On January 1, Washington DC’s Building Energy Performance Standards became the latest jurisdiction to enact a Performance-Based Building Energy Standard; if you are a real estate owner in the District of Columbia of an asset over 50,000 square feet and already mandated to benchmark, the new Building Energy Performance Standards (BEPS) applies to your building.
Boston is expected to release similar legislation this year, joining New York City and St Louis with active laws requiring building owners not only to report but reduce the carbon emissions of their buildings by a specific date. The fines for non-compliance are significant, as illustrated by New York City LL 97, carrying a civil period of $268 per ton over the limit. Failure to report is penalized at 50 cents per square foot of the building, per month and providing a false statement carries a $500,000 fine. In simple math, non-compliance could easily mean five to six-figure penalties.
This trend is not restricted to the four cities that have already passed legislation; there are at least another dozen known cities that are actively working on drafting similar ordinances in addition to at least a state or two.
To dive a little deeper into what one of these ordinances looks like, let’s take a closer look at the DC Building Energy Performance Standard (BEPS):
Starting January 1, 2021, existing buildings that meet BEPS criteria will be required to meet a minimum energy performance threshold. While past benchmarking requirements required buildings to report their energy consumption performance, this new law actually sets minimum criteria that the building must perform. These criteria will be placed into increasingly more efficient performance levels every six years, called BEPS1, BEPS2, etc.
In addition to increasingly more efficient energy and water consumption minimums, the number and size of the included properties will also increase over time:
- BEPS1: Private buildings >50,000 sq ft and DC owned > 10,000 sq ft
- BEPS2: Private buildings > 25,000 sq ft and DC owned > 10,000 sq ft
- BEPS3: Private buildings and DC owned >10,000 sq ft
There are multiple paths for compliance in each five-year compliance cycle:
- Performance Path: reduce energy usage by 20%
- Prescriptive Path: Implement cost-effective energy efficiency measures
- Standard Target Path: For property types above the national median, meet the standard
- Alternative Compliance Paths: Allows the building owner to apply to follow a path with an approved alternative special criteria
What does this really mean?
It means not only must you track your building energy use but also, depending on where that building use falls against the BEPS1 standard, you may need to develop a plan to meet the BEPS1 standard. If you already meet the BEPS1 standard, you have no current legal requirements, but it is suggested that you look ahead to BEPS2 and start developing a strategy to stay above that standard as well. For those buildings below the standard, the five-year compliance path selected provides compliance.
So what do I do?
As in any sustainability initiative, the initial step is making sure you have the data around the energy performance of your property. Building utility consumption data is required, and Energy Star’s Portfolio Manager is the reporting platform for DC’s currently required benchmarking ordinance.
Once you understand your energy consumption, you will need to determine how that consumption compares against the BEPS standard in effect. As noted, if you already exceed that standard, there is nothing immediate required to do.
However, if your building is not going to be below the threshold, you need to provide the compliance path you intend to take to comply with the regulation. Real estate has always been called local, and when it comes to site-specific strategies, this holds true. The specific measures to get to compliance in one property may be quite different in another property. In each case, an educated understanding of how the building is consuming energy is required and identifying effective energy efficiency measures will be critical. This is likely followed by boots on the ground audit and then implementation of measures designed to reduce energy consumption, leveraging utility incentive programs when possible to help offset costs.
You can see from the DC BEPS example; this is a time-consuming process complicated by geography. The more diverse your portfolio, the more likely you have buildings that are sitting in jurisdictions with reporting or performance ordinances. These ordinances are increasing in frequency, and with a more regulatory-friendly federal government, this trend is likely to continue. This means you need to know the actual consumption data of your portfolio’s energy and water and how it compares against similarly benchmark properties. While Energy Star Portfolio Manager does provide this ability, the tool requires the user is going to have to interpret the results and determine the most appropriate strategy to impact the consumption levels. With budget cycles, you will benefit from being proactive and developing a long-term plan that provides you the path to compliance.