Legislative Update
By Thomas J. Bisacquino
Latest Energy Legislation Good,
But Details Still Need Tweaking
CONGRESS IS POISED TO ENACT AN HISTORIC
climate change bill that will have noteworthy effects on
commercial development. Passed by the House Energy
and Commerce Committee, America’s Clean Energy
Security Act of 2009 includes a provision that mandates
strict energy codes for buildings.
The legislation establishes energy efficiency targets for
both commercial and residential buildings and requires
states to update their building codes to adopt them.
More specifically, the bill requires an immediate increase
of energy efficiency by 30%, a 50% rise by 2015 and a
5% increase every three years until 2030. The baseline
for reaching these targets for commercial buildings is
ASHRAE 90.1 (2004), which already increases required
energy efficiency by 18% over the prior code.
Congress’ proposed new standards
don’t take into full consideration the
consequences and costs of achieving them.
States that are not in compliance with these targets
within two years will cede authority to the federal government, which will then become the primary enforcer of
the states’ building codes. Additionally, the Department
of Energy can impose new fees to cover the costs of the
inspections required for enforcement as well as assess
civil penalties for violators.
Proponents of the bill suggest that the heightened
targets are easy to reach and will quickly pay for
themselves. They point to the fact that the federal government has already made a similar commitment for
public buildings with a target of creating carbon-neutral
structures by 2025. It is argued that since buildings—
both commercial and residential—are the largest users
of electricity in the country, stricter codes are the best
way to conserve energy. But Congress’ proposed new
standards present an impractical timeline and don’t take
into full consideration the consequences and costs of
achieving them.
Developers have made tremendous strides within
recent years to improve energy efficiencies and create
more sustainable buildings, as evidenced by showcase
properties across the nation. These tend to be located in
highly developed markets and are driven by tenant and
investor demand, lower operating costs and financial
incentives.
Not all markets are created equal, and nationwide
energy mandates for all building types will create a disincentive to develop new properties in areas where the
markets cannot absorb the increased expense. Time is
needed to bring all markets to a level of sophistication
where sustainable technologies and methods become
the norm and are available at reasonable costs.
There are severe limits within the confines of building
codes that determine what can be done to increase
energy efficiency. Energy codes generally regulate only
the building structure, mechanical and lighting systems,
but don’t address design strategies and the activities
within the building’s walls. Energy consumed by the tenant, appliances, building orientation, equipment maintenance, building operations and occupant behavior aren’t
included in codes, yet are responsible for as much as
25% of energy use in commercial properties.
Profitability is important to any industry, and no less
so to developers. The American Society of Heating,
Refrigerating and Air-Conditioning Engineers estimates
a payback period of 19 years for a commercial development reaching the 30% target. Currently, there is little
data to determine the costs and paybacks for achieving
the 50% goal for residential and commercial buildings,
largely because it is not practical using existing technology. In fact, even the most progressive sustainable
showcase properties often fall well short of hitting the
50% target.
We are encouraged by previous legislative efforts
to increase energy efficiency through incentives, including the Commercial Building Energy Efficient Tax
Deduction, and remain committed to working with
Congress on legislation that recognizes the balance of
the industry’s economic needs with the importance of
conservation. ◆
The views expressed in this column are those of the
author and not necessarily REAL ESTATE FORUM.
Thomas J. Bisacquino is president of the National Association
of Industrial and Office Properties, based in Washington, DC.
He may be contacted at energy@naiop.org.
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