February 17, 2011
First ever mobile post, so excuse the brevity.
Mayor Lee will sign the proposed ordinance into law tomorrow.
WHERE: Adobe headquarters, 601 Townsend
WHEN: 10 A.M., Friday, February 18, 2011
I wish I could be there, but I’m out of town.
Congrats, San Francisco!
For our comprehensive analysis, please click here
February 8, 2011
The San Francisco Board Of Supervisors unanimously passed the Commercial Buildings Energy Performance Ordinance. The ordinance now goes to Mayor Edwin Lee for signature. Mayor Lee is expected to sign the ordinance, and its provisions will go into effect as law.
This is a major step for San Francisco. Under the ordinance, San Francisco has the opportunity to make drastic cuts to energy use by existing buildings. It is believed that San Francisco is the largest city to require energy audits of commercial buildings.
For our full analysis of the ordinance, click here
January 30, 2011
As we’ve been reporting, the San Francisco Board of Supervisors may vote on the Commercial Buildings Energy Performance Ordinance this week. The first reading of the ordinance will be Tuesday, February 1, 2011 at 2pm in the Board of Supervisors chamber at City Hall. It is possible that the Board will vote at that time. We will let you know how it goes.
For our full analysis and a copy of the proposed ordinance, click here
January 24, 2011
As mentioned on Friday, the Land Use and Development Committee for the City and County of San Francisco is holding a hearing on Monday, January 24, 2011 to discuss the proposed Existing Commercial Buildings Energy Performance Ordinance. I encourage you to attend if possible.
The proposed ordinance would require certain commercial buildings to produce two reports, (1) an energy and performance audit every five years and (2) an Annual Energy Benchmark Summary (AEBS). Save for any confidential information, the audit and the AEBS would be made available to the public. The ordinance makes sense, but may place a cost on building owners that will inevitably be passed on to renters. The upside is that renters usually pay for utilities, so energy savings may offset the cost of the audit…something to think about in a green lease, that’s for sure.
Here’s a short summary:
The proposed ordinance will require two reports. The first report is the AEBS, and that will use the Energy Star Portfolio Manager Energy Performance Rating as a basis. This report will likely not cost too much money as it is based on the Portfolio Manager software that is freely available, and the data is generated from the local utility (in the case of San Francisco, PG&E).
The second report is a building-wide audit (as defined by ASHRAE Procedures for Commercial Building Energy Audits) conducted by a third-party vendor. As such, I am guessing the audit likely carries a higher price tag. Full disclosure, I have never hired someone to do an energy audit for a commercial building, so I am only guessing that the fees are more than nominal.
After the initial three-year staggered start period (which will also be used for the AEBS), the required energy audit would be required once every five years. As proposed, the audit requirement is as follows: Level I audits (as defined by ASHRAE) are essentially “walk-through” audits. These are required for buildings between 10,000 to 49,999 sq ft (smaller buildings). Level II audits (as defined by ASHRAE) are comprehensive surveys and analyses, and they are required for all buildings 50,000 sq ft and above. (larger buildings).
If owners do not comply with the requirements they may face fines. The fines are $100/day (for larger buildings) or $50/day (for smaller buildings) for every day of non-compliance up to 25 days per 12 month period. In other words, the maximum fine per year is $2,500 for a large building and $1,250 for a small building.
In general I like the ordinance but there are some issues that should be addressed… (more…)
August 16, 2010
As always, it’s great to have Sarah Grilli contribute. Here is her latest post:
Last week San Francisco Mayor Gavin Newsom proposed new legislation with co-sponsor City Supervisor Bevan Dufty focused on reducing the energy use of existing commercial buildings over 5,000 square feet. This new law is expected to be passed next month by San Francisco supervisors. San Francisco is currently subject to a strict green building code which was described in detail on a prior blog post. If this new measure passes, it will assist in making San Francisco’s green building legislation one of the most comprehensive of any city nationwide.
