Understanding Building Performance Standards
As more and more jurisdictions are creating energy benchmarking requirements, building performance standards (BPS) are also becoming significantly more common. According to the Institute for Market Transformation, a nonprofit organization that tracks the adoption of building performance standards, there are currently 10 BPS laws in the United States, with more expected to be adopted in the next several years. BPS laws rest on a foundation of benchmarking data. Governments use buildings’ benchmarking reports to measure their performance relative to the standards. Of the 10 current BPS policies in the U.S., seven were adopted by jurisdictions that already had benchmarking and transparency laws on the books for several years prior. There are at least 47 US state and local governments that have enacted benchmarking and transparency laws, so it is likely that many will enact BPS policies in the near future.
What are building performance standards?
Building performance standards (BPS) are laws that establish minimum requirements for the performance (most often measured in terms of energy use or greenhouse gas emissions) of buildings that get stricter over time. As their name suggests, building performance standard laws regulate buildings’ performance outcomes; they do not prescribe specific technologies or design features.
As an example, New York City’s Local Law 97 is a building energy performance standards law that requires buildings 25,000 square feet and larger to meet greenhouse gas emissions limits that get stricter every five years until 2050. New York City will check buildings’ annual benchmarking reports to see if they are meeting the emissions limits. Buildings that exceed the emissions limits will have to pay a penalty of $268 per metric ton of CO2 equivalent emissions above the limit. The penalty will increase to $431 per metric ton in 2030.
Why are governments adopting building performance standards?
Many state and local governments see building performance standards as a critical tool for addressing climate change, improving public health and safety, and promoting economic development. There are several reasons why many U.S. state and local governments are adopting laws and regulations that regulate buildings' energy or greenhouse gas (GHG) performance.
Climate action goals: Many state and local governments have set ambitious climate action goals to reduce greenhouse gas emissions and combat climate change. Buildings are a significant source of GHG emissions, and improving their energy efficiency and sustainability is an important part of achieving these goals.
Energy and cost savings: Improving the energy efficiency of buildings can result in significant energy and cost savings for building owners and occupants. By adopting building performance standards, state and local governments can encourage building owners to make energy-efficient upgrades that lower energy bills and reduce operating costs.
Public health and safety: Buildings that are energy-efficient and use clean energy sources can improve public health by reducing air pollution and improving indoor air quality. Additionally, buildings that are designed and constructed to withstand extreme weather events and natural disasters can enhance public safety.
Economic development: By promoting energy efficiency and sustainability in buildings, state and local governments can create jobs and spur economic development in the clean energy sector. This can include jobs in energy auditing, retrofits, and renewable energy installation.
How likely is it that more US governments will adopt building performance standards for existing buildings?
10 US state and local governments have already adopted building performance standards for existing buildings, including New York City, Washington, D.C., Denver, and Washington State. Other states and cities are in the process of developing their own standards, and some have indicated their intention to do so in the near future.
It is likely that more U.S. governments will adopt building performance standards for existing buildings in the coming years. As awareness of the need to reduce energy consumption and greenhouse gas emissions grows, many state and local governments are implementing policies and regulations to address these issues. Building performance standards are an effective way to reduce energy consumption and greenhouse gas emissions in the built environment, and they have been gaining momentum across the country.
In addition, the Biden administration has made addressing climate change a top priority. It has set a goal of achieving a carbon-free power sector by 2035 and net-zero emissions across the economy by 2050. To achieve these goals, the administration created the National Building Performance Standards Coalition, a group comprising at least 40 state and local governments that have committed to adopting building performance standards by Earth Day 2024.
How do building performance standards differ from energy codes?
Building performance standards and energy codes are related but different concepts. Building performance standards are a set of regulations that define specific levels of performance for various aspects of a building’s operations, such as energy efficiency, water conservation, greenhouse gas emissions, or indoor air quality.
Energy codes, on the other hand, are a subset of building codes that specifically focus on energy efficiency. Energy codes define prescriptive requirements meant to result in a minimum level of energy performance for new buildings. For example, energy codes stipulate the amount of insulation, the efficiency of heating and cooling systems, and the rated performance of lighting systems. Energy codes apply at the time of building construction or when a building undergoes a substantial renovation.
Unlike building performance standards, they do not govern the building’s actual measured performance once occupied.
What do building performance standards mean for building owners?
Building performance standards are becoming increasingly common in many jurisdictions as a way to encourage building owners to improve the energy efficiency and sustainability of their buildings. Building owners who do not prepare for BPS could face several risks, including:
Fines and penalties: If a building owner fails to comply with BPS requirements, they may be subject to fines or penalties, which can be costly.
Increased operating costs: Buildings that do not meet BPS requirements are likely to be less energy-efficient, which can result in higher operating costs over time. Building owners who do not invest in energy-efficient upgrades or retrofits may see their operating costs rise as energy prices increase.
