Commercial building decarbonization is shifting from a sustainability goal to a compliance issue. Cities including New York, Boston, and Washington, D.C., have established building performance standards that require certain existing buildings to meet energy or emissions targets, and noncompliance can carry significant financial penalties.

At the state level, requirements are also emerging through energy performance standards, emissions targets, and benchmarking programs. For facility managers, understanding where these regulations apply and how their buildings perform is becoming an important part of long-term facility planning.

Key Takeaways

Commercial building decarbonization is becoming a regulatory consideration as cities and states establish requirements for the energy and emissions performance of existing buildings. For facility managers, early preparation can free up time to address inefficiencies and plan investments before compliance deadlines.

How Are Building Decarbonization Regulations Affecting Commercial Facilities?

• Building performance standards are creating measurable energy and emissions requirements for existing commercial buildings.
• Requirements vary by jurisdiction, building size, property type, and compliance period.
• Noncompliance can result in substantial financial penalties in cities with active building emissions laws.
• State-level programs are expanding energy performance, emissions, and benchmarking requirements.
• Benchmarking, energy efficiency, electrification, and ongoing monitoring can help facilities prepare for changing requirements.

What Is Commercial Building Decarbonization?

Commercial building decarbonization is the process of reducing or eliminating greenhouse gas emissions associated with building operations. This can include reducing energy consumption, improving equipment efficiency, electrifying systems that currently rely on fossil fuels, and adopting cleaner energy sources.

Building performance standards, or BPS, establish measurable energy or emissions requirements for existing buildings. Unlike traditional energy codes that primarily apply to new construction and major renovations, BPS policies may require existing properties to demonstrate actual performance over specified compliance periods.

Building Decarbonization Regulations and Penalties

Building decarbonization regulations are not uniform across the country. Some jurisdictions directly regulate greenhouse gas emissions, while others establish energy-use targets, benchmarking requirements, or multiple compliance pathways.

Three major city programs demonstrate the different approaches being used:

New York City: Local Law 97

New York City’s Local Law 97 covers approximately 50,000 buildings, with most buildings larger than 25,000 square feet subject to greenhouse gas emissions limits. Those limits become more stringent over time.

Buildings exceeding their applicable annual limit may incur a penalty of $268 per metric ton of CO2 equivalent over the limit. A property exceeding its limit by 1,000 metric tons could therefore potentially face a $268,000 annual penalty.

Boston: BERDO 2.0

Boston’s Building Emissions Reduction and Disclosure Ordinance (BERDO 2.0) establishes emissions standards that become progressively more stringent as the city works toward carbon neutrality.

Large buildings that fail to meet certain requirements can face fines of up to $1,000 per day. Certain compliance pathways also allow buildings to make payments based on excess emissions, including $234 per metric ton through Boston’s Equitable Emissions Investment Fund.

Washington, D.C.: BEPS

Washington, D.C.’s Building Energy Performance Standards require covered buildings to meet energy performance standards or follow an approved pathway to improve performance.

Potential penalties can reach up to $10 per square foot of gross floor area. For a 100,000-square-foot commercial property, that could mean potential penalties of up to $1 million.

Which States Have Building Performance Requirements?

The regulatory movement extends beyond individual cities.

Washington State’s Clean Buildings Performance Standard establishes energy performance requirements for covered properties. Maryland has adopted requirements intended to move large buildings toward net-zero direct greenhouse gas emissions. California requires energy benchmarking and reporting for certain commercial buildings, while Colorado has also advanced policies addressing building energy use and emissions.

Not every state regulates carbon in the same way. Some requirements focus on energy performance or reporting rather than direct emissions limits. The broader trend, however, is toward greater measurement and accountability for the performance of existing commercial buildings.

What Are the Benefits of Commercial Building Decarbonization?

Compliance is only one reason to reduce building emissions. Decarbonization efforts can also help facilities reduce energy consumption, improve operations, and make more informed investment decisions.

Potential benefits include:

• Lower energy consumption and utility expenses
• Reduced greenhouse gas emissions
• Lower exposure to applicable noncompliance penalties
• Improved equipment and operational performance
• Better data for benchmarking and reporting
• More informed capital planning

Addressing energy waste can be particularly valuable because operational improvements may reduce both emissions and operating expenses before major capital projects are considered.

How Can Commercial Buildings Reduce Carbon Emissions?

Building decarbonization strategies can combine operational improvements with longer-term capital investments. A practical approach begins with understanding current performance before determining where improvements will have the greatest impact.

• Measure: Establish energy-use and emissions baselines through benchmarking and monitoring.
• Reduce: Address unnecessary consumption through scheduling, setpoint adjustments, equipment maintenance, HVAC optimization, and lighting improvements.
• Electrify: Evaluate replacing fossil-fuel equipment with electric alternatives such as heat pumps.
• Generate: Consider on-site renewable energy and other clean-energy options where appropriate.
• Document: Maintain performance data to track improvements and support applicable compliance reporting.

Facility managers should also determine which building emissions laws apply to each property and identify upcoming compliance periods. Starting early provides more time to address operational inefficiencies, budget for capital improvements, and adapt as requirements become more stringent.

Frequently Asked Questions

Do Building Decarbonization Regulations Apply To Every Type Of Commercial Property?

Not necessarily. Applicability can depend on building size, property type, ownership, and jurisdiction. Organizations with multiple properties should evaluate each building individually against applicable local and state requirements.

Can A Building’s Carbon Emissions Change Without A Change In Energy Consumption?

Yes. Energy consumption and carbon emissions are related but not identical. Emissions also depend on the type and source of energy being consumed, which is why decarbonization strategies address both energy efficiency and energy sources.

Why Should Multi-Site Facility Teams Standardize Energy And Emissions Data?

A consistent approach to collecting building performance data makes it easier to compare properties across a portfolio, identify higher-performing and underperforming locations, and prioritize future improvements. Standardized data can be particularly useful when properties operate under different state and local requirements.

Preparing For The Future Of Building Decarbonization

As building performance standards expand, facility managers have more reason to understand their energy use and emissions before compliance deadlines arrive. Establishing a baseline and identifying practical opportunities for reduction now can help facilities control costs, plan future investments, and stay ahead of evolving building decarbonization regulations.

Click here to read the full article, originally published by Envigilance.