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Energy Efficiency Benchmarking in the Private Sector

In the current market, many prospective buyers and tenants of buildings have no way of knowing the building’s energy efficiency.  They are therefore unlikely to buy or rent a more efficient building over a non-efficient one, limiting the market’s capability to promote sustainable infrastructure.  Energy efficiency benchmarking laws are a way for federal, state, and especially local governments to help solve this problem.

 

Energy benchmarking laws require that energy consumption is tracked and disclosed to prospective buyers and tenants.  This is done either on a fixed yearly schedule or when a building is put on the market, and the results can be made public or shown to prospective residents.  Ideally, benchmarking should go hand-in-hand with resources that can help mitigate low energy efficiency.  When energy efficiency is disclosed to the public, it creates an incentive for building owners and builders to make their building as energy efficient as possible.  As buildings become more energy efficient, owners start saving money on operating costs.  Energy benchmarking has also helped create thousands of jobs, and has the potential to create many more.

 

While energy benchmarking saves costs in the long run, the tracking of energy consumption does present an up-front expense.  In order to protect small businesses, most commercial energy benchmarking ordinances have a size cutoff. However, in residential buildings, energy benchmarking can actually help low-income residents by bringing to light high heating, ventilation, and air conditioning (HVAC) costs that the tenant would not otherwise be aware of.


The Benefits of Benchmarking Building Performance, Zachary Hart, Institute for Market Transformation, January 1st, 2016. Read more.



Benchmarking for Local Governments, Southwest Energy Efficiency Project, January 22nd, 2014. Read more.



IMT Model Statutory Language for States or Localities to Require Building Benchmarking, Institute for Market Transformation, January 1st, 2014. Read more.



City-utility partnerships seek better building energy data, Dan Haugen, Midwest Energy News, December 12th, 2013. Read more.



Building Energy Rating and Disclosure Policies Update and Lessons From the Field, Alex Hill and Philippe Dunsky, Northeast Energy Efficiency Partnerships, February 1st, 2013. Read more.



Benchmarking and Energy Savings, Energy Star, October 1st, 2012. Read more.



Energy Benchmarking, Rating, and Disclosure for Local Governments, State & Local Energy Efficiency Action Network, May 1st, 2012. Read more.



Energy Disclosure & The New Frontier for American Jobs, Andrew C. Burr, Institute for Market Transformation, March 1st, 2012. Read more.



Energy Audits and Retrocommissioning, New York, July 1st, 2010. Read more.



Building Energy Performance Policy, Institute for Market Transformation. Read more.



Energy-Efficiency Benchmarking and Disclosure, National Resources Defense Council. Read more.



Building Energy Use Benchmarking, U.S. Department of Energy. Read more.



In New York City, NY, Benchmarking Laws requires owners of large buildings to to enter their annual energy and water use in EPA’s ENERGY STAR Portfolio Manager and use the tool to submit data to the City. According to an EPA sponsored report, the city saw a cumulative energy savings of 5.7% during the first four years of the policy (2010-2013), which resulted in total dollar savings of $267 million. An input-output analysis estimated that operations and maintenance upgrades and capital improvements associated with the policy induced the creation of 3,132 jobs during the period. 

 

In Washington, D.C., the Clean and Affordable Energy Act of 2008 (CAEA) requires that owners of all large private buildings annually benchmark their energy and water efficiency and report the results to the city’s Department of Energy & Environment for public disclosure. The District government also must annually benchmark and disclose the energy and water efficiency of District government buildings over 10,000 gross square feet.

 

The Existing Commercial Buildings Energy Performance Ordinance of San Francisco, CA, requires commercial building owners to track energy usage each year, and have a professional identify opportunities for saving energy every five years. According to the city’s 2015 Energy Benchmarking Report, the overall Energy Use Intensity (EUI) of benchmarked facilities in 2015 decreased by 18.9% compared to 2009, and the average carbon footprint of benchmarked buildings improved by 33%. Energy audits of over 800 buildings in the city found opportunities to make $60.6 million in efficiency improvements between 2010 and 2014.

 

On 2008, Austin, TX, approved the Energy Conservation Audit and Disclosure Ordinance (ECAD), which requires building energy rating and disclosure for nonresidential facilities, as well as energy audits for homes and apartment complexes. ECAD helps meet some of the goals established in the Austin Climate Protection Plan, including offsetting 800 megawatts of peak energy demand by 2020 to reduce carbon dioxide emissions by over 365,000 metric tons.

 

The Energy Benchmarking Program in Seattle, WA, requires owners of non-residential and multifamily buildings to track energy performance and annually report to the city. The purpose of the ordinance is to reduce the energy consumption of existing buildings by 20% by 2020.

 

In 2013, Chicago, IL adopted a Building Energy Benchmarking Ordinance to raise awareness of energy performance, with the goal of unlocking energy and cost savings opportunities. The ordinance calls on existing municipal, commercial, and residential buildings 50,000 square feet and larger to track energy use, report to the City annually, and verify data accuracy every three years. Although the law covers around 1% of Chicago’s buildings, these account for about 20% of total energy used by all buildings. According to the 2016 Chicago Energy Benchmarking Report, properties that have reported consistently for three consecutive years have reduced energy use by 4%, leading to an estimated savings of $11.6 million per year. Properties with two consecutive years of reporting saw a collective energy reduction of 1.9%, saving an estimated $6.2 million per year.

POLICY CONTACT


Satya Rhodes-Conway
(608) 262-5387
satya@mayorsinnovation.org
Read more about private sector energy efficiency in your city in our report Cities at Work: Progressive Local Policies to Rebuild the Middle Class.