The Real Estate Roundtable and industry partners encouraged the U.S. Environmental Protection Agency (EPA) on Sept. 14 to enhance its set of effective, standardized, and voluntary federal tools that can assist real estate companies meet climate targets imposed by city and state laws. (Real estate coalition letter, Sept. 14)
EPA Standards to Quantify Emissions
- The coalition endorsed EPA’s planned improvements to its free, online Portfolio Manager benchmarking tool, announced in an ENERGY STAR July 2023 policy brief. Nearly 25% of U.S. CRE space measures energy and water use, waste disposal, and GHG emissions using Portfolio Manager.
- Without EPA’s voluntary resources to support uniform emissions measurement, compliance with local mandates is “exceedingly difficult, impracticable, and in some cases, impossible,” the letter states.
- “We value greatly our longstanding collaboration with the US-EPA’s ENERGY STAR program. It is the gold standard of resources which help our industry report on energy efficiency and the financial impacts from the increase of renewable energy supplies,” said Roundtable Sustainability Policy Advisory Committee Chair, Tony Malkin (Chairman, President, and CEO, Empire State Realty Trust), below.
- Malkin added, “Non-binding federal guidelines from the EPA’s strong and best-in-class analytical frameworks are the North Star through which local governments can inform their law-making, and this helps to bring some sense and order to the otherwise conflicting patchwork of climate laws and frameworks developed by states, cities, and NGOs. The future is hard facts and data, and our industry is fortunate to have a constructive and productive relationship with the EPA that focuses on points on the board, the how to address the what.”
- The American Hotel & Lodging Association; Building Owners and Managers Association (BOMA) International; CRE Finance Council; ICSC; Mortgage Bankers Association; NAIOP, Commercial Real Estate Development Association; and Nareit® joined The Roundtable on the coalition letter.
Anticipated SEC Climate Rules
- The Roundtable’s call for uniform methods to calculate and report emissions anticipates overdue rules this fall from the U.S. Securities and Exchange Commission (SEC). The SEC’s rules are expected to compel registered companies to disclose in investor filings material financial impacts related to climate change. (See Roundtable Weekly, June 10, 2022 and RER comments).
- Gensler is also scheduled to testify before the House Financial Services Committee on Sept. 19.
The Biden administration’s emphasis on climate policy will continue this fall, when it is expected to propose a uniform federal definition on the long-term concept of “zero emissions buildings.” The Roundtable’s SPAC will convene a working group to analyze the definition upon its release for public comments.
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U.S. Environmental Protection Agency (EPA) Administrator, Andrew Wheeler, above right, met yesterday with Real Estate Roundtable President and CEO, Jeffrey D. DeBoer, above left, to discuss a wide range of energy and environmental policy matters that impact the U.S. real estate sector. (Video on Roundtable’s YouTube page)
DeBoer interviewed Wheeler at The Roundtable’s offices in Washington, D.C., as part of a series of “listening sessions” between EPA and stakeholders. Their discussion covered:
- EPA’s development of a standardized process to systematically calculate the economic costs and environmental benefits of its regulatory programs (video at 3:29);
- A “science transparency” regulation that makes the scientific studies relied upon by EPA available to the public (video at 4:56);
- Wheeler’s implementation of a “lean management” system to streamline the agency’s procedures for project permitting and environmental reviews (video at 8:15);
- ENERGY STAR building ratings, and EPA’s corollary Tenant Space program that will launch on October 13. Wheeler stated he is a “strong” ENERGY STAR proponent, expanding the program to cover tenant spaces was “the right thing to do” – and that these platforms must remain voluntary to spur technological innovations deployed in buildings and manufacturing. ( video at 12:40);
- EPA’s development of COVID-related guidance to help the economy re-open, such as updated Portfolio Manager benchmarking instructions to account for recent changes in building occupancy and hours of operations, EPA’s approvals of cleaning and disinfecting products to combat COVID-19, and information on flushing pipes and plumbing systems to maintain indoor water quality (see, e.g., Roundtable Weekly, July 31, 2020 and May 22, 2020) (video at 15:45)
- Public-private partnerships to re-develop Brownfield sites in economically-distressed “opportunity zones” created under the 2017 Tax Cuts and Jobs Act. Wheeler remarked that every dollar EPA invests in a Brownfields clean-up leverages up to an estimated $20 dollars in private sector investment capital for surrounding low-income neighborhoods. ( video at 18:40)
- Also yesterday, EPA career staff spoke to The Roundtable’s Sustainability Policy Advisory Committee (SPAC) regarding the imminent launch of the ENERGY STAR Tenant Space program on October 13. Opportunities to certify high performance design and construction of leased office spaces will become a permanent EPA offering, and stem from the so-called “Tenant Star” law Congress passed in 2015 with the Roundtable’s strong backing. (Commercial Property Executive, May 4, 2015)
The Roundtable participates in EPA’s Smart Sectors Program, the agency’s platform to collaborate with industry sectors to protect the environment and public health though sensible, cost-effective regulatory and incentive programs. (EPA news release, Oct. 3, 2017)
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The U.S. Environmental Protection Agency (EPA) announced ENERGY STAR program guidance this week to reflect changes in building operations due to the COVID-19 pandemic. The guidance was developed after EPA sought input from The Roundtable’s Sustainability Policy Committee Advisory Committee (SPAC).
- The EPA guidance – “Has COVID-19 affected ENERGY STAR certification?” – impacts real estate industry practices regarding the web-based “Portfolio Manager” tool used by more than 450,000 properties (or nearly 45% of U.S. commercial building space) to measure, benchmark, and track energy, water, and waste management in buildings. “Portfolio Manager” is a voluntary platform at the federal level for private sector buildings although a number of state and local laws mandate its use in major markets.