In May, we mentioned that the Mayor was planning this legislation, and, as predicted by pundits, it does go far beyond the statewide energy reporting required by AB 1103. The program proposed by Mayor Newsom implements many of the recommendations suggested by the Task Force on Existing Commercial Buildings. (For our discussion of AB 1103 and our series on the Report from the Mayor’s Task Force On Existing Commercial Buildings, click here). The legislation is modeled on similar programs in California and Boulder, Colorado, and requires the use of free software from the US EPA.
The cornerstone of the legislation is that it requires building owners to conduct a comprehensive energy audit every five years and an updated audit every year. This emphasis on energy efficiency will provide an additional layer of measurement and verification that is often missed in building codes and third party rating system such as the USGBC’s LEED. However, the newest version, LEED 3.0, does require measurement and verification through a post occupancy audit process. See our prior blog post on this issue here.
The city’s efforts in this regard will provide an important catchall for non-LEED buildings, and even more importantly will focus on existing buildings, not new construction. In theory, once the building owners and managers receive an audit report they will embrace the resulting proposed energy-saving renovations. Most, if not all, of the available energy-saving renovations are subsidized by Federal and State programs, thus assisting implementation. Stay tuned to the California Green Building Blog for a comprehensive review of the ordinance if this legislation passes.
UPDATE: This legislation is on the way to passage. Click here for coverage
June 16, 2010
The Mayor’s Task Force Report On Existing Commercial Buildings divided their recommendations into four themes. In this final post of our series, we address the final theme, “Lead By Example.”
The theme speaks for itself. The task force essentially states that the city must institute change in municipal buildings before it can insist on changes in the private sector. I emphatically agree, if for no other reason than the government needs to understand how the systems work before enforcing their use. San Francisco, under Chapter 7 of the Environment Code leads by example, and there are other examples. The recently launched GreenFinanceSF, a Green Finance program from the SFPUC, is a direct answer to the task force report. Admittedly, we missed it in our last post on the topic, but we’ve updated the post, and we will discuss the program in the future. Please check out the program, it looks great.
Some argue that the private sector is more adept to implement change. The belief that the private sector will lead the way, however, is misguided. The private sector has had years to renovate existing buildings, but the implementation is only on the fringe. Below, please find a quick timeline as to why this is.
The 1960’s and ‘70’s saw a huge surge in societal awareness of sustainability. This was due to hippies, the oil embargo, and in my case, Ranger Rick, Woodsy Owl, the Tearful Native American, and John Denver (among others). Even then, these advocates addressed pollution and environment. Sustainability in construction was considered a fringe movement for those who could afford it. Then, sustainability lost momentum when the price of oil tanked in the 1980’s.
Even when oil prices rose in the ‘00’s, and analysts touted life-cycle cost savings, private developers were unwilling to pay a “green premium” (the cost difference between a green building and a standard building). But in 2001, citing life-cycle costs, energy independence, and social consciousness, California and Oregon required that all new municipal buildings meet high environmental and energy efficiency standards. Other states including Washington, and New York followed, and in 2003, the GSA mandated that all new federal buildings meet LEED Silver standards. Other states including Pennsylvania, Massachusetts, and Florida joined the green movement.
With such huge markets mandating green, economies of scale took over. To answer the large orders from state and the federal government, manufacturers produced higher volumes of green products thus reducing the price. The municipal contracts created a new green economy, and materials such as denim insulation (pun intended) emerged as viable products. New companies formed and new technologies were invented to answer the call for green supplies. Large contractors altered their methodologies and trained their workforce for the green future.
Legislating incentives to encourage green building helped too. The government, with the help of the taxpayer, led all of this. Let’s be clear. If it were not for government, the green building movement would still be for the eccentric fringe. Period.
I’ve said many times that political parties are a liability to progress. There is no room for partisanship in promoting sustainability and green building. Energy independence is a matter of national security, and as the gulf oil spew shows, clean energy is a matter of protecting our domestic economy (e.g. keeping fisheries open, generating new construction, or creating auto jobs building electric vehicles at the NUMMI plant). There is nothing wrong with government leading the way in green building and energy efficiency. To the contrary, it must be one of their highest priorities. Government involvement in sustainable development creates jobs, and makes us a stronger, more secure nation.
