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Legal and Financial Instruments that Support Renewable Instal-lations on Public Buildings
University of Eastern Finland Law School
International Resource Law Master’s Thesis 3.5.2017 (date of presentation)
Carmen Dupree: (263931) Supervisor: (Kim Talus)
Faculty Kim Talus Unit University of Eastern Finland Law School
Author Carmen Dupree
Name of the Thesis
Legal and Financial Instruments that Support Renewable Installations on Public Buildings
Major
International Resource Law
Description
Master’s thesis
Date
03.05.2017
Pages
67
Abstract
This paper examines the question of how to incentivize the adoption and use of renewable installa-
tions on public buildings, by governments via legal and financial instruments. Energy consumption
in buildings is steady increasing as population increases. At present, nearly half of the total green-
house gas emissions in cities, and GHG’s are the main cause of climate change. Climatologist’s and
policy experts agree that improving energy efficiency of building systems and operations is a very
effective way to combat climate change in the long term. Currently however, despite the fact that
improvements in existing buildings has the greatest potential for greenhouse gas emission reduc-
tion, most laws and regulations have focused primarily on new buildings. Therefore, improving en-
ergy efficiency in existing buildings represents a great opportunity for minimizing the effects of
climate change at a global level. There have been a number of legal and financial measures put in
place in both Europe and the United States to increase efficiency of buildings and decrease emis-
sions, yet there is still room for improvement. Compared to the United States, Europe has been tak-
ing the lead on the green building initiative from a legal perspective. This paper aims to look at the
effective legal measures in Europe and examine how they could be implemented in the United
States. The measures are composite of conventional approaches to innovative market-based instru-
ments. Although different proposed methods are similar to some extent, this paper will examine
them with the caveat that they are constrained by specific characteristics of each region.
Key words : Public Buildings, Renewable Installations, laws, United States, European Union
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TABLE OF CONTENTS
LIST OF ABBREVIATIONS ……………………………………………………………….IV
LIST OF REFERENCES ……………………………………………………………………VI
I. INTRODUCTION……………………………………………………………………………1
A. Comparative Analysis of Building Laws In the U.S. and the EU: Specifically the United Kingdom and California…………………………………………………………………….…3
B. Sustainable Building Features Including Renewable Energy and Building Design………………………………………………………………………………………….4
II. LEGISLATION CONCERNING ENERGY PERFORMANCE OF BUILDINGS
A. The European Legal System:Brief History of Sustainable Building Laws………………………..……………………………………………………………….…6
B. Directive of the European Parliament on Energy Efficiency: United Kingdom……………………………………………………………………………………….11
C. Cost Optimal Levels of Energy Performance Requirements: EcoDesign Directive, Renew-ables Directive: UK Compliance…………………………………………………………….14
III. U.S. ENERGY EFFICIENCY MEASURES: A.FederalLevel……………………………………………………………………………..……17
B. State and Local Level……………………………………………………………..………..19
IV. U.S REGULATORY INSTRUMENTS………………………………………………………………………………21
A. SpecialDistricts …………………………………………………………………………..22
B. Energy ImprovementDistricts…………..…………………………………………………24
C. Cooperatives……………………………………………………………………………….27
V. FINANCIAL INSTRUMENTS AND INCENTIVES:
A. Environmental Finance……………………………………………………………………34
B. Federal Bonds and Third Party Ownership…………………………………………………………………………………36
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VI. PUBLIC LEADERSHIP PROGRAMS:
A. London RE:Fit Program……………………………………….………….………………..42
B. pLAn Los Angeles………………………………………………………………………….47
VII. BUILDING CODES AND STANDARDS:
A. California Green Building Standards Code and Compliance Rates…………….………….54
B. United Kingdom Building Control Performance Standards and Compliance Rates….……63
VIII. CONCLUDING REMARKS……………………………………….………………….69
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ABBREVIATIONS
C&I commercial and industrial
CBSC California Building Standards Commission
CREB clean renewable energy bond
CSI California Solar Initiative
DG distributed generation
DOE U.S. Department of Energy
DRE Distributed Renewable Energy
EPA Environmental Protection Agency
EU European Union
ESS electrical service supplier
FERC Federal Energy Regulatory Commission
IOU investor owned utility
IREC Interstate Renewable Energy Council
IRS Internal Revenue Service
ITC investment tax credit
kWh kilowatt-hour
LLC limited liability company
LEED Leadership in Energy and Environmental Design
MS Member State
MW megawatt
MWh megawatt-hour
NREL National Renewable Energy Laboratory
OPUC Oregon Public Utilities Commission
PPA power purchase agreement
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PPP Public Private Partnership
PURPA Public Utility Regulatory Policy Act
PV photovoltaic
QF qualifying facility
REC renewable energy certificate
RES renewable electricity standard
RPS renewable portfolio standard
SREC solar renewable energy certificate
SSA solar services agreement
UK United Kingdom
US United States
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LIST OF REFERENCES
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Caffrey, Kristina. Note, The House of the Rising Sun: Homeowners' Associations, Restrictive Covenants, Solar Panels, and the Contract Clause, 50 NAT. RESOURCES J. 721, 725 (2010).
Clover, Ian. UK Solar PV Capacity Tops 6.5 GW Despite April Slowdown. PV Magazine. June 2nd 2015
Curley, Michael. Financial Policy for Renewable Energy and a Sustainable Environment. (CBC Press. London and Boca Raton. 2014)
Delp, Linda - Stewart, Elizabeth. Good, Green Safe Jobs: The Los Angeles Green Retrofit and Workforce Program. UCLA Institute for Research on Labor and Employment: Research and Policy Brief Number 2. p.2 (July, 2009)
Dollard, Tom - Edwards, Pollard. Builders Book: An Illustrated Guide to Building Energy Efficient Homes. Hayden House, London, UK. 2015.
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Economidou, Marina. Energy Performance Requirements for Buildings in Europe. RHEVA Journal, March 2012. p. 16-18.
EDF Renewable Energy Signs a 20-year PPA with Southern California Edison. Renewable Energy Focus. Vol. 15 Issue 1. February 2014 p. 6.
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Robinson, Nicholas, A. International Environmental Legal Trends: Factors Shaping the Practice of Environmental Law. p. 527, 531. Environmental Law Institute, Washington D.C. USA (2000).
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Hyatt, Wayne & JoAnne P. Stubblefield, The Identity Crisis of Community Associations: In Search of the Appro-priateAnalogy, 27 REAL PROP. PROB. & TR. J. 589, 599 (1993)
Khanna, Parag. Connectography:Mapping the Future of Global Civilization. (Random House, New York, NewYork. 2016)
Kollins, Katherine. Solar PV Project Financing: Regulatory and Legislative Challenges for Third-Party PPA System Owners. National Renewable Energy Laboratory. February, 2010
Leggett, Jeremy. The Carbon War: Global Warming and the End of the Oil Era. Rutledge, New York, New York. 2001
Nikolaou, T. Kolokotsa, D. & Stavrakakis,G. Review on Methodologies for Energy. Benchmarking, Rating and Classification ofBuildings, 5 ADVANCE IN ENERGY RESEARCH no. 1, at 53 (2011).
Parejo-Navajas, Teresa. A Legal Approach to the Improvement of Energy Efficiency Measures For the Existing Building Stock in the United States Based on the European Experience. Seattle Journal of Envi-ronmental Law. Volume 5 Issue 1, Article 14. May, 31, 2015
Rosas, Allan and Armati, Lorna. EU Constitutional Law: An Introduction. P49. Oxford and Portland, Oregon, 2010.
Rawworth, Phillip. European Union Law Guide. Volume 7, Part XIX, p. 38:2. Thompson Reuters 9/2016.
Sioshansi, Ramteen. Retail Electricity Tariff and Mechanism design to Incentivize Distributed Renewable Generation. Energy Policy. Integrated Systems Engineering Department. The Ohio State University. Columbus, Ohio. Accepted Dec 30, 2015.
Steel, William. UK Seeks Compromise on Biomass Head and Power Tariffs. Renewable Energy World, November, 4, 2016.
Swanson, Ana. Six Maps that Will Make You Re-think the World. Washington Post. April, 29, 2016.
Wiseman, H. - Brownin, S. Community-Scale Renewable Energy. P170. 4 San Diego J. Climate & Ener-gy L. 2013
Winokur, James. Choice, Consent, and Citizenship in Common Interest Communities, in COMMON IN-TEREST COMMUNITIES: PRIVATE GOVERNMENT AND THE PUBLIC INTEREST 87, 89 (Stephen E. Barton & Carol J. Silverman eds., 1994).
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Wolf, Michael, Allen. A Yellow Light for "Green Zoning: Some Words of Caution About Incorporating Green Building Standards into Local Land Use Law, 43 URB. LAW 949, 961 (2011) (citing ADVISORY COUNCIL ON HISTORIC PRESERVATION, SUSTAINABILITY AND HISTORIC FEDERAL BUILD-INGS 17-19 (May 2, 2011).
B. Official Sources
Asselt, Harro. Lecture on the December 2015 United Nations Climate Change Conference in Paris. Uni-versity of Eastern Finland, January, 16, 2016.
(USSC) U.S. Supreme Court. Dolan v. City of Tigard, 512 U.S. 374 (1994). DOLAN v. CITY OF TIGARD. CERTIORARI TO THE SUPREME COURT OF OREGON No. 93-518. Argued March 23, 1994-Decided June 24,1994
Energy Performance of Buildings Directive (EPBD) Compliance Study. Contract No. MOVE/ENER/SRD.1/2012-409-Lot3/ENER/C3/2014-542/S12.701648. Luxembourg Publications Office of the Euro-pean Union, 2015.
ENB-9.01 - Green Building Policy. GREEN BUILDING POLICY. Binding City Policy. BCP-ENB-9.01. Resolution No. 35956, adopted by City Council January 10, 2001. Filed for inclusion in PPD May 13, 2004. Superseded by Resolution No. 36700, adopted by City Council April 29, 2009. Superseded by Res-olution No. 37122, adopted by City Council April 22, 2015.
Guide to Title 24 California Building Standards Code: Based on the 2013 Edition of Title 24. California Building Standards Commission. Chapter 1, P. 1. 2013.
!IX
(USSC) U.S. Supreme Court. Nollan v. Cal. Coastal Com'n., 483 U.S. 825 (1987). Nollan v. California Coastal Commission. No. 86-133. Argued March 30, 1987. Decided June 26, 1987. 483 U.S. 825.
UNEP SBCI Report. United Nations Sustainable buildings and Climate Initiative. Buildings and Climate Change Summary for Decision-Makers. United Nations Environment Programme (2009).
C. Internet Sources
Arzilli, Gaia. UK Green Building Council. Accelerating the Growth of Smart Cities (September, 7, 2015). http://www.ukgbc.org/resources/blog/accelerating-growth-smart-cities
Building Codes for Energy Efficiency, EPA Mar. 27, 2015, {.http://www.epa.gov/cleanenergy/documents/suca/buildingcodesfactsheet.pdf }(2015).
Chaing, John. California’s Current Credit Ratings. Office of the State Treasurer (2016). http://www.treasurer.ca.gov/ratings/current.asp
Cities for a Sustainable Future. United Nations Department of Economic and social Affairs. May, 22, 2014. { http://www.un.org/en/development/desa/news/ecosoc/cities-for-a-sustainable-future.html }(22.5.2014)
EPA and DOE Join States to Speed Energy Efficiency Progress in the United States, DEPARTMENT OF ENERGY (Feb. 2, 2010), available at { http://energy.gov/articles/epa-and-doe-joinstates- speed-energy-efficiency-progress-united- states }. (2.2.2010)
Internal Revenue Service (IRS). IRS Announces New Clean Renewable Energy Bonds Allocations: Notice 2009-33. Last Updated (15.02.2017) www.irs.gov.
Khanna, Parag. How Megacities are Changing the Map of the World. April, 27, 2016. { https://www.y-outube.com/watch?v=U7y4GlmwPLQ }(4.27.2016)
Leese, Richard. Green Building Council Manchester, UK. 2015. { https://vimeo.com/121760191 }(20.03.2015)
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London’s Building Retrofit Programme - RE:FIT. Greater London – United Kingdom. (2009) { http://www.citynvest.eu/sites/default/files/library-documents/Model%203_London%20Building%20Retrofit%20Programme_final.pdf }(2015)
Maehulm, Mathis. Solar Energy Pros and Cons.{ energyinformative.org/solar-energy-pros-and-cons/#intermittent. } May 12, 2014
Mandatory Retorfit Programs. Los Angeles Department of Building and Safety. http://www.ladbs.org/services/core-services/plan-check-permit/plan-check-permit-special-assistance/mandatory-retrofit-programs
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Peterson, Lee J. Public-Private Partnerships Can Help Finance Renewable Energy Projects. Renewable Energy World (October, 18, 2010). http://www.renewableenergyworld.com/articles/2010/10/public-private-partnerships-can-help-finance-renewable-energy-projects.html
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Saiger, Aaron. Local Government as a Choice of Agency Form. Ohio State Law Journal. Volume 77:2. 423-456 (2016) {http://moritzlaw.osu.edu/students/groups/oslj/files/2016/06/Vol.-77_2-423-456-Saiger-Article.pdf} (2016)
The International Energy Efficiency Scorecard. American Council for an Energy Efficient Economy. {aceee.org/portal/national-policy/international-scorecard.}(2016)
Tristan Oliver. RE:FIT Programme Delivery Unit. Technical / Delivery Lead. { http://www.managener-gy.net/lib/documents/1243/original_REFIT_EASME_Presentation_Oct_2014_final.pdf?1413377269}(September, 2012)
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Solar Market Insight Report Q3 2016 Executive Summary. http://www.seia.org/research-resources/solar-market-insight-report-2016-q3
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TABLE OF LEGISLATION
(CBSC) California Building Standards Commission. CALIFORNIA BUILDING STANDARDS LAW HEALTH AND SAFETY CODE DIVISION 13, PART 2.5, SECTIONS 18901 - 18949.31 Effective Jan-uary 1, 2017.
COMMISSION DELEGATED REGULATION (EU) No 244/2012. supplementing Directive 2010/31/EU of the European Parliament and of the Council on the energy performance of buildings by establishing a comparative methodology framework for calculating cost-optimal levels of minimum energy perfor-mance requirements for buildings and building elements. Official Journal of the European Union 21.3.2012.
DIRECTIVE 2009/125/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 21 Octo-ber 2009 establishing a framework for the setting of eco-design requirements for energy-related products. Official Journal of the European Union L285/10 (31.10.2009).
DIRECTIVE 2009/28/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently re-pealing Directives 2001/77/EC. Official Journal of the European Union L 140/16, 5.6.2009.
