How to Navigate Local Building Performance Regulations

Building Performance Standards (BPS) are emerging across the US, from New York’s pioneering Local Law 97 to Energize Denver and Boston’s Building Emissions Reduction and Disclosure (BERDO) local law, with many more currently in development. Focused on reducing the operational carbon impact of the built environment, these standards require existing buildings to meet performance targets for either energy efficiency or greenhouse gas emissions.

For building owners and managers tasked with ensuring BPS compliance, knowing where to start may seem overwhelming; however, through shared knowledge and best practices it is possible to navigate the plethora of policy initiatives. Here, we outline the key steps and considerations for anyone embarking on decarbonization journeys.

Leverage Support Resources Fully

Many free resources are publicly available to support owners with building codes and policies, so make full use of these training tools and step-by-step practical recommendations. Additionally, most cities with BPS have their own resource hubs which aim to alleviate marketplace uncertainty, like Illinois’ Building Energy Resource Hub or California’s Building Performance Peer Learning Collaborative and Resource Hub, which facilitate the sharing of information and learning among peers.

There is also guidance applicable to all regions, including the Low Carbon Technology Strategies Toolkit from the U.S. Department of Energy; ASHRAE’s technical resource library; and “playbooks” for retrofitting various asset types, such as RMI’s guidance for large commercial buildings and New York’s Building Energy Exchange series.

Jurisdictions that are still developing their BPS are open to receiving public input in dedicated forums, as such, there is opportunity for building owners to shape evolving policies and be part of the positive change. Where regulations already exist, most provide a range of compliance pathways. Owners will be well served to access support resources to understand all the options inclusive of performance data submission timelines, applicable adjustments, and compliance flexibility.

Collaborate and Explore Alternative Compliance Options

At HDR, we stress to clients that there is value in exploring the alternative compliance pathways outlined in policies. A degree of flexibility is integrated into many, including Local Law 97, which allows a grace period until 2026 without fines if owners develop a “good faith” roadmap for decarbonization.

Where regulations do not explicitly state similar options, such as Energize Denver, in our experience policymakers are nevertheless willing to have conversations and work with building owners and are ever evolving their program to achieve improved flexibility. Specifically speaking, Energize Denver recently released “Enhanced Flexibility” updates to their program for the remainder of 2024 and into 2025. While adhering to BPS requirements is mandatory, their intention is not to be punitive, yet to spur tangible action. Therefore, we encourage owners to maintain an open dialogue and, in cases where certain requirements pose difficulties, to see if alternative solutions exist.

Create an Impactful Decarbonization Plan

One of the most effective solutions is to devise a robust, clear forward-looking decarbonization plan of which measures should be implemented, and when, to reach your performance targets and organizational climate goals over time. Most BPS targets become increasingly more stringent at intervals of every few years, allowing owners flexibility with sequencing changes; for example, selecting lower cost energy efficiency measures at first and deferring electrification until the equipment being replaced reaches the end of its useful life.

Reductions in carbon emissions or energy usage can be iterative, as most BPS timelines extend into the 2030s or 2040s. While we encourage owners to reduce emissions as quickly as possible, decarbonization planning cycles may cover a 10- to 20-year period, depending on the BPS, allowing these to be handled as capital projects.

The objective is to demonstrate continuous improvement. When collaborating with building owners on decarbonization strategies, our first step is to benchmark current energy usage and carbon emissions to establish baseline performance; in tandem with reviewing background building information, however, before conducting a site investigation to understand the field conditions, equipment status and operational needs. Based on this, we identify facility-specific and climate-specific carbon reduction measures.

Recommendations should be viewed within a building and business context. A facility with a natural gas-fired boiler will need to electrify its heating system in the future, for instance; however, this would not be cost-effective to do immediately if the equipment has several years of life remaining.

Capture and Analyze Accurate Data

As the saying goes, “you can’t manage what you don’t measure.” Performance standards establish Carbon Emissions Intensity (CEI) or Energy Use Intensity (EUI) targets for each building, and accurate data is vital to monitor progress.

CEIs and EUIs depend on individual building characteristics; however, it is impossible for a single ordinance to encompass every building type and characteristic. Reliable data can help you adjust your decarbonization plan accordingly. Accessing comprehensive, up-to-date data can be challenging, and therefore, harnessing digital tools and automated systems, including fault detection and diagnostics, can also help to avoid energy drift.

BPS are designed so that the majority of buildings covered by a particular standard are assumed to meet its initial performance targets. For example, New York City estimates that only 10-20% of covered buildings must take immediate action to comply with 2024 CEI targets, jumping to 35% by 2030. This shows that most building owners will eventually need to act, however, having accurate data now can help optimize the best sequence of actions to maintain compliance along the way.

Maximize All Available Funding Sources

Successful plans require investment, both upfront and over subsequent years. Although the cost implications of sustainable transformation pose one of the biggest constraints for owners, HDR always advises capitalizing on the diverse funding streams and models available.

Substantial climate-related federal funding, such as the Inflation Reduction Act, Infrastructure Investment and Jobs Act, and others, ranging from grants, tax credits, and bonds to low-interest loans are available to both taxable and tax-exempt entities. In parallel, there is also support from green banks, or local, state, or utility avenues to accessing capital.

Remember the All-Important “Why”

Building performance regulations may appear burdensome at first, yet these strive to address the significant impact of the built environment on climate change. There is a strong business case and many benefits associated with better performing buildings, which can see annual savings in operational and maintenance costs of $0.60 per square foot, and $0.53 per square foot for utilities, inclusive of electricity, natural gas, water, and steam. More efficient buildings also drive public health improvements through cleaner air, while creating thousands of green jobs. These are all goals worth striving for.

In many cases, updating facilities through retro-commissioning (RCx) or an energy audit can make a real difference while delivering savings through enhanced operational performance. The decarbonization of local electricity grids and direct renewable energy procurement through a utility or energy supplier may also aid compliance.

Decarbonization policies will continue to develop and tighten, and there are many advantages to preparing early with a well-considered plan and seeking expert advice where necessary. With collaboration and consistent improvements, we can build a sustainable and resilient future for our industry and society.