ma., Scotland, are just a few other with pending proposals.

But there is still a long way to go. Further discussions in the ACEEE report revolve around building types and sizes, which metrics should be used for performance standards, how and when should these standards apply and how stringent should they be, or whether trading should be included.

There’s also the question of whether energy-use benchmarking is a key foundation for performance standards. With 10 performance standards now in place and even more pending, the report’s authors believe that building benchmarking is generally an important precursor for performance standards. Success will be achieved by pairing building performance standards with other policies and programs, such as building benchmarking, education and technical assistance on ways to reach required performance, financial incentives and financing to help cover costs to building owners, and attention to how the performance standards apply in critical markets such as affordable housing.

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