Energy Disclosure & the New Frontier for American Jobs

7/31/2019 Energy Disclosure & the New Frontier for American Jobs

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Building EnergyTransparency

ENERGYDISCLOSURE& THE NEW

FRONTIER FORAMERICAN JOBSby Andrew C. Burr

Institute for Market TransformationMarch 2012


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urprisingly, the answer isght in front of us. New laws inw York City, San Francisco and other large

es requiring energy perormance disclosure

buildings have the potential to become a

t century engine or job creation and signi-

ntly improve the course o Americas energy

ure.

As a Silicon Valley venture capitalist, I

ould believe that technology will rescue our

onomy. Ater all, I spend my days searching

the next big thing: Hybrid vehicles, smart

hnologies, new sources o energy and the

e. Sometimes called clean tech, these are

breakthroughs that could reduce our ad-

tion to oreign oil and create jobs.

But will technology alone really creates? I worry that many existing technologies

languishing, unused. For example, in com-

rcial and industrial buildings, smart lights

d smart motors can reduce electricity con-

mption by more than 50 percent. Yet, even in Caliornia, these money-saving

hnologies are rarely used. My enthusiasm as an investor is muted when last

ars big innovation is collecting dust on the shel.

This is troubling. Why invest in new technologies when no one is using

existing money-saving technologies? I energy-saving products dont sell,

s bad news or the environment and terrible news or American workers. I

oney-saving innovations sit on the shel, the unemployed sit at home.

Economics 101 says when a technology saves money, it will be used. Not so

in my experience. Amid the excitement about clean

technology, the bigger problem is: How to motivate

the use o existing energy-saving products.

Some American cities are solving this motiva-

tion problem with a novel new idea: Grade buildings

based on how much energy they use and publish the

scores on the internet.

Brilliant in its simplicity, public disclosure

o building energy consumption will start a stam-

pede to upgrade buildings motivating the good

buildings to achieve higher levels o eciency and

prompting the laggards into action. Using the na-

tionally accepted ENERGY STAR perormance

scoring system which grades buildings rom 1 to

100 and is based on actual utility bills an anemic score o 17 in a class A

Manhattan oce tower will generate action: An energy auditor will be hired,

meters installed, lighting ungraded, ans and motors tuned, and old rerigera-tors replaced. The ENERGY STAR score o 17 becomes 77. New jobs will be cre-

ated and the building owners and tenants will spend less on their utility bills.

Under Mayor Michael Bloombergs direction, New York City is now im-

plementing a public disclosure law or its largest commercial and multiam-

ily buildings. Washington, DC, and San Francisco are ollowing close behind.

San Franciscos situation is noteworthy because its regulation was spearheaded

by large property owners who had grown weary o green-rating schemes that

sometimes give top honors to very wasteul buildings and usually ail to recog-

nize the most ecient buildings.

The owner o one iconic building in San Francisco discovered his building

had an ENERGY STAR score o 1, the lowest on the scale o 100. High utility

bills had been ignored in this San Francisco landmark, but the threat o public

Foreword

We have entered a new era o constrained spending, highnemployment and complex political turmoil, yet the question onveryones mind is simple: How do we create jobs?

disclosure nally inspired an energy m

In each o these cities, building

no longer ask what is the cheapest air

or the cheapest light xture, but rathe

I get my building to an 80 or 90? Ex

become the goal. And as building ow

smart thermostats, smart lights and

jobs will be created.

Public disclosure o commercial

ergy consumption will unleash the ma

capitalism. Eventually, disclosure sho

the law across America. In the meantim

ies should ollow the leadership o New

San Francisco and Washington, DC. P

sure will motivate millions o energy

and employ many thousands o skille

workers. With no subsidies, these citie

secure Americas energy uture.

Elton Sherwin is a Silicon Valley vent

and the author o two books, Addicted to

The Silicon Valley Way. The Senior Ma

tor at Ridgewood Capital, he serves on

fve private companies, including NR

which develops non-electric hybrids.

Ledby MayorMichaelBloomberg,New York

Cityhas adopted sweepingbuilding energy

transparencyrequirementsthataectapproxi-

mately16,000o thecityslargestcommercialand multiamily residential properties. Busi-

nessleadersinNew Yorkcreditthis initiative

orexpandingthe marketor energy-ecient

productsandservicesandcreatinglocaljobs

improvingbuildingoperations.

y Elton Sherwin

uilding Energy

ansparency


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16,000Number o commercial

and multiamilyproperties required toannually benchmark and

publicly disclose energyperormance under thecitys Local Law 84.

