Energize Denver Rules Plague The City's Commercial Owners. They're Also Not In The Building Code Yet

Energize Denver, the city’s signature climate ordinance, directed officials to rewrite building codes by January 2025 to require electrification of some heating and water systems in existing commercial buildings. But the rewrite never happened, Bisnow has learned.

The 2021 ordinance specifically instructed the city to require certain HVAC and water heating systems to be replaced with electric alternatives once they reached the end of their useful life.

The mandate was included in the city's municipal code, but it has yet to make it into the building and fire code, leaving a gap between what the law says and how it is enforced.

“When it comes to existing commercial buildings, Denver's municipal code directed the city to make updates to the Denver Energy Code related to requirements for electrification by January 1, 2025,” Emily Gedeon, director of communications and engagement at Denver’s Office of Climate Action, Sustainability and Resiliency, told Bisnow in an Aug. 19 email. 

“Please note that the city has not yet made those changes and did not do so before January 1, 2025,” Gedeon wrote. “Thus, there are no electrification requirements in place for existing commercial buildings in Denver’s Energy Code at this time.”

The city intends to begin a code development process later this year, Gedeon said in a follow-up email Aug. 22, adding that there will be no ramifications for the city should it not follow the requirement laid out in the ordinance. 

Property owners and developers across the city have raised concerns about the Energize Denver program for years, saying compliance will raise prices for consumers and add a layer of complexity for new projects as the metro area tries to recover from the pandemic. 

The city pushed Energize Denver forward as part of broader climate and sustainability goals. Real estate is responsible for 40% of global greenhouse gas emissions.

Denver CRE groups are part of a coalition that has filed a federal lawsuit challenging Energize Denver’s performance requirements as well as similar state rules.

Even still, representatives from the local commercial real estate community said the changes had been written into the city’s building code, and they have spent months trying to navigate the new rules.

“It is news to us to learn that these requirements were not set in code,” Heather Howerton, the association executive at Denver Metro Commercial Association of Realtors, told Bisnow in an email. “We look forward to learning more from the City and what this means for the thousands of commercial owners actively auditing their buildings and advancing costly requirements.”

The 2025 Denver energy code requires certain space and water heating systems in new commercial buildings to be electric, Gedeon said, but it doesn't mandate electrification for those systems in existing commercial properties.

Energize Denver sets targets for annual carbon emissions per square foot for large buildings, tightening through 2032. While it doesn’t require owners to rip out functioning systems, its required code update would mandate that space and water heating equipment be replaced with electric alternatives, like heat pumps or electric boilers, when existing systems reach the end of their useful life. 

Industry players say the performance targets, even without the code change, make electrification all but mandatory.

“The goal is reducing emissions per square foot, and the way you’re going to get there, in most cases, is going to be electrification,” NAIOP Colorado Executive Director Kathie Barstnar told Bisnow in an interview. 

After being presented with the city’s comments, Barstnar expressed surprise and told Bisnow she would not comment further without more clarification from the city of Denver. 

Gedeon also pointed to recent updates to Energize Denver extending key deadlines to 2028 and 2032, with the option to request more time, and delaying penalty enforcement until 2029 while cutting fines in half. Those deadlines were initially scheduled to kick in starting in 2024 and go into full effect in 2030.

The city has also capped required efficiency gains and introduced new financial incentives, making compliance more achievable for building owners facing cost or infrastructure constraints.

Two recent reports from the Common Sense Institute warn that environmental policies, from pollution fees to stricter local building codes, have cost Colorado building owners and tenants more than $120M between 2018 and 2021, reduced gross domestic product by $524M and cut nearly 1,800 jobs.

Local regulations on new construction had cost residential building owners and tenants a combined $104.4M through 2023. 

At the same time, state mandates driving electrification are projected to push electricity prices up at more than three times the rate of inflation, far outpacing historical growth.

That broader cost environment only sharpens the confusion in Denver, where developers are spending millions on compliance even as key code updates remain pending.

CORRECTION, SEPT. 5, 12:14 P.M. ET: This story has been updated to clarify the dates mentioned in the Common Sense Institute studies.