San Francisco Existing Commercial Building Energy Ordinance: Why Do It?

Unless you own a commercial building in San Francisco, you may have missed a relatively recent piece of legislation that requires all buildings over 10,000 square feet to benchmark and disclose their energy use annually plus get an energy audit every five years. This three part series goes over why the legislation was passed, how to comply if you own a building, and how owners can make the most of this new requirement.

Energy waste in buildings, especially commercial buildings, is a classic example of a market failure. Complicated lease structures separate the entity that pays for energy in commercial buildings – usually the tenant – from decisions about the original design and ongoing operation of the building. Additionally, energy use, especially during peak demand times, has large costs that are socialized across all energy consumers.

Policy makers at local, state and federal levels have decided that the societal costs of wasted energy are high enough that the government should do something to safeguard the public (just like with vehicle fuel mileage standards). Energy efficiency codes are the primary and heretofore most effective method for reducing energy waste in buildings. California is the poster child for this. Since passage of California’s landmark building energy code, Title 24, in 1978 and appliance standard, Title 20, in 1976 the state’s per capita energy usage has remained almost flat while energy use in the rest of the country has continued to rise by over 30%. This reduction in energy waste has saved Californians from spending over $66 billion in energy costs and building approximately 20 power plants.[1,2,3]

Energy codes are enacted state to state. Many states have had minimal or non-existent codes until recently when having such codes was made a requirement in order to receive certain portions of the American Recovery and Re-investment Act (ARRA) funding. So hopefully we will see a leveling out of energy use across the country in the years to come.

All this sounds great, right? The thing about building codes, though, is that they only impact new construction and substantial renovations. Until recently, financial incentives for voluntary efficiency improvements seemed like the only way that jurisdictions could encourage energy efficiency in existing buildings. That was until a few cities pioneered the way with new legislation that required some combination of regular energy benchmarking, disclosure of Energy Star ratings and energy audits for commercial buildings.

You can think of these laws as the equivalent of tracking the miles per gallon (benchmarking) and getting a smog test for your building (auditing). So far six cities (Austin, D.C., New York City, Philadelphia, San Francisco and Seattle) have passed such rules. San Francisco’s was enacted in February 2011.

Each city ordinance has its own nuances, which were developed through long multi-stakeholder negotiating processes involving the environmental and real estate communities. I personally participated in the negotiations in New York as part of the New York State Energy Research and Development Authority (NYSERDA). One of the many issues that we had to consider was if there were enough qualified professionals available to perform the benchmarking and auditing services in the legislated timelines. Of course that also meant that we had to define what a qualified professional was (sneak peak to the next installment of this series: Carbon Lighthouse is a qualified energy auditor for compliance in San Francisco).

The laws, all of which share similar frameworks, do some pretty great things from an environmental perspective. For starters, there will be widely available and up-to-date data on the amount of energy being used across a huge population of buildings. Prospective owners and tenants will be able to use that data to evaluate new properties and owners of underperforming buildings will feel pressure to become more efficient, both in terms of energy and operating costs. The audits go a step further to get building owners to buy in – literally – to the idea of energy efficiency. The mandated audits will help owners and managers understand where improvements could be made in their building, though they stop short of requiring that those upgrades are made.

If you are a data-obsessed building nerd, like we all are here at Carbon Lighthouse, this is all great news. The downside, however, is that benchmarking and audits aren’t free to building owners and knowing how to comply can be really confusing. The next two posts will cover how to comply if you are a building owner and how to make sure that you are investing in your building rather than just paying a tax to the data collectors.

[1] California Energy Commission. Building Energy Efficiency Standards, Frequently Asked Questions.
[2] California Energy Commission. AB 758 Comprehensive Energy Efficiency Program for Existing Residential and Nonresidential Buildings.

3 Responses to San Francisco Existing Commercial Building Energy Ordinance: Why Do It?

  1. Good to see you explaining (and working) on this! Back around 2002, the City of San Francisco tried to justify putting in new peaker plants (in poor neighborhoods of color, of course) by claiming that the electricity needs of the City were rising fast. They even hired the usually-reliable Rocky Mountain Institute to write a report, which completely ignored conservation and efficiency – and the recent history of conservation in the face of the “energy crisis” in California. Fortunately, environmental groups and public pressure exposed their misinformation and the ability of the City to flatline energy use. I guess City politics has changed since then, and a good thing!


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