For Net Zero, Regulatory Compliance Is Not the Finish Line

Mahesh Ramanujam

A myriad of new laws, from Local Law 97 in New York to the new ‘stretch’ building codes in Boston, focus on slashing emissions from the built environment, which account for upward of one-third of U.S. annual energy-related emissions. While these building performance standards and codes have many commercial real estate developers, owners and managers feeling overwhelmed or frustrated, they represent an enormous opportunity for decarbonization efforts.

CRE leaders who are bold and go beyond compliance to implement net zero-enabling technologies and processes not only gain a competitive edge, but they can play a crucial role in helping us make progress toward our climate goals. Besides avoiding costly penalties for non-compliance, conducting building performance-enhancing retrofits, renovations and process reforms promise multiple added benefits, including carbon emission reductions, operational cost-savings, new revenue streams and improved environmental, social and governance outcomes.

Net zero should not be scary. CRE leaders can start today, and they needn’t feel overwhelmed or forced to do this on their own. There is a wide range of commercially available, cost-effective building energy efficiency solutions they can implement now to meet and exceed these regulatory requirements and lay the groundwork for net zero achievement.

Materials, Equipment and Controls for Energy Efficiency

To achieve regulatory compliance, data and information gathering is crucial. Installing an onsite advanced energy metering system allows you to capture energy usage data in near real-time, which helps asset owners and managers better understand their performance and adopt strategies to address inefficiencies and save costs. Leveraging a building management system is another simple way to reduce operational carbon emissions and utility costs.

One of the biggest advantages is that BMS detect changes in operational patterns and equipment performance declines and runs diagnostics so it can detect when equipment is starting to fail beforehand. BMS can be used to track and verify shutdowns, for holiday scheduling and peak load management, to optimize equipment runtime and support demand response.

Once you’ve identified where your pain points lie, the next step is upgrading materials and equipment such as building envelope and insulation, HVAC, interior lighting, water heating, mechanical pumps and motors and miscellaneous plug loads. Targeting your most energy-inefficient or most emissions-intensive operations with corrective actions or infrastructure and equipment upgrades will net you the biggest savings.

The strategies used don’t have to be overwhelming. When it comes to heating and cooling a building, a poorly designed building envelope, for example, can result in massive increases in energy costs. A more energy-efficient envelope that has a streamlined design allows for a greater level of control over indoor air quality, temperature and humidity along with increased energy efficiency. Strategies include retrofitting wall insulation with a second skin (façade) or curtain wall, adding insulation to roofing systems, installing a cool roof system, covering the inside surface of existing windows glass with solar control window film to minimize solar heat gain, using exterior window shading and light shelves—or simply placing a vestibule in heavy traffic areas like a building’s main entrance to reduce the cooling load caused by the constant opening and closing of exterior doors.

When it comes to lighting, if the average office building were to simply comply with the ASHRAE 90.1-2004 energy standard, lighting power savings of 23 to 55 percent could be achieved. And this is just if they were to reduce their lighting power density to code, which is considered the minimum; even deeper savings are possible using paths outlined in tools such as the ASHRAE Advanced Energy Design Guides and the DOE Commercial Lighting Solutions program. Lighting conservation measures that could be considered include: switching to LEDs, calibrating exterior lighting, retrofitting interior fixtures to reduce lighting power density, installing occupancy sensors to control interior lighting, maximizing daylight harvesting, retrofitting exterior fixtures and taking advantage of utility rebates and incentives.

Renewable Energy Supplementation, Grid Interactivity, Carbon Capture

Once their assets are in compliance, an adaptive, incremental approach can help CRE leaders go the extra mile and adopt net-zero enabling technologies. Taking an all-at-once approach where owners and developers front-end all of the costs for retrofits and building performance enhancements is rarely successful or lucrative. Setting in place targets, developing a plan with very clear timelines and taking steps over time with incremental cost deployment can be a recipe for success.

One place they could start is with renewable energy supplementation and microgrid integration. Beyond equipping a building with a more reliable and affordable supply of baseload and backup power, these technologies help businesses address emissions sources (i.e., fossil fuels-generated electricity) that energy efficiency alone cannot. And when paired with a BMS to optimize energy consumption, onsite renewable power generation and microgrids can reliably yield an energy surplus, which businesses can sell back to the grid.

Similarly, retrofits that enable building-to-grid interactivity can transform either a whole building or its component parts (e.g., heat pumps, EV charging stations, onsite battery energy storage systems, etc.) into grid-serving assets. Buildings can earn passive revenues by offering up their latent potential for load flexibility, power dispatch and other grid services to their electric utility.

Lastly, there will inevitably be scenarios where complete emissions reductions are financially or technically difficult. In this case, onsite carbon capture equipment can not only help building owners and managers tackle their “hard-to-abate” energy applications, but equip them with a new, revenue-generating commodity: CO₂.

The importance of balancing incremental cost deployment with the pursuit of immediate energy cost savings cannot be overstated. This approach enables your BPS-regulated CRE leader to secure the funds they need to invest in simultaneous and subsequent building performance enhancements. Moreover, better-performing buildings will not only fetch higher rents, but improve your ESG credentials, opening the door to more attractive terms for project financing and risk and liability coverage.

Strategic incrementalism can yield compliance achievement, enable self-sustaining momentum toward net zero and, importantly, will give implementers a competitive edge.

Mahesh Ramanujam is a co-founder of the Global Network for Zero.