DIRECTIVE 2010/31/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 19 May 2010 on the energy performance of buildings. Official Journal of the European Union L 153/13, 18.6.2010
DIRECTIVE 2012/27/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 25 Octo-ber 2012. on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Direc-tives 2004/8/EC and 2006/32/EC. Official Journal of the European Union L 315/1, 14.11.2012.
Department of Energy Energy Efficiency and Conservation Block Grant Program CFDA 81.128. Pro-gram Specific Requirements- 2015 Compliance Supplement (June 2015). Department of Energy. CATA-LOG OF FEDERAL DOMESTIC ASSISTANCE (No. 81.128).
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FINAL EXPRESS TERMS FOR PROPOSED BUILDING STANDARDS OF THE DIVISION OF THE STATE ARCHITECT – STRUCTURAL SAFETY REGARDING PROPOSED CHANGES TO CALI-FORNIA ADMINISTRATIVE CODE. CALIFORNIA CODE OF REGULATIONS, TITLE 24, PART 1. State of California Building Standards Commission, December, 18, 2015.
HCD(2016) Report to the Legislature. Brown, Edmund, Governor. Podesta, Alexis, Secretary of Busi-ness, Consumer Services and Housing Agency. Metcalf, Ben, Director of Housing and Community De-velopment. 2016 Report to the Legislature: Status of the California Green Building Standards Code: CALGreen. State Department of Housing and Community Development, September 2016.
Internal Revenue Service. Part III-Administrative, Procedural, and Miscellaneous: New Clean Renewable Energy Bonds. Notice 215-12. 2015, Section 1
Kyoto Protocol to the United Nations Framework Convention on Climate Change, Kyoto, 10 December 1997, in force 16 February 2005, 37 International Legal Materials (1998) 22. (Kyoto Protocol).
The People of the City of Los Angeles. An ordinance reinstating Article 5 of Chapter 3 of Division 7 of the Los Angeles Administrative Code to establish the Green Retrofit and Workforce Program, including creation of a Green Retrofit Development Interdepartmental Task Force, and a GreenRetrofit Develop-ment Advisory Council.Ordinance 182258. p.1
SB-350 Clean Energy and Pollution Reduction Act of 2015. Senate Bill No. 350 Chapter 547: An act to add Section 44258.5 to the Health and Safety Code, to amend Section 1720 of the Labor Code, to amend Sections 25310 and 25943 of, and to add Sections 25302.2 and 25327 to, the Public Resources Code, and to amend Sections 359, 399.4, 399.11, 399.12, 399.13, 399.15, 399.16, 399.18, 399.21, 399.30, 454.55, 454.56, 701.1, 740.8, 9505, and 9620 of, to amend and repeal Sections 337 and 352 of, to add Sections 237.5, 365.2, 366.3, 454.51, 454.52, 740.12, 9621, and 9622 to, to add Article 17 (commencing with Sec-tion 400) to Chapter 2.3 of Part 1 of Division 1 of, to add and repeal Article 5.5 (commencing with Sec-tion 359.5) of Chapter 2.3 of Part 1 of Division 1 of, and to repeal Article 5 (commencing with Section 359) of Chapter 2.3 of Part 1 of Division 1 of, the Public Utilities Code, relating to energy. Legislative Counsel’s Digest. Approved by Governor October, 7, 2015 and filed with Secretary of State October, 7, 2015.
Single European Act. Signed 28.2.1986. Entry into force 1.7.1987. OJ L 169 of 29.6.1987
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I. INTRODUCTION
With the ever increasing threat of climate change, the desire to facilitate renewable energy
installations is not a revolutionary phenomenon. The weighing of environmental benefits over
the upfront financial costs of renewable energy has been an uphill battle in many countries in-
cluding the country with the highest GDP in the world, the United States. To someone who is
unfamiliar with contemporary climate law this may be a surprise yet, it is in fact true that the
worlds number two emitter of GHG’s is failing at the federal level, to use its financial advantages
in a way that would efficiently combat this problem . 1
The United States government is not the only nation struggling to implement sound cli-
mate policies at the national level. States like China, India, Brazil, and Canada, are also drag-
ging their feet when it comes to implementing sustainable development policies that target their
nation as a whole . However, the one commonality among all of the aforementioned States and 2
really all States for that matter, is the ever expanding size of the megacities located within each
of these individual regions. In today’s world, the economies and population size are growing at
such a rate that the GDP of one of these megacities amounts to one third and in some countries
one half of the nations over all GDP . The term megacities constitutes a metropolis reaching be3 -
yond their territorial borders for example Los Angeles, extending it transit systems past San
Diego into Tijuana, Mexico . In some regions such as sub-Saharan Africa, countries like Togo, 4
Doris, Elizabeth - Cochran, Jaqulin - Vorum, Martin. Energy Efficiency policy in the United States:Overview of 1
Trends at Different levels of government. National Renewable Energy Laboratory:Technical Report 2009.
There is currently no comprehensive policy strategy for energy efficiency in the United States. “Policies are con-ceived within narrow political constraints based on some specific need, and without a thorough consideration of the policies’ interaction with other policies. A strategic approach to improving energy efficiency in the United States would coordinate efforts across jurisdictions and sectors, as occurred under the National Action Plan for Energy Ef-ficiency.”
The International Energy Efficiency Scorecard. American Council for an Energy Efficient Economy. aceee.org/2
portal/national-policy/international-scorecard.
Khanna, Parag. Connectography:Mapping the Future of Global Civilization p.293 City Building as State Building. 3
Random House Publishing, New York, New York 2016.
Khanna, Parag. How Megacities are Changing the Map of the World. April, 27, 2016.4
�2
Benin, Ghana, are becoming suburbs of the megacity Legos, to the extent that transit systems are
being built between these places.
Some have argued that in order to accurately monitor sustainable development in today’s
world it is arguably more important to understand the world stage in terms of these megacities
and their regional location rather than by territorial boundaries . This is because in order to at5 -
tract more commerce and connectivity, cities have a desire to adopt global value chains and at
the moment the most popular value shared among all of the worlds megacities is sustainable de-
velopment. In each of these megacities there are hundreds of learning networks dedicated to
sustainable urbanization via technology and policy transfer between cities . Building zero emis6 -
sion buildings and installing renewable technologies on existing buildings, is one of the most ef-
fective courses of action to take in achieving sustainable development as buildings contribute to
1/3 of global GHG emissions . Local governments in and around these megacities have more 7
power than they appear to have regarding sustainable development based on the policies and
methodologies they choose to enforce. Although the world’s cities appear to be increasingly ded-
icated to sustainability, countries that rank the highest in terms of energy efficient buildings
(Germany, Italy, Austria) are those that have national energy efficient requirements . By com8 9 -
paring and assessing the national, state, and local renewable energy laws currently in place in the
US and the EU, this paper aims to determine whether it is a more fast and lucrative means to
achieving sustainable development goals via laws and polices at a local level than approaching it
legally from national level.
Swanson, Ana. Six Maps that Will Make You Re-think the World. Washington Post. April, 29, 2016.5
See, 4. Khanna, Parag.6
UNEP Report. Buildings and Climate Change Summary for Decision-Makers. “It is estimated that at present, 7
buildings contribute as much as one third of total global greenhouse gas emissions, primarily through the use of fos-sil fuels during their operational phase”
International Energy Efficiency Scorecard 2016. American Council for and Energy Efficient Economy. aceee.org/8
portal/national-policy/international-scorecard.
International Energy Efficiency Scorecard. American Council For an Energy Efficient Economy. aceee.org/portal/9
national-policy/international-scorecard.
�3
A. Comparative Analysis of Building Laws in the U.S and the EU: United Kingdom and
California
The intention of this paper is to delve deep into the current structure of the legal and finan-
cial institutions in place, that are dictating building standards and renewable energy installations
on public buildings in both the U.S. and the EU. Federal and state level legal measures will be
taken into account in regards to California and compared to the EU legislation implemented in
the United Kingdom. This paper will also look at local government policies and issue affecting
renewable installations on public buildings in the major cities of both the United Kingdom (Lon-
don) and California (Los Angeles). While this paper primarily looks at renewable installations on
public buildings from a legal standpoint, it will also take note of the policy initiatives currently in
place, in order to paint a clear picture of the both the hard law and soft laws regarding the per-
formance of public buildings.
The paper will begin by comparing EU legal measures on the energy performance of
buildings with federal legal measures in the US and then zone in on the legal measures in the UK
and California. The primary take aways from this comparison will be; determining the laws and
policies in California and the UK that promote these installations and those that hinder them. In
addition, Where national laws come up short, the paper will look at the actions local city gov-
ernments within California and the UK, have taken promote these installations themselves. The
focus is on public buildings specifically to determine the extent to which governments are taking
legal action to enforce sustainable building laws on their own property and thus, leading by ex-
ample.
By looking at and comparing the challenges that face renewable installations on public
buildings in the U.S and the EU and subsequently the U.K. and California, a legal solution is
aimed to be reached that will promote improvements in sustainable building laws. Those suc-
cessful laws (or policies) will be identified by the extent to which they have resulted in sustain-
able renovations of existing buildings as well as sustainable design of new buildings. The goal
of environmental finance is to bring the greatest environmental benefit to the greatest number of
�4
people at the lowest possible cost. Therefore it would be useful to examine the quality/effective-
ness of sustainable building laws, with the goal of environmental finance in mind.
B. Sustainable Building Features: Including Renewable Energy and Building Design
Solar energy installation in the U.S. experienced a record breaking increase of 43% during
the second fiscal quarter of 2016. This rising popularity in the solar industry in the non-residen-
tial sector, is attributed to major state markets are transitioning toward more diversity in types of
project development . Self-consumption projects that avoid system-size limits set under net me10 -
tering programs and new community solar programs are countering continued weakness in the
non-residential rooftop solar. Most notably, community solar programs in California and the
Northeast are on track to drive over 100 MWdc of community solar for the first time ever on an
annual basis . The non-residential sector recognizes the benefits of solar installations not only 11
for the fact that it is environmentally clean and can cut energy cost, but also because the abun-
dance of sunlight makes solar a practical investment in that it will not be depleted. While some
regions of the world are certainly sunnier than others, all regions have the capacity to generate
power from solar energy.
Unfortunately, solar technology does have its draw backs, the primary one being reliability.
Solar energy is unreliable in the sense that access to sunlight is intermittent, so to the extent that
the weather is unpredictable, so too is the power to be generated by solar panels . There are bat12 -
teries that can store solar energy but they are quite costly and when it comes to renewable energy
projects, cutting cost is essential. In Europe, many countries with less annual sunlight have pri-
oritized investments in wind farms over solar, making wind one of the more popular forms of
renewable technology in the EU . Like solar however, wind farms face similar intermittency 13
Solar Market Insight Report Q3 2016 Executive Summary. http://www.seia.org/research-resources/solar-market-10
insight-report-2016-q3.
See, 10. SEIA Executive Summary.11
Maehulm, Mathis. Solar Energy Pros and Cons. energyinformative.org/solar-energy-pros-and-cons/#intermittent. 12
May 12, 2014
Wind In power: 2015 European Statistics. The European Wind Energy Association. windeurope.org/wp-content/13
upload/files/about-wind/stastics/EWEA-Annual-Statisitcs-2015.pdf
�5
problems in that, when wind patterns are unpredictable so is the production of energy it gener-
ates. This is where the benefit of examining Geothermal installations comes in because unlike
wind and solar, the power output of a geothermal power plant can be accurately predicted. Geo-
thermal energy can therefore meet base load energy demands where as weather dependent re-
newable technologies, cannot. One concern about geothermal energy is that it has been linked to
some GHG emissions such as suffer dioxide and silica emissions . While significantly less 14
harmful than emissions associated with coal/fossil fuels, geothermal energy still receives criti-
cism because of this. So what solar and wind lack in reliability, geothermal makes up for and
what geothermal lacks in terms of being emission free, solar and wind make up for. Together
these three technologies equate the perfect renewable energy investment for public buildings in
terms of reliability and cleanliness.
Maehulm, Mathis. Geothermal Energy Pros and Cons. energy informative.org/geothermal-energy-pros-and-cons/ 14
June, 01, 2013
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II: LEGISLATION CONCERNING THE ENERGY PERFORMANCE OF BUILD-
INGS
A. The European Legal System:Brief History of Sustainable Building Laws
Prior to the 1999 Treaty of Amsterdam, the objective of sustainable development was not
as much of a priority as it is today, in the European Union. This treaty stressed the necessity for 15
sustainability and environmental protection by including these objectives into article two of the
EC treaty. By 1998, the Commission recommend to the European Council that environmental 16
concerns be inserted in to all policies within European institutions via the Fifth Community Ac-
tion Programme on the Environment entitled, Toward Sustainability. Article 174-176 of the EC
Treaty, explicated the Community’s competence in the implementation of environmental legisla-
tion by introducing; the principle of preventative action, the stipulation that polluters should pay,
co-decision legislative procedure, and the ability of Member States to introduce more stringent
environmental measures than those standards provided by the EU. When it comes to the inter17 -
pretation of environmental cases in the EU, the European Court of Justice (ECJ) invokes the pre-
cautionary principle laid out in article 174 section 2 of the EC Treaty, in conjunction with the
polluters pay principle and the principle that correction should occur at the source. In the EU 18
there are various types of legislative acts that the Union can impose upon Member States, creat-
ing rights and obligations that each state must comply with. The legislative acts that are adopted
jointly by the European parliament and Council can take the form of either, directives, regula-
tions, or decisions. Depending on the nature of each of these legislative acts, they are designed
to be applicable to each Member State regardless of their legal system. There is no gradation 19
of importance between regulations, directives, or decisions, as compliance with each of these
Rawworth, Phillip. European Union Law Guide. Volume 7, Part XIX, p. 38:2. Thompson Reuters 9/2016. 15
Rawworrth, Phillip. European Union Law Guide. Volume 7, Part XIX, p. 38.2. Thompson Reuters 9/2016.16
The Single European Act. Articles 174-176. 198717
Robinson, Nicholas, A. International Environmental Legal Trends: Factors Shaping the Practice of Environmental 18
Law. p. 527, 531
Rosas, Allan - Armati, Lorna. EU Constitutional Law: An Introduction. p.49. Oxford and Portland, Oregon, 19
2010.
�7
forms of legislation on the part of Member States is obligatory . However, the ways in which 20
Member States are required to apply each of the forms of legislation, is where the true distinction
lies.