- EPA explained that building owners and managers should update Portfolio Manager “use details” to reflect changes in occupancy and operations that may have occurred since the start of the pandemic – for both the numbers of workers in a building and the asset’s weekly operating hours. (Point #1 in EPA’s guidance) The agency also provided practical instructions on how to update such “worker numbers” and “hours of operation” details in the Portfolio Manager tool.
- When merged with data on a building’s actual energy consumption, these “use details” are key variables to determine a 1-100 ENERGY STAR rating that allow investors, tenants, regulators, and other audiences to assess an asset’s energy performance compared to like-kind buildings.
- EPA staff sought input on these matters at SPAC’s “virtual meeting” on June 12, which was held in conjunction with The Roundtable’s remote Annual Meeting (Roundtable Weekly, June 12). SPAC members were surveyed for their recommendations about how ENERGY STAR should address changes in building operations during the pandemic. The committee’s preferred option is now reflected in EPA’s latest guidance.
- EPA plans to issue additional guidance (expected in September) to advise owners and managers on how to apply for ENERGY STAR certifications that may be awarded to buildings in 2020. (Point #3 in EPA’s guidance) The key clarification in this week’s announcement is that updating “use detail” data to reflect COVID-era operations is prerequisite for the ultimate ENERGY STAR “label,” which may be granted for a building that ranks “75” or higher on EPA’s scale.
- This week’s guidance is the latest example of longstanding cooperation between the ENERGY STAR program and SPAC. It follows collaborations to update the technical models that EPA currently uses to “score” buildings (Roundtable Weekly, July 19, 2019). SPAC also assisted the agency with developing the “ENERGY STAR Tenant Space” program to recognize high performance design and construction of leased office. (Roundtable Weekly, June 15, 2018)
SPAC is led by Chairman Anthony E. Malkin (Chairman, President, and CEO, Empire State Realty Trust) and Vice Chairman Daniel Egan (Senior Vice President, Energy & Sustainability, Vornado Realty Trust).
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The U.S. Environmental Protection Agency (EPA) on July 15 released highly anticipated updates to its ENERGY STAR scoring model – a key federal label that rates and compares U.S. buildings’ energy performance. The scoring update includes changes advocated by The Real Estate Roundtable and other real estate organizations.
- ENERGY STAR is a widely recognized, national label used as a market signal for well-managed property assets with smaller carbon footprints. The label impacts nearly 35,000 buildings and plants nationwide, representing more than 5 billion square feet of commercial space. ( ENERGY STAR “Facts and Stats “)
- In a significant improvement affecting office and other property types, EPA will reintroduce a heating degree day (HDD) adjustment into the scoring process. Including HDD in ENERGY STAR equations will result in more equitable ratings for properties in all climates. As a result, some office buildings in colder climates will see score increases – and buildings in warmer locations will not see score decreases. (Analysis and Key Findings from EPA’s Review of the ENERGY STAR Score Model for Office Properties, July 15)
- Last August, EPA announced the first updates to its ENERGY STAR office rating model in over a decade. Initial analyses by The Roundtable’s Sustainability Policy Advisory Committee (SPAC) indicated that EPA’s equations at that time produced arbitrary scoring results. In particular, a SPAC working group initially identified and then advocated for the result ultimately announced by EPA this week – to include the HDD scoring adjustment.
- Since last September, EPA has suspended certifications for office, warehouse and other property types during a “study period” to assess its scoring models with stakeholder groups. (Roundtable Weekly, Sept. 14)
- The Real Estate Roundtable sent a summary of recommended changes to EPA on Nov. 26, urging revisions to the scoring model so that buildings of all sizes located in varying climate zones across the country are rated fairly. (Roundtable Weekly, Nov. 30)
The Roundtable’s Sustainability Policy Advisory Committee (SPAC) is led by its Chairman, Anthony E. Malkin (Empire State Realty Trust), left, and Vice Chair Daniel Egan (Vornado Realty Trust)
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- “The Roundtable’s constructive engagement with the EPA over the last 10 months has resulted in a better outcome on an issue with massive national implications for our industry,” said Anthony E. Malkin, Chairman and CEO of Empire State Realty Trust, and Chairman of The Roundtable’s Sustainability Policy Advisory Committee (SPAC). “We commend EPA for acting on our feedback and their transparency and candor, which led to an improved set of ENERGY STAR scoring models. In particular, the agency took the corrective action to account fully for climate variations so that all types of commercial buildings – no matter where they are located, in hot or cold temperature zones – are on a level playing field as owners respond to investor, tenant, and other market demands to attain ENERGY STAR ratings for their assets.”
- On July 17, EPA released a 23-page presentation – Update on the ENERGY STAR Office Model for U.S. Properties.
- On July 22, updated office property scores will be live in EPA’s Portfolio Manager, an online tool used to measure and track energy and water consumption, as well as greenhouse gas emissions. EPA advises stakeholders to download their current scores before July 21, as Portfolio Manager will be unavailable that day to allow for the release of the updated score model.
- On July 31, EPA will reinstate ENERGY STAR certification for office buildings, after its suspension since last September. (EPA’s ENERGY STAR resources)
Malkin also noted, “The Roundtable’s work with EPA is far from finished. We are in the midst of active engagement to ensure that federal-level building energy data, on which ENERGY STAR is based, is robust and reliable; that EPA continues its recognition programs for tenants to label high-performance leased spaces; and that the EPA provides critically important federal guidance to help synchronize emerging state and local mandates that address buildings and climate change. The ENERGY STAR whole-building rating program is now back on track, providing The Roundtable with the policy foundation we need to pursue other important objectives on SPAC’s agenda.”