Leading by Example: Building Performance Standards for Decarbonizing Federal Buildings

In February 2021, the United States rejoined the Paris Climate Accord, and President Biden announced the new US commitment to reducing economy-wide greenhouse emissions by 50 percent relative to 2005 levels by 2030. Given the political infeasibility of economy-wide carbon pricing, achieving this ambitious goal will likely require a collection of policies that target specific sectors (National Academies of Sciences, Engineering, and Medicine 2021). Although decarbonizing electricity is typically the lowest-cost option and thus most likely path for achieving reductions in the near term, reductions in other sectors, including buildings, will be required to achieve this ambitious target.

Commercial and residential buildings are responsible for about 12.5 percent of total US greenhouse gas emissions but more than 30 percent of emissions when indirect emissions from electricity use are included (EPA 2019). Ongoing efforts to decarbonize electricity supply are reducing the electricity-related emissions attributable to buildings, but they do not address the fuel-related portion. Thus, decarbonizing buildings requires a combination of reducing on-site fuel consumption and a switch to cleaner energy, like electricity.

Existing policies aimed at reducing emissions from the building sector have predominantly targeted energy efficiency improvements through the use of incentives, minimum efficiency standards for new buildings and their appliances and equipment, and information programs that help consumers and businesses factor future energy costs into leasing or purchasing decisions for structures and appliances. For example, building energy codes in many US states (no federal building code exists) typically require new or renovated buildings to contain certain design features intended to reduce energy use.

The results of policies like those are difficult to estimate because the level of energy use in the absence of the intervention is unknown. Some studies rely on engineering models to estimate savings ex ante, but these models can overestimate savings due to other factors, such as the rebound effect (the tendency for consumers to use more energy as consumption becomes cheaper with efficiency improvements). Few studies validate ex ante savings estimates with observations about outcomes in commercial buildings. Some studies have estimated the effectiveness of certain interventions ex post, but empirical studies are rare (Gillingham et al. 2018).

Buildings’ emissions intensity has fallen, but progress has been gradual relative to what is now required to achieve deep decarbonization. Between 1999 and 2018, commercial building floor space in the United States increased by 44 percent (EIA 2020a) while commercial building emissions declined by 8 percent (EPA 2019). Much of the decline in buildings’ emissions intensity during this time can be attributed to improvements in electricity emissions factors and lower indirect emissions tied to electricity consumption. In fact, the emissions associated with buildings’ direct fuel consumption increased by 12 percent over that same period (EIA 2020a). When measured in greenhouse gas emissions per square foot of commercial building space and excluding the gains in electricity emissions rates, the emissions intensity of fuel use in buildings has improved by only 1 percent per year over the past 20 years. Author’s calculations based on data from EIA (2020a).

The extent to which improvements in building performance experienced to date are due to policy is unclear, but the fact that existing policies tend to focus on the adoption of more efficient technologies or practices and not on specific emissions outcomes limits their ability to achieve significant emissions reductions in the sector. Few current policies offer incentives to encourage building occupants to adjust behavior to save energy after the efficiency improvements have been made. An important exception to this could be the cost of energy use, as long as building occupants face those costs directly, which may not be the case for leasing arrangements if occupants’ energy use is not separately metered.

Given the limitations of existing building energy efficiency policies in meeting future emissions reduction goals, several cities here and abroad have started to implement building performance standards (BPS). This approach, which focuses on outcomes rather than mandated upgrades or efficiency subsidies, requires covered buildings to achieve certain energy or emissions performance goals, which become more ambitious over time. Cities with BPS programs include New York, Washington, DC, and Tokyo.

Several institutions have looked at design options for a citywide BPS. A report by the American Council for an Energy Efficiency Economy (Nadel and Hinge 2020) summarizes and evaluates BPS programs of some current and proposed city programs, focusing on such criteria as metrics, stringency of standards, allowing for trading, and other considerations. A report from the Urban Green Council (2020) focuses on designing a BPS with trading for New York City and also includes suggestions about incorporating environmental justice into policy design, options for allocating and pricing credits, and options for tracking compliance. The Institute for Market Transformation (2021b) published a model BPS ordinance that explores design considerations applicable to any city looking to adopt a BPS.

Although research has addressed how to design a BPS program for a particular city, designing a program that spans multiple regions or an entire nation can be more complicated. This paper considers the options for implementing a building performance standard across a broader scope of buildings and geography: federally owned or leased buildings, which comprise 1 billion square feet across the country (excluding the Department of Defense) and represent roughly 1 percent of the total commercial building stock. According to the most recent Commercial Buildings Energy Consumption Survey, conducted by the Energy Information Administration (EIA 2020a), total US commercial building stock in 2018 consisted of roughly 5.9 million buildings with a total of 97 billion square feet. According to the most recent Commercial Buildings Energy Consumption Survey, conducted by the Energy Information Administration (EIA 2020a), total US commercial building stock in 2018 consisted of roughly 5.9 million buildings with a total of 97 billion square feet.

In May 2021, the Biden administration announced that the Council on Environmental Quality would launch an interagency effort with the General Services Administration (GSA), Department of Energy, and Environmental Protection Agency (EPA) to develop building performance standards for federal buildings (White House 2021b). By focusing on outcomes, a BPS can ensure that reductions in energy use are achieved cost-effectively and has the potential to drastically lower the carbon footprint of the US federal building stock. Additionally, a well-designed federal BPS can serve as a blueprint for BPS policies in other cities, for corporations with large building portfolios, and for a broad-based national policy. In developing the BPS, the agencies will need to consider data availability and metrics, options for flexibility, and enforcement mechanisms that will determine its ability to deliver. Potential interactions with other decarbonization policies and regional energy mixes could also be important considerations for policy design.

The rest of the paper is organized as follows. Section 2 looks at the existing federal building stock and current and past federal policies aimed at reducing its energy use. Section 3 presents BPS design options and looks at types of standards, metrics, and flexibility mechanisms. Section 4 considers issues unique to designing a BPS for the federal government. Lastly, Section 5 concludes.

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