The U.S. Environmental Protection Agency’s (EPA) ENERGY STAR® for Commercial Buildings program has recently been revamped with updated metrics. This has caused some confusion in the real estate industry, as some of the potential new scores for 2019 will reflect significant score reductions.
The 1-100 ENERGY STAR scores are achieved through benchmarking a property with EPA’s Portfolio Manager® tool and comparing that energy usage with similar buildings around the country. A median score of 50 roughly equates to the U.S. national average, while a score of 75 or higher reflects a top-performing building, which may qualify for an ENERGY STAR certification. These scores are embedded in commercial real estate’s operational best practices and business models.
ENERGY STAR scores are created based on data from the Commercial Buildings Energy Consumption Survey (CBECS), which—until recently—had not been updated since 2003. The CBECS, which is administered by the U.S. Energy Information Administration, is a nationally represented source of statistical information on energy-related characteristics and consumption for commercial buildings. The new data set for energy use in buildings utilizes information gleaned from a 2012 CBECS.
The new scores have the potential to affect building sales as well as lease requirements, where tenants are looking for spaces in buildings that hold ENERGY STAR certifications. Additionally, many buildings are required to post their ENERGY STAR scores as part of state and local benchmarking mandates. ENERGY STAR scores also are used as evaluative criteria for building designations, such as the BOMA 360 Performance Program.
The industry update has been planned for some time. In a presentation from EPA during the 2018 BOMA International Conference & Expo in San Antonio, the agency reported that commercial office buildings would see an on average score reduction of eight points, whereas warehouses would see an increase averaging three points.
On August 26, EPA announced that the new metrics for ENERGY STAR were live. Once the scores were uploaded to Portfolio Manager, some property professionals became aware of the differences between their old scores and the new scores for the first time. Because of the ensuing confusion, EPA has since suspended the awarding of certifications for all U.S. property types with the new score models. ENERGY STAR began a three-phase review period for the new scores, beginning with a listening and engagement phase, during which they solicited feedback on the application of the models to various U.S. commercial building sectors and the resulting scores.
BOMA International continues its dialogue with EPA on the new rollout of ENERGY STAR scores to make sure the revised scores are as equitable as possible.
At EPA’s request and to ensure that our members’ collective voices are heard, BOMA International collected individual building data via a survey to determine the overall impact of the new scores. As hypothesized, the data—compiled from respondents representing nearly 2,000 buildings—showed varying results. A preliminary reading of the results suggests that larger buildings have the potential for increased reductions well beyond the assumed eight-point average, as do buildings in colder climates.
The next phase of this process is analysis, during which EPA will evaluate the feedback and observations collected during the listening phase. EPA will be working in conjunction with stakeholders, including BOMA International, to conduct this analysis. In early November, BOMA International, NAIOP and ENERGY STAR co-hosted an online discussion to hear additional feedback from property professionals and to allow them to ask questions directly. The survey results from BOMA International have been communicated to EPA, and the agency will determine if there are any adjustments within Portfolio Manager that need to be made before the end of the year. The final phase will be to communicate out the results of the analysis through webinars and other engagements.
As BOMA continues its dialogue with EPA on the new rollout of ENERGY STAR scores, BOMA International’s advocacy staff has communicated the need to have a finalized system in place by early 2019. While some buildings will need additional energy-saving measures to retain their ENERGY STAR certifications, BOMA International, as a key ENERGY STAR partner, will work with EPA to make sure the revised scores are as equitable as possible.
This article was originally published in the November/December 2018 issue of BOMA Magazine.