By theNumbers: Howtransparencyhas transormedbusiness in NewYork Cityinthepast 18months

The New Frontier orAmerican Jobs

We have long known that

improving the energy eciencyo Americas buildings canuel economic growth in localcommunities across the country.

Reducing energy consumption in our oces, malls, schools, apart-

ment buildings and other large structures creates high-paying jobs that

will ne ver be exporte d and puts dollars back in the poc kets o business-

es and amilies. Most o the existing buildings in American cities were

built decades ago and will live or generations to come beore they are

replaced. By investing in our past, we can reinvest in our uture.

Our cities are up to the challenge. Innovative energy disclosure rules

adopted by several o Americas largest cities are shepherding in a new era

o energy awareness and transparency in ex isting buildings. Simple yet

powerul, these rules are uncovering energy-savings opportunities that

have gone unnoticed or years by building operators and businesses, un-

locking market-driven demand or energy-ecient products

workers including engineers, acilities managers, energy au

tainability consultants, sotware developers, architects a nd co

workers. Bet ter still, this pro-bu siness env ironment is emerg

public investments or subsidies, proving that job creation an

sponsibility can go hand-in-hand.

This report proles just a ew o the many business lead

day are leveraging greater energy transparency to do more b

create real jobs by controlling energy costs or businesses and

With similar stories waiting to be told in scores o commun

the country, this new rontier or American jobs is well within

uilding Energy

ansparency


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uilding Energy

ansparency

Competingto Use Less

There is intense competitionmong automakers to sell vehicleshat cost us less at the pump.

75 millionSize in square eet o the combined portolios onew real estate clients at Ecological, a locally basedsustainability services rm.

By theNumbers: Howtransparencyhas transormedbusiness in NewYork Cityin thepast 18months

Food companies compete or our appetites by slashing calories and using

althier ingredients. But imagine a world where cars and trucks didnt have

l economy stickers, and not a single snack or beverage carried a nutritional

el. Without that inormation, there would be little competition among man-

cturers to make uel-ecient vehicles or healthier oods and little demand

them because nobody would know the dierence.

For decades, nobody has known the dierence between an energy-e-

ent building and an energy-inecient building. Companies that can help

sinesses reduce energy usage and utility bills have struggled in a marketplace

ere inormation about building energy consumption is virtually nonexistent.

Thats why these companies are welcoming building energy transpar-

cy with open arms. They know that better inormation means more market-

ven demand and competition or better buildings. It means more private

estment channeled into improving building operations, training workers,

nducting energy audits, retuning mechanical systems and upgrading equip-

nt. And that means more work improving American buildings and more

merican jobs.

40Expected number o buildinenergy improvement projecexecuted this year by FS Enelocally based multiamily enmanagement rm, up rom projects in 2010.

By theNumbers: Howthas transormed businesCityin thepast 18month


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Proles

cological | www.ecologicalgroup.com

ndsay Napor McLean, Chie Operating Ocer

More than 400 new clients covering 75 million SF in New York City in

past 12 months as a result o Local Law 84 and other Greener, Greater

Buildings Plan laws

The Greener Greater Buildings Plan has spurred the New York market

to interest and activity around energy eciency. As the benchmarking

process was completed or the rst year o compliance in 2011 and build-

ings were able to see how their usage stacks up, we saw a signicant rise

in the number o clients that are interested in the actions they can take to

improve their buildings eciency, and their bottom lines. The transpar-

ency that GGBP and Local Law 84 bring to the market around energy use

is having the intended impact and sharpening the ocus on ceasing to

waste expensive resources. We anticipate that this trend will continue in

the New York market with each year o compliance reporting.

rig

Energy Print | www.energyprint.com

Mike Williams, Chie Operating Ocer

Doubled subscription base and added approximately 2 FTEs as a result

o Local Law 84 and Seattles benchmarking ordinance. Added six value-

added resellers to the companys network, enabling local revenue to con-

tractors and consultants

The majority o building owners do not have visibility to the energy per-

ormance o their portolios, nor do they understand that energy is one o

their largest controllable operating expenses. ENERGY STAR is the right

rst step by bringing awareness to energy usage, however it doesnt give

owners actionable inormation on how to improve. Thats why compli-

ance with benchmarking laws is important to us. We tell clients, I you

have to do it, get something out o it. We use benchmarking ordinances

and ENERGY STAR administration as a catalyst to drive real change,

helping owners and managers operate more protable buildings.

10-15Number o employees hired by Steven Win

Associates, a high-perormance buildingconsulting rm, to meet growing client demor energy efciency services.

