In Part One of our analysis of the report from the Mayor’s Task Force on Existing Commercial Buildings, we discussed the task force’s four themed approach to improving the energy efficiency of existing commercial buildings: 1) “maximize transparency,” 2) partner with the private sector, 3) attract game-changing capital, and 4) lead by example. We now turn to theme two, “partner with the private sector.”
As discussed in Part One of this post, the transparency mandates suggested by the task force, and/or mandated under AB 1103 will force private industry to report energy use. These reporting requirements will generate market forces that push buildings to higher energy efficiency. But, will developers, owners, and tenants really compete in a race to the top of efficiency based on AB 1103 alone? The answer is “probably not,” or maybe I should say, “probably not quickly enough.”
Sure, required energy reporting will occur, but the desired reduction in energy use will not manifest rapidly. Without government mandate and assistance for developers, owners, and tenants, the measures suggested by the task force, including mandatory energy audits, will create resentment and real hardship for businesses. Also, the local taxpayers might not be happy with the incentives and rebates suggested to assist in deferring the cost (though some of the underwriting will come from state and federal grants).
The task force suggests two low-cost “tools” to rapidly generate efficiency results and ease the private burden of implementing energy efficiency. The first suggestion is a “no-brainer,” but the second might not be as simple.
The first tool is the “Green Tenant Toolkit” (“GTT”). Rather than simply mandating energy efficiency, the GTT proposes a “toolkit” with suggestions for developers, owners, and tenants regarding “best practice recommendations, a model green lease, [and] a standardized checklist to identify green features of spaces for lease.” Also, as a part of the “partner with the private sector” theme, the task force suggests a public/private (dare I say) task force to come up with the language and suggestions for the GTT. The proposed GTT is a quick and easy resource, and one that will ease the burden of implementing energy efficiency measures.
The second tool suggested by the task force is “unilateral submetering.” This strategy proposes allowing tenants or landlords to implement submetering at the requester’s expense. This is risky, and not completely thought out. First, this option likely already exists for a majority of tenants and landlords, and second the suggestion ignores the issues that arise from such a policy.
For example, unlike other tenant-level capital improvements, submetering affects the operating costs of other tenants. Generally, a building’s utility costs are averaged, and then allocated to tenants based on square feet. If a large tenant has a significant amount of space that is below the average energy use in a building, and that space is removed from the building energy calculation, the average cost will rise for other tenants. Conversely, a landlord, at the bequest of other tenants, may submeter a power-sucking data center. This action will lower rent for a majority of other tenants, but send operating costs for the data center through the proverbial roof. It’s not quite that simple, but the example above is closer to the reality than the task force lets on.
To achieve the equity the task force seeks, unilateral submetering will need further analysis, or testing before city-wide implementation. Perhaps if a tenant submeters, a landlord could be forced for one year to keep the submetered tenant in as part of the calculation for the building’s energy use averages until other tenants can take action to either lower energy costs or also submeter? Or perhaps the city will limit the amount a landlord can raise an energy charge thus encouraging energy efficiency? Perhaps other tenants will just have to “get with the program,” submeter, and increase their efficiency to realize ROI. There are no easy solutions to this question, but submetering is an effective tool to reducing energy use, and is required for any effective energy efficiency policy.
The task force’s next suggestions – including the suggestion of a government fund to cover expenses for implementation of energy efficient technologies – will be covered in part three of our analysis. Stay tuned…
Steve Sacks
Sarah Grilli