Project Summary

Rethinking Office Building Efficiency

The City of Boulder Addresses Commercial Building Efficiency

In order to do its part to reduce global GHG emissions, the commercial building sector needs to reduce its energy use by 50-70 percent by the year 2050. The more basic and easy-to-implement energy efficiency measures together cannot achieve that level of savings, and though deep energy retrofits of existing building may achieve such saving, it may not be practical or economically viable to deep retrofit every building. So what has to be done? Some communities are working on the problem.

The Basics

In most US communities, the commercial building sector is responsible for a significant portion of the community’s energy consumption – nearly 40 percent nationally. Fortunately, there is a great deal of potential energy savings available within the commercial building sector.

Even a basic approach, based on improved integration of readily available technologies - such as energy efficient windows, lighting, appliances and controls - that includes a basic set of best practices related to design and operations, can yield energy savings of 15 – 25 percent.1

Efficiency Measures

The graph here shows a 22 percent energy savings in a typical US commercial office building when a set of quick payback energy efficiency measures are implemented.2 Those measures include high quality, energy efficient lighting technology, advanced HVAC motors and drives and HVAC performance tuning,
plug load management, and advanced metering.

Is 20 Percent Energy Savings Enough?

Most experts agree, we must start now to aggressively reduce energy use in new and existing buildings to lower our energy-related carbon footprint and help stabilize atmospheric CO2 concentrations at the level called for by the Intergovernmental Panel on Climate Change (IPCC). By most estimates, the commercial sector needs to reduce energy use by 50-70 percent by the year 2050 to reach these targets.3 How do we get to that level of energy savings?

One doesn't have to look far to find examples of individual commercial buildings embracing the latest in energy and resource management. There are LEED certified buildings in all 50 states and in over 100 countries worldwide.4 And there are an increasing number of deep energy retrofit5 projects in many of the Nation’s large cities. Of particular note, the Empire State Building recently underwent a deep retrofit that is expected to yield a 38 percent improvement in efficiency and save $4.4 million in annual energy costs.6 Also, in Denver, the Byron Rogers GSA building is undergoing a deep retrofit project expected to be completed in 2013 with an anticipated 70 percent annual energy saving.7

But deep retrofitting every building is a daunting challenge, and in fact, even modest building renovations in economically difficult times can be a challenge.

So how do we get there in 40 years?

Investor-owned and municipality-owned utilities, as well as many cities and states, manage and/or regulate demand side management programs, some of which have a eye trained on the commercial building energy sector.

Most investor-owned energy utilities have demand side management (DSM) programs designed to entice energy users to reduce their demand. They may offer rebates for energy efficiency product and services, energy education and outreach, and market transformation initiatives.8 The inherent problem with these programs is in the business model of the utilities; their business goal is to sell energy, so they have little incentive to develop their DSM programs beyond what is mandated by the Public Utility Commission.

In 1994 the city of Berkeley, California, adopted a commercial energy conservation ordinance (CECO) that added a fairly aggressive set of energy conservation measures to their building codes. This is an example of addressing commercial energy conservation via a primarily regulatory approach on the part of the city government. It has had modest success (in the area of 13 percent energy savings) but far short of targets being defined today.

In February 2011, San Francisco, California enacted an ordinance, known as the “Existing Commercial Building Energy Performance Ordinance.” This law requires annual ENERGY STAR benchmarking, the public posting of benchmarking data, disclosure to the Department of the Environment as well as energy audits every five years.9 Though this approach gets the information collection process started, it’s not clear what the city will do to incentivize commercial building energy efficiency.

On April 21, 2011 in Austin, Texas the Austin City Council approved the Energy Conservation Audit and Disclosure (ECAD) ordinance, which requires most commercial properties to undergo an energy audit and energy disclosure, and to progressively implement energy conservation measures.10 This is a fairly new program and its success remains to be seen, but it is a great example of a municipal utility collaborating with city government to take a progressive role in addressing commercial sector energy use.

Tokyo has launched a cap and trade system for buildings this past spring making it an early market-based solution to building energy efficiency. This program sets a cap on large-building carbon emissions in Tokyo, and designs a trading system and guidelines for emission reduction. The program is being touted as a success in the sense that it has brought a number of stakeholders together and gotten significant buy-in for the program. It’s worthy to note that the program targets (and in fact is mandatory) only the highest emitters, and not the entire commercial energy sector.

What about a voluntary approach that reaches an entire community?

Another community taking an innovative approach to large-scale commercial energy efficiency improvements is the city of Boulder, Colorado. In 2006 the residents voted in favor of an energy tax, the revenue from which is directed toward energy and carbon reduction projects aimed at achieving the City’s carbon reduction goals.11 It is an example of a community funded and operated voluntary DSM program that can reach all of the energy consuming sectors of the city with the sole goal to achieve specific carbon emission reductions.

Though the City of Boulder’s Local Environmental Action Division has implemented a number of energy efficiency programs throughout the community, it has had difficulty gaining significant traction in the commercial building sector. To address this, it decided to take a closer look at the contributing factors to the commercial sector energy consumption, and then develop innovative strategies to address the barriers.

Facilitating the commercial sector to help solve the problem

Recognizing the need for stakeholder input and feedback in the program development process, the City asked stakeholders to help co-create a viable and impactful program for the commercial building sector. In June of 2011, the City of Boulder and Point380 as its consulting partner designed and facilitated a collaborative stakeholder workshop that identified these challenges for the energy sector:

Designing and implementing a long-term commercial sector programs is especially difficult for these key reasons:

  • There is a misalignment of energy efficiency incentives divided between building tenants and landlords that exists primarily due to the predominant tenant/landlord relationship. This is often called the tenant/landlord split incentive.
  • Building Owners and Managers are often unwilling to take a financial risk on energy efficiency improvements even if the project has a viable payback, especially during economic downturns.
  • Information about energy efficiency programs and incentives offered by the City, the local utility, and third parties is not being communicated clearly to the Building Owners and Managers.

In response to these challenges, the Workshop participants identified and outlined three potential programming concepts they felt would benefit the market sector:

  • Innovative Finance Mechanisms - Develop and provide innovative, custom financing that meets the interests and investment criteria of the key commercial building stakeholder groups (e.g., medium and large BOMs, tenants).
  • Energy Efficiency Menu: EZ Energy Resource - Develop clear and concise energy efficiency information for each commercial building stakeholder group, and for key windows of opportunity identified for each group.
  • Commercial Real Estate Broker Energy Efficiency Education Program - Develop and implement commercial broker education and training, including energy efficiency tools and resources.