White Paper Follow Up: Energy Legislation: Should You Keep Up Or Lap the Field?

Yesterday, we reported on New York City’s newly adopted energy codes and some of the changes in enforcement policy coming to the city. This is the latest in a string of initiatives here in NYC. My fair city isn’t the only one trying to catch up with the sustainable revolution, but I wanted to delve into the new codes as an example of why property owners should be ahead of the game, and not simply keeping pace.

As governmental regulations continue to catch up with the social and political demands for sustainability, we continue to see fluctuations in how local legislators deal with the issue. It’s important to remember that while legislators are vulnerable to the political whims of special interest groups and the latest poll data, larger market forces are not. In the interest of keeping our paper factually up-to-date, we would like to clarify a point made in “The Financial, Legal and Socio-Economic Imperatives section.” Here we mentioned the proposal Mayor Bloomberg put forth requiring all owners of buildings larger than 50,000 square feet in New York City to perform energy audits every 10 years beginning in 2013, and implement efficiency upgrades with payback periods of less than five years. That legislation has changed a bit was passed last week. Here are the four primary initiatives (outlined yesterday, but presented here again for further discussion). 

Int. No. 564-A:Legislation that creates a New York City Energy Code that existing buildings will have to meet whenever they make renovations;

Int. No. 476-A:Legislation that requires large buildings owners to make an annual benchmark analysis of energy consumption so that owners, tenants, and potential tenants can compare buildings’ energy consumption;

Int. No. 973-A:Legislation that requires large commercial buildings (over 50,000 square feet) to upgrade their lighting and sub-meter tenant spaces over 10,000 square feet; and

Int. No. 967-A:Legislation that requires large private buildings to conduct energy audits once every decade and implement energy efficient maintenance practices. Also, all city-owned buildings over 10,000 sq ft will be required to conduct audits and complete energy retrofits that pay for themselves within 7-years.

See the entire text here.

As you can see in the points above, energy audits are back in but there is still no required retrofit. However, the city has closed a loophole allowed owners to perpetuate bad practices by renovating less than 50% of a given building or space. In the past, doing so would allow the project to bypass current energy code and be "grandfathered in." Now any retrofit or renovation must meet current energy code.

 The other point of interest in NYC’s legislation. Lighting is specifically targeted in Int. No. 973-A, see the following from the NYC press release:

In New York City, lighting accounts for approximately 20 percent of the energy used in buildings and roughly 20 percent of a building’s carbon emissions.  The legislation requires that lighting systems in commercial buildings over 50,000 square feet be upgraded to meet the requirements of the New York City Energy Conservation Code (essentially ASHRAE 90.1-2004).

The landscape of environmental legislation is constantly evolving, and we are likely to see more changes in the future. So what does this mean?

From our point of view it means property owners have one of two options. They can simply “keep up” with energy and environmental legislation as necessary or they “lap the field.” We believe forward-looking businesses striving to become the most effiecient will be least effected by political whim and will be positioned to make the most profit from their retrofits. "Middle of the pack" owners will not be able to make a differentiated offer to the market based on the energy effeiciency or sustainability.

Business owners need to be ahead of the curve in implementing cost saving, energy efficient solutions  because they reap competitive advantage. So whether you’re in NYC, or anywhere else you can enjoy a competitive market position despite the legislative climate of your district. The question you have to ask yourself is…do you want to do this on your terms, ahead of the curve, or on the government’s?

NYC is going to make you change your lightbulbs

In the latest two-step from NYC on the subject of green building, here's the latest bill to pass (as reported by LightNow)

Some highlights (again, thanks to LightNow for the run down):

Int. No. 973-A: Legislation that requires large commercial buildings (over 50,000 square feet) to upgrade their lighting and sub-meter tenant spaces over 10,000 square feet;

Int. No. 564-A: Legislation that creates a New York City Energy Code that existing buildings will have to meet whenever they make renovations (closing the loophole that allows buildings to perpetuate non-compliant systems if they perform renovations on less than half of a given building system);

Int. No. 476-A: Legislation that requires large buildings owners to make an annual benchmark analysis of energy consumption so that owners, tenants, and potential tenants can compare buildings’ energy consumption; and

Int. No. 967-A: Legislation that requires large private buildings to conduct energy audits once every decade and implement energy efficient maintenance practices. Also, all city-owned buildings over 10,000 sq ft will be required to conduct audits and complete energy retrofits that pay for themselves within 7-years.

I don't have a ton of time this morning for commentary, but look for more tonight. We specifically mentioned NYC legislation initiatives in our white paper. This update only strengthens the argument that businesses are soon going to face one of two options, meeting energy requirements on their own terms, or have their arms twisted. Build2Sustain advocates the former.

Look for more on the bill from our blog later this week.

New York State Builds The Case for Build2Sustain

Ok, so not literally or purposefully. But, the New York State government released a draft of their 2009 State Energy Plan today that outlines their objectives and strategies for the future. As I was reading, I found that they have written an argument for why B2S needs to exist. Here are some of the sections that I found particularly interesting (emphasis ours):

"The 2008 Optimal Report concluded that opportunities for electricity end-use efficiency in New York are extensive and inexpensive compared with available supply options. Results of the study estimate the State’s achievable potential through 2015 to be about 26,000 GWh, representing a reduction of approximately 14 percent from the forecast of electricity demand in 2015. In addition, improved building codes and appliance standards, likely to be implemented prior to 2015, could provide a reduction of an additional 11,000 GWh (5.7 percent) from the forecasted electricity use....The benefit-cost ratio of the electric efficiency measures is estimated to be 2.60, which means that the New York economy would capture approximately $2.60 in benefits for every dollar invested in efficiency."

"The 2008 Optimal Study attributes 38 percent (9,824 GWh) of the statewide achievable potential to New York City, 14 percent (3,603 GWh) to Long Island, and the remaining 48 percent (12,573 GWh) to the rest of the State. Approximately 70 percent of the total achievable potential savings in 2015 would be in the commercial sector, 17 percent would be in the residential sector, including low-income programs, and 13 percent would be in the industrial sector."

"Similarly, the end-uses with the greatest efficiency potential for the commercial sector are indoor lighting, cooling, ventilation, and refrigeration. Within the commercial sector, the study concludes that the building type with the greatest energy savings potential is office space, which accounts for 33 percent of the efficiency savings opportunities."

So with all these stats and the state looking to improve efficiency through new and existing programs and improved building codes, why do we still need Build2Sustain to develop best practices and convince developers, owners, and tenants that they will benefit from doing a whole scale renovation? Won't they be forced to with these new codes?

"New York's Energy Code applies to a building renovation only if the renovation is “substantial,” i.e., it involves replacement of more than 50 percent of any building subsystem. This “50 percent rule” currently provides owners of existing buildings opportunities to avoid application of the Energy Code by breaking building renovations into separate projects with no single project involving the replacement of more than 50 percent of any building subsystem. In turn, this reduces the State's opportunity to use the Energy Code to achieve improved energy efficiency in existing buildings. While the Energy Code applies to all new construction, the number of new buildings constructed annually is typically dwarfed by the number of existing buildings being renovated, particularly in urban areas, such as New York City. Therefore, the 50 percent rule significantly limits the State‟s ability to use the Energy Code to achieve an overall improvement the energy efficiency of buildings."

Now, who wants to join us?