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States, cities, and other localities are increasingly passing laws and ordinances that impose regulatory mandates on buildings to reduce greenhouse gas (GHG) emissions, energy consumption, or both. These local laws are known as Building Performance Standards (BPS).
The effect of BPS laws, and the energy consumption and emissions “targets” they would impose on buildings, can require asset owners to pay for energy efficiency “retrofits,” electrification projects, and install solar panels or other clean energy technologies. If an owner does not take such steps to reduce emissions or energy use, they could pay fines or penalties.
Flexible, voluntary guidelines–like those released for federally-owned buildings–are needed at the national level to help standardize a potential patchwork of divergent state and local laws that vary in how they regulate buildings’ energy usage and greenhouse gas (GHG) emissions.
Federal Government: No federal agency has authority from Congress to regulate private sector buildings through a national building performance standard (“BPS”). However, US-EPA and US-DOE have developed the best voluntary system in the world to recognize high-performance buildings. In particular US-EPA’s ENERGY STAR “taxonomy” provides proven strategies for quantifying, measuring, and improving commercial building efficiency. For decades, ENERGY STAR has provided the real estate industry with tools to save energy costs, reduce energy use and cut emissions.
States and Localities: A number of progressive cities and states (map) have enacted BPS mandates. Generally, state/local BPS laws impose onerous “net zero” emissions and or “electrification” targets. Failing to meet local BPS requirements can result in fines and penalties on buildings. The regulatory specifics, however, vary from jurisdiction to jurisdiction, making compliance exceedingly complex and expensive. To help bring some consistency to the nationwide “patchwork” of building performance regulations, RER has developed a peer reviewed policy guide outlining key issues and talking points that should be considered whenever a state or locality adopts a BPS law.
Non-Governmental Organizations: NGOs have developed their own BPS-type standards and climate accounting frameworks. Some have international influence across global markets. Chief among these are the Science Based Targets Initiative (SBTi) and World Resources Institute’s Greenhouse Gas (GHG) Protocol. Government bodies increasingly incorporate GHG Protocol and SBTi standards in their policies. Likewise, major real estate lending and equity institutions have also adopted these NGO frameworks to align with their ESG investment principles.
Voluntary, non-regulatory federal guidelines signifying “high performance” real estate are critical to unleash America’s energy dominance.
o These include recognition from US-EPA (e.g., ENERGY STAR and “NextGen” certified buildings) and US-DOE Better Buildings initiatives.
o US-EPA and US-DOE public-private partnership programs serve important business purposes. They provide standardized, government-backed tools and criteria for the real estate industry to:
▪ Quantify energy savings, so families and businesses can save money on utility bills;
▪ Place less strain on the electric grid so increasing demands for power can accommodate critical areas of U.S. economic growth like artificial intelligence;
▪ Attract investors by showing U.S. buildings are highly profitable and efficiently managed; and
▪ Advance technological innovations in America’s buildings to enhance our global competitiveness.
o Ample resources from Congress and the administration should be devoted to maintain and evolve US-EPA and US-DOE public-private partnerships with the real estate industry.
States and localities should ensure their building performance mandates reflect the 20-points raised in RER’s peer reviewed policy guide for fair and reasonable BPS laws.
o Chief among these points: US-EPA and US-DOE guidelines should offer compliance pathways with state/local BPS laws. Uniform federal criteria can bring rationality and consistency to the chaotic “patchwork” of BPS regulatory mandates across the country.
o No city or state BPS law should fine or penalize a “high performance” building recognized by US-EPA or US-DOE partnerships.
o Policymakers must also must also consider how BPS regulations impact key points such as:
▪ Affordability and supply of housing for low-income and working class families;
▪ Availability of debt, equity and incentives to pay for all of the retrofit projects induced by BPS laws;
▪ Reliability of local grids to provide electricity, if power infrastructure is strained by all of the extra loads caused by building electrification;
▪ Achievability of goals to reduce overall emissions, if the community’s electric grid relies heavily on fossil fuels; and
▪ Accessibility of market-based programs (e.g., RECs) to purchase clean power to help achieve an “all of the above” energy strategy.
The U.S. government should not award federal grants to induce states and localities to enforce BPS regulations on the real estate industry.
o Our system of federalism gives states and localities the right to develop BPS laws. If a jurisdiction chooses to do so, its laws should not be supported by U.S. taxpayer-funded grants resulting in costly, burdensome regulations.
o The U.S. government should not award BPS grants for local laws levying fines on buildings that the U.S. government itself lauds as “high performers”—such as through the US-EPA ENERGY STAR program
o Congress should oversee federal BPS grant awards and examine how states and localities are spending this money supported by U.S. taxpayers.
States, cities, and other localities are increasingly passing laws and ordinances that impose regulatory mandates on buildings to reduce greenhouse gas (GHG) emissions, energy consumption, or both. These local laws are known as Building Performance Standards (BPS).
The effect of BPS laws, and the energy consumption and emissions “targets” they would impose on buildings, can require asset owners to pay for energy efficiency “retrofits,” electrification projects, and install solar panels or other clean energy technologies. If an owner does not take such steps to reduce emissions or energy use, they could pay fines or penalties.
Flexible, voluntary guidelines–like those released for federally-owned buildings–are needed at the national level to help standardize a potential patchwork of divergent state and local laws that vary in how they regulate buildings’ energy usage and greenhouse gas (GHG) emissions.
The U.S. Environmental Protection Agency’s ENERGY STAR for Certification for Buildings program is a proven platform for building owners and managers to “label” their assets as top energy efficiency performers in the marketplace.
Investors, tenants, and employees seek buildings and workplaces with ENERGY STAR ratings because they signal well-managed, profitable assets with reduced carbon footprints.
