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Benchmarking Is Putting Buildings at the Center of Climate Policy

Curbing carbon emissions first requires counting them. This is done with a process called benchmarking, which helps standardize the way that emissions are reported. Benchmarking laws have popped up all over the world. Several cities around the United States are building on benchmarking ordinances, using basic carbon accounting to guide future policies. For now, complying with benchmarking laws is easy and fines are light, but more aggressive climate policies based on the numbers are already picking up speed. Buildings are one of the largest consumers of energy and therefore are one of the biggest contributors to emissions. For that reason, they are being targeted by many of the benchmarking laws. Besides the legal ramifications, buildings that aren‘t benchmarked may soon find themselves falling behind. 

Buildings are responsible for 30 percent of annual global CO2 emissions. Tackling climate change requires our buildings to operate better, but first, we must understand how efficiently they are operating now. Local benchmarking laws have been passed in New York City, Washington D.C., Austin, Philadelphia, Denver, Pittsburgh, Chicago, and many others. The process is relatively simple. Building owners of an asset of a certain size, typically larger than 50,000 square feet, are required to request annual usage statistics from their energy and water providers. Those numbers are then used to benchmark the asset, usually requiring the owner to upload the information into the Environmental Protection Agency’s ENERGY STAR Portfolio Manager system. Some ordinances also require benchmarking documents to be filed with a city office. The information is then made publicly available. That’s it, it’s that easy. 

Simply counting and making the numbers publicly available has been shown to lower emissions by 10 percent, according to the EPA. Becoming aware of energy use, energy costs, and greenhouse gas emissions helps owners and tenants begin to look for opportunities to reduce all three. Transparency is the key. Being able to see benchmarking scores allows market forces to recognize and reward high-efficiency buildings, creating an economic driver for improving others. 

Energy savings also mean cost savings. Saving just 2 percent every year adds up quickly. Benchmarking also gives owners actionable data that can guide efficiency upgrade decisions. When aggregated, it creates one of the best data sets to understand carbon curbing efficacy. The idea is to turn a building’s power bill into a roadmap, with enough roadmaps we can figure out which route is best. Benchmarking is extremely low cost, it’s not asking for any capital investment. Even still, right now only roughly 25 percent of commercial space in the United States is benchmarked in ENERGY STAR’s Portfolio Manager, a promising start. 

Punishment for failing to benchmark buildings is light, most often a fine of a few hundred dollars, with a set maximum of a few thousand dollars. Already we’re starting to see more aggressive policies based on the benchmarking numbers, ratcheting up enforcement for those owners that didn’t get the message the first time. Philadelphia City Council unanimously passed the Building Energy Performance Policy, commonly known as the Building Tune-Up, aimed at incentivizing buildings larger than 50,000 square feet to improve energy efficiency. The policy estimated it will be able to cut nearly 200,000 metric tons of carbon pollution to help the city meet its goal of cutting emissions by 80 percent by 2050. 

The law requires owners who do not have a previously certified high-efficiency building to undergo ‘tune-ups’ to energy and water systems, including inspections and corrective actions to building envelopes, HVAC, conveying systems, hot water systems, and lighting. Owners will be responsible for inspections and corrective actions covering plumbing systems, lights, sensor optimization, design issues, outside air control, energy and water bill analysis, and common maintenance items that impact energy demand. Philly’s law requires owners to hire a tune-up specialist, either a professional engineer or certified energy manager, to inspect the systems and recommend any necessary corrective action, submitting a report to both the owner and the city’s office of sustainability. Owners must resolve all corrective actions that would not require permits. Failure to file a report by September 30, 2021, will result in a $2,000 fine. Each day thereafter, $500 will be added to the total.

For benchmarked buildings that achieved an ENERGY STAR rating of 75 or higher, owners don’t have to deal with this new complicated wrinkle and simply apply for an exemption that can be automatically granted via ENERGY STAR’s public database. Must be nice. 

Benchmarking by itself is just the start. Benchmarks are the basis of the benchmarking performance standards (BPS) that will soon come to define buildings. State and local governments are coupling benchmarking policies with other programs aimed at use reduction. Most are voluntary campaigns, but as the climate crisis worsens and federal leadership doodles, many cities are ramping up regulations. Philadelphia is part of a larger trend sweeping across the United States that has cities stepping up to fill gaps in climate leadership. Philly’s tune-up policy is similar to what we’ve seen in Seattle and Washington D.C. Denver is also developing some of the highest benchmarking performance standards in the country, looking to assess hefty fines and civil penalties for buildings that refuse to upgrade Energy Star scores. 

New York City is taking things a step further. Not only will NYC require carbon reporting, but that reporting will be the basis of carbon caps. Local Law 97 requires New York City buildings over 25,000 square feet to submit a carbon report to NYC’s Department of Buildings, measuring emissions against limits set by the new law. Being over your building’s limit, which will decrease over time, will subject the property to hefty fines, assessed at $268 per year per metric ton of CO2, potentially costing owners hundreds of thousands. The fines max out at $5 million annually, still enough to make even the most profitable buildings fall into compliance. Falsifying reports will cost perpetrators $500,000 and up to 30 days in jail. 

Local leaders and policymakers are getting serious about this problem. Building owners should take heed. Benchmarking is just the beginning, the easy part. If you can’t handle benchmarking, you’re not going to like what comes next. Evaluating building systems to plan out needed repairs and optimization is the next step. Costly energy system losses will become even more costly when the city orders them to be fixed in “a timely manner” or risk forfeiting your certificate of occupancy. Getting out ahead of improvements to poorly functioning buildings will be critical to avoiding fines and mandated corrective action. Making buildings better before laws force them to be will prevent headaches and fines later on. I guess it is true what they say, “an ounce of prevention is worth a metric ton of cure.”

Associate Editor
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