In 2017, Washington, DC became the first LEED Platinum city in the world. Next, DC may be the first Net Zero City in the world, thanks to the passing of the Clean Energy DC Omnibus Act of 2018. The Clean Energy DC Omnibus Act of 2018 (Omnibus) may be the most ambitious renewable energy policy in the country, and it has significant implications for building developers, owners, and operators.
Aggressive ground-breaking building energy performance standards:
This part establishes a Building Energy Performance Standard Program that targets existing buildings – the largest greenhouse gas emitters in the city. Work under this program will establish energy performance benchmarks per building type across DC’s existing building stock. These benchmarks are currently being defined as equal to DC’s median ENERGY STAR score for a building of its type. Building owners will need to improve energy performance relative to the established benchmarks.
The Department of Energy & Environment (DOEE) will be the entity that completes the energy performance assessments necessary to establish the benchmarks. The assessments will be applicable to all privately-owned buildings with 50,000+ sq. ft, and government buildings with 10,000+ square feet starting in 2020. All privately owned buildings with 25,000+ sq. ft. will be rolled into the programs by 2023, all privately owned buildings with 10,000+ sq. ft. will be required to meet the established benchmark by 2026.
If a building does not meet the established benchmark, the owner will have five years to meet the 20% improvement or face a penalty from DOEE. Buildings will need to perform third-party verification of it’s energy performance and Energy Star statement—this language that has been written into the Green Building Act as well.
Renewable Portfolio Standards (RPS):
This bill calls for DC to meet 100% RPS by 2032 and then 10% solar energy by 2041. It will require 80% of a supplier’s electricity to come from long-term Power Purchase Agreements. Renewable portfolio standards require that a specified percentage of the electricity that utilities sell comes from renewable resources.
There will be minimal impact on real estate owners and operators from this part of the Omnibus.
The utility companies supported the bill, and Dave Velazques, the president of Pepco Holdings said, the Omnibus requirement is, “an important step toward advancing the cause of clean energy for the benefit of every ward in the District of Columbia.”
Increase the Sustainable Energy Trust Fund (SETF):
There will be an increase to the SETF fee for natural gas and energy use to fund the District of Columbia Sustainable Energy Utility (DCSEU) and the District’s Green Bank, while making money available for low-income energy assistance. The DC Green Bank is a policy tool to use public purpose funding to attract private investment. The goal of DC Green Bank is to expand renewable energy, lower energy costs, reduce greenhouse gas emissions, create green jobs, and enhance resilience. The DCSEU helps DC residents and businesses use less energy and save money. The DCSEU delivers financial incentives, technical assistance, and information to District residents and businesses, helping them to save on their energy costs.
Reduction in emissions generated by transportation:
The Department of Motor Vehicles will establish a tax on vehicles based on their fuel efficiency, excluding electric vehicles. All public transportation vehicles must be zero emission by 2045. Additionally, the Mayor can create a greenhouse gas fuel fee should Maryland and Virginia create a similar law.
Implications for building developers, owners, and operators are most directly connected to the first part: Aggressive ground-breaking building energy performance standards.
In the United States, buildings account for almost 40 percent of national CO2 emissions, and out-consume both the industrial and transportation sectors.
The policy leans on ENERGY STAR data, which changed in 2018. One recommendation is for property managers to proactively understand their current ENERGY STAR score since the 2018 changes. Once this information is known, identify starting energy conservation measures that would work to improve your ENERGY STAR score and evaluate the cost of those measures. This information will allow property managers to allocate CapEx dollars to the appropriate measures and incorporate them into budgeting on time for the roll out of the law.
Energy audits are a smart investment, and the energy savings they reveal can often pay for the costs of the audit in the first place. By virtue of lowered maintenance and energy costs, the return on investment from green building is rapid: green retrofit projects generally are expected to pay for themselves in just seven years. Green buildings reduce day-to-day costs year-over-year. LEED buildings report almost 20 percent lower operating costs than typical commercial buildings, and green building retrofit projects typically decrease operation costs by almost 10 percent in one year. Retrofits can be further supported through the use of green leases, specifically energy aligned lease clauses that can equitable distribute the first cost of the upgrade investments in a way that is beneficial to the building owner and tenants.
Paladino released an e-book with a process to achieve net zero energy for new and existing buildings. While the goal here may not be to achieve net zero energy, the process and steps included can provide a roadmap for the path toward leading energy performance.
Building developers, owners, and operators should also pay attention to the fourth part: Reduction in emissions generated by transportation.
While this part of the Omnibus is specific to vehicle tab fees, it does bring to light the advantage to developers that build with transit orientation in mind. Proximity to train and bus lines will be an advantage as the cost of vehicle ownership increases.
While these additional regulations in an already-regulated industry may seem like a new hurdle, the truth is that energy efficiency has significant benefits to building owners and operators. Additionally, by demanding the rapid upskilling around energy strategies in the region, the service providers, architects, and general contractors will also rapidly develop new skills and strategies to help their clients achieve these goals.
The need for Omnibus is simple:
“The fight to reduce the impacts of climate change is the most important environmental issue of our time and, if the federal government is to abandon us in this effort, then the District can serve as a model for other jurisdictions and states to follow.” – Councilmember Mary Cheh who helped create the legislation.