Of the three forms of legislation, regulations have the greatest direct impact because they
are directly applicable in the domestic legal order of each Member State . This means that re21 -
gardless of conflict that the regulation has with domestic law, it must be put aside so that the reg-
ulation may be applied. On the other hand, Directives while still binding in their entirety, the
results to be achieved from this legislative act constitutes an adoption of measures that are con-
sistent with the domestic law of each member state . What this means is that directives lay out a 22
number of measures that are binding and must be complied with, but it is up to each Member
State to decide how to apply these measures in a way that is complementary to their domestic
legal system. There is a deadline for compliance with each directive that is issued and only when
a Member State fails to apply the measures at the prescribed deadline, does the directive become
directly applicable. Decisions like regulations are binding in their entirety, however they may
only apply to a specific set of people and therefore do not share the broad nature of regulations
and directives . 23
The setting of norms, standards, and prohibitions in EU environmental legislation can
take the form of target standards, performance standards, and specification standards . While 24
target standards are not always binding and do not directly regulate industry, they do guide
member states into the direction of long term environmental goals and obligate Member States to
comply by establishing limits on specific types of pollutants. The targets that are most related to
the energy performance of buildings are the 2020 targets where 20% of consumption in the EU
comes from renewable sources and GHG’s are reduced by 20%. The 2012 Energy Efficiency
Rosa, Allen. Armati, Lorna. EU Constitutional Law: An Introduction p.50. Oxford and Portland, Oregon, 2012. 20
Regulations, Directives, and Other Acts. European Union Law. europa.eu/europan-union/law/legal-acts 21
Regulations, Directives and Other Acts. European Union Law. europa.eu/european-union/law/legal-acts 22
Rosas, Allen. - Armati, Lorna. EU Constitutional Law:An Introduction. Oxford and Portland, Oregon. 2010 p.5023
Economidou, Marina. Energy Performance Requirements for Buildings in Europe. RHEVA Journal, March 2012. 24
p. 16-18.
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Directive (EED) was the legislative result of this 2020 target, as it is referenced consistently
throughout the document. Performance standards are more binding in that, they prohibit certain
poor quality conditions such as emissions standards which, apply to buildings as well as vehicles,
waste, and other sectors. Specification standards include requirements for best available tech-
nology (BAT) and best available technology not entailing excessive costs (BATNEEC). Direc-
tives that establish these types of standards are often used to establish standards for use by Mem-
ber State regulators . On the basis of the polluters pay principle include energy charges and tax25 -
es, non-compliance fees and performance bonds are enforcement incentives used by Member
States that can take various forms.
The performance based requirements in building codes have been increasingly become
more stringent in the past decade but a number of Member States began instituting thermal per-
formance requirements for building codes much earlier. Some Scandinavian countries have had
performance requirements for buildings dating back to the mid 1940’s and other Member States
began to follow suit during the 1970’s oil crisis . These 20th century building codes constituted 26
a prescriptive based approach to energy consumption in that, they focused on specific elements
of a building rather than focusing on the building as a whole. The shift from a prescriptive based
approach to a performance based approach occurred when the Energy Performance of Buildings
Directive 2002/91/EC was introduced. The performance based requirements for new buildings
vary from Member State to Member State depending on the definitions and calculation methods
each country chooses to use. The setting of building code requirements with legally based per-
formance targets are typically expressed by an absolute value (kilowatt hours) or on a percentage
improvement requirement . 27
The non-domestic new buildings code requirements in the UK apply the latter via the
Target Carbon Dioxide Emission Rate (TER). TER is based on achieving a percent reduction in
Rawworth, Phillip. European Union Law Guide Volume 8, p. 41C-55. September, 2016. 25
Economidou, Marina. Energy Performance Requirements for Buildings in Europe. RHEVA Journal. March 2012. 26
Table 2 p. 16.
Economidou, Marina. Energy Performance Requirements for Buildings in Europe. RHEVA Journal. March, 27
2012. p. 17.
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CO2 emissions over a notional building of the same size and shape. To address environmental
health in addition to energy requirements, many Member States have instituted performance re-
quirements for ventilation, including technical requirements for heat recovery. This is because
insufficient ventilation leads to both energy wastage and poor air quality and in the UK, they
have introduced requirements to limit the air tightness of buildings; Maximum n50=10 m³/h
m² . 28
In 2009 the 2020 targets were enacted via the Climate and energy package, designed to
facilitate the reduction of energy consumption (one of many of the EU’s main Objectives) . Set 29
in 2007 by EU leaders, the targets indented to help meet the EU’s international commitments to
the Kyoto Protocol, a treaty that pertains specifically to the threats of climate change. The main
legislative instruments that are related to the 2020 targets include; the energy strategy 2010
which defines energy priorities for the next 10 years (including measures on the energy perfor-
mance of buildings), and the 2012 Energy Efficient Directive which, establishes a common
framework of measures that promote energy efficiency in each Member State (amending direc-
tive 2009/125/EC and 2010/30/EU). The latter Directive addressed the fact that the measures
outlined the previous directives, would be insufficient in meeting 2020 targets and there for must
be amended to include more ambitious measures, including those related to the energy perfor-
mance of buildings . Since the EU regulation of the energy efficiency of buildings is based on 30
directives rather than regulations, there implementation of the measures will slightly vary from
Member State to Member State. While the 2012 Directive does set minimum requirements for
energy effect standards for new and existing building stock, building energy codes are developed
at the national level, adopted at the state level and then enforced by local governments. In order
for the directive to be effective, Member States must meet the minimum requirements for the en-
Economidou, Marina. Energy Performance Requirements for Buildings in Europe. RHEVA Journal. March 28
2012. Table 2 p. 20.
Parejo-Navajas, Teresa. A Legal Approach to the Improvement of Energy Efficiency Measures For the Existing 29
Building Stock in the United States Based on the European Experience. Seattle Journal of Environmental Law. Volume 5 Issue 1, Article 14. May, 31, 2015. p.375
DIRECTIVE 2012/27/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 25 October 2012 30
on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC. OJ L 315/1, 14.11.2012.
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ergy performance of buildings by transposing them into their domestic legal system with either
equal or more ambitious standards. 31
In regards to public buildings specifically, Article (5) of the Directive 2009/28/EC on the
promotion of energy efficiency, required Member States to ensure that new public buildings that
are subject to renovation must lead by example in the use of RES-H projects. Directive 32
2010/31/EU sets requirements for intelligent calculation of energy consumption metering sys-
tems for new buildings and the renovation of existing buildings. Members must insure that in-
stallations are optimized and cost effective, ensure that all new buildings are nearly zero energy
buildings by 2020 and for public buildings by 2018 . In the year prior, the 2009/72/EC directive 33
concerning the common rules for the internal market in electricity states in Annex I that, “Mem-
ber States shall encourage the use of intelligent metering systems whenever a building is con-
structed. Further Member States must encourage the installation of active control systems such
as automation control and monitoring systems.” The directive also required that Member 34
States inspect heating and air conditioning systems older than 15 years with regards to their en-
ergy performance, and finally that Member States must implement Energy Performance Certifi-
cate schemes accordingly with the requirements outlined by the directive. The commission dele-
gated Regulation EU No 244/2012 established a comparative methodology framework for calcu-
lating cost optimal levels of minimum energy performance requirements for buildings and build-
ing elements . As previously mentioned, Directives 2009/25/EC and 2010/30/EU both consti35 -
Building Codes for Energy Efficiency, EPA (Mar. 27, 2015), epa.gov.31
DIRECTIVE 2009/28/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 23 April 2009 on 32
the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC. Article (5). OJ L 140/16, 5.6.2009.
DIRECTIVE 2010/31/ EU of the European Parliament and of the Council on the energy performance of buildings. 33
Article 9 (a). OJ L 153/13, 18.6.2010.
DIRECTIVE 2009/72/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 13 July 2009 con34 -cerning common rules for the internal market in electricity and repealing Directive 2003/54/EC. OJ L 211/55, 14.8.2009 Article (9) Nearly-Zero Buildings.
COMMISSION DELEGATED REGULATION (EU) No 244/2012 of 16 January 2012 supplementing Directive 35
2010/31/EU of the European Parliament and of the Council on the energy performance of buildings by establishing a comparative methodology framework for calculating cost-optimal levels of minimum energy performance require-ments for buildings and building elements. OJ L81/18, 21.3.2013.
�11
tute legislative measures regarding the energy performance of buildings. Yet since the Directive
2012/27/EU energy efficiency directive amends the aforementioned two, the next section looks
at this particular directive more closely.
B. Directive of the European Parliament on Energy Efficiency: United Kingdom Imple-
mentation
Directive 2012/27/EU: Article (3) European 2020 strategy implemented at a national lev-
el a strategy for smart sustainable growth via national reforms programs MS are required to set
national targets and in close dialogue with the commission, indicate how they will achieve these
targets.
On February 7 2011, the European council determined that the sustainability targets for 2020
were not on track and thus concluded that more effective action be taken on the part of member
states to ensure higher energy savings . The areas in which the council sought to see increased 36
energy savings included buildings, transport, products and processes . 37
Implementations of energy targets by member states were then reviewed in 2013. States
would be following the instruction of the 2011 Energy Efficiency plan which, emphasized the
importance of the role of the public sector in energy efficient buildings and appliances. The total
volume of public spending 19% of the EU’s GDP, hence the need for the public sector to be a
catalyst for market transformation towards more energy efficient products, buildings, and ser-
vices. the 2011 Energy efficiency plan pointed out that 40% of the EU’s energy consumption
came from buildings. With this in mind, the 2012 directive stated that Member States should es-
tablish a long term strategy for investments in the renovation of commercial and residential
Directive 2012/27/EU, Having regard to the opinion of the committee of the regions (2). The Conclusions of the 36
European Council of 4 February 2011 acknowledged that the Union energy efficiency target is not on track and that determined action is required to tap the considerable potential for higher energy savings in buildings, transport, products and processes. Those conclusions also provide that the implementation of the Union energy efficiency tar-get will be reviewed by 2013 and further measures considered if necessary.
Directive 2012/27/EU Article (7)37
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buildings. It is because of these requirements within the 2012 directive that constitute the dri-
ving force behind the London refit program.
The Kyoto protocol demands that ratified members reduce GHG’s by 80-90% by 2050 compared
to 1990. Therefore in the 2012 directive, the European Council recognized that renovating and 38
construction of nearly zero buildings are crucial to meeting the 2050 targets outlined in the pro-
tocol.
In regards to policy sharing initiatives, the directive explicitly encourages that municipalities par-
take in policy sharing initiatives and makes reference to the covenant of mayors are an example
of a policy sharing outlet . According to the 2013 report from the commission to the European 39
Parliament and Council on the progress of member states towards nearly zero buildings, the UK
was included among 15 of the 27 Member States to have set intermediary goals. In fact, the UK
went beyond the nZEB requirements in it’s reported objectives stating plans for zero carbon
standards.
The encouragement of energy management systems to be the driving force behind energy saving
plans is another way in which, the directive recommends public bodies to manage their energy
consumption. There is no explicit requirement for Member States to purchase specific energy
saving products in new and renovated buildings but rather, entrusts the administrative depart-
ments within each Member State to make responsible purchasing decisions when it comes to en-
ergy saving appliances and technologies . 40
When making reference to said administrative departments, the directive is talking about
those departments whose jurisdiction extends over the entire member state. However, it goes on
to say that in State’s that have no such administrative body, then it shall apply to a group of ad-
Kyoto Protocol to the United Nations Framework Convention on Climate Change, Kyoto, 10 December 1997, in 38
force 16 February 2005, 37 International Legal Materials (1998) 22. (Kyoto Protocol)
DIRECTIVE 2012/27/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 25 October 2012 39
on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC. Article(18). OJ L 315/1, 14.11.2012
Directive 2012/27/EU: OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 25 October 2012 on 40
energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC. Article (19). OJ L 315/1, 14.11.2012
�13
ministrative departments whose competence collectively covers the territory of a Member State.
This is significant to the UK since it is made up of England, Wales, Scotland, and Northern Ire-
land. In the 2013 Commission reports on the UK National targets, each of the four countries
have set their own targets but were collectively required by the directive to meet the national en-
ergy savings target of 9% by 2016. As a whole, RES in UK public buildings were required to in-
crease from .03% in 2010 to .16% in 2020. In regards to the forms of shared-RES technologies
for heat to be installed in UK buildings by 2020, geothermal energy in not even accounted for at
0.00% while solar is barely targeted at 0.5%. Instead, the UK 2013 commission report has bio-
mass and heat pumps making up the bulk of renewable heating sources with biomass at 63.1%
and heat pumps at 36.3% . 41
As mentioned previously, the UK made a proposal for zero carbon buildings for new
public and residential buildings however, no real numerical definition of a nearly zero energy
performance standard was made. The UK commission report outlined the combination of eco-
nomic incentives and financing instruments for nZEB, that slightly varied for each country with-
in the UK. In regards to retrofits for public buildings in England and Wales, the green deal was 42
described as the “flagship policy” for promoting such renovations. In Northern Ireland, the Pub-
lic Sector Building Demonstration Program was the financial instrument created to target gov-
ernment buildings within the territory. In addition to this, the UK department of environment, 43
proclaimed the giving of an annual prize for development of sustainable public buildings as a
means of meeting the demonstration requirement outlined in the 2012 directive. Finally in re-
gards to the education and training of Member State citizens in the 2012 directive, the UK
Commission report committed to the development and maintenance of education and training by
Steel, William. UK Seeks Compromise on Biomass Head and Power Tariffs. Renewable Energy World, No41 -vember, 4, 2016.
Hans Erhorn - Heike, Erhorn - Kluttig,Fraunhofer. Towards 2020 Nearly Zero Energy Buildings: Overview and 42
Outcomes. Energy Performance of Buildings Concerted Action (August 2015) p. 8.
UK Green Building Council. Response to the consultation on changes to Part L of the building regulations – con43 -sequential improvements for existing buildings (2013). p. 1
�14
sector skills councils, universities and colleges, as well as independent experts who must be
members of a special accreditation team approved by the government. 44
Compliance with the 2010 and 2012 EU directives is no doubt the main reason why the
EU as a whole is ranked number three in suitability (behind Germany #1 and Italy #2) . While 45
the U.S sustainability efforts for buildings continues to improve with each passing year, the lack
of an equivalent legal obligation to comply with sustainable building requirements at the federal
level, has left it lagging behind. However, looking at the Member state requirements for nZEB
in the 2012 directive, the U.S. could benefit from adopting similar legal instruments perhaps at
the national level, state level, or at the very least the local level.
