Let There Be Data
Cities and states across the United States are banking on the power of mandatory data reporting to spur energy efficiency in buildings.
New York City developers have been building and marketing green properties for over a decade so that they can claim state tax credits, meet local mandates, and differentiate their offerings in a crowded market. At the high end, these projects include all the bells and whistles: They make their own power with microturbines, they treat their own wastewater, and they provide high levels of occupant control and fresh air. The more competitively priced properties simply do what’s required to meet minimum green standards. All these projects are also supposed to be energy efficient—but what exactly that means has been open to interpretation.
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Beginning in September 2012 (for large commercial buildings) and 2013 (for multifamily residential buildings), a lot of the mystery around what is and is not operating efficiently should disappear. That’s when Local Law 84 requires the city to start posting energy report cards for privately owned buildings (owners have to begin reporting that data by August 2011). If the backers of this law are right, just putting actual numbers out for the public to see will make energy efficiency a higher priority for new buildings and renovations. At a minimum, it will create a strong incentive for facility managers to operate their properties as efficiently as possible. “In the process of doing the benchmarking they will find cost effective improvements,” suggests Lane Burt, technical policy director at the U.S. Green Building Council.
New York isn’t the only place where energy reporting is now the law. Washington, D.C., Seattle, San Francisco, and the state of Washington also have requirements kicking in this year, according to BuildingRating.org, a website that tracks this trend. Mandates in California and Austin, Texas, go into effect in 2012. There are many variations on these mandates, but they tend to fall into two main categories: 1) annual reporting to the government and 2) disclosure to the other parties (and to the government) in conjunction with a sale or lease. Both types of programs depend on the U.S. Environmental Protection Agency's Portfolio Manager, because it has a track record as a tool for collecting energy numbers and key property characteristics in a consistent and manageable way.
Disclosure advocates like Lane Burt are bullish about the power of data: “Anytime you provide more info into the marketplace in a way that’s usable for the market, it’s a good thing,” he says. But not everyone is happy about these new laws—the National Association of Realtors has been working to prevent their adoption out of concern that it would make older properties harder to sell. “We support incentives in the form of grants and loans for efficiency upgrades,” explains environmental policy representative Austin Perez. “But we don’t like any kind of a mandate, anything that would happen at point of sale to slow down the transaction and stigmatize the properties.”
In principle, collecting energy data and creating report cards seems simple, but in reality it’s rife with pitfalls. A new report from the Institute for Market Transformation outlines many of those obstacles and offers strategies that local and state governments can use to overcome them—beginning with the advice that you have to reach out and educate the market about what you’re trying to do before you can expect them to comply. The report also points out that owners of multi-tenant buildings may not have the authority to demand energy bill data from their tenants. For those buildings it’s essential that utilities be authorized to combine the results from multiple tenant meters and report whole-building performance.
California’s reporting mandate was originally slated to take effect in 2010 and has been delayed twice since then. The delays stem from both policy problems—getting regulators to define the rules clearly—and technical issues. “It has taken longer than expected to get utilities to provide whole building consumption data electronically,” says Cliff Majersik, executive director of the Institute for Market Transformation. One of the details yet to be worked out is exactly when in the process of a real-estate transaction the disclosure has to happen. Majersik is hopeful that they make sure it happens early in the process. “The whole point is that it should be part of the decision,” he notes.
Whether the mandates involve annual reporting or disclosure for transactions, most observers believe that the information about how buildings are actually performing will eventually become widely available. That will happen either through direct access to a database managed by the government, or via private real-estate databases, such as CoStar, that track the attributes of each property, including its physical condition and dollar value of recent transactions. Governments in New York City, Washington, D.C., and San Francisco are building channels to make the data available publicly. Others have not described any plans to do so, but may be obligated to release data anyway as public information.
Many of the mandates wisely start with public buildings, which gives the agencies a chance to figure out their systems before imposing them on private owners. Farthest along in this process is Washington, D.C., which released a rather embarrassing assessment of its own buildings in 2010, showing offices and libraries performing slightly worse than the national average, and schools, park buildings, and police stations performing much worse. District officials used this information wisely, notes Majersik, with this message: “We are wasting a lot on energy. Now we have the information that we need to start targeting the worst performers and improve.”