In the fall of 2020, New York City doubled down on its well-recognized efforts to pressure the owners of large buildings to improve the energy efficiency of their assets. As of October 31, all landlords of structures over 25,000 square feet are required to post an energy-efficiency-rating “label,” updated annually, in the foyers of their buildings. Similar to the public health green/yellow/red signage in restaurant windows, the ratings range from A to F, depending on the results of a standardized audit. A recent investigation by The City, a New York online magazine, found that while many buildings are gradually becoming more energy efficient, nearly half scored Ds and Fs on last year's rankings.
New York City has been requiring building owners to submit information about the energy performance of their buildings for a decade, and this “benchmarking” policy has become gradually more aggressive, beginning with very large structures, then expanding to somewhat smaller buildings, banning the use of heating oil, and finally requiring disclosure.
“There’s some element of naming and shaming to inspire some action,” observes Chris Halfnight, policy director of the Urban Green Council, a non-profit focused on promoting building sustainability in New York. “Nobody wants to live and work in or own and operate a building that’s getting a D when there are buildings getting As and Bs.”
The premise behind regulated building benchmarking is that it forces asset managers to measure energy performance, which provides them with information they can use to upgrade their systems. While the capital costs of those retrofits aren’t trivial, more energy-efficient buildings have lower operating costs, less exposure to rising energy prices and smaller carbon footprints.
The policy is rooted in the old accountant’s adage about not being able to manage what you don’t measure. But does benchmarking produce results?
In December 2020, after a decade of benchmarking, the results of New York’s policy were impressive: “Over the last 10 years,” according to a summary by the Urban Green Council, “total emissions from roughly 3,200 regularly benchmarked properties fell by about 22.6 percent.” Levels of four major air pollutants related to the use of now banned heating oil fell by 29%.
Those results built on earlier assessments that provided proof of concept. In 2017, the National Electrical Manufacturers Association produced a survey that looked just at NYC. It found that 77% of building owners changed the way they manage their assets because of benchmarking, for example investing in more energy-efficient lighting or calibrating their HVAC systems so they wouldn’t heat and cool simultaneously. The authors cite results from other studies showing that compliance with the bylaws led to an overall 14% reduction in building energy-use intensity (i.e., energy use as a function of size) between 2011 and 2014.
A Lawrence Berkeley National Laboratory evaluation pointed out that, as of 2016, 24 jurisdictions in the U.S. had benchmarking and transparency (B&T) rules. It found that in 10 of the largest cities in those regions, buildings demonstrated “a 3 to 8 percent reduction in gross energy consumption or energy use intensity over a two- to four-year period of B&T policy implementation.” While the authors cautioned that some of the findings were preliminary, they did note that building owners also made non-energy improvements to their assets – water consumption, for instance – resulting in higher property values and improved productivity for tenants.
There’s some element of naming and shaming to inspire some action.
-Chris Halfnight, policy director of the Urban Green Council
The cities that have B&T rules aren’t just the usual suspects; they include places like Kansas City, Denver and Orlando, and (red) states like Utah and Ohio. In other words, this approach isn’t just the preserve of cities under Democratic administrations, like NYC or Seattle.
Canada, interestingly, is way behind. British Columbia has a benchmarking program, but it is voluntary, and only a year old. In Ontario, the previous Liberal government passed benchmarking legislation but didn’t bring it into effect. The Tories did enact the law, known as Energy and Water Reporting and Benchmarking (EWRB), but the regulations apply only to buildings over 100,000 square feet and exempt public sector real estate. The regulations will extend to buildings over 50,000 square feet in 2023.
As for the transparency part, the raw data collected under EWRB is released through Ontario’s open data portal. But, unlike many of the U.S. B&T laws, including New York’s, addresses aren’t disclosed, nor has the Ontario government done much with the data it does gather. As one City of Toronto energy official puts it, the information is “not particularly useful.”
Sean Brennan, Urban Green Council’s director of research, says the location data is crucial because it enables policy-makers and researchers to make detailed location-based evaluations of energy consumption patterns in the city, which in turn allows the city to focus its enforcement efforts.
The transparency, he adds, “helps the public grasp what is going on.” For example, the B&T data has been used to map energy efficiency within the city.
Anecdotally, Brennan says, the subject of a building’s energy-efficiency ratings now comes up in the context of meetings of the occupants of co-ops, or when firms looking to rent office space are reviewing leases and wondering if they’re moving into a healthy building.
Halfnight points out that B&T policies are not “a mandate to take action … It’s a necessary first step.” What’s clear, however, is that when benchmarking rules force landlords to measure and disclose how they run their assets from an energy-efficiency point of view, many will take the next step because it makes good business sense.
The emission reduction is the bonus.