By theNumbers: Hhas transormed busCityin thepast 18mo

Bright Power | www.brightpower.com

Jefrey Perlman, president and ounder

4 FTEs added and maintained as a result o Local Law 84 and other

Greener, Greater Buildings Plan laws

Local Law 84 is a really positive orce. The act that we have competitors

that didnt exist beore shows that its growing the market. Our pitch to

our customers is you have to do the benchmarking, and ENERGY STAR is

good but doesnt give you everything you need, which is where our Ener-gyScoreCards sotware comes into play. Our client base in New York City

is a lot bigger than it was beore Local Law 84 was adopted. Its helped us

gain traction, especially in the market rate housing sector, which doesnt

have the same targeted incentives as aordable housing. The law has

helped us get in the door with owners and oer them something they

now need - a must have rather than a nice-to-have.

Sustainable Real Estate Solutions | www.srmnetwork.c

Brian McCarter, chairman, CEO and ounder

Increased New York City client base by more than 30 percen

additional account management sta as a result o Local Law

Market evidence continues to mount that benchmarking an

regulations are achieving their public policy goal to stimulate building owners and managers to urther invest in energy e

industry best practice is emerging in markets with disclosure

where the rst step is a desktop benchmarking analysis inclu

and public benchmarking database resources, ollowed by an

ergy audit to identiy energy conservation measures and relate

cial metrics or poorly perorming buildings.

uilding Energy

ansparency


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uilding Energy

ansparency

RatingAmericasBuildings

Case StudyFS Energy / FirstService Corp. / www.FirstService.com

For a compelling example o how transparency in NewYork Citys building stock is already changing businesusual, look no urther than FS Energy (FSE).

This locally based building energy management compa-

ny, a division o the real estate services rm FirstService Corp.

(NASDAQ:FSRV; TSX: FSV), has grown rom less than three

employees in 2009 to a sta o more than 10 in 2012. Interest

in building energy improvements across the companys man-

aged portolio o 400 multiamily cooperatives, condominiums

and rental properties is skyrocketing. With less than 10 retrot

projects completed rom 2009 to 2010, FSE now has 30 retrot

projects in progress and expects to have 40 projects completed

by the end o 2012.

The secret to success is benchmarking and transpar-

ency, says David Diestel, senior vice president o operations or

FirstService Residential Management. FSE last year developed

its own energy scorecard, known as the Building Energy Rat-

ing Guide (BERG), or all o its New York City properties and

watched as client demand or greater energy eciency began to

steadily increase.

As recently as a year ago, FSEs typical clients did not

have any idea o their buildings perormance or how it per-

orms relative to other properties, Diestel said, making it

nearly impossible to interest them in eciency imp

But in 105 client presentations since the company

ing scorecards in mid-2011, 92 presentations resu

no-cost eciency projects at a property, and 38

nancial commitments or building energy asses

could lead to retrot projects. Our own benchm

energy disclosure eorts in New York, concurre

citys Local Law 84, have proved to us that these

help educate and motivate owners to improve pe

Diestel said.

Helping spur this transormation is an innova

ing package oered by FSE where clients pay o

ciency upgrades through savings on utility bills

work is New York Citys energy transparency law,

FSE another selling point to engage clients. Accor

estel, Having legislative eorts support FSEs goa

carbon and cost in properties increased client aw

urgency to become educated and consider investing

We ully expect that public disclosure will motivat

urther improve perormance.

Major cities across theountry are movingwitly to make theiruildings more energyransparent.

New York City, San Francisco and the District o

lumbia now require the energy perormance o large

ldings to be rated and publicly disclosed, while other

es and several states require building owners to re-

se perormance inormation to prospective renters,

vestors and lenders. In all, current transparency re-

rements could aect more than 4 billion square eet

commercial and multiamily residential foor space

nually, more than twice the volume o commercial

ace that has been LEED certied.

To generate building energy perormance metrics,

nsparency rules leverage the use o the governments

ERGY STAR Portolio Manager benchmarking tool.

is simple and ree sotware rates the energy peror-nce o buildings (a process known as benchmark-

,) creating a standard measure o the energy e-

ency o a building compared to similar buildings.

day, ENERGY STAR sotware is the most widely used

nchmarking program or commercial buildings in the

untry.

92 resulted in lowno-cost eciencimprovements

38resul ted in fncommitments ocomprehensiveeassessments

2009 2010 2011 2012

30

inprogress,

40

executed(exp

ected)

40

30

20

10

105 client presentations

David Diestel


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uilding Energy

ansparency

A Foundationor the Future

As the businesseaders profled in thiseport are makinglear, greater buildingnergy transparency isxpanding the marketor energy eciencyervices and creatingew jobs.

