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Revealing Ratings to Validate Value of Energy Efficient Space - Building Priorities Briefing

What do Seattle, Austin and New York have in common? They've all enacted regulations to expose energy-wasting buildings. Owners of large buildings will have to disclose their energy scores to prospective buyers, tenants and lenders. Similar laws have been passed in three states -- and more are on the way. In this month's briefing we explore what's driving these mandates, and how they affect building owners and tenants. Some building owners are making improvements now, to raise their energy scores before they're made public. What's the business case? We'll learn about that, as well as where are the best places to look for low-cost and no-cost ways to boost a building's efficiency score. (podcast) (transcript)

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Building energy scores - editorial graphic on EnergyPriorities.com

Owners of large buildings will have to disclose their energy scores to prospective buyers, tenants and lenders, under new laws in 6 state and local jurisdictions. (EP photo)

Program notes & transcripts

From Seattle Washington to Washington DC, building owners are taking a new interest in how much energy their buildings waste. That's because lawmakers in a half-dozen cities and states are taking an indirect approach to making buildings more efficient.

New rules require owners of large buildings to measure their energy use through a process called benchmarking. It uses the preceding 12 months of energy consumption to calculate a score for each building.

But that's not the part that has the attention of owners. The laws go on to require public disclosure of those energy scores whenever a building is sold, leased, or refinanced.

That's not unheard of. Europe is well ahead of the U.S. when it comes to building energy performance labeling.

California led the way here in 2007 and gave owners almost 3 years to get ready for disclosure. It was soon joined by the District of Columbia, Austin Texas, and New York City. Seattle is the latest jurisdiction to enact a mandate, which strengthens a 2009 Washington state law.

Part 1: What's behind the new rules for energy benchmarking and disclosure

More on benchmarks

All of the mandates we're talking about on this program affect commercial buildings, and some also cover multifamily residential properties, but not single-family homes.

Energy legislation now pending in Congress includes a voluntary national program for rating and labeling buildings.

Why are cities and states mandating that building owners measure energy consumption? If the goal is to make buildings more energy efficient, why not just require owners to do that?

To help us understand what's behind these new requirements, our first guest this month is Cliff Majersik, LEED AP, executive director of the Institute for Market Transformation. His nonprofit organization focuses on market-based solutions to advanced green building and energy efficiency; it's based in Washington DC.

» Transcript

Part 2: Why some owners are making improvements years ahead of the disclosure deadline

Of these latest mandates at the state and local level, some of the requirements are in effect today, and some will phase in starting in 2010 and 2011.
Energy Efficiency Guide for Existing Commercial Buildings: The Business Case for Building Owners and Managers

Understanding the economic benefits of energy efficiency has become a necessary skill for owners and managers of buildings. A new publication from leading industry organizations provides guidance for the business case to achieve energy savings.

"Energy Efficiency Guide for Existing Commercial Buildings: The Business Case for Building Owners and Managers" provides the rationale for improving and sustaining energy efficiency in existing buildings.

The guide is available from ASHRAE online.

But many owners have been benchmarking their portfolios of buildings for years. And they're making improvements, to raise their energy scores before they're made public.

In many cases, it's the tenant who pays the electric and gas bills -- so, what's the business case for a landlord to make buildings more efficient, when it's not required by law, and doesn't directly save them money?

Our second guest will shed some light on that question -- Jack Beuttell, LEED AP, is Global Sustainability Manager for Hines, a real estate investment, development and management firm based in Houston.

» Transcript

Part 3: The 5 layers of energy-efficiency opportunities in buildings

Whether the law mandates energy benchmarking and disclosure, or the market demands more energy efficient buildings, the result is that owners make improvements that reduce energy waste.

But where do they begin? How do they know it'll work? And how do they pay for it?

Here to answer those questions is Ash Awad, Vice President of Energy for McKinstry, a Seattle-based firm that designs, builds, operates and maintains commercial buildings nationwide.

» Transcript

Part 4: Take-aways for owners and tenants

Even if Cliff Majersik is right and jurisdictions race to pass benchmarking and disclosure laws, it will be a few years before those laws are ubiquitous.

That gives owners time to improve their energy efficiency scores. Start by benchmarking your portfolio. The EPA's Portfolio Manager tool is free, and you don't have to wait for a law requiring you to use it. You'll find it at EnergyStar.gov.

Then look for cost-effective ways to reduce energy waste, using the 5 layers of opportunity Ash Awad described. Start with the no-cost measures, then those that might qualify for funding or performance contracts.

Once you've improved your scores, trumpet that success to your tenants and investors.

Help occupants feel like they're part of the solution -- part of achieving energy efficiency in their buildings -- as Hines does with their Green Office for Tenants program.

And if you lease space, ask the owner or manager about your building's energy rating. Let them know you want improvements that reduce energy waste.

You might not have much leverage until your lease is up for renewal; at that point ask about a green lease.

And when you shop for space, be sure you're comparing all the factors that affect your total cost per square foot -- including energy efficiency scores.