C. Cost Optimal Levels of Energy Performance Requirements: EcoDesign Directive, Re-
newables Directive: UK Compliance
According to Article 5 of Directive 2010/31/EU, the European Commission must estab-
lish a comparative methodology framework for calculating cost optimal levels of minimum ener-
gy performance requirements for buildings and building elements. Member States must take 46
necessary measures to ensure that minimum energy performance requirements are set within the
parameters of the established cost optimal level and subsequently, Member States are not re-
quired to set minimum energy performance requirements that are not cost effective. Therefore 47
the Commission Delegated regulation EU No. 244/2012, requires the setting of minimum re-
quirements to be set from either a macroeconomic perspective regarding investments in energy
The Building Regulations 2010. Conversion of Fuel and Power in New Buildings Other Than Dwellings Docu44 -ment L2B: 2013 Edition Incorporating 2016 Amendments. Department of Communities and Local Government, 2016. Article 3.25 p.10.
Parejo-Navajas, Teresa. Volume 5 1 Issue I Article 14. A Legal Approach to the Improvement of Energy Efficien45 -cy Measures for the Existing Building Stock in the United States Based on the European Experience. The Seattle Journal of Environmental Law. May, 31, 2015
DIRECTIVE 2010/31/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 19 May 2010 on 46
the energy performance of buildings, OJ 18.6.2010 L 153/13
DIRECTIVE 2010/31/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 19 May 2010 on 47
the energy performance of buildings, OJ 18.6.2010 L 153/13. Article 4 (1)
�15
efficiency, or a strictly financial perspective that only considers the investment itself. Further,
Regulation 244/2012 (2) states that national minimum energy performance requirements should
not be more than 15% lower than the outcome of cost optimal results of the calculation taken as
the national benchmark. The key legislation used by the Commission to establish this compara-
tive methodology include the Energy Performance of Buildings Directive (EPBD), the Energy
Efficiency Directive, the Renewables Directive, and the Eco-design and labeling Directive. 48
The UK was one of five Member States (France, Estonia, Germany, Portugal) that set
minimum requirements for energy performance of new buildings that were more ambitious than
the cost optimal level for their country. The UK was also one of 11 Member States whose 49
compliance with Regulation/244/2012 on cost optimal level was set at no more than above 15
%. The compliance of the UK with EPBD, Regulation/244/2012, and Directive 2009/EC on 50
Labeling and Building Design for new buildings were considered by the European Commission
to be more ambitious than the minimum requirements. This is in part, due to the fact that prior 51
to the issuing of the EPBD regulation, the UK already had set challenging energy standards for
new buildings through part L of the UK building regulations. Part L of the UK building regula52 -
tions requires that, designers consider the range of options they have available to them including,
decentralized renewable energy sources, district block heating, combined heat and power and
heat pumps, and all new buildings including dwellings must follow the Target CO2 Emission
Rate (TER). Considering that the primary intention of Directive 2009/EC on labeling and de53 -
Boermans, Thomas. Assessment of the Cost Optimal Calculations in Context of the EPBD (ENER/C3/2013-414). 48
November, 19, 2015 p. 2.
European Commission. Report From the Commission to the European Parliament and the Council: Progress By 49
Member States in Reaching Cost Optimal Levels of Minimum Energy Performance Requirements. Commission (2016) 464 finial. Brussels 29.7.2016.
See, 49. Report from Commission. Section 5.2. Brussels 29.7.201650
See,49. Report from Commission. Section 5.1. Brussels 29.7.201651
Bramhall, Jonathan. Recast of the Energy Performance of Building Regulations. Department of Communities 52
and Local Government. Impact Assessment, 08.11.2012. IA No. DCLG1051.
The Building Regulations 2010. Conversion of Fuel and Power in New Buildings Other Than Dwellings Docu53 -ment L2A: 2013 Edition Incorporating 2016 Amendments. Department of Communities and Local Government, 2016.
�16
sign was to establish a Community wide eco-design requirements for energy related products,
already having these standards included in domestic building regulations, really gave the UK a
leg up in terms of potential amendments needing to be made to building codes and standards. 54
DIRECTIVE 2009/125/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 21 October 2009 54
establishing a framework for the setting of eco-design requirements for energy-related products. Official Journal of the European Union L285/10 (31.10.2009).
�17
III. U.S. ENERGY EFFICIENCY MEASURES
A. Federal Level
Policy and programs enforced at the state level, have been the most effective means for
reducing energy consumption in the U.S. for the past several decades. However, there are feder-
al regulations in place that enforce energy efficiency requirements as well. For instance, the En-
vironmental Protection Agency (EPA) and the Department of Energy (DOE) are two federal
agencies that have joined forces in facilitating energy efficiency measures in states all across the
U.S via the creation of the State Energy Efficiency Action Network (SEE). In regards to public
buildings, the SEE is designed to help states achieve maximum cost effective energy efficient
renovations in buildings by 2020. The SEE aims to do this via the use of energy audits and retro-
commissioning practices . Other recent federal regulations include the establishment of mini55 -
mum efficiency requirements for appliances as well as types of equipment used by industries.
Prior to this, the late 1970’s was when the majority of federal laws regarding energy efficiency,
were created with the adoption of the Clean Air Act (CAA) . During this time, significant in56 -
vestments were made in the development of energy and research, the development of financial
incentives and grants, and finally the setting of energy efficiency standards. In 1976, attempts
were made to set national building energy efficient standards but it was opposed by the building
industry. Thus the 1976 legislation was transposed into voluntary guidelines that states may or
may not choose to follow. In 1990, the acid rain trading program amended the CAA creating
more ambitious requirements for the energy sector in reducing CO2 emissions and remains the
most recent federal legislation to be implemented at the national level . 57
As mentioned earlier in the previous section, had the United States ratified the Kyoto
Protocol, this would have constituted the most ambitious federal energy efficiency law in history
EPA and DOE Join States to Speed Energy Efficiency Progress in the United States, DEPARTMENT OF ENER55 -GY (Feb. 2, 2010), available at http://energy.gov/articles/epa-and-doe-joinstates- speed-energy-efficiency-progress-united- states.
Benedick, Richard. Ozone Diplomacy:New Directions in Safe Guarding the Planet. Harvard University Press, 56
1998.
Leggett, Jeremy. The Carbon War: Global Warming and the End of the Oil Era. Rutledge, New York, New York. 57
2001
�18
as treaties are the supreme law of the land. In December 2015 the U.S. did ratify the Paris Cli-
mate Agreement which some would argue is a significant leap towards more ambitious national
climate laws. However, some attendees of the Pairs conference claimed that much of the origi-
nal language in the Paris agreement had to be altered before President Obama would agree to it.
For instance, changing the words “shall” to “should” was a must because in U.S. national law,
the word “shall” is mandatory where as “should constitutes a recommendation . From a legal 58
perspective, the U.S. ratification of Paris agreement constituted a very successful set of national
recommendations rather than legal requirements. Despite the drawbacks at the national level for
green buildings, there are two policy instruments that are available; "National Action Plan for
Energy Efficiency Vision for 2025: A Framework for Change," 2008, and the Energy Efficiency
and Conservation Block Grant (EECBG) Program, funded for the first time by the American Re-
covery and Reinvestment Act (Recovery Act) of 2009. The former constitutes a set of recom-
mendations for 2025 building targets that 120 organizations thus far, have agreed to comply with.
These recommendations are not binding and therefore compliance with its measures is not
mandatory . The later provides states and local governments with information about how to ob59 -
tain funding and develop strategies for energy efficiency projects . 60
Asselt, Harro. Lecture on the December 2015 United Nations Climate Change Conference in Paris. January, 16, 58
2016.
National Action Plan for Energy Efficiency Vision for 2025: A Framework for Change, EPA (November 2008), 59
http://www.epa.gov/cleanenergy/documents/suca/vision.pdf.
Energy Efficiency and Conservation Block Grant Program, CATALOG OF FEDERAL DOMESTIC AS60 -SISTANCE https://www.cfda.gov/index?s=program&mode=form&tab=core&id=lfbO0162365c82d9b123b52-ca3a6ce43f (last visited Mar. 30, 2015).
�19
B. State And Local Level
In the United States, Codes and Standards are developed at state and local levels and it is
up to each state to develop it’s own plan for enforcement of these codes and standards as well as
plans to collaborate with utility companies to assist in compliance with these standards . Across 61
the board in the U.S, energy codes the residential sector and the industrial sector are regulated
separately. Beyond this national requirement, it is up to states/municipalities to use any existing
codes as they see fit . As the nation’s leading performer on environmental regulations, it is no 62
surprise that in 1978 California was the first state to include energy requirements in it’s building
codes.
Unfortunately, not all states have the ambitious energy saving codes that California has
implemented. There are currently 16 States whose building codes are outdated and undemanding
in their energy standards for buildings . Therefore, it is not an uncommon trend for municipali63 -
ties and local jurisdictions to develop their own building codes that, in larger cities, are often
more demanding than state codes and standards . For example, Portland’s Green Building policy 64
makes it mandatory for the new construction and major renovation of all city facilities to meet
certified Leadership in Energy and Environmental Design (LEED) standards . In this respect, 65
the standard and code requirements are not unlike those measures in the 2012 EU directive re-
garding public agencies and the necessity for them to lead by example.
Parejo-Navajas, Teresa. A Legal Approach to the Improvement of Energy Efficiency Measures for the Existing 61
Building Stock in the United States Based on the European Experience. Seattle Journal of Environmental Law. Volume 5 1 Issue I Article 14. 5-31-2015 p395
Building Codes for Energy Efficiency, EPA (Mar. 27, 2015), .http://www.epa.gov/cleanenergy/documents/suca/62
buildingcodesfactsheet.pdf.
See, 57: Parejo-Navajas, Teresa. A Legal Approach to the Improvement of Energy Efficiency Measures for the 63
Existing Building Stock in the United States Based on the European Experience, p.396
Cities for a Sustainable Future. United Nations Department of Economic and social Affairs. May, 22, 2014. 64
http://www.un.org/en/development/desa/news/ecosoc/cities-for-a-sustainable-future.html
ENB-9.01 - Green Building Policy. GREEN BUILDING POLICY. Binding City Policy. BCP-ENB-9.01. http://65
www.portlandoregon.gov/citycode/?c=34835&a=54355
�20
Due to the lack of harmonized building codes, compliance with building codes and stan-
dards is a constant issue. Most states have implemented building codes and standards intended
for new buildings, but most lack any retrofit regulations pertaining to existing buildings and it is
in this way that Portland is the exception rather than the rule for building codes in the U.S . The 66
fact that building codes and standards and compliance with them would improve if implemented
federally, is an understatement. In addition to this, if technical/financial assistance was provided
to states by the federal government, an increase in building retrofits would undoubtedly be the
result. However, given the hodgepodge nature of current U.S. building code, it is necessary to
look at the states/municipalities with the most ambitious energy efficient building standards so
that cities/states with weaker codes can aim to imitate a similar legal approach to this issue.
See, 57: Parejo-Navajas, Teresa. A Legal Approach to the Improvement of Energy Efficiency Measures for the 66
Existing Building Stock in the United States Based on the European Experience, P. 397
�21
IV. REGULATORY INSTRUMENTS IN THE U.S.
The main regulatory instruments that a state can set are codes and standards that are gen-
erally determined via the auditing method discussed above. The stands set minimum efficiency
requirements for new buildings and buildings undergoing renovation. These codes and standards
are helpful in that they set baseline requirements however, they generally focus on one area of
energy performance (such as thermal resistance) rather than the performance of the whole build-
ing . A more multidimensional approach to setting codes and standards would be through 67
benchmarking.
Benchmarking constitutes the comparison of the energy performance of a building or
building type to another building or building type. Benchmarking is a more progressive form of
estimating a building’s energy consumption than it’s counterpart, baselining. Baselining simply
looks at a single building’s current energy performance and compares it with it’s past perfor-
mance. While the latter only looks to one building as an indication of improved energy perfor-
mance, the former is inclusive of best practice buildings, thereby providing more information to
the engineers/architectures involved in the retrofit process . Energy Performance Indicators 68
(EPI) and Energy Use Intensity (EUI), both of which calculate the amount of energy used per
floor area. Once the data has been collected on the energy performance of a building, a database
is created via audits . Under European regulation, “energy audits are systematic procedures 69
used to identify, quantify and report existing energy consumption profiles and energy saving op-
portunities in buildings, industrial or commercial operations or instillations, and in private or
public services.” As a part of Energy Management Systems, energy audits are included in plans
that establish energy efficiency objectives and strategies. The fiscal advantage of doing a de-
tailed energy audit is that it informs building owners about pay-back periods that would result
BenchMarking and Energy Savings:Data trends EnergyStar Portfolio Manager. https://www.energystar.gov/ia/67
business/downloads/datatrends/DataTrends_Savings_20121002.pdf?3d9b-91a5
Building Energy Use Benchmarking Guidance. EISA SECTION 432 – Benchmarking of Federal Facilities (42 68
U.S.C. 8253 Subsection (f), Use of Energy and Water Efficiency Measures in Federal Buildings) April 15, 2010
See, 57: Parejo-Navajas, Teresa. Legal Approach to the Energy Efficient Measures for Existing Building Stock in 69
the United States Based on the European Experience p.363-365
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from energy improvements. Once the energy performance of a building is measured, it is classi-
fied based on it’s level of performance the minimum of which, is set by law. The best practices
level is defined as a reasonably achievable level of energy performance with a quality design and
practice and the practical use of subsidies . Finally the state of the art level describes the maxi70 -
mum level of energy performance to be achieved in future with the best available technology.
Once the energy performance level and measures for improvements of a building have
been identified via audits, the next phase is the implementation of the identified best measures.
Compliance and enforcement of best practices will help ensure this implementation and thus acts
as a promising source of leverage for the regulatory sector. Regulatory instruments are currently
one of four main instruments for promoting energy efficiency in buildings at the global level.
The other three instruments for promoting energy efficiency in buildings are, economic and mar-
ket based instruments, financial instruments and incentives, and support information and volun-
tary actions.
A. Special Districts
Special Districts are the most common, and perhaps the most obscure form of local gov-
ernment in the United States. They consist of members business/property owners residing within
a certain territory who pay taxes that go towards the overall objective of that specific district.
Like all other forms of government, non-profits and government bodies residing within a special
district, are exempt from taxation. Special districts can range from water districts to fire districts,
and it is not uncommon to be residing in an area where these districts overlap one another . 71
The bulk of the ridicule regarding special districts, concerns two areas. The first area is
related to inaccurate budget reporting on the part of the respective department to which the spe-
cial district is concerned. There have been cases where water departments have over reported the
T. Nikolaou, D. Kolokotsa & G. Stavrakakis, Review on Methodologies for Energy. Benchmarking, Rating and 70
Classification ofBuildings, 5 ADVANCE IN ENERGY RESEARCH no. 1, at 53 (2011).