But as many o them note, benchmarking and transpar-

cy are a beginning, not an end. Creating long-term jobs im-

oving the energy eciency o our buildings will depend on

h innovation and new technologies rom entrepreneurs and

rt-up companies; the availability o capital to perorm up-

des; public-private partnerships to train new workers; and

ost o other big initiatives and ideas.By simply adding energy transparency into the real estate

rketplace, we can build a solid oundation or that uture

ed on demand, competitiveness and inormation allow-

a smarter America to nally begin tapping into decades

missed opportunities to improve our buildings.

280Number o buildings benchmarked by US EGroup, a locally based building energy manasolutions rm, or compliance with the citytransparency requirements.

By theNumbers: Howtransparencyhas transormedbusiness in NewYork Cityin thepast 18months


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Proles

teven Winters Associates | www.swinter.com

rica Brabon, senior consultant

Added more than 10 people in the New York City market as a result o

Local Law 84 and other Greener, Greater Buildings Plan laws

People are interested in what the benchmarking number means. Our

hook or clients is that you cant understand your buildings perormance

until you measure it. Until you understand perormance, you cant make

a decision about investments. Its a matter o explaining to people that its

not just about compliance, but what you can do to improve. Our business

is growing a lot and we anticipate it will continue to grow. We already

have more work to do than we have people or.

US Energy Group | www.use-group.com

Warren Zaretsky, vice president o marketing

Benchmarked approximately 280 buildings or Local Law 84 compliance

For years weve been telling people, We can save you money, and ourprospective clients tell us to prove it. Its much easier to prove i you have a

baseline. Thats the starting point. We see Local Law 84 as a great help to

our company and the environment.

Sustaining Structures | www.sustainingstructures.com

Theresa Stroisch, CEO, and Kevin Dingle, president

30-50 percent client growth and potential to triple sta over the next ew years

as a result o the Seattle benchmarking ordinance

The Seattle benchmarking ordinance is creating and sustaining real green

jobs. Companies like ours are building relationships with clients because com-

pliance is just a starting point. We expect the clients that we have now to be

long term clients. Theresa Stroisch

When an owner or manager sees a benchmarking score might be lower than

expected, theyre a little more receptive to improvements to bring the score up,

which in turn lowers their utility costs. It makes it real world or them when

they see the benchmarking numbers. Kevin Dingle

Advanced Energy Innovations | www.nrgadvocate.com

Ken Patterson, senior energy advocate

Increased sta by 50 percent and nearly doubled revenue as a

Los Angeles Commercial Building Partnership, a voluntary

benchmark, audit and improve buildings.

Whether it is required or not, benchmarking is always our r

clients. Its where we get enough data to see where the next lot o owners are just throwing darts when it comes to impro

perormance. Benchmarking tells us where the bullseye is.

30%Increase in New York City client base atSustainable Real Estate Solutions, an energymanagement sotware provider.

By theNumbers: Howtranspaencyhas transormed businessNewYork Cityin thepast 18mo


9/916 WWW.IMT.ORG/RATING INSTITUTE FOR MARKET TRANSFORMATION, 2012

Building Energy

Transparency

About the Institute for Market TransformationThe Institute or Market Transormation (IMT) is a Washington, DC-based nonprot

organization promoting energy efciency, green building, and environmental protection in

the United States and abroad. IMTs work addresses market ailures that inhibit investment in

energy efciency and sustainability in the building sector.

About BuildingRating.orgA joint project o the Institute or Market Transormation and the Natural Resources Deense

Council, BuildingRating.org is the worlds most comprehensive resource dedicated to energy

perormance rating and disclosure policies or homes and commercial buildings. BuildingRating.

org eatures an online library o building energy perormance rating and disclosure resources,

including inormation on policies, programs, impact analyses, and rating systems and tools. It

launched in 2011 to acilitate the sharing o global rating and disclosure policy intelligence and

best practices.

www.imt.org

www.buildingrating.org

Report prepared by the Institute or Market Transormation,

January 2012

Graphic design by Jessie Despard

DisclaimerThe views and opinions expressed in this report are the responsibility o IMT and do not

necessarily represent the views and opinions o any individual, government agency, ororganization mentioned in this report

For more inormation about this report, please contact:

INSTITUTE FOR MARKET TRANSFORMATION

1776 MASSACHUSETTS AVE. NW

SUITE 815

WASHINGTON, DC, 20036

(202) 525-2883

Documents

Energy Disclosure & the New Frontier for American Jobs