DC Adopts Nation’s Strongest Climate Law

December 18, 2018 | Cliff Majersik

Today, the Council of the District of Columbia unanimously voted to adopt the Clean Energy DC Omnibus Act. The bill is based on DC Mayor Muriel Bowser’s Clean Energy DC plan, which the Institute for Market Transformation (IMT) helped to write. When Mayor Bowser signs the bill, it will become the strongest climate law ever passed by a U.S. city. The bill outlines concrete steps that when fully implemented are projected to reduce the District’s greenhouse gas emissions by over 40 percent. The District has committed itself to cutting its emissions by 50 percent by 2032.  With this new bill, it is taking an enormous step toward achieving its climate commitments.

The provision of the bill which has drawn the most attention is its requirement that by 2032 all electricity purchased in the District be renewable, beating out other city and state 100 percent renewable portfolio standards (RPS) by more than a decade. The RPS will be an important part of cutting the District’s emissions, however, the most innovative and high-impact provisions of the law are its measures to improve the energy efficiency of buildings in the District.

This bill will make DC the first U.S. jurisdiction to require a broad swath of existing buildings to improve their whole-building energy performance.

District buildings account for 74 percent of DC’s carbon emissions. Over the last several years, IMT has worked with District leaders including the Bowser administration and the bill’s lead author, Councilmember Mary Cheh, to convene stakeholders to develop a consensus reflected in provisions of the bill to significantly increase the energy efficiency of buildings in the District. These provisions are projected to cut the District’s carbon emissions by almost one million tons per year.

To do this, the bill introduces a novel policy mechanism, which IMT took a leading role in developing: the building energy performance standard (BEPS). The District will group buildings into building types and set a separate minimum energy efficiency standard no lower than the median performance level for each building type. Under BEPS, all existing buildings over 50,000 square feet will be required to reach minimum levels of energy efficiency or deliver savings by 2026, with progressively smaller buildings phasing into compliance over the following years.[1]  This mechanism provides a critical model for other cities with ambitious climate commitments.

Saving energy in existing buildings must be a central pillar for the District to achieve its climate commitments.

Despite the frequent appearance of cranes and construction, the District typically adds less than three percent to its building stock each year, and so to meet its commitment it must slash energy use—and the associated emissions—in existing buildings. This action also creates a wave of community benefits in the form of local investment, job creation, and increased attractiveness and competitiveness for building owners and tenant companies. The District currently has more than 12,000 efficiency jobs and more than 1,500 renewable energy jobs.[2] BEPS will drive increased investment and create new jobs in both of these areas. Energy efficiency will also impact the region’s resiliency by improving buildings habitability in the face of extreme weather or blackouts and by reducing demand on and need for costly new energy supply infrastructure—a win for all District residents and businesses. It will reduce the $1.8 billion the District economy spends annually on imported energy from fossil fuels. These energy cost savings, as well as additional financial resources which the bill devotes for investment in the energy efficiency of affordable housing, will push back against the energy burden on low-income District residents, which has been rising for years, and against the District’s housing affordability crisis.

In helping the District implement the BEPS, local building owners will continue to lead the way for their peers around the country.

On the whole, District building owners are national leaders in energy efficiency. The Washington metro area (which includes suburban Virginia and Maryland) continually ranks in the top three for the most ENERGY STAR-certified buildings (most recently ranking second in the nation). It also tops the list of the most LEED-certified square footage in the U.S.—according to research by Adobo—which dubbed the region “LEED capital of the U.S.”

Most buildings in the District are so efficient that they already comply with BEPS or will be able to comply with BEPS without any capital investment. As in cities everywhere, many building owners in the District have ample opportunities to save significant energy at little or no cost through operational changes like improving daily procedures for starting heating and cooling equipment or training janitorial staff to turn off lights at night. In a minority of cases, BEPS will require owners to make capital investments in their own buildings.  Such investments usually yield an enviable return. IMT has published case studies of such investments from around the country. Typically, owners realize $2-$3 in additional property value for every $1 they invest in efficiency improvements to their buildings. More efficient properties have shown lower operating expenses and vacancy rates, leading to higher net operating income and asset value. Additionally, high-performance buildings have a positive impact on occupant health and wellbeing, leading to better productivity and less sick days among other benefits, according to a recent report from Stok.

The real estate sector is highly fragmented in the District and around the country with many different building owners, operators, tenants, and service providers. This fragmentation creates impediments to a single building owner making operational or capital improvements to its buildings. By driving collective action across the District’s entire building sector, BEPS helps overcome these impediments.

Now that the bill is adopted, the work begins to put the DC Clean Energy Plan into action. IMT looks forward to rolling up its sleeves to help the DC Sustainable Energy Utility, the District Department of Energy & Environment, and the private sector improve the efficiency of buildings across the District.

 

[1] The bill also progressively extends the District’s existing benchmarking and transparency law to smaller buildings. By starting with its largest buildings, the District is focusing its initial efforts on the buildings that use the most energy and typically have the most capacity to adopt best practices for saving energy.

[2] “U.S. Energy and Employment Report,” National Association of State Energy Officials and ENergy Futures Initiative, May 2018, page 43, www.usenergyjobs.org

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