Energy Use Benchmarking Comes to Chicago

By Matt Baker

Greenwashers. They are the ones telling you that their product is sustainable and never mind about backing those claims up. You might be annoyed to discover that you’ve wasted your money on paper towels or a floor cleaner that claimed to be green but wasn’t. Now imagine that the product bathed in greenwashing isn’t some $5 cleaning product but a piece of real estate.

Even if someone isn’t actively fleecing you, it can still be hard to distinguish the green from the not-so-green buildings. All that could change in Chicago with the passage of a new energy benchmark ordinance. The Chicago City Council has approved legislation first introduced by Mayor Rahm Emanuel that requires buildings to track their energy use. The ordinance will also create a database where the energy efficiency for various buildings will be publicly compared and contrasted.

glowing house aerialThe mayor hopes that the ordinance will encourage building owners to make upgrades that lead not only to a more efficient building stock but to job growth as well. “Good data drives markets and innovation,” Emanuel said. “This ordinance will accelerate Chicago’s growth as a capital for green jobs by arming building owners, real estate companies, energy service companies and others with the information they need to make smart, cost-saving investments.”

Approximately 3,500 buildings will be affected by the new ordinance. Commercial, residential and municipal buildings over 50,000 square feet are now required to track energy consumption using Portfolio Manager, the online software component of the EPA’s Energy Star program.

Building energy use data will be automatically reported to the city each year. Every three years, a licensed professional will audit the data. The city will publish an annual report on energy efficiency.

The program will be phased in with large commercial buildings (greater than 250,000 square feet) reporting their energy use by next summer; residential buildings of that size and commercial buildings greater than 50,000 square feet will start reporting in 2015. Finally, residential buildings greater than 50,000 square feet have until 2016.

In all cases, public disclosure of individual energy performance won’t begin until one year after a building has begun to report. The city hopes that the one-year grace period will encourage those with sub-par statistics to implement changes in their buildings before those numbers go public.

The primary goal for the benchmarking is to nurture Chicago’s stock of energy-efficient properties. A recent EPA study showed that buildings that use Portfolio Manager can expect average energy savings of 7%. That would equate to hundreds of millions of dollars in energy savings for Chicago properties.

“This ordinance can be huge for Chicago,” said Rebecca Stanfield, Deputy Director of Midwest Policy for the National Resource Defense Council. “Locked up in Chicago’s buildings is an enormous well of potential for saving money, creating jobs and reducing pollution through cost-effective energy efficiency improvements. The City Council took a big step towards capturing all those benefits and took an important swipe at Chicago’s contribution to climate change.”

The ordinance currently excludes certain facilities, such as data centers, television studios and trading floors, though there is enough wiggle room in the ordinance language that those spaces may be required to report in the future. It also exempts buildings under financial distress, such as those in foreclosure or under a tax lien. Buildings that have suffered half occupancy or less will also not have to report.

In passing the ordinance, Chicago will join several other cities that require energy benchmarking, including Austin, Boston, Minneapolis, New York, Philadelphia, Seattle, San Francisco and Washington, D.C. California and Washington State both also have similar laws.

“Benchmarking energy performance empowered us to identify opportunities for energy improvement, track progress over time and demonstrate achievements in a simple and cost effective manner,” said David Pogue, Global Director of Corporate Responsibility at CBRE, which has worked to comply with New York’s version of this ordinance. “Transparency and data disclosure will help property and financial markets accurately value energy-efficient buildings.”

However, not everyone supports the legislation. There were 17 dissenting votes when it came up before the City Council. One of those voting nay was Alderman Harry Osterman (48th). “While I strongly support taking measures to improve energy efficiency, I believed this legislation needed more time to be structured in a way to better serve large, multi-dwelling buildings,” said Osterman.

Another vocal opponent to the ordinance is Alderman Brendan Reilly (42nd). Among his chief concerns are the possibility of higher condominium fees and that the benchmarking will marginalize older buildings when they come to market.

“Frankly, not all of our members are Class A LEED Platinum,” reads a BOMA-Chicago press release critical of the legislation. “We represent many buildings that are doing what they can to improve their sustainability and energy efficiency, but still struggle with infrastructure limitations and the cost of retrofit work. Publishing the scores for buildings that simply cannot afford the work necessary to raise them will not ‘shame’ those buildings into achieving higher scores. It will simply impose yet another competitive burden on an already challenged sector.”

This past summer, the Bank of America Tower in New York received some unwanted press when it came to light that the nation’s first LEED Platinum skyscraper emits more greenhouse gases than any other comparable Manhattan building. Labels such as “toxic tower” and “energy hog” were perhaps unfair, since even skyscrapers of similar square footage behave differently based on age, use and many other factors.

This barrage of bad publicity has given another group reason to oppose the legislation. Energy use disclosure will make it much more difficult for property managers to greenwash their buildings. You can’t deny metrics.

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