Written on: July 9, 2023 by Joe Uglietto
Our Industry must deal with enormous threats to its existence each and every day. Many of us have gotten used to the usual suspects—State legislatures considering electrification mandates, clean heat standards that regulate all heating fuels and electric vehicle and electric equipment incentives to entice our customers to make the switch. However, another approach is gaining steam and will add to the squeeze should it become commonplace. This new-ish threat comes to us in the form of Building Performance Standards.
A Building Performance Standard is yet another attempt to regulate emissions, deployed primarily at the State and local levels. Colorado, Maryland and Washington State have already enacted Building Performance Standards. Boston, MA, New York City and Washington, D.C. have joined the party at the local level; Cambridge, MA, is expected to enact its own Building Performance Standard later this year.
The goal of a Building Performance Standard is to reduce emissions in commercial and industrial buildings. This is a worthy goal, to be sure, but as with the rest of the electrification plans that fit into the “nice idea, not so nice results” category, the devil—and the cost—is always in the details. Let’s take a look at a one example: Boston’s Building Performance Standard.
Building Emissions Reduction & Disclosure Ordinance (BERDO) is Boston’s recently enacted standard. BERDO sets requirements for all qualifying large buildings within the city limits to reduce their greenhouse gas emissions gradually, with a goal of net zero by 2050. Buildings larger than 20,000 sq ft or with 15 or more individual dwelling units are required to reduce their carbon footprint on an annual basis. All buildings must be carbon neutral by 2050, but the annual reduction requirements vary based on building use. Healthcare facilities, universities, multi-family housing, manufacturing/industrial and all other building uses will have different reduction requirements. All qualifying buildings will be required to report their emissions on an annual basis to the State. The entire carbon footprint of the building is measured—electricity, heating, hot water and any other activity that produces greenhouse gas emissions. If a building does not reduce its emissions by the required amount each year, Renewable Energy Credits (RECs) will need to be purchased or the building owner will be required to pay a fine in the form of an Alternative Compliance Payment (ACP) per ton of carbon dioxide emitted above the requirement. Unfortunately for these buildings, there is no incentive for reducing emissions beyond the minimum requirement.
As we have seen in virtually every State that has attempted to adopt narrow policies or regulations to force electrification on its consumers and businesses, the unintended—and in some cases, intended—consequences may be significant. Building owners will incur increased costs whether they are actively complying with the standard or paying for RECs or fines. In either case, operating costs will increase, rent will increase and consumers will bear the brunt of these regulations.
Building Performance Standards are just another example in a long line of legislative and regulatory threats to our Industry that will squeeze our businesses, impact consumers and have a negligible impact on reducing emissions. It will be critical that we remain vigilant as individual business leaders and as an Industry to vocally oppose these poorly thought-out regulations whenever and wherever we can. ICM
Renewable Energy Insights is a regular column by Joe Uglietto, President of Diversified Energy Specialists, consultant to the industry with a focus on emissions reductions and renewable energy innovation.
