The Energy and Commerce Committee is Holding Hearings on the Waxman-Markey Bill This Week
|Henry Waxman, Chairman of the House Energy and Commerce Committee.|
Democratic lawmakers have proposed creating a national building label that would measure and disclose the energy performance of U.S. commercial property and homes.
The label, which lawmakers say would spur the property market to factor building energy use into transactions and increase energy efficiency, is included in a draft version of "The American Clean Energy and Security Act of 2009," the proposed climate change bill released late last month by Reps. Henry Waxman of California and Edward Markey of Massachusetts.
The Energy and Commerce Committee is holding hearings this week on the legislation, which is already receiving attention for its cap-and-trade proposal, and said it would vote on the measure before Memorial Day.
Energy efficiency advocates have long sought to increase energy transparency in the real estate sector, which accounts for nearly half of the nation’s energy consumption and greenhouse gas emissions. They point to gas mileage labels on cars and energy stickers on appliances as evidence of how labeling can raise the level of consciousness about energy use.
"People haven’t thought a lot about the energy use of buildings. This has been low on the list for a long time," said Ron Jarnagin, a staff scientist in the Pacific Northwest National Laboratory’s Energy & Environment Directorate and chair of a committee for the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) that is also developing a building energy label.
"If we have a way to compare buildings, anybody who might be interested in purchasing or leasing a property will have some interest in how well yours performs compared to another property," he said.
The building labeling provision is based on similar terms in the Dingell-Boucher climate change bill that was drafted last year but never formally introduced. Though the language of the provision remains broad, it lays the groundwork for what a final label might look like and how it would be implemented.
The U.S. Department of Energy is charged with creating the label, which would include demonstration projects and educational outreach to building stakeholders, the bill said. Authority to implement the label would be in the hands of states, with DOE distributing federal funds to help states with labeling expenses.
Like the building energy label that ASHRAE is developing, the Waxman-Markey label would include two ratings -- a performance grade based on utility bills and other operating characteristics, and an asset grade (also known as a design grade) that would assess a building’s energy efficiency potential based on computer energy models. On the commercial side, both grades would be derived from the government’s Energy Star program.
More than 11.5 billion square feet of commercial floor space has already been rated for energy efficiency using Energy Star, making that program a logical starting point for a building label, advocates say.
Yet, few of those ratings have been broadcast to the marketplace, and the ones that have tend to be for only the most energy-efficient buildings. "Obviously if the score is on the higher end, there is a competitive advantage to disclosing that score," said Eleni Reed, director of sustainability strategies for Cushman & Wakefield. Lower scores tend to stay hidden, she said.
One of the main goals of the label would be to repackage Energy Star scores in a consumer-friendly format. The bill recommends tying disclosure to the sale, lease, permitting or financing of a property, or to building audits conducted with federal or state funds. It presents the possibility of disclosing energy use in local tax records, however it does not mention the public display of the label, as is required for some labels under the European Union’s building labeling program.
According to Jarnagin, "Just to have a label generated for a building is not sufficient. You need to be able to disclose that information in a meaningful way."
The bill avoids endorsing one strategy over another, a decision that is already being made in some statehouses.
Under a new law in California, building energy benchmarking and disclosure is required during a property transaction, which is favored in the EU system. The District of Columbia is phasing in a law that requires energy benchmarking for all commercial buildings and calls for the posting of energy scores on a public web site.
With both those laws officially on the books next year, "The scope of disclosure is an area where we’ll be finding out a lot more," Reed said.
Options related to the appearance of the label are also on the table. The EU label provides a carbon footprint rating, which is not included in either the ASHRAE or the Waxman-Markey markups. A proposed building label in Brazil would go even further, providing individual ratings for lighting, mechanical systems and the building shell.
The bill is also vague on some finer points of the label that could present challenges, and a few logistical hurdles remain.
Though the label would be property type-specific, it still may not capture all the intricacies of building energy use, said Joe Wick, managing director of Client Solutions with Cushman & Wakefield. For instance, in the office sector, tenants with greater energy demands from trading floors, data centers or broadcast studios would impact an owner’s ability to receive a high energy rating.
"There are types of tenancies that in effect will bring down an Energy Star score, and the owner may not have complete control of that," Wick said.
Energy Star scores are computed by property owners or managers using computer software and are not independently verified unless a property is recognized by Energy Star as a top achiever. That would need to change if benchmark scores were widely disclosed or mandated to prevent potential abuses, several people said.
Moreover, the government would need to ensure that the workforce is in place to assess, model or verify the energy use of a large volume of buildings, which has been an issue in the U.K.
ASHRAE has pledged to develop requirements and help train such a workforce in conjunction with its building label, which is due out in a prototype version later this year.
The biggest logistical challenge to the label would be establishing ratings for properties like multifamily buildings and data centers that cannot currently be rated through Energy Star.
To receive an Energy Star rating, the energy use of a building is compared with energy data for similar buildings compiled through the government’s Commercial Building Energy Consumption Survey (CBECS). While most property types are present in the survey, many of the samples are not large enough to provide a statistically significant comparison.
The Waxman-Markey bill calls for improvements to the CBECS that would develop measurement protocols for "at least 90 percent of all major commercial building types" within five years.
Improving the CBECS is a "critical investment," said Jason Hartke, director of advocacy and public policy for the U.S. Green Building Council, one of the organizations that helped lawmakers craft the label provision.
"CBECS has not traditionally been funded very well," Hartke said. "With a very modest investment of $3 million to $7 million, it could capture much more of the market."