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Real Estate Law

Columbia Law School Center for Climate Change Law: Building Energy Audits and Benchmarking – A Growing Trend

Columbia Law School Center for Climate Change

J. Cullen Howe   By J. Cullen Howe, Environmental Law Specialist, Arnold & Porter LLP

Increasingly, states and municipalities are requiring buildings within their jurisdictions to perform energy audits or otherwise disclose their energy use, usually referred to as “benchmarking.”


A building energy audit is simply a report on a building’s energy use and performance, as well as measures that can be taken to increase energy efficiency and reduce costs.  Building energy audits can take several forms.  The American Society of Heating, Refrigerating, and Air-Conditioning Engineers (ASHRAE) has established several levels of energy audits.  Level 1 requires only a walk-through of the building and a preliminary energy analysis.  This level is meant to identify the so-called “low-hanging fruit” of energy efficiency initiatives available for a building, such as lighting upgrades.  Levels 2 and 3 are much more detailed and provide comprehensive analyses of building energy use, efficiency upgrades, and return on investment.


“Benchmarking” is simply measuring the amount of energy used in a building and comparing it with similar buildings.  EPA’s Energy Star Portfolio Manager is a widely accepted approach for compiling building energy data and comparing it with similar buildings nationwide.  Portfolio Manager is an online tool that allows building owners and operators to track energy use in a single building or a portfolio of buildings, compare a building’s energy performance against other similar buildings, estimate a building’s carbon footprint from the use of purchased energy and on-site fuel use, and track energy conservation improvements.  If a building achieves an Energy Star score of 75, meaning that it is more energy efficient than 75% of similar buildings, it is eligible to receive the Energy Star designation.


A number of states and municipalities have begun requiring building energy audits or benchmarking in certain instances.  For example, California recently enacted a law (AB 1103) that requires commercial buildings to release water and energy benchmark data and ratings for the previous 12 months to parties in commercial real estate transactions involving the sale, lease or financing of a building.  The law is expected to go into effect in the second quarter of 2011.  Similar laws have been enacted in Washington D.C. and Seattle.


At the municipal level, one of the laws (Local Law 87) passed as part of New York City’s Greener, Greater Buildings Plan requires that beginning in 2013 all private buildings over 50,000 square feet (as well as public buildings over 10,000 square feet) conduct ASHRAE Level 2 energy audits every ten years and submit the results to the New York City Department of Buildings.  Another law (Local Law 84) enacted as part of the plan requires that covered buildings benchmark their energy and water use using Portfolio Manager.  San Francisco recently enacted a law requiring buildings over 10,000 square feet to benchmark their energy use on annual basis using Portfolio Manager and file this information with the city, as well as conduct energy audits every 5 years.


Reprinted with permission from Green Building Law Update Service.


The Green Building Law Update Service is a 2011 LexisNexis Top 50 Blogs for Environmental Law & Climate Change nominee.


J. Cullen Howe is an environmental law specialist at Arnold & Porter LLP. Much of Cullen's work focuses on climate change, where he attempts to educate lawyers and the public at large on the enormous cooperation necessary to adequately address this problem. In addition to his work on climate change, Cullen is the managing editor of Environmental Law in New York, edits the Environmental Law Practice Guide, Brownfields Law and Practice, the Environmental Impact Review in New York, and has drafted chapters in the Environmental Law Practice Guide on climate change and green building. Mr. Howe is a graduate of Vermont Law School, where he was the managing editor of the Vermont Law Review, and a graduate of DePauw University, where he was a member of Phi Beta Kappa.


These publications can be purchased at the Store by clicking on the above links. subscribers may also access them at the following links: Environmental Law in New York; Environmental Law Practice Guide; Brownfields Law and Practice; Environmental Impact Review in New York.


J. Cullen Howe is the author of Green Financing: Governmental and Private Programs Concerning Financing of Green Buildings, Ch. 2M, in Real Estate Financing (Lexis treatise), and will be discussing this development in his next update for the treatise. subscribers may also access comprehensive Green Building materials at All Green Buildings Analytical Materials, Legal News, Surveys & Briefs.


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  • Anonymous
    Mr. Howe, thanks for this post. It was interesting to read about how the government is imposing benchmarks that ensure that new buildings are more efficient and energy-conscious. It's good to see a more aware populous. With this in mind, I'm currently trying to expand my investment holdings and have been looking to real estate. Considering the "go-green" attitude of the country do you think it would be easier for me to get real estate financing if I invest in an "green" property?