Climate Communities Ber Presentation 9.6.12

BUILDING ENERGY RATING, BENCHMARKING AND

DISCLOSUREPresented to

CLIMATE COMMUNITIESJim O’Reilly

Director of Public PolicyNortheast Energy Efficiency Partnerships

(NEEP)September 6, 2012

NORTHEAST ENERGY EFFICIENCY PARTNERSHIPS“Accelerating Energy Efficiency”

MISSIONAccelerate the efficient use of energy in the Northeast and Mid-Atlantic Regions

APPROACHOvercome barriers to efficiency through Collaboration, Education & Advocacy

VISIONTransform the way we think about and use energy in the world around us.

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OVERVIEW

1. What is building energy rating or building energy benchmarking?

2. Why are cities/states adopting energy rating or benchmarking laws/ordinances?

3. How have these been developed, and by whom?

4. What have been barriers to adoption? How can we overcome those?

5. Where is this occurring?6. How can it be applied?

WHAT IT ISN’T…

“It’s creepy white vans driving by houses doing scans at night.”

- Real estate broker testifying in opposition to Connecticut building energy rating bill

‘ENERGY GUIDE’ FOR BUILDINGS

THE RATIONALE

• Existing buildings account for 40% of energy and CO2 emissions

• Most EE programs focus on new construction and natural replacement opportunities– Discretionary retrofits often neglected

• Market barriers to EE retrofits are strong– Sales and rental markets fail to value energy efficiency– Split incentives

• Real estate sales/leases are the single biggest investment most of us will ever make

THE RATIONALE

+ Bill savings + Green jobs- CO2 emissions

BACKGROUND

• 2009 NEEP report examined:• Models – U.S. and abroad• Rationale• Recommendations

• Currently being updated with lessons from the field

• Ready this fall…

TWO MARKETS, TWO APPROACHES

HOMES

Triggered Disclosure (“Time of Sale”/ “Time of Listing”)

COMMERCIAL BUILDINGS

Triggered Disclosureand

Ongoing Disclosure

TWO MARKETS, TWO APPROACHESAsset Rating Based on building assets

Less dependent on occupant behavior

Allows ‘apples-to-apples’ comparison

Operational Rating Based on performance data

Tracks occupant use over time

Compares against peers (CBECS/ENERGY STAR Portfolio Manager)

WHAT A LABEL MAY LOOK LIKE

WHAT A LABEL MAY LOOK LIKE

WHAT A LABEL MAY LOOK LIKE

WHAT A LABEL MAY LOOK LIKE

OVERCOMING BARRIERS

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• Opposition- Largely from real estate interests- Brokers – residential and commercial- Asset managers get it

- Support from large and small asset and property management firms in NYC, Philadelphia, e.g.

• Their reasons?- Cost, cost, cost

• Underlying reasons?- Failure to recognize market value of energy efficiency

OVERCOMING BARRIERS: EDUCATION/OUTREACH

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OVERCOMING BARRIERS: PROOF POINTS

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OVERCOMING BARRIERS: PROOF POINTS

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Q1 2012 | Green GaugePhiladelphia MSA Non-Green v. Green Office BuildingsPrevious 12-month review Non-Green Green

Total S.F.–

84,650,601 s.f. Projected: - 29,982,613 s.f. Projected:

Overall vacancy 16.5% Projected: 11.7% Projected:

YTD net absorption 138,160 s.f. Projected: -26,658 s.f. Projected:

Under construction or renovation 0 s.f. Projected: 1,157,412 s.f. Projected:

Average rent $22.84 p.s.f Projected: - $26.44 p.s.f. Projected:

Overall vacancy for green office buildings is

4.8% less

than non-green buildings.

Jones Lang LaSalle Research

n Non-Green buildings = 900 propertiesn Green buildings = 107 properties

Overall green office buildings have a

$3.60 higher asking rental rate than non-green buildings.

OVERCOMING BARRIERS: PROOF POINTS

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Massachusetts Commercial Asset Rating Pilot

• Two year pilot: 2011-2013 – Two Phases: Testing innovation and Demonstration

• Goal: Identify cost-effective, scalable methods to assess “as-built” building and systems to generate energy-use intensity rating – Compare energy use between buildings, independent of

occupant behaviors – Combine with operational data to provide

comprehensive energy information to inform investment opportunities

OVERCOMING BARRIERS: PROOF POINTS

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Massachusetts Commercial Asset Rating Pilot

• Phase 1– Eleven diverse office buildings modeled by four teams – Preliminary results just come in, being analyzed

• Phase 2– Currently recruiting buildings in fall 2012 – Greater Boston and the Merrimack Valley – 30-40 buildings for a statistically useful sample

WHERE IS THIS OCCURRING?

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IMPLEMENTATION

• Currently more adoption at municipal than state level

• Exceptions in:– California– Washington State– Kansas– Nevada

• Local adoptions in:– Austin– NYC– Washington, D.C.– Philadelphia

IMPLEMENTATION• California

– Requires commercial buildings to obtain, disclose ENERGY STAR ratings at time of a sale/lease/financing.

– Also exploring use of asset ratings in existing commercial buildings over the next few years.

• Washington State– Benchmarking now required for large commercial

buildings– Mandatory disclosure at the time of sale or lease

• Kansas– Disclosure of energy efficiency characteristics of

new homes to prospective home buyers prior to P&S

IMPLEMENTATION• Austin

– Requires benchmarking of commercial buildings; audit and disclosure at time of sale for homes

– Also includes mandatory upgrade under certain conditions for multi-family homes

• NYC– City's Greener, Greater Buildings Plan requires

annual benchmarking, disclosure for large commercial and multifamily buildings

– City’s first report issued just this summer• Compliance relatively high: 75 percent

• Lots of room for improvement, both in process and buildings

IMPLEMENTATION• Washington, D.C.

– All public and private commercial buildings (incl. multi-family) to be benchmarked and disclosed annually

• Philadelphia– Ordinance just passed in June– All commercial buildings >50,000 SF benchmarked,

disclosed to potential buyers/renters

IMPLEMENTATION• The not-so-successful…

– Connecticut• Little public opposition during legislative hearings• Real estate groups worked behind the scenes to

convince governor to slow effort• Watered down measure ending up dying with

session

– Vermont• Considered process initiated two years ago• Study group established, looked at different cost-

effective methods of rating and disclosure for homes

• Key committee chair was a Realtor…• Back to the drawing board

KEY CONSIDERATIONS• Build stakeholder support

– Include opposition voices

• Address issues of cost– Research/offer different compliance paths– Research proof points of value

• Emphasize ability to be a market differentiator• Understand that this will take some time

NEEP - Real Estate Checklist and Guidancehttp://neep.org/uploads/policy/NEEP_BER_Report_12.14.09.pdf

- Valuing Energy Efficiency through Disclosure

http://neep.org/uploads/policy/NEEP_BER_Report_12.14.09.pdf

Institute for Market Transformation http://www.buildingrating.org/

Consumers Union Energy Codes Campaign

http://www.consumersunion.org/energy/codes

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RESOURCES

THANK YOU

JIM O’[email protected]

Visit NEEP’s Building Energy Rating website:

http://neep.org/public-policy/building-energy-codes/building-energy-rating

91 Hartwell Avenue Lexington, MA 02421 P: 781.860.9177www.neep.org