Saiger, Aaron. Local Government as a Choice of Agency Form. Ohio State Law Journal. Volume 77:2. http://71
moritzlaw.osu.edu/students/groups/oslj/files/2016/06/Vol.-77_2-423-456-Saiger-Article.pdf
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amount of water consumed within that territory, to fire fighters using excess funds on alcohol and
recreational drugs. The second area of complaint has been made by residents who are paying a
disproportionately higher amount of taxes than their neighbors across the street, whose property
value may be the same, yet whose address lies just outside of the territorial boundary of that dis-
trict . Despite these shortcomings however, many special districts are designed to meet de72 -
mands that are specific to the needs of the community concerned. It is in this way that special
districts would be beneficial to the installation of renewable technology on public buildings.
Like other forms of government, special districts have the ability to issue bonds which, as
discussed earlier, are an effective means to installing renewable technologies within communi-
ties. In addition to the financial benefits that result from special districts, another obvious benefit
is the fact that they are assigned to only one task where as municipal governments are responsi-
ble for carrying out and overseeing a multitude of tasks . Board members of special districts are 73
often experts in the related field. Many special districts have been criticized for not being suffi-
ciently transparent as well as failing to make the public sufficiently aware of elections. However,
some states like California have made strong efforts to demand that these districts be more trans-
parent. Core legal changes that must occur in order to promote community scale renewable in-
stallations. For instance, state legislatures and utilities must recognize communities as producers
of energy i.e. redefining the utility consumer relationship. At present, most public utility laws do
not address community scale generation with multiple end users. 74
Oliver, John. Special Districts: Last Week Tonight (HBO). March, 6, 2016. 72
The U.S Census Bureau defines "special district governments" as “all organized local entities (other than counties, 73
municipalities, townships, or school districts) authorized by state law to provide only one or a limited number of designated functions, and with sufficient administrative and fiscal autonomy to qualify as separate governments; known by a variety of titles, including districts, authorities, boards, and commissions." See Federal, State, and Lo-cal Governments, Definitions, U.S. CENSUS BUREAU, http://www.census.gov/govs/definitions/index.html#s. See also DAVID L. CALLIES ET AL., CASES AND MATERIALS ON LAND USE 682 (5th ed. 2008) (suggesting fund-ing of distributed solar through, among other solutions, "special district assessments").
Wiseman, H. - Brownin, S. Community-Scale Renewable Energy. p170. 4 San Diego J. Climate & Energy L. 74
2013.
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For states that prohibit production of energy that are not produced by public utilities,
must form innovative business structures or modify existing ones. Legal experts have identified
three enterprise types that could potentially achieve this and they include: energy improvement
districts and cooperatives in existing neighborhoods, and homeowners associations in new sub-
urbs. All three of these models present opportunity for self governance by end users (this is the 75
key to harmonious allocation of limited common resources such as shared energy.) Community
scale renewable energy in an existing neighborhood is difficult because of the legal and physical
infrastructure associated with the buildings, roads, etc. in that community, are complaint with
existing standards and codes. This is where creating a special district, in this case an energy dis-
trict, would act as a very effective means for updating energy requirements within a specific
community. In other words, requiring the participation of all citizens and businesses in a special
district in a publicly governing institution is one option to jump this hurdle. Another approach
that is similar to the special district concept, is a community co-operative. The primary differ-
ence between the two is that the latter is best defined by making participation voluntary with par-
ticipants opting into a private co-op situation, where as the former constitutes mandatory partici-
pation . 76
B. Energy Improvement Districts
The arrangement in an EID is a special district that would require all of those within the
area served by a renewable energy project to participate financially or otherwise in a way that is
proportionate to their interest in the project EID’s provide the members with the power to ac-
quire, install, and operate community scale renewables in a manner that is consistent with exist-
ing state public utility laws. Being a member within an EID, allows participants to acquire
common space and fund and maintain a solar array, wind turbine or what have you. Another op-
tion alternative to acquiring common space, would constitute the EID’s themselves purchasing
Wiseman, H. - Brownin, S. Community-Scale Renewable Energy. p171. 4 San Diego J. Climate & Energy L. 75
(2013).
See, 70: Wiseman. Community-Scale Renewable Energy. p17276
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and maintaining collectively owned individual equipment for rooftops backyards etc. Partici-
pants pay into the EID through a tax based on their energy usage, ability to pay, average of prop-
erty ownership, number of end users or any similar criteria. EID’s operate under a resident con-
trolled district council with the authority to plan and implement energy projects.
Once certified, an EID would be able to obtain start up funding that would go towards the
formation of a council which is tasked with putting together community scale renewable
projects. The utilization of shared public space such as schools, parks, and buildings, is one of
the key criteria for EID projects . Examples of such projects include; “supporting projects to 77
install solar panels on schools and other community institutions, turn brown-fields into solar
farms, or develop community-owned wind farms. 2. An EID could make seed capital available to
a worker-owned cooperative that conducts energy audits and retrofits for residences, government
facilities, community institutions and small businesses. 3. An EID could offer incentives for
clean energy companies to locate within its boundaries if they agree to hire locally and pay living
wages. 4. An EID could help build the capacity of residents to engage in energy planning and
business development through training and technical assistance.” Mandatory aspects of EID
takes care of free rider problem as all members are financially contributing to energy upgrades.
modeled on a business problem that addresses the collective action problem, in the land use con-
text business improvement districts (BID) over 1000 BID’s in the U.S. working on improvement
of aesthetics and security that go beyond what was provided for by the municipality . 78
In regards to the procedure for establishing a BID, city council members must approve
plan that is created: once a bid is established a board of directors is elected to oversee the imple-
mentation of the plan and all property owners within the territory are members and must pay tax
for the upkeep in the area. Any unwilling members may still be forced to pay these taxes but
Giancatarino, Anthony. Energy Investment Districts (EID’s): Policy Concept Paper. Center for Social Inclusion. 77
New York, New York. June, 4, 2014.
Indeed, the ability for neighborhoods to allocate their own resources is seen as one of the greatest benefits 78
of the BID form. See, e.g., Richard Briffault, The Business Improvement District Comes of Age, 3 DREXEL L. REv. 19, 22 (2010) ("[Tlhere is great value in an institutional form that allows neighborhoods to raise addi-tional revenue from property owners or businesses within the community to be used to finance programs for and activities within the community, rather than to depend entirely on city hall for public services").
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usually have option to object and are given notice before BID is established. In NYC there are
currently 64 BIDS and in these districts, government and non-profit owners pay no fees and resi-
dents pay lower fees than business owners. The BID legal model could potentially be a very ef-
fective institutional non-commercial model for retrofitting buildings in old neighborhoods in
what are called, Block-level Improvement Districts. At present, BLID’s are not authorized on a
nationwide basis, but it is an interesting concept that some states and municipalities could ex-
plore the legal limitations of this model further . In theory both BIDs and BILDs could provide 79
energy resources themselves: Portland But more productive application would be via the creation
of EID’s which would deal exclusively with energy and be authorized explicitly to own energy
structures and sell energy.
In 2007, the state of Connecticut issued Ordinance 1077 which, authorized any munici-
pality within the state to establish an Energy Improvement District whereas the effort is to in-
crease the efficiency and reliability of energy sources and further the interests of commerce and
industry. This act allows the board (Mayor, and four members which, he appoints 2 serving 2 80
year terms and 2 serving 4 year terms) to determine the location, type size, and construction of
the distributed resources in the district and must be approved by municipal, state and federal
agencies . Make plans for developing and operating these resources and for coordinating its 81
facilities with public and private agencies.
In regards to the impact that EID boards have on public buildings, the municipality may
allow the board to use, maintain, and operate its property. As of March, 2016, the EID board
meeting discussed the renovation of light fixtures in Stamford city schools as well as plans for
the installation of combined heat and power. Similarly, the EID in Bridgeport, Connecticut met 82
on March, 27, 2012 to discuss plans for the construction of an aerobic digester and cogeneration
Ellickson, Robert C. New Institutions for Old Neighborhoods, 48 DuKE L.J. 75, p. 77-78 (1998). 79
City of Stamford, Connecticut. Ordinance Number 1077 Supplemental Amending Chapter 119, Energy Improve80 -ment District. LR28.061, 11.7.2007.
See, 80. Ordinance Number 1077, Section 2.81
City of Stamford,Connecticut. Energy Improvement District Board Meeting, 15.03.2016. Stamford Virtual Con82 -ference Room.
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system at their West side waste water treatment plant. Likewise, in June, 2010, the city of Ore83 -
gon in Northwest Ohio established an Energy Special Improvement District (ESID), acting with-
in the authority of Senate Bill 232. The pilot project for this ESID consisted of the installation 84
of a geothermal heat pump on the city’s local fire station.
C. Cooperatives:
As noted previously, Cooperatives are a private and voluntary alternative to the public
mandatory EID. This would translate into an electric coop where members build own and main-
tain the renewable energy infrastructure as well as paying in based on the amount of energy used.
State laws for the creation of coops vary generally have 4 princes; The first principle is democ-
ratic ownership and control by users, the second principle is limited returns on capital, the third
is return of benefits or margins to users on the basis of use, and the fourth is having the obliga-
tion of user-owner financing. One person, One vote regardless of the amount of money is in-
vested, and not acting as investment vehicles but instead is helping group of individuals reach
common business goals. The third and fourth principles address the for the members, by the
members, approach to any co-op organization which put simply, cannot be run on purely profit
maximizing purposes. In the energy cooperative regulatory scheme, the coop would purchase 85
City of Bridgeport, CT Energy Improvement District. Anaerobic Digester Community Meeting, March, 27, 2012 83
5:30 PM.
Bricker & Eckler LLP. City of Oregon Establishes an Energy Special Improvement District as Part of the North84 -west Ohio Advanced Energy Improvement Corporation. Lexology, USA, September, 21, 2012.
U.S. DEP'T OF AGRICULTURE, COOPERATIVE FINANCING AND TAXATION 6, available at http://85
www.rurdev.usda.gov/rbs/pub/cirlsec9.pdf (summarizing "[t]he 8 percent [limitation on dividends] is a historical level contained in many State laws").
, e.g., Mo. REv. STAT. § 394 (2012) (dealing with the creation and requirements for rural electric cooperatives); S.C. CODE ANN. § 33-49-250 (2012) (defining the powers of the cooperative, including to "generate, manufacture, purchase, acquire, accumulate, and transmit electric energy and to distribute, sell, supply, and dispose of electric energy to its members"); OKLA. STAT. ANN. tit. 18 § 437.1 (West 2012) (stating: "Cooperative, nonprofit, mem-bership corporations may be organized under this act for the purpose of supplying electric energy and promoting and extending the use thereof in rural areas").
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and maintain its equipment and distribute to its members. At the same time, its non profit status
would likely gain the approval of public utilities because it would not be viewed as a competitor.
Few coops other than rural electric coops, focus specifically on the provision of energy.
The primary reasons for the limited use of energy co ops are due to limit on profit which
limit interest from typical renewable energy companies and investors also the fact that profits are
divided based on member use rather than investment, also deterring for profit investment. Like
governments, coops also do not benefit from tax credits. Despite limits on business structure for
energy, several community solar projects have adopted the coop mechanism. i.e solar pioneer II
project in Ashland, Oregon: citizens and business purchase upfront, one quarter, one half, or full
solar panel increments and now receive payment for the value of the corresponding energy pro-
duced over a 20 year term as well as rights to renewable energy credits. Another example of a
functioning energy co-op is the Colorado Clean Energy Collective which, allows individuals to
own solar panels directly in a community solar farm. While, some communities are hesitant to
sell shares into such projects due to concerns about state and federal securities regulations, non-
profit coop structures may provide exemptions from these regulations. In summation, coops
work best where renewable projects are purely community based and the financial capacity of
members is for the most part equal. At the same time however, the provision of energy rather
than the maximization of profit, must be the end goal.
D. For New Sub Divisions:
Upon the creation of an new sub division, developers advantage over property owners in
existing neighborhoods; do not have to impose new institutions on residents. Can establish in-
stead upfront common fees for construction and maintenance of renewable infrastructure. by
doing this developers are binding future residents to community scale energy while placing them
on notice of their fees and their purpose. can avoid inequitable cost structure based on resident
home size or other income proxies; EID’s can use similar varied fee structures but they must first
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be approved by the city government . The Home Owners Association (HOA) is a natural vehi86 -
cle for overseeing and funding the operation of community renewable infrastructure. A HOA is
equivalent to the board of directors in BID’s in that, they collect monthly annual fees from all
residents. The kind of rules an HOA is authorized to make include: with respect to homeowners
usage of energy produced and what state and federal laws bind an HOA with respect to their sale
and distribution of energy. In addition to this, HOA’s can identify the state specific rules that per-
tain to these legal areas and modify them to allow for HOA’s to finance or participate in renew-
able energy projects. This is the first step in ensuring that the HOA formed, may be used for
community scale renewable energy. States that do support community scale renewable energy
must prevent HOAs from banning distributed renewable equipment . 87
In many respects, it is Easier to form the BIDs because they do not require municipal or
property owner approval. This is because of covenants conditions and restrictions (CC&R’s) as
they are already established before property owners approve their lots. Simultaneously, munici-
palities increasingly require the establishment of HOA’s by developers to ensure that streets and
other subdivision infrastructures, will be maintained and paid for by subdivision residents rather
than the city. One problem would occur if the owners of lots within subdivision have a highly
differing income then it is likely that uniform fees would seem unfair. This problem is reduced in
BIDs as here, there is in place the reduction or elimination of fees for governments or non-prof-
See, Wayne S. Hyatt & JoAnne P. Stubblefield, The Identity Crisis of Community Associations: In Search of 86
the AppropriateAnalogy, 27 REAL PROP. PROB. & TR. J. 589, 599 (1993)
("A community association is an automatic, mandatory membership organization. That means that all owners of property subject to the covenants creating the community association automatically become members of that associ-ation by virtue of taking title to that property. They must remain citizens of that association subject to its governing and taxing powers so long as they remain owners." )
Kristina Caffrey,. The House of the Rising Sun: Homeowners' Associations, Restrictive Covenants, Solar Panels, 87
and the Contract Clause, 50 NAT. RESOURCES J. 721, 725 (2010).
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its. When properties are not homogenous, CC&Rs can include carried fee assessments that ac-
count for income differences. 88
The extent to which counties allow for zoning codes for instance, in San Diego the zon-
ing regulations were recently broadened for unincorporated areas looking to support community
scale renewables. Previously, the county required any such projects to obtain a major use
permit. This legal change is crucial to the implementation of community scale renewable 89
projects in existing neighborhoods simply because if zoning codes are too narrow, individuals
should apply for interconnection specifying technical interconnection standards and requiring
utilities to indicate interconnection status on the internet. This would standardize the intercon-
nection process for small scale renewables. Once this is standardized, the next thing communi-
ties must consider is the extent to which its structures are designed to undergo renewable installa-
tions such as, building accessibility to sunlight and other things of that nature.
