What is Your Building’s MPG?

California recently enacted new legislation that pushes building owners to lift the hood on their facilities and truly examine performance. AB 1103 requires electric and gas utilities to track the energy consumption data of their customers’ non-residential buildings. The building owner can ask the utility to transfer the data to ENERGY STAR’s Portfolio Manager, an interactive tool maintained by the U.S. Environmental Protection Agency that tracks and assesses energy and water consumption.

While Portfolio Manager is a secure online tool with voluntary reporting based on your project’s utility bills, starting in January 2010, owners in California will have to disclose their buildings’ ENERGY STAR Portfolio Manager information to anyone interested in buying, financing, or leasing the building, if requested.

Whether or not you live in California, multiple factors give energy conservation a larger impact on the continued viability of your building:

• Climate-change action.
• Lower operating costs.
• Position in the marketplace.

Upcoming federal carbon legislation under consideration, like the Draft Carbon Tax Legislation, Save Our Climate Act, will further drive understanding of energy impacts on climate change. Buildings consume approximately 40 percent of total energy in the United States, and about 70 percent of the electricity (mostly produced with coal). By burning fossil fuels and consuming substantial amounts of electricity, buildings have become clear contributors to climate change. On a worldwide level, experts are changing the conversation from one focused on energy expenditure to one focused on carbon-based accounting of environmental performance. In addition to energy use, this accounting analyzes the emissions tied to the delivery and expenditure of the energy in a building; the full transportation picture from an operational standpoint, including employee commuting; emissions associated with waste disposal and refrigerants; and the benefits of using renewable energies.

Having a low carbon footprint will help you create a commodity for trading. According to some sources in 2006, trading volume of carbon offsets (such as carbon financial instruments and renewable-energy certificates) jumped 200 percent in voluntary markets (primarily the United States). And, once legislation is enacted, if you’ve documented reduction of your total carbon emissions over time, your organization will be well positioned, and your building will serve as an example for others.

The slow market offers a prime opportunity to become internally focused. Now is the time to take stock of how much energy your building consumes and where improvements can be made. Facility managers are faced with lowering energy budgets despite the fact that prices continue to rise. A little knowledge goes a long way, and major changes aren’t always required for big impacts on energy savings. Begin by surveying the market for available incentives and programs for building efficiency. Audit your facility to determine what’s working and what’s not. Look for cost-effective upgrades and utilize a life-cycle cost analysis (LCCA) to evaluate energy-efficiency upgrades. Seek low-hanging fruit, such as controls upgrades, light-efficiency lighting and daylighting, added insulation and shading, and commissioning. Measure the resulting performance with benchmarking tools, such as the ENERGY STAR Portfolio Manager, and then take it a step further, establishing your carbon footprint. Educate your facilities staff and vendors about the improvements you’re making and the opportunities for operational efficiency that they have within their role.

Property buyers are becoming more informed about the value of energy efficiency. In the same way, consumers are concerned about vehicle fuel efficiency –  after grappling with gas prices that approached $5 a gallon a mere 6 months ago –  real estate professionals are beginning to pay more attention to energy use on a comprehensive scale. Because you can’t tell what kind of performance a building gets by looking at it, benchmarking your property against other buildings in your location, size, and classification is a genuine asset. As the market turns around, building owners who can show that they’ve evaluated and improved performance will be in a much more appealing position to buyers and bottom-line-conscious tenants.

There’s little doubt that it’s increasingly important to understand your building’s total energy picture and benchmark yourself against your competition. Europe and Great Britain already have mandates in place for measuring commercial buildings’ resource consumption, and California’s tap on the accelerator is likely just the beginning for the United States. Those who take steps now to assess building performance will place themselves ahead of the curve.

Past Issues:
December 2008 - The Risk of Doing Nothing: Big 3 Automakers’ Lessons Learned?
November 2008 - Clean Up with Day Cleaning – In More Ways than One
October 2008 - It’s a Bigger Deal than You Think, Part 3: Operations
September 2008 - It’s a Bigger Deal than You Think, Part 2: Physical Attributes
August 2008 - It’s a Bigger Deal than You Think, Part 1: Location
July 2008 - Mercury: A Light-Bulb Moment
June 2008 - Taking the Mystery Out of Green Leases
May 2008 - The Snake in the Garden
April 2008 - The Triple Bottom Line: Past the Tipping Point for Green
March 2008 - Build It Green and They Will Come
February 2008 - Moving to Greener Pastures
January 2008 - Tenants Make It Easy Being Green

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