New Energy Star building performance metrics being applied on August 27 by the U.S. Environmental Protection Agency (EPA) could lower the score of almost every building participating in the program, which encompasses over half of commercial real estate building floor space in the United States. This will cause some to fall below the 75-point level needed to achieve certification through the program.

The EPA is updating the calculations for Energy Star performance metrics used to reflect the latest available market data, explains Leslie Cook, program manager for Energy Star’s Tools Team at EPA. “Currently, our models are based on 2003 data,” Cook says. “The score is a comparison with the national building stock and the stock has improved. That means, on the whole, [current building] scores will go down [based on the new metrics]. We’re anticipating a lot of scores to decrease by a certain magnitude.”

The update is in response to the U.S. Department of Energy’s Commercial Buildings Energy Consumption Survey (CBECS), conducted approximately every five years, which is used as the benchmark for buildings in the Energy Star program. Due to unusable data collected in a 2007 CBECS survey, EPA’s building performance tool has continued to rely on results from a prior survey that is nearly 15 years old, and which do not reflect the improvements in energy efficiency made in buildings over this time.

“One should assume there’s going to be a material change and a very material shift downward in the number of buildings that actually qualify for Energy Star. That’s a huge outcome and, frankly, it’s got a lot of people worried,” says ULI member Anthony E.  Malkin, chairman, president and chief executive officer of Empire State Realty Trust.

The metrics being put in place on August 27 reflect a CBECS that was started in 2012 and finalized in 2016. While certification applications filed prior to July 26 are still based on the old scoring system, applications filed between July 26 and August 26 are not guaranteed to be based on that scoring system. All applications filed from August 27 onward will be subject to scoring according to the new benchmarks, and all building scores—regardless of when applications were filed—will be adjusted to reflect the new metrics. However, buildings certified before July 26 will not lose the 2018 certification, regardless of how low their score falls.

Because certifications for 2019 will be based on the new rating, buildings certified for 2018 with scores too low to qualify next year will need upgrades in energy conservation, Cook notes. “After the score change happens, if your building falls below that 75 (minimum score), there may be some work to do to get back to 75. We think that will be attainable for a lot of buildings,” she says.

“With this change, the EPA is acknowledging that the market has become more efficient, and the agency is updating its scores to reflect that. It’s great that the Energy Star rating will be based on a more current data set,” says Eric Duchon, director, global head of sustainability at LaSalle Investment Management. “While we would have preferred more gradual updates, we understand that EPA could not control the CBECS data set updates. I look forward to a better, more regularly timed process going forward.” LaSalle Investment Management is a member of ULI’s Greenprint Center for Building Performance, which seeks to lead the global real estate industry toward improved environmental performance, focusing on energy efficiency and reduced carbon emissions, water, and waste.

Marta Schantz, senior vice president of the Greenprint Center, points to the importance of using actual data—not default data—about a building to arrive at a score that is as accurate as possible; and the need to update performance information monthly, rather than annually.

She also highlights the value of constantly seeking and making improvements in energy consumption. “This benchmark change should encourage building operators and managers as well as the overall capital budgeting team to make buildings more efficient in terms of retrofits, whether that is advising tenant fit outs to be more sustainable and energy efficient, replacing HVAC [heating, ventilation and air conditioning] units with high-efficiency models, or even installing a revolving door in the front to be more efficient with ventilation and airflow,” she says. “All sorts of energy efficiency measures can be employed to improve the performance of the building and move the score back up.”

“It’s very important from the perspective of the industry to recognize that this was always meant to be a rigorous achievement, not an easy pat on the back,” says Malkin. “It’s really important that people focus on the technologies that are going to advance toward the goal [of increased energy efficiency], opposed to something that might be a nice plaque.”