Easements have been an effective mechanism for ensuring that there is adequate air quali-
ty, sunlight, or similar conditions, so that property owners may have a right to open a block of air
on neighboring properties. Easements vary based on the property laws within a city or state and
can either be imposed on neighbors or they can be private where legislation allows property
owners to include restrictions in their deeds . No matter what their form, easements enable 90
Winokur, JamesL.Choice, Consent, and Citizenship in Common Interest Communities, in COMMON INTEREST 88
COMMUNITIES: PRIVATE GOVERNMENT AND THE PUBLIC INTEREST p.87, 89 (Stephen E. Barton & Car-ol J. Silverman eds., 1994).
See, e.g. Ellickson, Robert C. Cities and Homeowners Associations, 130 U. PA. L. REV. p.1519, 1522, 1524 (1982) (differentiating HOAs from other "governments" in that in HOAs, homeowners voluntarily subject themselves to rules by moving to the community).
Wolf, Michael Allen. A Yellow Light For "Green Zoning”: Some Words of Caution About Incorporating Green 89
Building Standards into Local Land Use Law, 43 URB. LAW 949, 961 (2011) (citing ADVISORY COUNCIL ON HISTORIC PRESERVATION, SUSTAINABILITY AND HISTORIC FEDERAL BUILDINGS 17-19 (May 2, 2011),
IOWA CODE § 564A.3-A.4 (2012) (allowing a "city council or the county board of supervisors" to "designate a 90
solar access regulatory board to receive and act on applications for a solar access easement" and allowing property owners to apply to the border for "an order granting a solar access easement").
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communities to build renewable instillations in areas with existing buildings and since this is the
end goal, communities must explore what form would apply to them.
An even more affirmative route than easements for the installation of renewables, would
be via the requirement for the construction of renewable infrastructure in infill development.
Zoning codes can mandate that renewables be installed or that at least the proper hookups are
installed to facilitate these installations. Cities also have the ability to require that developers
install dwelling units so that a solar energy system may be installed and future property owners
have the ability to negotiate with developers about purchasing said units. These same require-
ments could also be imposed on existing neighborhoods and demand that retrofits be consistent
with the best practices outlined by the EPA, for energy ready homes program . 91
The legal measures that can be taken by municipalities are related to zoning and planning
requirements on the part of developers. As stated previously, municipalities can require that de-
velopers of new buildings or subdivisions zone construction so that there is sufficient access to
sunlight and that renewable technology be part of the building plan in order to produce Net Zero
buildings. However, it is possible for local governments to overstep their legal bounds here at
the national level.
For instance, the U.S. Supreme Court ruled that any conditions developers are required to
meet by local governments must prove that any conditions attached to zoning permits must be
proportional to the impacts of the project and the conditions imposed. This matter was brought
to the court under two separate cases, Nolan v. California Coastal Commission, and Dolan v. The
City of Tigard . In the latter case, the court found that government agencies may not require 92
that people surrender their constitutional rights in exchange for discretionary benefits where the
property sought has little or no relationship to the benefit concerned. Here a small business own-
er was looking to expand her business on property that she owned and would only be granted a
Solar PhotovoltaicSpecification, Checklist, and Guide, U.S. ENVTL. PROT. AGENCY, http://www.energystar.gov/91
ialpartners/bldrs lendersraters/rerh/docs/Renewable EnergyPV.pdfVOa3e-05ee (last visited Apr. 12, 2013).
Some states currently do not apply Nollan and Dolan to impact fees, although this doctrine may change. See, e.g., 92
St. Johns River Water Mgmt. District v. Koontz, 77 So.3d 1220 (Fla. 2011) (finding that Nollan and Dolan are only applicable where the condition sought involves a land dedication).
�32
permit by the city of Tigard if she were to dedicate part of her land to a greenway/bike path, to
help achieve the city’s goal of reducing traffic congestion. However, the court found that the
dedication requirements were not related to the development of her business and thus constituted
an uncompensated taking of her property therefore violating the fifth amendment. So if a district
or municipality is seeking to promote renewable instillations via permit requirements, they must
first provide a numerical estimation of climate impacts related to carbon emissions, heating and
cooling of buildings, or what have you, that would be significantly reduced by renewable energy
installations.
Alternatively, the Nollan v. California Coastal Commission case outlines the courts
views on the use of easements by local authorities. Previously mentioned were the ability of lo-
calities to use easements of light and air as a means to promote solar and wind installations. In
addition to this, there are three other types of easements recognized by common law courts and
they are; easements of right-of-way, easements of support, and easement rights pertaining to arti-
ficial waterways.
In common law courts, easements themselves are considered property rights in that, they
are meant to protect the right of persons to have access and enjoy land other than land that is
owned by them. In the Nollan case, the right of way easement was imposed by the California
Coastal Commission (CCC) onto all property owners along Ventura County beaches, including
the Nollan family . The CCC required that the development of homes along the ocean front, 93
must dedicate a strip of land along the beach front so as not to deny the public access to the
beach. The court ruled in favor of the Nollan family arguing that there must be a close nexus
between the regulatory conditions imposed and the development impacts of concern and that the
regulatory action must substantially advance legitimate state interests.
The Former Supreme Court Justice Scalia, found that that the public access condition did
not meet the nexus test by compensating for the slight loss of view that would occur with the de-
Nollan v. Cal. Coastal Com'n., 483 U.S. at 825 (1987). The California Coastal Commission required own93 -ers of beachfront property wishing to obtain a building permit to maintain a pathway on their property open to the public. Faria Beach, Docket No. 86-133, State Appellate Court. 177 Cal.App.3d 719, 223 Cal. Rptr. 28, reversed.
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velopment of the Nollan’s property. Upon this ruling, a local authority wishing to use easements
in efforts to reduce impacts on climate change, that authority must show that the interest is suffi-
ciently connected to the requirements of renewable construction . The interpretation of ease94 -
ments could potentially become more lenient depending on the next Supreme Court justice who
is appointed. However, if the next justice is appointed under a republican administration this No-
vember, it is likely that current interpretations will stand and localities will have to be mindful of
the language that they apply regarding the conditions of easements.
Dolan, 483 U.S. at 391 (requiring an "individualized determination" of 94
impacts but not a "precise mathematical calculation").
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V. FINANCIAL INSTRUMENTS AND INCENTIVES:
A. Environmental Finance
The main goal of environmental finance is to bring the greatest amount of environmental
good to the greatest number of people at the lowest possible cost. Having not ratified the Ky95 -
oto protocol into the United States federal legislation, has been without a doubt the greatest legal
challenge in the U.S, in terms of achieving this goal at a national level. This is because in the 96
U.S, treaties are the supreme law of the land and had it been ratified, every state would have
been legally required to comply with its energy targets, including those related to the energy per-
formance of buildings and mandatory requirements for renewable energy installations.
Alternatively in the U.K, as a member of the EU, they are required to comply with all
treaties, directives, and regulations implemented by the European Union, therefore making the
implementation of laws on the energy performance on buildings, much more effective at the na-
tional level. Since the policies that facilitate these environmental projects are enforced weakly at
the federal level in the U.S, it has been and continues to be, up to state and local authorities to
put policy in motion. Prior to the 2008 market crash, Berkley, CA came up with what is likely the
most successful model for governments doing solar instillation at the local level and that was the
Property Assessed Clean Energy program or PACE. This plan comprised the city of Berkley
buying solar panels for homes via the issuing a municipal bond and getting repaid by placing tax
assessment on home owners property.
The average life span of a solar panel is 20 to 25 years, so the government would issue a
20 year bond. The idea behind this plan is that the fact that governments, unlike individuals,
have very good credit and are able to get the lowest possible interest rates no matter how good
someones credit may be. In addition to low interest, governments are also able to issue bonds
over a much longer period of time than a private individual could. This is crucial to the goal of
Curley, Michael. Finance Policy for Renewable Energy and a Sustainable Environment. CRC Press, Taylor and 95
Francis Group, Boca Raton, FL (2014).
Kyoto Protocol to the United Nations Framework Convention on Climate Change, Kyoto, 10 December 1997, in 96
force 16 February 2005, 37 International Legal Materials (1998) 22. (Kyoto Protocol).
�35
environmental finance because longer terms equate lower payments and therefore greater incen-
tive for doing the instillations.
Eventually other cities and states began to adopt similar legislation to the PACE program
because it was virtually painless. For one, it was completely voluntary so an increase in taxes
was a product of consensus. Secondly, both the improvement and the assessment go with the
property so if the house is sold to a new owner, they reap the benefit and pay their fair share.
Finally the extended term limit made it easier for a wider spectrum of individuals to be party to
the program. Unfortunately, the housing market crash brought this to a grinding halt when the
Federal Housing Finance Association when they recognized that solar lien’s actually took legal
precedence over mortgages owned by the government sponsored enterprise, Fannie Mae who
was loosing billions of dollars a month at the time. The order issued to Fannie Mae to stop buy-
ing mortgages with solar liens on them still stands. While this put a damper on residential instil-
lations, the FHFA ruling did not apply to public land, obviously . So going back to the initial 97
goal, greatest environmental good at lowest cost, to what extent could governments utilize their
assets (long-term bonds and low interest rates) on their own buildings; schools, jails, libraries
etc.
Many cities in the U.S. have entered into a Power Purchase Agreement (PPA) for a solar
system on top of their land. The solar contractor will use city land to construct the array, in ex-
change for long-term, low electricity rates. This will in turn help keep rates low for customers
and with an significant amount of annual savings from reduced energy costs. The city will also
have the option to purchase the system at fair market value after 20 years. At the same time
states are cutting their energy bills by a significant amount and private entities are getting the
federal tax incentives that governments cannot, allowing for the lowest solar overall solar price.
The problem is that PPA’s are only legal in half of the U.S. which, illustrates the problem with a
lack of federally harmonized laws regarding renewable energy. Third parties break through the
cost barrier of instillations and if they are legally prevented from interjecting, then it makes it
much more difficult for these instillations to occur.
See, 95: Curley, Michael. p. 20-2897
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B. Federal Bonds and Third Party Ownership
Third party ownership has been established as a financing solution for renewable instilla-
tions in the United States and for many public buildings across the country, it has been a catalyst
for offsetting up front instillation costs as well as subsequent maintenance costs. Despite it’s po-
tential, third party ownership does face significant challenges in several states . Other states 98
such as California however, have implemented solutions to combat these challenges. One major
challenge to Third party ownership Through PPA’s pertains to the state’s definition of an “Elec-
tricity utility includes seller of electricity” where California’s Solution was to exempt non-con-
ventional generation (including solar) from definition of electrical corporation or public utility.
Alternatives to PPA for third party ownership for public buildings include solar leasing, Clean
Renewable Energy Bonds (CREB’s), and Utilities as contract intermediaries . 99
The solar leasing model was adopted in St. Louis County, Missouri and has proven to be
a success. Here the Parkway school district installed solar arrays on all 28 of its schools at no
upfront cost through a 20 year lease which has cut the district’s energy costs significantly (an es-
timated $1 million over the course of the lease. The fixed lease rate allows aids the district in
realizing cost savings as utility rates increase over time. Operations and maintenance are not the
responsibility of the school since the system is owned by a third party. While Parkway school
district exemplifies the benefits of this approach, critics of the Solar leasing model argue that al-
Cory, Karlynn. “Don’t Be a Party Pooper! How States can attract Third Party PPA Financing” https://financere.n98 -rel.gov/finance/content/don%E2%80%99t-be-party-pooper-how-states-can-attract-3rd-party-owned-ppa-financing 02/08/2010
Internal Revenue Service (IRS). IRS Announces New Clean Renewable Energy Bonds Allocations: Notice 2009-99
33. Last Updated (15.02.2017) www.irs.gov.
Munis and co-ops may apply to the Internal Revenue Service (IRS) for clean renewable energy bonds (CREBs) to help finance renewable projects, which have traditionally been smaller projects. CREBs, an alternative to tax-ex-empt bonds, are a financing instrument with a structure similar to a tax-exempt bond except that the federal govern-ment provides the investor with a tax credit in lieu of an interest payment (Cory, Coughlin, and Coggeshall 2008). A recent allocation and authorization of $800 million in CREBs funding (H.R. 2008) makes this option again available to state and local governments, co-ops, and munis, each of which receives one third of the allocation.18 While this structure has some challenges (Cory, Coughlin, and Coggeshall 2008), Congress updated the CREBs structure in October 2008 in an attempt to address a number of the drawbacks.
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though solar leasing avoids the retail cost of electricity, this model creates challenges for the use
of federal tax credit and accelerated depreciation.
Clean Renewable Energy Bonds are another aforementioned strategy that are designed
exclusively for states and municipalities that want to install solar PV on government property.
Critics argued that some projects may be too large to qualify under the initial 2005 round howev-
er, project size was not a factor in the CREB 2009 round. Unfortunately project owners had to
apply by August 2009 to secure a CREB allocation. However, Another application round for
CREB’s was opened on March 5 2015, where the federal government made 1.4 billion USD for
new CREB’s where applications were taken on a first come first serve basis and applicants in-
cluded government bodies, cooperative electric companies, and a closed end application period
for public power providers. This new CREB application round was validated under §54C(a) 100
of the Internal Revenue Code which, provides guidance on application requirements and forms
for request of volume cap allocation; the methods that the Department of the Treasury and the
Internal Revenue Service will use to allocate the remaining volume cap. 101
CREB’s were created under the Energy Tax incentives of 2005 and by 2009, the CREB
allocation was increased by $1.6 billion bringing the total of New CREB’s to $2.4 billion . Un102 -
der this program the investor receives a type of tax credit bond from the U.S. Department of the
Treasury rather than an interest payment from the issuer. In many cases however, the tax credit
provided to investors has proven insufficient and investors have required issuers to pay supple-
mental interest payments or issue their bonds at a discount. The lesson here is that Tax credit
bonds differ greatly from tax-exempt municipal bonds. The latter constitutes the issuer making
cash interest payments and the federal government exempts this interest from the federal taxes
which, allows investors to offer bond rates that are lower than that of corporate bonds of similar
credit rating (remember the PACE program).
Internal Revenue Service. IRS Announces New Clean Renewable Energy Bonds Allocation. IRS.gov 100
04.03.2016
Internal Revenue Service. Part III-Administrative, Procedural, and Miscellaneous: New Clean Renewable Ener101 -gy Bonds. Notice 215-12. 2015, Section 1.
