Policy Issues

ENERGY STAR - For Tenants

ISSUE

To complement its “whole building” rating program, in 2018 EPA issued its first labels to recognize commercial tenants for high performance design and construction of leased spaces.

Winners of the inaugural “ENERGY STAR for Tenants” award occupy 4.2 million square feet of commercial leased space across the nation.

The behavior, space design, and equipment choices of tenants can account for more than 50% of energy consumed in commercial buildings – beyond the owner’s ability to control. Evolving EPA’s ENERGY STAR program to add tenant-based recognition is thus a key objective to achieve better efficiency, lower energy use, and a reduced carbon footprint attributable to U.S. real estate.

Position

The Real Estate Roundtable strongly supports “ENERGY STAR for Tenants.” We were the key advocates that urged Congress to give EPA authority to create the program through the Energy Efficiency Improvement Act of 2015.

The tenant recognition label should become a permanent offering in EPA’s family of ENERGY STAR products. The 2018 awards were a great start, and we encourage EPA to commence the next round of “ENERGY STAR for Tenant” labels as soon as possible.

Background

“Split incentives” are a barrier to deployment of energy efficiency investments in buildings. Tenants – who are responsible to pay their own utility bills under triple net leases – do not shoulder the owner’s capital investment risk for central system HVAC, windows, roofs, and other whole-building improvements. “ENERGY STAR for Tenants” can help better align owners and lessees around shared energy and climate goals, by providing tenants with deserved recognition for the high performance investments they make in their own leased spaces.

Commercial lessees who received the initial “ENERGY STAR for Tenants” award in 2018 demonstrated satisfaction of EPA’s five design and construction criteria:

(1) estimate energy use in their space;

(2) separately meter their energy use;

(3) share that space-level data with their landlord/building manager;

(4) deploy high efficiency lighting; and

(5) inventory equipment in their spaces and use ENERGY STAR-labeled equipment where possible.

As EPA gears up for version 2.0 of “ENERGY STAR for Tenants” recognition, the agency will modify these criteria with “lessons learned” from its first round of awards.

ENERGY STAR for Tenants Links: