In the United States, buildings account for almost 40% of energy consumption and over 30% of greenhouse gas emissions and can be a higher source of emissions in cities.1 State and local governments are implementing building performance standards to help achieve their energy and decarbonization goals for the building sector. Benchmarking is used to measure a building’s current energy performance against buildings of similar size and occupancy. Benchmarking allows building owners to understand their building’s operational performance. Currently, over 40 cities have benchmarking policies in place for public, commercial and/or multifamily buildings2. Building Performance Standards (BPS) take benchmarking a step further where outcome-based policies and laws are aimed at reducing the carbon impact of the built environment and require existing buildings to meet energy and/or greenhouse gas emissions-based performance standards3.
Source: Map: U.S. City, County, and State Policies for Existing Buildings: Benchmarking, Transparency and Beyond – IMT
The map below highlights where Building Performance Standards are in place or under consideration. Although multiple state and local governments have passed BPS policies, none have been fully implemented yet.
Source: BECP’s Tableau Public page
Washington, DC and St. Louis utilize compliance cycles where building performance standards will be updated after each cycle. Washington, DC, began their first BPS compliance cycle on January 1, 2021 and will conclude in 2026. The standards include performance targets based on Energy Star Scores or Source Energy Use Intensity.5 In St. Louis, the first BPS compliance cycle began May 4, 2021 and will conclude in 2025.6 The standards include performance targets based on Source Energy Use Intensity.
New York City and Boston utilize emission limits and greenhouse gas-based performance standards. New York City’s Local Law 97 requires most buildings over 25,000 square feet to meet greenhouse gas emissions limits by 2024. The city seeks to reduce the emissions from its largest building by 40% in 2030 and 80% by 2050.7 In Boston, the Building Emissions Reduction and Disclosure Ordinance (BERDO) sets requirements for large buildings to reduce their energy use. BERDO requires all buildings over 20,000 square feet to meet a series of emission intensity targets starting in 2025 and ending at carbon neutrality in 2050. June 15, 2022 was the initial reporting and verification deadline.8
Denver and Montgomery County, MD utilize the trajectory approach where each building has its own trajectory for reaching the final standard based on its performance in the baseline year.
Source: Building Performance Standards: Overview for State and Local Decision Makers (epa.gov)
Currently, over 20 states and 50 cities have implemented greenhouse gas emission reduction goals, and building performance standards will become more ubiquitous nationwide. Building performance standards help reduce emissions gradually over time and many municipalities try to build in flexibility with compliance pathways so building owners can budget for upgrades that will improve their buildings. Building upgrades not only help with efficiency but also lower operating expenses and increase occupant satisfaction. High-efficiency HVAC systems with improved controls increase the comfort and productivity of building occupants. For longer term compliance with BPS, building owners should focus on envelope optimization and high-efficiency heating and cooling systems, paired with modern control systems.5 Since Buildings account for over 30% of greenhouse gas emissions, reducing the amount of energy used in buildings is essential to achieve energy and decarbonization goals.
The views expressed herein are presented for informational purposes only and are not intended as a recommendation to invest in any particular asset class or security or as a promise of future performance. The information, opinions, and views contained herein are current only as of the date hereof and are subject to change at any time without prior notice.
Assistant Vice President, Assistant Construction Manager
Boyd Watterson Asset Management, LLC