WAYS & MEANS: Beating the Game

WAYS & MEANS: Beating the Game

Why do people obsess over prices at gas stations? The answer is simple: We like games with tangible goals. That’s why miles-per-gallon (MPG) ratings are so often used as a barometer for a car’s practical value. For many of us working to reduce energy consumption, the next MPG is a building energy performance benchmark.

Ways & Means is a weekly column by Mark Alan Hughes on economics, politics and sustainability in Philadelphia.

Why do people obsess over prices at gas stations when, say, their habit of jackrabbiting the pedal at traffic lights costs them more than they save from shopping cents on a gallon? The answer is simple: We like games with tangible goals. Find the glowing numerals of a deal and you’ve beaten the game.

Likewise, the miles-per-gallon (MPG) ratings that are used to advertise cars offer a simple barometer of a car’s practical value. The rating very quickly helps the consumer feel like he or she has beaten the game by getting the best deal. After a generation of mandatory use, the MPG is as familiar and trusted a statistic as yesterday’s high temperature.

For many of us working to reduce energy consumption, the next MPG is a building energy performance benchmark.

From a previous Daily post:

Benchmarking policies 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 [including Philadelphia and New York City] and two states have passed laws that mandate benchmarking energy use in some form. Connecticut, Vermont and Massachusetts are considering similar policies now.

Now, to be clear, I am a huge fan of these building benchmarking and disclosure laws that are gaining traction across the country, namely in our own city, under the leadership of Councilwoman Blondell Reynolds-Brown and with support from the Nutter Administration and a broad set of stakeholders. And in many discussions, the MPG analogy makes sense: Let’s label buildings so that people who want to buy or lease them know how much energy (or water, etc.) they use each month, and how much it will cost them. And indeed, that information is crucial to getting the prices right in the market. All things considered, a building that costs less to operate should be worth more.

But there is an important difference between MPG ratings for cars and energy ratings for buildings. The former displays the average performance of that car model, not the performance of that particular car.

Breakdown of how much energy use large and small buildings account for in New York City. Credit: PlaNYC

The benchmarking and disclosure of a building’s energy performance is about one individual building and compared to other individual buildings. Building labels are, therefore, a bit more like the EnergyStar labels we see today on many appliances. But even these appliance labels report only how the model performs compared with other models, and not about the particular water heater or dishwasher you are thinking about buying.

So building performance is way harder than anything thing we’ve tried to label to date. And the owners of these buildings are rightly concerned with accuracy.

But, as with so many policies in the sustainability realm, New York City is showing that hard is not impossible. The Mayor’s Office of Long-Range Planning and Sustainability has just released the first-of-its-kind report showing how to do this and why it’s worth it.

The acknowledgements page in that report is a mini-case study in mobilizing stakeholders to produce progress. In particular, the positive involvement of the New York real estate industry through the local chapter of the Building Owners and Managers Association (BOMA) shows what happens when interest groups act responsibly and thoughtfully.

Everyone in New York — the marketplace of buyers and sellers, the public square of regulators and citizens, the academe of researchers and innovators — now knows more about their buildings than their peers in any other city in the United States. This information will yield an ever-increasing cornucopia of benefits: More jobs, better protected consumers, rewards for owners investing in better buildings and the suppliers who provide the means to do so, more latitude for the city and its citizens to secure their energy independence, and on and on.

The transparency of building performance through benchmarking and disclosure is difficult but achievable. Thanks to the work of thought leaders like the Institute for Market Transformation, these ideas and methods are available to governments throughout the country and around the world. And thanks to cities like New York and Philadelphia, the path forward is well-Iit, not unlike the prices on a gas station.

Mark Alan Hughes is a Distinguished Senior Fellow at PennDesign and a Scholar in Residence at the Robert A. Fox Leadership Program at Penn.

Mark Alan Hughes is a Distinguished Senior Fellow at PennDesign and an Investigator at the US Department Of Energy’s Energy Efficient Buildings Hub at the Philadelphia Navy Yard. He is a Faculty Fellow of the Penn Institute for Urban Research, a Senior Fellow of the Wharton School’s Initiative for Global Environmental Leadership, and a Distinguished Scholar in Residence at Penn’s Fox Leadership Program. He has been a senior fellow at the Brookings Institution, the Urban Institute, and a senior adviser at the Ford Foundation. He was the Chief Policy Adviser to Mayor Michael Nutter and the founding Director of Sustainability for the City of Philadelphia, where he led the creation of the Greenworks plan. Hughes holds a B.A. from Swarthmore and a Ph.D. from Penn, joined the Princeton faculty in 1986 at the age of 25, has taught at Penn since 1999, and is widely published in the leading academic journals of several disciplines, including Economic Geography, Urban Economics, Policy Analysis and Management, and the Journal of the American Planning Association, for which he won the National Planning Award in 1992.

Tags: new york cityphiladelphiaenergy

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