The task force report is very good, but now the hard part begins. It has been six months since the report was issued, and I have not seen any new legislation passed or proposed. GreenFinanceSF is a great program, but that was in the works long before the task force report was issued. According to the San Francisco Examiner, the Mayor was going to propose new legislation, but I haven’t heard about it since. I’m happy to help if that’s what it takes, but let’s keep up the momentum.
June 2, 2010
Parts One and Two of our analysis of the Final Report and Recommendations from the Mayor’s Task Force on Existing Commercial Buildings discussed mandatory energy audits, the risks associated with allowing unilateral submetering, and the welcome drive to increase transparency in energy use reporting under an expanded implementation of AB 1103. In Part Three of this post, we look at the task force’s proposal to “attract game-changing capital.”
First, it should be noted that the task force’s interest in attracting game-changing capital comes from not only prudence, but also awareness of the acute financial restraints facing our society. The task force offers low-cost solutions such as the Green Tenant Toolkit, and looks to engage the private sector in these and other initiatives.
There are two possibly expensive financial initiatives proposed by the task force that we will address at length. The first is a Financial Optimization Tool (FOT) – a fantastic idea. The proposed FOT is software that organizes and amalgamates all incentives and rebates available to building developers, managers, and tenants. Currently, the best place to find such information is through the Database of State Incentives and Renewable Energy (www.dsireusa.org) (a website that is the anchor on our Tax Incentives and Rebates page). The problem with DSIRE, and other resources such as the Flex Your Power website or the US Department of Energy Efficiency & Renewable Energy Newsletter, is the fluctuating information is difficult to organize.
DSIRE addresses this problem by simply listing every incentive available, and weekly (if not daily) updating that list. This approach is thorough, however it creates a mountain of information to sift. The FOT is a great alternative because it allows owners to use all incentives to design an energy efficiency program specifically tailored to their financial circumstances and their building’s design and condition.
To address the need for constant updates, the task force suggests a public-private partnership (P3). The inclusion of a private partner could be effective. But, as with so many other opportunities that are offered to private industry, this represents an early sale of future assets. Further, including private industry may undermine the intent of the FOT
P3s have an essential place in our society, however, for this situation P3s are not an effective solution. To have the greatest impact, all parties should have access to the FOT. Use could eventually be required as a standard of care for the building management industry or as part of energy audits. But, if a P3 private company is involved there needs to be a profit angle. Due to its niche market, the FOT will not produce sufficient advertising revenue. And without advertising, the only profit angle is through subscriptions.
A subscription-based FOT will fail because it will deter a majority of potential users including other municipalities. Further, if the FOT is privatized, anti-trust issues arise if use of the FOT is required
The best approach to implement the FOT is a “top down” approach that I will discuss in Part Four of our analysis. The federal government, working with state and local agencies, must come up with this tool, so that it is accessible to all interested parties. Perhaps federal leadership is too much for a locally convened task force to suggest, and perhaps this tool needs to start at the state level with contributions from our state universities. What the FOT does not need is a private partner seeking profit.
There are areas where a P3 will work, and one surprising area the Task Force misses is an opportunity to suggest a partnership in finance. The report suggests following the BerkeleyFirst distributed power program that utilizes AB 811. As we previously discussed on the CGBB, the BerkeleyFirst program is not only innovative in attaching the debt obligations of a solar installation to property taxes, it is also innovative in allowing a private company to underwrite the financing for the installations. This powerful P3 model epitomizes P3 success. The private partner provides funding, and earns a fair return on investment. The municipality reaps the reward of infrastructure development at a fraction of the cost. Perhaps the task force was wary of opening the proverbial floodgates to private enterprise, or perhaps the task force did not want to single out Renewable Funding LLC, the underwriter in the BerkeleyFirst program.