Lower market value: Buildings that do not meet BPS requirements may be less attractive to tenants or buyers who prioritize sustainability and energy efficiency or want to avoid the costs of fines and penalties. As a result, the market value of these buildings may be lower than similar buildings that meet BPS requirements. As BPS become more common, buildings that do not meet these requirements may become obsolete or difficult to lease or sell.
Reduced competitiveness: Building owners who do not invest in energy-efficient upgrades or retrofits may find it more difficult to compete with other buildings in their market that are better-performing and not at risk of noncompliance penalties. This could result in lower occupancy rates or lower rental rates.
By preparing for BPS and investing in energy-efficient upgrades or retrofits, building owners can reduce these risks and potentially benefit from lower operating costs, improved market value, and increased competitiveness.
What do current building performance standards laws look like?
To date, there is considerable variation in the structure of existing BPS policies, with no clear consensus on a preferred policy model. For instance, while eight of the existing laws are based on measures of buildings’ energy consumption, New York City’s and Boston’s BPS laws set standards in terms of greenhouse gas emissions attributable to buildings’ energy use. Some BPS policies assign performance standards 20–30 years into the future, while others only cover a period of 10 years. Policy design choices such as this have significant implications for building owners’ compliance strategies. The table below summarizes BPS policies from four different major cities, including New York City's Local Law 97, Boston's Building Emissions Reduction and Disclosure Ordinance, Denver's Building Performance Ordinance, and Washington DC's Building Energy Performance Standard. You can find detailed summaries of each of these policies and all of the other BPS laws on our compliance page.
What should building owners do to bring their buildings into compliance with a building performance standard?
If you own a building in a state or local jurisdiction that has adopted a building performance standard, the following steps will help you determine what, if anything, you need to do to bring your property into compliance.
Understand the BPS law: The first step you should take is to read the building performance standard law and any supplemental explanatory materials the government publishes. You want to determine if the BPS applies to your building. Most building performance standards only apply to buildings above a certain size threshold (e.g., 25,000 square feet) and some laws create exemptions or special rules that apply to some building types. Owners should make sure they understand how the BPS law applies to their properties before making any other decisions.
Assess current building performance: To date, all existing building performance standards rely on a building’s benchmarking data to measure performance. Owners should review their latest benchmarking report to see how much their buildings’ performance needs to improve to meet compliance with the BPS in the short and long term. Next, owners should hire a qualified energy auditor to conduct an energy audit to evaluate the current energy performance of their building in detail and identify upgrades and improvements they can make to improve the building’s performance.
Identify potential upgrades: Based on the assessment, building owners can identify potential upgrades, such as lighting upgrades, HVAC system upgrades, or building envelope improvements, that could improve the building's energy efficiency and help meet BPS requirements. Building owners should consider both low-cost/no-cost measures, such as energy-efficient lighting and occupancy sensors, as well as more extensive upgrades, such as HVAC system replacements or building envelope retrofits. The upgrades should be tailored to the specific needs of the building, the requirements of the BPS, and the expected return on investment.
Evaluate financial feasibility: Building owners should evaluate the financial feasibility of potential upgrades, taking into account the upfront costs, energy savings, and potential financial incentives or rebates available. Energy-efficient upgrades can be expensive, and building owners should consider the financial implications of each upgrade option, including the cost of penalties or fines from failure to comply with the BPS. Owners can work with a financial advisor to evaluate the costs and benefits of each option and determine the best path forward.
Develop a compliance plan: Building owners should develop a plan for implementing energy-efficient upgrades or retrofits to meet the BPS requirements, prioritizing those measures with the highest return on investment and the greatest impact on energy performance. The plan should include a timeline for each upgrade and a budget for the work. Building owners should also establish a project management plan to ensure that the work is completed on time and within budget.
Engage with contractors and vendors: Building owners should engage with contractors and vendors who specialize in energy-efficient upgrades and retrofits, to ensure that the work is done to high standards and in compliance with BPS requirements. Building owners should obtain multiple bids for each upgrade and check references to ensure that contractors have a good track record of completing similar projects.
Monitor building performance: Building owners should monitor building performance after upgrades or retrofits are completed to ensure that energy savings are realized and the building continues to meet BPS requirements. They can use energy monitoring software or other tools to track energy consumption and identify areas where further improvements can be made.
Stay informed: Building owners should stay informed about local BPS policies and regulations, and any changes that may affect their building's compliance. They can work with local organizations and industry groups to stay up-to-date on new policies and regulations and to advocate for policies that are supportive of their business goals.
How can Touchstone IQ help my building(s) meet applicable Building Performance Standards?
Our in-house engineering team is specially trained to help building owners and managers to devise a BPS compliance strategy that reduces costs, minimizes disruptions to building operations, and reduces the administrative burden. Based on the unique compliance requirements in each participating city or state, our strategic recommendations will be fully customized based on your location and building portfolio. Contact our team today to get a bid and discuss options.
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