Imagine you are the owner of an office building in your local metro area. You have good tenants who honor their leases and pay rent on time. Let’s say that after taxes, the mortgage and utility bills, the building costs $100,000 per month to maintain so that it yields a modest profit.
Now let’s say that, simply by updating your building to make it more energy-efficient, you could save anywhere from $7,000-$8,000 each month. If only that info were available to small-time landlords like you, right?
This is the problem that advocates like Andrew Burr of the Institute for Market Transformation want to fix. Burr pushes cities and states around the country to adopt policies that require building owners to measure their properties’ energy use and disclose it to the public, the local government and in some cases, directly to tenants.
The purpose of benchmarking energy use is twofold: To make markets more efficient, and to use policy to reduce costs and, ultimately, create jobs.
In the past five years, five U.S. cities and two states have passed laws that mandate benchmarking energy use in some form. Connecticut, Vermont and Massachusetts are considering similar policies now, and Philadelphia has legislation on the table this year.
Burr said that although he sometimes finds building owners and trade groups wary of benchmarking laws, the benefits are clear to those who already do it. Before mandatory benchmarking, many owners don’t know enough about their buildings to slash excessive or unnecessary energy use. With the numbers suddenly available, they can take any number of measures to cut back, including changing the habits of tenants or commissioning the design and installation of energy-saving tools. After all, green retrofits can be a money-saver for landlords.
Studies have found that after making benchmarking mandatory, buildings can save 7-8 percent in energy costs immediately, according to Alex Dews, program manager for the Philadelphia Mayor’s Office for Sustainability, who along with Burr gave a presentation on the topic in Philadelphia on March 15.
In other words, you can save a tremendous amount of energy and money that heretofore went to waste, simply by getting people to pay attention.
New York City passed a law in 2009 requiring that only buildings above 50,000 square feet—which account for just 2 percent of all 1 million of the city’s buildings, but about half of the city’s total floor area—benchmark and disclose their annual energy use. The law applies to public and private buildings alike and affects about
4 billion 2.5 billion square feet of property altogether.
Nationally, benchmarking laws impact about 4 billion square feet of property. To put that number in perspective, this is three times as much floor space as contained every Walmart, Costco, Home Depot, Home Goods and Barnes and Noble in the country combined. Oh, and these buildings account for about about $15 billion annually. At the first deadline for disclosure, said Burr, 80 percent of building owners complied.
Philadelphia has a similar law now under consideration, and is already in the process of measuring energy use in all city-owned buildings that are 100,000 square feet or larger. Two of Philly’s biggest energy users — the Philadelphia Art Museum and City Hall — are city-owned, according to Dews.
The first measurements should be complete in the summer or early fall, Dews said. The aim is to reduce energy use across the city by 10 percent by 2015. If the law came to pass, it could help achieve Mayor Michael Nutter’s broader goal of making Philadelphia the nation’s greenest city by that same year.
UPDATE: This morning, the Institute for Market Transformation released a report describing how benchmarking energy use could also serve as a catalyst for job creation. The major takeaway is that, due to increased demand for energy-efficient services and technology, a nationwide benchmarking policy would create an estimated 23,000 jobs by 2015 and 59,000 by 2020. It would also save about $18 billion in reduced energy costs for building owners, consumers and businesses over the next eight years.