Nonetheless, San Francisco launched GreenFinanceSF, and the city called on Renewable Funding LLC to finance the project. BerkeleyFirst deserves a great amount of credit as the first program of this type in California, but GreenFinanceSF looks to be a broader initiative that has a longer list of eligible projects. Unlike BerkeleyFirst which funds solar residential solar installations, GreenFinanceSF finances a long list of energy and water retrofit projects. The California Green Building Blog will offer further analysis of the GreenFinanceSF program in the future.
The next and final installation of our analysis of the task force report will discuss a topic near and dear to my heart – the suggestion by the task force that government “lead by example.” I am a firm believer in this approach. This is not about government intervention, this is about leadership. No matter where your political loyalties fall, you’ll want to read next week…
May 25, 2010
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…
May 4, 2010
In December, 2009, a task force convened by San Francisco Mayor, Gavin Newsom, issued a report on the steps necessary to make existing commercial buildings more efficient. (Click here for the full report) It’s not as comprehensive or technical as reports one expects from the specialists and experts that comprise the task force, but it is a good policy report. Why am I slightly “cool” on the report? It’s no fault of the task force.
The reason is because it’s a policy report, and until the policies are enacted, the report is just hot air blowing in December. (Cue sly grin for “hot air” pun). The reason this post is coming up now, however, is not only the fact that I’m finally getting around to it, but also the fact that Mayor Newsom seems to be as well…(getting around to the report, that is).
San Francisco has arguably the best green building track record of any city in the United States, so if anyone can enact the recommendations, San Francisco can. As you will read below, Mayor Newsom is reportedly going to propose enacting one of the recommendations into law. Before addressing the proposed law, let’s look at how the task force recommends we fix the existing commercial buildings.
Rather than reinvent the wheel, the task force recommends following the California Long Term Energy Efficiency Strategic Plan (CEESP). CEESP sets a goal of zero net energy for new (and some existing) residential buildings by 2020 and commercial buildings by 2030. Regarding existing buildings in San Francisco, the task force believes the CEESP goal could be achieved with a 50% reduction in all existing building energy use by 2030. That amounts to a 2.5 % reduction in energy use every year . . . daunting, but doable.
The task force report uses four general “themes” to suggest meeting and exceeding CEESP: 1) maximize transparency, 2) partner with the private sector, 3) attract game-changing capital, 4) lead by example. I will address each of these in turn, but don’t worry, I only address number 1 in this post. The rest will wait for Part 2.
1) Maximize Transparency: The task force recommends the disclosure of energy performance for all existing commercial buildings. Sounds pretty good, right? Well, the requirement to disclose energy efficiency in commercial buildings has been law for some time now. AB 1103, enacted in 2007, with requirements set to trigger in 2009 (delayed until July 2010), requires “electric and gas utilities . . . to maintain records of the energy consumption data of all nonresidential buildings to which they provide service.” And the utilities must provide those records to property buyers, tenants, or investors.
According to the San Francisco Examiner, the mayor will propose a similar requirement shortly, but with the added bonus that the energy consumption data would be available to the general public.
This idea sets off a slew of potential legal issues, and here’s one: From a transaction side, a lease now has new potential incentives and benchmarks. If a tenant reduces energy consumption over a series of years, that could be worth a bonus from the landlord because it makes the property more valuable from a public relations standpoint and also from a re-sale re-lease perspective. On the contrary, a landlord may simply require that a tenant improve energy efficiency every year, and set penalties if they fail to meet the benchmarks. A successful business relationship will find a middle ground, but these are certainly new bargaining chips. Just think we haven’t even entered the world of cap and trade…
Lets also remember there is no current penalty for failing to increase efficiency. The rest of the task force recommendations rely on private help and public leadership. Is that enough? I’m not so sure…
Stay tuned for Part 2….
(Editor’s Note: check out the Institute for Market Transformation – a great resource I found in researching some of this post.)
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