When it comes to decreasing energy use in privately owned buildings, is it more effective to use a carrot or a stick?

That was one of the questions explored during a panel discussion sponsored by the National Building Museum and the Urban Land Institute (ULI) in Washington, D.C. Other issues tackled by panelists included how to standardize and utilize building energy use data.

It’s well known that buildings account for about a third of the energy used in the United States. Thus, reducing building energy use is a critical component in the effort to reduce climate-changing carbon dioxide emissions. The federal government aims to slash greenhouse gas emissions nationwide by 80 percent by 2050; ULI is looking toward a 50 percent cut in building sector emissions by 2030.

But what’s the best way to achieve these goals? Some well-known voluntary programs have been criticized for complexity, cost, focus on new construction, and limited reach. For these reasons, nearly a dozen U.S. municipalities have gone beyond voluntary measures and passed new laws requiring property owners to measure and publicly release their buildings’ energy use.

Cities that have launched mandatory building energy use reporting programs are facing a number of challenges, panelists noted, but they agreed that they are doing the right thing. While some 80 percent of New York City building owners reported their energy use as required, Seattle and San Francisco have achieved only 30 percent compliance to date. None of the three cities has gone so far as to issue violation notices to noncompliant landlords, but that idea is not off the table.

“We feel we need more mandatory standards,” said Laurie Kerr, senior policy adviser, New York City Mayor’s Office of Long-Term Planning and Sustainability. “California has led the nation for 35 years, yet even with all their effort, they have only kept energy use flat. New York City could add a million new residents and is outgrowing its buildings, so we need to do more.”
Landlords may be subject to the “Lake Wobegon syndrome,” Kerr said. “Transparent published energy use data would reveal which buildings are below and above average, and no one wants to be seen as below average,” she noted. “We are seeing a four-to-one difference between the top and bottom performers, so it’s clear that those buildings with below-average scores are using a lot of energy and have a great deal of room to improve.”

Jayson Antonoff, energy and climate change policy adviser for the city of Seattle, said that sending violation notices to the 70 percent of building owners who have not reported their energy use would not be politically viable. “That’s why our focus is outreach, education, technical support, and helping building owners understand the benefits of participating,” he pointed out.
In San Francisco, the situation is similar, said Barry Hooper, private sector green building specialist for the San Francisco Department of Environment. “We have a 30 percent compliance rate in part because we adopted and implemented the new policies quickly, and have not followed up with communication. We do not intend to use public shaming to drive compliance. Our agency is structured to provide analysis and positive services such as free energy audits, dramatic rebates, and follow-up services to make sure the measures we recommend are installed.”

One major impediment to reducing building energy use is “inertia,” which can be attributed in part to the landlord/tenant “split incentive” issue, according to Charles “Chuck” Leitner, chair of the ULI Greenprint Center for Building Performance. “Landlords say they don’t control energy consumption in tenant space, while tenants say they care but often have no real incentive to save energy,” he explained. “To unlock this debate, we have to standardize building energy performance measurement and get away from the notion that all energy-efficiency investments must have quick paybacks.”

Kerr suggested that building owners’ increasing use of the Environmental Protection Agency’s Portfolio Manager tool is a good first step toward standardization. “In a few years, there will start to be a consensus as to what works best,” she predicted.
Leitner also concluded on a hopeful note: “We have learned that once landlords become comfortable with benchmarking, there is a lot of enthusiasm for making investments to reduce the carbon footprint. Markets are transforming, with large users driving change, and the definition of a quality building now includes energy efficiency.”