An Update on the State of Building Performance Standards Across the U.S.

In the U.S., buildings are the largest contributor to greenhouse gas emissions, representing 35% of total energy-related emissions. As a result, building performance requirements are on the rise across the U.S in an effort to align the operation of the global building stock with tangible decarbonization goals. Now, as of July 2024, roughly 50 cities reportedly have at least some kind of requirement in place, while nine U.S. localities and four U.S. states have even more stringent BPS laws on the books, according to the Institute for Market Transformation. As BPS become more commonplace, building on the work of mandatory benchmarking ordinances, building owners, architects, consulting engineers, and facility managers — who have historically been most concerned with implementing energy code requirements as the primary energy-related regulations – will now need to have a thorough understanding of any BPS targets.

To date, nine U.S. localities and four U.S. states have enacted laws adopting BPS; most states have building codes for new construction and renovations derived from national model codes, with amendments, and many local governments do too. 

What Are They?

Building performance standards (also referred to as Building Energy Performance Standards (BEPS) are state and local laws that require existing buildings to achieve minimum levels of energy or climate performance targets by certain phased-in deadlines.

While each local entity customizes the BEPS requirements to fit its needs, in general, a BPS policy contains:

• Performance Target: depending on the jurisdiction the target will be framed either in terms of on-site energy use intensity (EUI) or annual greenhouse gas emissions— with different target levels for each building type (e.g. one target for offices, another target for multifamily, etc.).
• Timeframes: Buildings subject to these policies have a set number of years, referred to as a cycle, in which to comply – with increasingly stringent interim targets in subsequent years. As the policy ages and new jurisdictional climate goals are identified, additional buildings may be included. This phase in approach allows ample flexibility for buildings to improve over time and discourages long-lived investments in inefficient and environmentally damaging technology.
• Fines/Penalties: Penalties vary for non compliance, some jurisdictions have relatively low annual penalties, whereas others have heavy penalties. Penalties are intended to level the playing field for market participants.

Realities for Building Owners

These building-related sustainability regulations are set to gain prominence in the latter half of the decade, and despite the upfront challenges of compliance, building professionals can glean benefits from this transition to an efficient and decarbonized built environment. Astute investors are seeing that buildings that fail to live up to higher environmental standards will increasingly be seen as less valuable or outright risky to invest in. On the other hand, commercial real estate companies that champion buildings with net zero carbon reductions, optimized for health and well-being, and that are resilient to climate change will see the benefits of doing so – namely, cost savings, increased property values, improvements to indoor air quality, and investor approval.

Cost Savings: BPS presents not only environmental advantages but also substantial financial savings for building owners and stakeholders. These financial effects include the adoption of cost-effective energy upgrades, prompting investments in technologies for enhanced energy efficiency and long-term savings. BPS also contributes to lower operating costs by emphasizing energy efficiency, resulting in reduced utility bills and operational expenses, enhancing the financial viability of assets. Additionally, adherence to BPS often leads to an augmented market value for buildings, attracting environmentally conscious investors and tenants. Opting into energy-saving operational strategies like peak load management, demand response programs, and weather-dependent operating can also significantly lower energy bills.

How Do They Relate to Energy Codes?

Most states or cities across the country have comprehensive policies in place to ensure that newly constructed buildings meet certain requirements, mainly in the form of building energy codes. Thus far, energy codes and BPS policies have been considered separately by stakeholders —energy codes apply to new construction (but come into play during specific events such as major retrofits and equipment updates) whereas BPS laws apply to existing buildings. And unlike traditional building codes that prescribe specific design elements, BPS emphasize results. Thus, for codes, the “performance” path means modeled performance based on an energy model. BPS policies, on the other hand, are “outcome-based” policies, which evaluate compliance based on measured, verified, real-world performance like energy bills.

However, all new construction becomes “existing” once the certificate of occupancy is issued subjecting them to BPS requirements, so owners and architects of new buildings should design them with future building performance standards in mind. An assumption may be made that because a building is “new construction”, it will be ready to meet an impending BPS target, but that may not be the case, especially depending on what energy code is in place. Most jurisdictions have not adopted the most recent model energy code (the 2021 IECC or ASHRAE 90.1-2019), which would put buildings in the best position to achieve BPS targets, and many jurisdictions do not update the code every cycle.

A National Definition for Net Zero Buildings

The U.S. Department of Energy (DOE) has finalized part 1 of its definition of a Zero Emissions Building, setting a clear benchmark for the industry. This move aims to standardize what constitutes a zero-emissions building, providing consistent and measurable minimum criteria for sustainability goals and compliance. Part one of the definition covers operational emissions for existing residential and commercial buildings that are not federally owned. DOE has indicated that future iterations will aim to address embodied carbon as well. 

Key Components of the Definition:

1. Zero On-site Emissions: Buildings must produce no emissions on-site from energy use, requiring the elimination of fossil fuel-based energy sources.
2. Complete Renewable or Clean Energy Integration: The sole use of renewable energy sources, such as solar or wind, is mandated to cover the building’s energy needs.
3. Energy Efficiency: High energy efficiency standards are essential, with buildings required to minimize overall energy consumption.
4. Lifecycle Considerations: The DOE emphasizes the importance of considering the entire lifecycle of the building, including construction, operation, and demolition.

This definition will be verifiable through ENERGY STAR Portfolio Manager for relative metrics like energy efficiency, which will simplify and streamline the calculation process for building owners. According to the DOE, several green building organizations plan to embed the definition within their certifications. Groups including the U.S. Green Building Council (USGBC) and the American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) have applauded the new national definition.

Regulatory Compliance: A unified federal net zero definition that defines an ultimate target and includes minimum efficiency requirements for both new and existing buildings will help to align jurisdictional policies, moving them towards the same targets over time. Building owners and developers will likely need to align their projects with this new definition to meet regulatory standards such as building performance standards that adopt this definition into their policy framework.

More About WatchWire

WatchWire by Tango is a market-leading, energy and sustainability data management platform that uses cloud-based software to collect, automize, and analyze utility, energy, and sustainability data metrics. WatchWire streamlines, automates, and standardizes your sustainability reporting process by integrating directly and/or providing reporting exports to ENERGY STAR Portfolio Manager, LEED Arc, GRESB, CDP, SASB, GRI, and more. The platform provides customizable dashboards, which allow asset managers, sustainability managers, engineers, and more to monitor individual key performance indicators (KPIs) and create custom views for specific use cases.

To learn more about WatchWire and its capabilities, you can visit our website, blog, or resource library, request a demo, or follow us on LinkedIn, Instagram, or Twitter to keep up-to-date on the latest energy and sustainability insights, news, and resources.