Energy Efficiency

Energy efficiency is one of the most controllable operating costs for commercial buildings. It makes both economic and social sense to employ strategies to reduce a building’s total energy usage. However, arbitrary mandates oftentimes are based on assumptions that have little to do with realistic capabilities and business realities. In this section, NAIOP outlines our energy policy and provides a understanding of the built environment’s role in increasing energy efficiency.

Download NAIOP’s Position on Energy Efficiency  

The
Issue

Becoming more energy-efficient is an important consideration in today's commercial real estate industry. At a time of increasing energy costs, both developers and their tenants understand that it makes economic sense to develop properties that lower their costs, thereby keeping them competitive in the marketplace. Most of the greenhouse gases that are released into the atmosphere come from coal-fired power plants during the production of electricity. Because buildings use a large percent of the nation's electricity, they are attributed responsibility for a large percentage of greenhouse gas emissions. The goal of reducing the greenhouse gas emissions attributable to commercial buildings therefore, has become a key component of the ongoing debate over energy.

Position

In the real estate industry, local economic conditions determine the levels of efficiencies and costs that can be absorbed in a given market. Not all markets are created equal, however. Nationwide energy mandates for all building types will therefore create a disincentive to develop new properties in areas where the markets cannot absorb the increased costs. Time is needed to bring all markets to a level of sophistication where more sustainable technologies and methods become the norm and are available within a reasonable cost.

  • Energy Savings and Industrial Competitiveness Act (Senate) /Energy Savings and Building Efficiency Act of 2015 (House): NAIOP has been actively involved in supporting: S. 720 (Portman/Shaheen) and H.R. 1273 (Blackburn/Schrader). These bills advance building code efficiency targets while taking into account upfront costs to developers. They include realistic payback schedules for increased energy improvements.
  • Energy Efficient Commercial Building Tax Deduction: The federal incentive was renewed at the end of 2015 as part of the tax bill known as the PATH Act. Rather than continuing to pass short term extensions of this incentive, we believe that it should be enshrined in the tax code, making the incentive permanent. Additionally, the deduction amount should be increased and retooled to make it more usable for retrofits.
  • Federal Rebates: Encouraging residential building owners to purchase energy efficiency appliances with federal rebates has been very successful. A similar approach is needed for energy efficient equipment installed in commercial buildings.

Status

In the Senate, Senators Rob Portman (R-Ohio) and Jeanne Shaheen (D-N.H.) have been working on building energy efficiency legislation for several years, and introduced legislation this Congress known as the Energy Savings and Industrial Competitiveness Act. Their bipartisan bill was passed by the Senate Energy and Natural Resources Committee by a favorable vote of 19-3. The bill was then folded into a broader energy bill, S. 2012, which passed the Senate with bi-partisan support.

In the House of Representatives, the Energy Savings and Building Efficiency Act, was introduced by Congresswoman Marsha Blackburn (R-TN) and Congressman Kurt Schrader (D-OR). The House Energy and Commerce Committee also included the bill into a larger energy measure, H.R. 8, which was passed by the House in December of 2015.

Talking
Points

  • Most developers cannot implement energy saving measures with more than a 5-year payback.
  • There are limits within the confines of a building code as to what can be done to increase energy efficiency. Energy codes generally only regulate the building's envelope (roof, wall and floor insulation), mechanical and lighting systems. Much of a building's energy use falls outside the purview of codes and will not be affected by an increase in code efficiency.
  • Since 2002, commercial building energy codes have already achieved gains approaching 50 percent. These substantial gains have been achieved in just the last three code cycles: 2004, 2007 and 2010.
  • Efforts to encourage states to update their building codes should remain voluntary and not be tied to federal funding requirements.
  • Congress should not attempt to force building owners to disclose the energy usage of buildings to the public (energy benchmarking). Most of the energy used in buildings is actually in the control of tenants, not owners and managers. Oftentimes, the owners of a building do not have access to the energy bills of individual spaces, or control over how that energy is used. It is unfair to stigmatize an entire building because some tenants might have high energy needs and demands.