Monday, August 24, 2009

Green Building Provisions in Waxman-Markey

At a recent cocktail party I found myself discussing the environmental and economic benefits of green buildings with someone who owns and manages a small portfolio of commercial properties. As we discussed these benefits and how they were relevant, particularly within the economic realities of today’s commercial property market, I pointed out the connection between our built environment and climate change – more specifically how increasing energy efficiency in buildings can have a tremendous impact on reducing greenhouse gas emissions. As an attorney certified by the U.S. Green Building Council as a LEED Accredited Professional, in my practice I am beginning to have discussions regarding the interconnection between green buildings, sustainability and climate change and see these issues continuing to increase as climate change legislation comes closer to reality.

Globally, buildings are responsible for more carbon dioxide emissions than any other sector, higher than transportation and industry. According to a 2008 Environmental Information Administration report, buildings in the United States account for 72% of electricity consumption and nearly 40% of primary energy use and carbon dioxide emissions. Meanwhile, buildings gaining certification through the Leadership in Energy and Environmental Design (LEED) process can reduce energy use up to 50%, decrease carbon dioxide emissions by 40%, and dramatically reduce water consumption and solid waste. These key statistics combined with the recognition that energy efficiency is one of the cheapest and most important methods of reducing energy consumption and greenhouse gases has led to building efficiency provisions being included in the Waxman-Markey bill, the bill that establishes a plan to address greenhouse gases and combat climate change in the United States.

Currently the House and Senate have two separate versions of the Waxman-Markey bill and both contain green building provisions related to energy efficiency. The House bill, the American Clean Energy and Security Act (ACESA), and the Senate Energy and Natural Resources Committee markup entitled the American Clean Energy Leadership Act (ACELA), establish a national building code addressing energy efficiency. The energy efficiency standards of both versions represent significant energy efficiency improvements over established baseline codes - the 2006 International Energy Conservation Code (“IECC”), a model code already adopted by many state and municipal governments throughout the United States to establish minimum design and construction requirements for energy efficiency, for residential buildings and ASHRAE Standard 90.1-2004 for commercial buildings.

Implementation of a national building code for energy efficiency is somewhat different in each of the two versions of Waxman-Markey, with ACELA representing a lower requirement that is also not as strict as ACESA in its implementation requirements. As provided in ACESA, buildings built to code within one year of enactment would need to meet national energy efficiency targets that achieve 30 percent reduction in energy use as compared to the baseline codes. Buildings would then be required to achieve 50% reduction by 2014 for residential and 2015 for commercial. ACESA adds an additional 5% reduction in energy use for each year thereafter until 2029 for residential buildings and 2030 for commercial buildings.

ACELA’s target reductions are at least 30% by 2010, similar to the House version. However, ACELA does not increase efficiency to at least a 50% reduction in energy use until 2016, and does not include additional, incremental increases in efficiency (though the Secretary of Energy would have discretion to set standards above the minim reduction, provided there is at least 3 years notice to aid in implementation).

Under ACESA, within one year of establishment of the national building energy efficiency code, states must certify that their building codes meet or exceed the national standard or the national code applies. Alternatively, states could certify that local building codes for governments representing 80% of the state’s urban population meet or exceed the national standard. Further, states and/or local governments have two years to demonstrate compliance with ACESA. Compliance is defined as demonstrating that at least 90% of new construction and substantial renovations in the previous year met the code provisions for energy efficiency. If compliance cannot be immediately demonstrated, states have seven years after enactment to exhibit “significant progress” towards compliance. Significant progress is defined as developing a plan for enforcement of the national building code standard, taking steps towards implementing the plan, maintaining funding for enforcement, and showing that at least 50% of new and significant renovations meet or exceed the national code requirements.

The certification and compliance provisions of ACELA, in comparison, are less stringent. Under ACELA, states have two years to certify they are working to update the energy efficiency of their building codes. States also have three years to confirm they have achieved compliance or are making “significant progress” towards compliance. Significant progress under ACELA is achieved if a state is implementing a plan for achieving compliance within 8 years of the enactment. A state may also petition the Secretary of Energy to have their target lowered to the highest achievable level.

The environmental benefits of green buildings are well established and some states and many municipalities are already incorporating green building design and construction techniques into their building codes. Energy efficiency provisions included in both versions of Waxman-Markey signifies that these benefits are entering the mainstream – not just in design and construction of buildings, but in an overhaul of how this country consumes energy. Energy efficiency represents one of the most important, and arguably cheapest, options for reducing greenhouse gas emissions, decreasing dependence on fossil fuels, and combating climate change and Waxman-Markey incorporates this into building codes on a national level.

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  1. Hi Richard,

    Thanks for posting this >> I was unaware of pending legislation that requires all private buildings to come into compliance with a green ethos, if you will.

    I wonder, however: the costs must be significant ... do either of the bills have subsidy provisions to help business with the upgrades (I'm thinking mostly small business, in this case)? And if not, in your opinion, what are the likelihood of suits to avoid compliance?

    And although I am a supporter of legislation that steers us (and business) into more eco-friendly habits, I wonder if the "significant progress" exceptions will be blown wide open ... do you think they will be taken advantage of?

  2. ACELA appropriates $100,000,000 for each of fiscal years 2009 through 2013, and such sums as are necessary for fiscal year 2014 and beyond, for technical assistance and support, incentives, and enforcement.

    ACESA appropriates at least $125,000,000 each year for training and assistance. As an incentive and enforcement mechanism, ACESA includes a complex calculation for the amount of funding that will be withheld from noncompliant states.

    The enforcement provisions and amount of federal funding available on an annual basis should prove adequate to both entice compliance and minimize the economic impact of the energy efficiency requirements. Accordingly, while I personally believe the "significant progress" excpetions are too lenien they likely will not be abused by a state to avoid compliance.

    From an economic impact perspective, there is also an economy of scale argument to be made. As energy efficient building codes and technology become the norm rather than the exeption the cost of related expertiese and products will decrease. This appears to be the case with the capital or up-front cost associated with constructing a project with the goal of achieving LEED Certification.


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