Kollins, Kathrine - Speer, Bethany, - Cory, Karlynn. Solar PV Project Financing: Regulatory and Legislative 102
Challenges for Third-Party PPA. System Owners P.43. National Renewable Energy Laboratory (2010).
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On the other hand, Tax credit bonds under which CREB’s operate, constitute the federal
government providing the investor with tax credits instead of interest payments from the borrow-
er. Unlike tax-exempt bonds, CREB’s are considered taxable income according to the IRS. In
addition to this, the benefit of long term tax-exempt municipal bonds does not apply here since
under the CREB longer terms translates into increased cost to the Treasury Department, bond
term limits are set at a maximum of 14 to 15 years. In theory, this approach subsidizes municipal
borrowing entirely. The plus side to this approach was that it avoided technology bias and eligi-
ble projects included facilities generating power from a variety of sources, including solar and
geothermal. CREB’s also proved to offer public entities lower cost financing than traditional
municipal bonds . Applications for this bond must be prepared in the same format as the form 103
and must be submitted by a qualified issuer i.e. government body, cooperative electric company,
public power provider, clean renewable energy bond lender, and a non-profit electric utility
which has received a loan or a loan guarantee under the rural electrification act. There were 104
17 states (government bodies) that were allocated CREB’s yet of these states, California had the
most projects by far the majority of which, were issued by school districts within various cities
across the state. 105
Another approach to third-party ownership mentioned above, were the Utilities acting as
contract intermediaries. In states like North Carolina where utilities are monopolized and third
party ownership is not allowed, Utilities may act as contract intermediaries . Under this 106
arrangement the third party owner sells power from the solar PV system back to the utility
which, then sells the power back to the site host/end user. However, third parties are likely to be
dis-incentivized to deploy solar PV technology in states where where there is potential regulatory
See, 99. IRS Guidance 103
See, 95. Internal Revenue Service, 2015, Section 3.02(a). 104
Internal Revenue Service. New Clean Renewable Energy Bonds-2009 Allocations: This Schedule Allocates New 105
Clean Renewable Energy Bonds Among Qualified Issuers
Kollins, Kathrine. Solar PV Project Financing: Regulatory and Legislative Challenges for Third-Party PPA Sys106 -tem Owners. National Renewable Energy Laboratory. February, 2010
“Utilities as Contractual Intermediaries: A utility may act as a contractual intermediary.Under this arrangement, the third-party owner sells power from the solar PV system to the utility, which, in turn, sells the power back to the site host/end-user”
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uncertainty or if net metering is prohibited in that state. Another downside to this approach is
that the host building is not benefit from the power generated onsite and is therefore still required
to pay electricity costs to the utility.
At present, the use of PPA’s are the fastest growing financing model for non-residential
solar PV instillations, and took over all other financing models in 2008 . The third party PPA 107
model constitutes a customer hosting property where the instillations will take place and signing
a PPA with the project developer. The developer builds, owns, and operates the system at the
host site and then sells the electricity back to the customer via the long term PPA. Under this
model, the customer reaps the benefits of solar power while also dodging the upfront capital cost
of instillation. The capital costs are placed on the generator because it is an entity that is designed
to capture available tax benefits. In addition to tax benefits, other incentives for developers un-
der a PPA model include electricity sales, the sale of environmental attributes (REC’s), cash in-
centives, and state and federal tax incentives that constitute a return for paying for the project up
front. Customers wanting to avoid any up front costs entirely, generally will pay more for elec-
tricity. As discussed earlier with the PACE program, the biggest deterrent for renewable instilla-
tions is the high upfront costs. Therefore the greatest benefit of a PPA model is that it offsets the
up front cost challenge and recognizes that most people are more equipped to make payments
over time rather than a large initial payment all at once.
Under the right circumstances, the PPA third party ownership model has great potential
for facilitating solar instillations on public buildings. However, developers wanting to approach
third-party ownership using the PPA model, must take into consideration whether or not the state
has a regulated or deregulated electricity market or a hybrid of both . In regulated states where 108
See, 106. Kollins,Kathrine. “The third-party PPA model is quickly becoming the financing method of choice 107
across a wide range of PV generation market segments (Frantzis et al. 2008) and is even finding a niche in the resi-dential and federal markets. However, use of this finance model may be inhibited if it conflicts with state legislation and regulation that was established before third-party ownership was used to finance renewable energy projects.”
See, 70. Nickokalou, T. P. 4. Oregon, 2007. 108
“In states with regulated, vertically integrated utilities, third-party owners of PV must understand the regulatory framework within which they operate. First, the state’s definition of a utility maybe problematic. In some states, selling power to an end-use customer may mean that the third party provider would be considered a utility and there-fore need to be regulated by the utility regulators. In a few states with ample incentives or REC markets, the third-party owners have tried to get the regulations or laws changed”
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utilities are monopolized and customer choice is not an option, third party ownership may not be
permitted. In states like Texas with co-op utilities and municipal utilities, do not open their terri-
tory to competition and are regulated by their cities and have a different set of rules and regula-
tions than IOU’s. Alternatively, in states like California where electricity markets are a hybrid of
regulated and deregulated, developers will want to consider how that state defines a utility and
subsequently, whether or not it will be regulated as such. In addition to this, a developer will
want to know whether or not net metering is permitted in the state and if it is not, developers
should consider this a deal breaker.
In order for PPA’s to be effective, California had to make some adjustments to how a util-
ity would be defined. California public utility code 218 states the following: “A corporation or
person employing cogeneration technology or producing power from other than a conventional
power source for the generation of electricity solely for… the use of sale for not more than two
other corporations or persons solely for use on the real property on which the electricity is gener-
ated.” This stipulation not only makes allowances for developers to sell electricity to residential
customers, but also to commercial and industrial buildings that are net metered. In order for
states to make adjustments to how renewable energy suppliers are defined will take the effort and
support of lawmakers to change state laws, otherwise PPA will not be an option for them.
To the extent that power generation equipment is considered a public utility, will pose
another challenge to the PPA model. The legislative solution to this is to explicitly exempt the
desired renewable energy sources from being considered power generation equipment. This was
done in Oregon where all power generation equipment is to be considered a public utility source
with the exception of solar and wind . Another legislative challenge which developers should 109
seek clarification about before entering into a PPA agreement in a particular state, is how the
state defines competitive service suppliers. This is because the extent to which developers pro-
vide services to site hosts via maintenance and operations, it may be subject to regulation if the
definition of competitive service supplier is vague. Oregon debunked this vagueness by recog-
See, 70. Nickokalou, T P. 5 Oregon 2007. “Notably, not all states have clearly regulated or deregulated retail 109
electricity generation markets. In fact, some could be said to have “hybrid” markets with characteristics similar to both regulated and deregulated markets. Oregon is an example of a hybrid electricity market where third-party own-ership is allowed and where a combination of IOUs, munis, and co-ops provide electricity to customers”.
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nizing that ancillary services that relate to the management of electric power that is delivered
through the transmission and distribution grid did not apply to third party owners who generated
power on the customer’s side of the meter and did not use the distribution system. Oregon’s re-
defining of competitive utilities and clarification of service suppliers should be a model for other
states looking to promote third party development of renewable energy sources for the simple
reason that, if faced with regulation equal to that of utilities, doing business would be much too
difficult for third party owners. Therefore, when it comes to the regulatory decisions made by
utility commissions, having state legislation that promotes the deployment of renewable energy
is a necessity.
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VI. PUBLIC LEADERSHIP PROGRAMS
A. RE:FIT London Program
In June 2015 the mayor of London at that time, Boris Johnson, announced that there 110
would be money transferred into the city’s budget for the development of solar PV on public
buildings across the city under the RE:FIT program. Making it one of his top priorities to sup-
port public sector solar programs with the 2015/2016 budget, Johnson’s plan has resulted in the
Green Party estimation that the vast majority of London’s 3,000 schools could accommodate 25
KW or more of rooftop solar . In addition to London’s school buildings, other buildings being 111
retrofitted or in the process of retrofit include, Libraries, office buildings, civic centers, hospitals,
cultural centers, theaters, hostels, universities, fire and police stations, community centers,
leisure centers, and crematoriums. Not only would this Satisfy the DECC target goal of 22 GW
of solar PV capacity by 2020, but it would also make a significant contribution to London’s goal
of cutting carbon emissions by 60% below 1990 levels by 2025. This ambitious program goes
into stark contrast with the UK’s Climate Change act which, aims for an 80% reduction in green
house gas emissions below 1990 levels by 2050.
Funding for RE:FIT projects in London is provided mostly in part by the London Energy
Efficiency Fund (LEEF) . LEEF currently has 100 million in pounds from the European Re112 -
gional Development Fund and the London Green Fund to be lent to the public or private sector
borrowers on projects that promote energy efficiency. Working with building owners, public
bodies and voluntary bodies, ESCO’s and developers, LEEF will support refurbishment projects
and projects under the retrofit in London. To the extent that your works will promote energy ef-
ficiency or reduce carbon emissions and your funding requirement is between 1 million pounds
and 20 million pounds, your project will be benefited by LEEF. Loans under LEEF are both
flexible and competitive and lasting for up to 10 years at an interest rate of 1.65%.
Clover, Ian. UK Solar PV Capacity Tops 6.5 GW Despite April Slowdown. PV Magazine. June 2nd 2015. 110
London’s Building Retrofit Programme - RE:FIT. Greater London – United Kingdom. http://www.citynvest.eu/111
sites/default/files/library-documents/Model%203_London%20Building%20Retrofit%20Programme_final.pdf
London Energy Efficiency Fund. Amber Green Sustainable Capital: Executive Summary p.2 (April, 2014).112
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Surprisingly, the RE:FIT scheme is modeled after the Energy Performance Contracts in
the US. Upon meeting with Bill Clinton in 2008 at the GLA for c40 cities, Mayor of London at
the time, Ken Livingston, was intrigued by the EPC process and asked if it could be applied in
his city . By 2010, the Greater London Area applied for European Local Energy Assistance 113
(ELENA) and in the following year, ELENA accepted project awards for program delivery unit.
In London, the program delivery unit manages the RE:FIT framework of suppliers, facilitates the
uptake by London based public sector organizations, and supports clients through all stages.
Mayor Boris Johnson points out that most clients lack the knowledge and expertise necessary to
undertake Energy performance contracts and advises that they explore the framework of EPC’s,
funding options, the RE:FIT process, project delivery, and the ESCO approach.
Energy performance contracting is a financing mechanism where upfront project costs are
financed through delayed payback which comes from the savings acquired from the retrofit
project. Under EPC, the savings and financing options are based on increases in energy effi114 -
ciency that yield savings in utilities and operation costs. The EPC approach is usually lead by
Energy Service Companies ESCO’s. ESCO’s are generally tasked with the development, con-
struct, and financing of projects aimed at the reduction of resource consumption. In 2013, 75%
of ESCO revenue projects came from renewable energy projects on state and municipal build-
ings . The EPC process emulates the design build process for delivering construction projects 115
but with the incorporation of performance guarantees as well as measurement and verification.
The greatest advantage in using an EPC process is that it addresses specific financial lim-
itations that would otherwise prevent project development under retrofit. For instance, EPC in-
C40 Cities. Case Study: RE:FIT Programme Cuts Carbon Emissions from London’s Public Buildings (Sep113 -tember 30 2014). http://www.c40.org/case_studies/re-fit-programme-cuts-carbon-emissions-from-london-s-public-buildings
Berghorn, George. Energy Performance Projects Yielding Greening and Security Benefits. Corrections Today 114
March, 2013. Vol 75 Issue1. p. 44-48.
London’s Building RetroFit Programme: RE:FIT. Greater London-United Kingdom, Model 3 p.2 (2015). http://115
www.citynvest.eu/sites/default/files/library-documents/Model%203_London%20Building%20Retrofit%20Pro-gramme_final.pdf
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corporates financial incentives offered by utilities as a means to acquire additional capital . 116
Subsequently, the performance guarantee offsets the risk that project savings through efficiency
will not meet minimum return on investment thresholds established by most public entities.
Finally, EPC process mitigates the issue of funding shortages by providing low interest financing
and payment of project costs through he recapture of savings by an ESCO . However, EPC is 117
not without it’s disadvantages. Primarily due to market failure, not all ESCO’s are capable of
providing financial services or equipment, legal expertise, and can sometimes be more concerned
with low cost measures rather than building envelope. Despite these draw backs, the most cru-
cial benefit of energy performance contracting for governments is that it allows for future operat-
ing cost savings to pay for improvements. The tax exempt status of public agencies is utilized
under this approach as opposed to other methods previously mentioned because, here it enables it
to access lower cost financing than what is available to an ESCO. While the aforementioned
Power Purchase Agreements are one financing mechanism under EPC used in London (via
ESCO), the one used in London, other options for funding are available as well including; public
agencies borrowing from banks or from public financial institutions (such as the previously men-
tioned LEEF, Salix, and London Energy Efficiency Fund) or funding provided by the building
owner . 118
Buildings interested in the RE:FIT are not limited solely to solar PV instillation projects,
they may simply be interested in projects designed to replace dated and wasteful light fixtures
and appliances with energy star products. Once the building has been identified and the target of
payback and energy savings has been set, a decision on which funding approach to adopt must be
made followed by a completion of the project brief. Upon meeting these criteria, an ESCO must
be chosen next. Under the RE:FIT framework, pre-negotiated EU regulation and compliant con-
Asia Pacific Projects Update. EPC Contracts in the Power Sector p. 3 (2015). https://www.dlapiper.com/~/me116 -dia/Files/Insights/Publications/2012/02/EPC%20contracts%20in%20the%20power%20sector/Files/epccon-tractsinthepowersector/FileAttachment/epccontractsinthepowersector.pdf
See, 112. London Energy Efficiency Fund. “Public sector organizations interested in retrofitting their buildings 117
based on the principle of EPC will first need to sign a Memorandum of Understanding to the RE:FIT programme. It indicates interest and commitment at senior level”. (2014)
Oliver, Tristin. RE:FIT Programme Delivery Unit. Technical / Delivery Lead. http://www.managenergy.net/lib/118
documents/1243/original_REFIT_EASME_Presentation_Oct_2014_final.pdf?1413377269
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tracts is what is currently used with a set of 12 prequalified ESCO’s. The building owner then
chooses the ESCO who is required to carry out the instillations and see to it that services are de-
livered during the payback period and that the guaranteed energy savings are met. The ESCO is
financially liable if energy savings are below what was agreed upon. The project delivery unit
under RE:FIT can help an organization to decide what type of funding would benefit them the
most and inform them about how to access a particular funding method. Thanks the funding by
ELENA and the GLA, the project delivery unit comes at no cost to the user. The PDU acts as the
permanent energy efficient management office under the GLA. Their primary duties are to pro-
vide support to RE:FIT users during the whole process and this support includes management
buy-in service delivery and performance monitoring. Over all the PDU acts as a project facilita-
tor, financial advisor, marketer, and aggregator . 119
So it appears that the public financial institutions and funds that make RE:FIT possible
for the London based public sector are LEEF, SALIX, and the Public Works and Loan Board
which lends money from the national loan board to local authorities and subsequently collect the
repayments. The international financial institutions supporting RE:FIT are ELENA and the 12
ESCO’s that prequalified in the retrofit process. All projects under the RE:FIT scheme are pub-
licly funded using property owners and ESCO’s as vehicles and financial instruments made up of
grants, loans, EPC financing, and self funding. The repayment method is characterized by a
guaranteed savings agreement. Thus far there have been 440 buildings in London that have un-
dergone retrofit projects and a total of 199 local organizations have been engaged in the RE:FIT
program. The success of London’s EPC is composite of public agencies planning and policy in-
centives, utilities executing energy efficient programs, finances providing capital to the market,
ESCO’s in developing profitable business models, and building owners investing in energy effi-
See, 112. European Local Energy Assistance (ELENA): is part of the European Investment Bank’s broader effort 119
to support the EU’s climate and energy policy objectives. This joint EIB-European. Commission initiative helps lo-cal and regional authorities to prepare energy efficiency or renewable energy projects ESCOs: 12 pre-qualified En-ergy Services Companies (2014)
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cient retrofits . Yet what is likely even more so the reason for London’s successful application 120
of EPC financing for retrofitting its buildings, is the fact that the city’s policy perspective trans-
lates into a plan that can be implemented building by building.
