THE AVENUE AUGUST 2, 2011
As the debt deal makes starkly clear, the Washington paralysis that has prevented serious action on critical fronts like energy policy and climate change is about to engender a new era of programmatic gutting. Which means the country’s policy laboratories--the states, cities, and, importantly, its metro areas--are going to have to step up to the plate and build the next economy region by region. And in small but meaningful ways, they already are.
Take the commercial building sector. Across the country, American cities and few states are putting into effect rules that require commercial buildings to measure and disclose their energy use. It is hard to overstate how significant this move is going to be in the energy sector. By making building energy use data transparent--similar to Energy Star ratings for appliances and miles-per-gallon labels for vehicles--it will stimulate market demand for energy efficiency and encourage building owners to make energy improvements.
Yesterday was New York City’s deadline for 16,000 large commercial buildings to report their energy use or face a quarterly fine of $500. The city will make this data public starting next year. The law is part of the city’s Greener, Greater Buildings Plan, a package of initiatives to make existing buildings more energy efficient. Buildings account for 80 percent of the city’s carbon emissions and the targeted commercial buildings comprise almost 50 percent of that. Seattle, with a goal of cutting its energy usage by 20 percent by 2020, will require commercial building owners with more than 50,000 square feet of interior space--which roughly translates to 860 buildings--to track and report their energy usage by October 1. An additional 8,000 building owners with 10,000 to 49,999 square feet of interior space are mandated to report this data by April 1, 2012.
Similar requirements are poised to go into effect in San Francisco and Washington D.C. in October and in Austin in June, 2012. While California will have a statewide rule on this early next year, several other states are also planning on making public disclosure of commercial building energy use mandatory. The Department of Energy will also introduce a voluntary program to rate the energy efficiency of commercial buildings in 2012.
The Institute for Market Transformation recently released a report which provides the first comprehensive review of building energy rating and disclosure laws around the country. The report notes that these disclosure laws will have a significant on U.S. real estate market and affect four billion square feet of building space.
With U.S. buildings accounting for 40 percent of energy consumption, building rating and disclosure policy can be an important tool to increase the asset value of energy efficient structures and create market-based incentives for energy improvements.