Energy Star is a program created and administered by the Environmental Protection Agency. The program has two components: the Energy Star appliance labeling system, which helps consumers identify energy efficient microwaves, televisions, and other items, and Portfolio Manager, an online tool used to track energy and water consumption in buildings.
Portfolio Manager is of particular importance to the commercial real estate industry, as is it used to benchmark energy consumption data of more than 40 percent of domestic commercial building space. Participation is voluntary, though a number of local governments, in addition to the state of California, require its use in order to enforce mandatory benchmarking laws. The data can be applied to a standardized national benchmark and helps building owners and architects assess energy use relative to similar buildings in the program. Furthermore, buildings that meet certain EPA criteria for energy efficiency are deemed “Energy Star certified,” making them more attractive to tenants and investors.
As part of a broader effort to cut federal spending levels, President Trump has previously proposed eliminating the Energy Star program. Doing so would not only deprive the real estate community of a valuable tool to monitor, compare, and reduce energy consumption, but would also create significant compliance issues for building owners in localities that require the disclosure of benchmarking data. While NAIOP continues to oppose such mandates – the Energy Star Portfolio Manager tool was originally conceived as a voluntary program, rather than a directive – these laws are already well established, and elimination of Energy Star would create uncertainty for public and private sector stakeholders.
Congress is in the process of developing legislation that will set federal agency spending levels. These appropriations bills will ultimately determine the fate of the Energy Star program.
Furthermore, EPA recently updated its scoring models to account for new consumption data. These models had not been updated in over a decade, and thus buildings were being benchmarked against data from 2003. Because the newer data reflects a more efficient stock of buildings (due to changing technology, tenant preferences, and other factors since 2003), Energy Star scores for most properties declined.
To more thoroughly assess the impact of these changes, EPA halted all new Energy Star certifications and initiated a review of its models.
NAIOP supports voluntary measures to promote energy efficiency, and has joined with others in the real estate community to convey to lawmakers the importance of maintaining programs like Energy Star that are voluntary in nature.
- Energy Star is a voluntary program that leverages public-private partnerships to reduce energy consumption.
- Portfolio Manager is used to track the energy usage of more than 40 percent of all U.S. commercial real estate space, including in several localities that mandate disclosure of this information. Eliminating the program would therefore lead to significant compliance challenges for local governments and private sector businesses alike.
- Energy Star is a proven job creator, and encourages well-paying American manufacturing, construction, and other related jobs.
- The program saves billions of dollars for families and businesses. In 2015 alone, businesses cumulatively saved $3.4 billion on utility bills through the Energy Star buildings program.
- Energy Star enhances the nation’s energy security and independence, and incentivizes the construction of resilient buildings and infrastructure.
- The program boosts real estate property values, as Energy Star-rated buildings have become an important indicator for profitable and sustainable assets, two key metrics for investors and tenants.