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Zero Carbon Emissions: Navigating The Path To Sustainability Through Energy Compliance Codes

The Boston skyline

In an effort to forge a more sustainable future, cities across the country are taking action to reduce carbon emissions. This is being accomplished through tightening energy codes for new construction and enacting energy compliance codes for large commercial buildings.

Local officials, real estate investors and building owners across the country have begun to set their sights on achieving net-zero carbon emissions by 2050. But considering that nearly 40% of global carbon emissions stem from the construction and operation of buildings, they have a long way to go.

The implementation of energy compliance codes for large commercial buildings is helping to maximize energy-efficiency while decreasing harmful emissions. However, many CRE professionals are finding these codes to be complicated and tedious to navigate, prompting them to refrain from taking a deeper dive into the matter.

ELM Consulting, a bespoke energy-efficiency and sustainability consulting firm, helps its clients understand these complicated codes through energy benchmarking and a holistic approach to building efficiency and optimization.

“By reducing energy consumption, buildings reduce the waste of energy and raw materials,” said Charlie Benzyk, principal consultant at ELM Consulting. “Companies want to become more energy-efficient because it can have a material impact on their bottom line. They reduce waste now, and they’re saving in the future.”

Founded in 2015, ELM Consulting has worked on more than 350 projects totaling more than 20M SF for its clients and analyzed more than 45,000 utility bills.

The company offers its clients an innovative tool called Energy Insights to track utility information, energy usage and other key metrics that can be updated in real time to simplify energy compliance and track progress toward sustainability goals. This dashboard allows owners and operators to view the most important building metrics at a glance, either at the portfolio level or at the individual asset level.

Energy compliance codes vastly differ from city to city, but Boston’s Building Energy Reduction and Disclosure Ordinance, or BERDO 2.0, sets some of the nation’s strictest standards for large commercial buildings. New York City and Washington, D.C., are other cities leading the charge when it comes to energy compliance regulations.

BERDO 2.0 requires that all commercial and residential buildings in Boston with at least 15 units or 20K SF report their energy and water usage annually to the city or face penalties. Fines for not reporting can range from $150 to $300 daily, depending on property size. Similarly, fines for failing to comply with emissions regulations can range from $300 to $1K daily. Buildings will also be required to have their data confirmed via third-party verification, which ELM can assist with. 

“Cities typically start with benchmarking and reporting to get their CRE landlords to share data, just so they know what they're dealing with,” Benzyk said. “Then, cities will start to put limits on the amount of energy or carbon emissions per square foot. That's what can differ from place to place, setting what their actual measured metric is.”

Starting in 2025, carbon emissions will be capped for buildings in Boston that fall under the updated BERDO regulations. Every five years until 2050, the maximum volume of acceptable carbon emissions will decrease until net-zero emissions are achieved. 

Other cities are taking different approaches to limit carbon emissions. In New York City, local laws regulate the city’s building sustainability initiatives. 

Local Law 97, a part of the Climate Mobilization Act of 2019, requires all buildings larger than 25K SF to align with carbon emissions standards by 2024 to reach the city’s 40% carbon reduction goal by 2030. The alternative is a steep fine of $268 per metric ton of carbon emitted above the designated limit. Those that fall under this regulation will be required to file a report with the city's Department of Buildings by May 1, 2025, and every year thereafter.

In the nation’s capital, the Building Energy Performance Standards program, or BEPS, is helping the city achieve its goal of reaching a 50% decrease in carbon emissions by 2032. Put into effect in 2013, BEPS requires all privately held buildings of 25K SF or more to measure energy and water performance. 

All D.C. government-owned buildings of 10K SF or more are also required to comply with BEPS. Failure to comply with these standards will result in a $10-per-SF fine, with a maximum penalty of $7.5M.

“There are many reasons to participate in energy reduction programs, including local utility and federal tax incentives like the Inflation Reduction Act,” said Whit Wilcox, vice president of partnerships at ELM Consulting. “ELM specializes in translating the energy-efficiency and incentive conversation to provide maximum benefit to the CRE community. We use the term 'incentivizing incentives' to relay to owners and operators that incentives not only provide a cash infusion for incremental improvements but also set a building up for future success navigating compliance goals.”

Wilcox said that besides financial and environmental reasons to participate in such programs, the commercial real estate sector is taking energy compliance and sustainability metrics into account when assessing the long-term viability of potential investments. Over time, a more efficient building would have lower operating costs, thus increasing potential net operating income. Decreasing the upfront costs of implementing efficiency measures is where utility and tax incentives come into the equation, Wilcox said.

"With more cities planning to follow suit, ELM can help businesses understand these codes and set realistic sustainability goals through our Energy Insights tool and suite of professional services, ultimately increasing the value of their assets," Benzyk said.

This article was produced in collaboration between Studio B and ELM Consulting. Bisnow news staff was not involved in the production of this content.

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