Dive Brief:
- California released its draft strategy to implement building performance standards that would set long-term targets for 2045 with interim compliance checkpoints every five years.
- The BPS would require commercial and multifamily buildings larger than 50,000 square feet to meet limits for site energy use intensity and onsite greenhouse gas intensity, with the potential for future demand-management metrics.
- The proposed strategy would provide multiple alternative compliance pathways for buildings with unique constraints and prevent owners from passing noncompliance penalties onto tenants while deferring to local governments that adopt stronger standards, according to the Institute for Market Transformation.
Dive Insight:
Two California cities — Chula Vista and West Hollywood — have adopted their own building performance standards. Six other cities — Berkeley, Los Angeles, Sacramento, San Diego, San Francisco and Santa Monica — and the county of Los Angeles have their own standards in the works, according to the California Building Energy Action Plan, released Aug. 7.
The draft building energy performance strategy report, released July 7 by the California Energy Commission, is the first step toward improving participation and strengthening enforcement of California’s benchmarking requirement, CEC said.
The CEC was mandated in 2023 through Senate Bill 48, the Building Energy Savings Act, to develop a strategy in collaboration with other state agencies to use statewide building benchmarking data to track and manage large buildings’ energy use and greenhouse gas emissions to achieve the state’s goals, targets and standards.
Although California’s benchmarking program has set a strong foundation for BPS by providing the analytical basis for assessing building performance, there are challenges, according to the California Build Energy Action Plan.
For example, building owners often have to pay for upgrades before they receive program funds. They also must balance long-term compliance plans with other priorities when faced with emergencies, and they can face setbacks when working with contractors who only specialize in one part of the building, according to a report by the American Council for an Energy-Efficient Economy. Building tenants are also vulnerable because landlords sometimes pass on the cost of some upgrades to them.
Residential and commercial buildings in California consume more than 70% of the state’s electricity and more than 50% of its gas, generating about 25% of the state’s GHG emissions, the CEC said in its report.
Only about 70% of required buildings are compliant, according to IMT, which has worked with the CEC and state Sen. Josh Becker since 2022 to develop the statewide building performance policy.
The CEC BPS strategy recommends multiple ways to address compliance issues.
The draft strategy would use a trajectory-based approach, setting long-term performance targets for 2045 and interim compliance targets every five years, providing building owners with long-term certainty while also enabling better performers to move along a flatter path to final compliance, IMT said in a blog post.
The report recommends options for alternative compliance pathways so that buildings can comply even if standards cannot be met. These include portfolio compliance, timeline adjustments, baseline adjustments, target modifications and building performance action plans.
These flexibility mechanisms provide a way for the policy to ensure all buildings are able to move toward long-term compliance in a way that reflects their circumstances, says IMT, noting this is particularly important for affordable housing and other under-resourced building types.
It would also encourage regulators to explore future demand-management metrics such as coincident peak demand that could better support electric grid reliability as the state’s power system evolves. Because of the state’s widespread advanced metering, CEC’s data warehouse and leading electric demand flexibility initiatives, California is “uniquely well-equipped to be the first jurisdiction to put in place demand-management BPS metric(s),” IMT said.
The CEC’s report outlines a number of ways that the state’s BPS could prevent building owners from passing on noncompliance penalties to residential and small commercial tenants and protect tenants from displacement during retrofit projects. Collected penalties would be reinvested into performance improvements for buildings serving low-income communities, per the report.
“The state could require owners of buildings leased to small commercial tenants provide relocation assistance [and] require building owners who receive subsidies from the state to offer relocation assistance and access to advisory services,” the draft report states.
CEC also said that green leases, also called performance-based leases, could address the split incentive challenge by equitably aligning costs and benefits of utility efficiency investments for both owners and tenants.
“California cannot achieve midcentury climate and social goals without addressing building performance,” CEC said. “By promoting clear and achievable building performance targets, California could encourage proactive investments in energy efficiency, building electrification, and load flexibility to support state goals.”