The United Kingdom Green Building Council has openly admitted to the fact that the
source of promoting sustainable development is found at the city level and requires a devolution
of powers to local authorities. Manchester, Birmingham, Liverpool, and Sheffield are all cities
that they aim to follow the lead of the Greater London Area in devolving their sustainability ef-
forts to the local level . At the 2015 UK GBC conference the chief executive of the Manchester 121
city council Howard Bernstein stated that, “centralization does not work- the reason that it does
not work is because all of the difficult stuff is incapable of being solved at the national level.” 122
The entire thesis of this conference was the need for Manchester, as well as all major cities, to
redesign their cities in a sustainable way so as to benefit the residents and attract commerce.
The head of Manchester city council Sir Richard Leese, spoke of the net zero energy
buildings that are under construction spearheaded by local authorities and Manchester Universi-
ty. However, this was a segue into an even more crucial point that 90% of the buildings that will
be used by the city of Manchester in 2050 are the buildings that are currently there. Considering
this fact, there is no denying that retrofitting Manchester’s municipal buildings is essential to the
overall sustainable development of the city hence, the need to look at how London has tackled
this issue. Leese points out that despite the small number of rent a roof schemes and retrofit
schemes that the city has adopted, they are not up to scale with what would have a real energy
saving impact. Green Deal was a finance company that was set up to lend money to green deal
providers and was a potential outlet for future retrofit projects but has recently ceased to be fund-
See 118. Oliver, Tristin. 120
“This allows the PDU to develop a full retrofit project and support the organization through the whole RE:FIT process in its role as facilitator and financial advisor. The following steps need to be considered:Identification of the buildings to be retrofitted, Setting of target energy savings and the payback period, Decision on funding approach, Completion of project brief”
House of Ministers Treasury. Policy Paper: Summer Budget 2015. Regional Levers of Growth: Devolution Sec121 -tion 5.3. https://www.gov.uk/government/publications/summer-budget-2015/summer-budget-2015
Leese, Richard. Green Building Council Manchester, UK. 2015. https://vimeo.com/121760191122
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ed by the national government. European funding, particularly European `regional development
funding provides a minimum amount that is allocated to green projects is going to play a crucial
role in jumpstarting these projects. manchester has already begun an investment pipeline in two
areas, non fossil fuel energy source development and solar PV. Geothermal and hydroelectric
energy are two renewable sources that have great potential for development in this region. Pri-
vate sector funding into urban development will also play a crucial role Manchester life initiative
which is a joint venture through Abu Dhabi united and Manchester city council . 123
Similarly in Birmingham, the desire to restore existing city buildings is coupled with a
need for sufficient funding . At the city’s green building conference last year, Birmingham city 124
council expressed an interest in adopting a financial model similar to that of SOAR Build in
Sheffield, UK. SOAR Build is a construction related social enterprise that specializes in com-
munity regeneration and constitutes a joint venture partnership between the public and private
sector. Also like Manchester and the GLA, Birmingham’s retrofit program and sustainability
policies over all, will look at the c40 Arup partnership reports for policy guidelines . 125
B. The pLAn: Los Angeles
Much like the ambitious efforts of Mayor Boris Johnson, Los Angeles Mayor Eric
Garcetti, launched a similar sustainability plan in April 2015. The key polices of the pLAn target
a wide array of issues designed to mitigate climate change but the policy that specifically ad-
dresses renewable instillations on municipal buildings states that, “all city-owned buildings that
are 7,500 square feet or larger are required to be built to achieve LEED certification . Existing 126
municipal buildings must meet the requirements of the Green Building retrofit ordinance.” Los
Angeles is currently leading not only the state of California but also the whole of the United
States in its municipal green building program. The city has the highest number of EPA rated
MANCHESTER 2015. UK-GBC CITY CONFERENCE:SUMMARY REPORT123
Arzilli, Gaia. UK Green Building Council. Accelerating the Growth of Smart Cities (September, 7, 2015). 124
http://www.ukgbc.org/resources/blog/accelerating-growth-smart-cities
Arup. Cities Alive: Rethinking Green Infrastructure (2014). www.arp.com125
Vitaly Troyan, City Engineer, Bureau of Engineering. Gary Lee Moore, Deputy City Engineer. City of Los An126 -geles Sustainability Initiative.
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Energy Star certified buildings in the country and the city’s department of water and power has
the most effective energy efficient program of any other utility in the state . This success is 127
directly linked to Los Angeles Better Building challenge which, the Mayor aims to expand to 60
million square feet . 128
The Los Angeles Better Buildings Challenge (LA BBC) is designed to simplify the path
to energy efficiency by acting as a hub for relevant information, incentives, and support services.
The LA BBC builds on three categories of city sponsored retro-fit programs which are munici-
pal, affordable housing, and commercial properties. In regards to municipal buildings, the LA
BBC is built off of the aforementioned green retrofit and work ordinance. The green retrofit and
work ordinance calls for the retrofitting of over 1,000 municipal buildings and since 2009, more
than 100 projects have been launched totaling at one million square feet and resulting out of in-
vestments of $16 million. The ordinance calls for a green retrofit task force and an advisory
council . The task force under the ordinance is obliged to see to it that buildings are meeting 129
the Leadership in Energy and Environmental Design (LEED) green standards that were estab-
lished by the United States Green Building Council. Project Labor agreements are one outcome
of this ordinance which are aimed at minimizing labour grievances, conflicts that by extension
will amplify project cost containment and ensure that projects are completed in a timely and cost
efficient way . 130
Thus far, the LA BBC’s biggest contribution to increasing energy efficiency of its munic-
ipalities has been providing transparency of energy consumption and savings data. In addition to
tracking energy savings,the LA BBC tracks banking cost savings for reinvestment in additional
projects as well as publishing case studies to communicate the cities plans to the public. It is the
IFC International National Association of Energy Service Companies. Introduction to Energy Performance Con127 -tracting. U.S. Environmental Protection Agency Energy Star Buildings (October 2007).
Los Angeles Recognized For Leadership In Energy Efficiency, Better Buildings Challenge (January 29 2014). 128
http://energy.gov/articles/los-angeles-recognized-leadership-energy-efficiency-better-buildings-challenge.
Mandatory Retorfit Programs. Los Angeles Department of Building and Safety. http://www.ladbs.org/services/129
core-services/plan-check-permit/plan-check-permit-special-assistance/mandatory-retrofit-programs.
The People of the City of Los Angeles. An ordinance reinstating Article 5 of Chapter 3 of Division 7 of the Los 130
Angeles Administrative Code to establish the Green Retrofit and Workforce Program, including creation of a Green Retrofit Development Interdepartmental Task Force, and a GreenRetrofit Development Advisory Council.Ordinance 182258. p.1
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obligation of the mayor to appoint a program director who in conjunction with the green devel-
opment task force will submit a plan to the city council for retrofitting all city buildings at or
larger than the size of 7,500 square feet. There are 13 key elements that were required to be con-
sidered in this plan under the ordnance, one of which, explicitly states, “solar, geothermal, and
other renewable energy systems.”
Perhaps the most progressive priority in the ordinance is that within the initial 5 years of
the program, 50 percent of buildings that are retrofitted must be located in areas with high levels
of poverty and unemployment . This is extremely essential to the progression of sustainable 131
development because impoverished areas have some of the highest levels of energy consumption
due to the fact that their buildings are dated . Therefore, it is perhaps more necessary for cities 132
to redistribute funds into retrofitting their impoverished sections of town over any other section
because doing so would ultimately result in the highest level of overall reduction in energy con-
sumption. While this priority of impoverished areas is listed 2nd after the priority of facilities
facing health and safety risks, the two are essentially linked because health and safety risks are
much higher in facilities located in poor sections of town.
The Green retrofit development interdepartmental task force is made up of the general
managers and directors of all of the major departments and bureaus, from parks and recreation to
the Bureau of engineering . The task force is required to provide advice and comments for the 133
development and implementation of the program, provide advice for the city’s efforts to seek and
apply for grants and other funding sources for the implementation of the program, and provide
advice and recommendations on project labor agreements . The Green Retrofit Advisory 134
City of Los Angeles- Green Building Retrofit Requirement. Summary: Ordinance 182259 (September, 21, 131
2012). http://programs.dsireusa.org/system/program/detail/4708
Spector, Julian. Where America’s Poor Pay the Most for Electricity. The Atlantic:City Lab (April, 14, 2016). 132
http://www.citylab.com/housing/2016/04/electricity-bills-by-city-low-income-costs/478155/
Delp, Linda - Stewart, Elizabeth. Good, Green Safe Jobs: The Los Angeles Green Retrofit and Workforce Pro133 -gram. UCLA Institute for Research on Labor and Employment: Research and Policy Brief Number 2. p.2 (July, 2009). http://urbanhabitat.org/files/LAGreenJobs.pdf
City of Los Angeles Sustainable Building Initiative: An Action Plan for Advancing Sustainable Design Practice 134
(2015). http://eng.lacity.org/projects/sdip/docs/SustainableBuildingInitiativeActionPlanFinal043003.pdf
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Council is much like the Project Delivery Unit under London’s RE:FIT in that; they provide
guidance to the task force (i.e. all major departments in the local government) for development
and implementation of the program. This is inclusive of budget review and notification about
grants and other funding sources, developing green careers for local workers via the necessary
training, and provide support for small green business. The council consists of nine members
each of which represents organizations that are relevant to the over all intention of the green
retrofit program . These organizations include labor, energy and environment, philanthropy, 135
architecture, and engineering. When it comes to the construction of new buildings, both the
pLAn and RE:FIT aim to construct net-zero energy municipal buildings.
California’s Current renewable energy target includes 25,000 mw by 2020 which,
amounts to a 33 percent target for state buildings in the same year . In the state inventory of 136
renewable energy projects which calculated the state’s potential renewable capacity in
megawatts, had state buildings and load centers amounting to 14-26 mw . While policy makers 137
are interested in going forward with renewable energy projects on state buildings and state land
over all, the challenges that face these projects include funding, lack of longterm consistency,
long and complex permitting contracting and approval process, and a lack of knowledge of the
energy arena amongst government agencies . Thankfully, the pLAn in conjunction with the LA 138
BBC, has addressed each of these challenges to one extent or another. In regards to funding,
pLAn takes the public-private partnership which goes in contrast to the other two forms of fund-
ing in California previously mentioned, bond financing, and power purchase agreement.
The public-private partnership funding approach constitutes a reduction of costs in the
project for public agencies mostly because they simply lack the ability to hire new kinds of ener-
City ofLos Angles, California. Ordinance 180633. Creation of the Green Retrofit Advisory Council: Section 135
7.304. http://clkrep.lacity.org/onlinedocs/2006/06-1963_ord_180633.pdf
California Energy Commission. Renewable Energy-Overview p.2 (October, 11, 2016). http://www.energy.ca.136 -gov/renewables/tracking_progress/documents/renewable.pdf
California’s Path to 12,000 Megawatts of Local Renewables. Governor’s Local Renewable Power Working Con137 -ference Renewables on Public Buildings p. 3 (July, 2011). https://www.gov.ca.gov/docs/ec/Public_buildings.pdf
California’s Path to 12,000 Megawatts of Local Renewables. Governor’s Local Renewable Power Working Con138 -ference Renewables on Public Buildings. Challenges: p.4 (July, 2011) https://www.gov.ca.gov/docs/ec/Pub-lic_buildings.pdf
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gy experts or maintenance costs, due to small budgets. In addition to this, the private company
will reap the benefits of tax credits the same way they would under the power purchase agree-
ment discussed earlier . Unlike the power purchase agreement however, the Public-Private 139
Partnership does not create disincentives for public agencies . For instance, a building that in140 -
curs savings on energy costs would result in a lower utility budget in future years meaning less
money for that agency in subsequent years. Despite the Promising nature of the PPP agreement
for States in the U.S. and countries in the United Kingdom, PPP may be more difficult to achieve
in other EU countries. This is because countries in the EU operate under a civil law system
rather than a common law system. The former is much more limiting because it prioritizes ad-
ministrative law codes over a contract while the latter, is more extensive and private 141
With tax exempt bonds, local governments are able to cover a portion, but not the entire
debt associated with the service obligations. While it is not wrong to suggest that tax exempt
bonds offer the lowest interest rates, they are attached to a whole new slew of transaction
costs. Any debt incurred by a local entity for the purposes of solar instillations or retrofits in 142
general, is subject to being put up to a public vote in the state of California where nearly every
public issue can be put to a referendum. While it may not be the case in every state or locality,
California’s credit ratings has gone up in the past year . The improvement was a result of pay143 -
ing off what was recently a deficit of $15 Billion. Therefore if the bond issued were a general
obligation bond it would add on to the state’s debt which it has only recently been able to pull
itself out of and additionally, would be in competition with other infrastructure needs that voters
City of Los Angeles Sustainable Building Initiative. Financial Incentives: p.20 (2015) http://eng.lacity.org/139
projects/sdip/docs/SustainableBuildingInitiativeActionPlanFinal043003.pdf
Peterson, Lee J. Public-Private Partnerships Can Help Finance Renewable Energy Projects. Renewable Energy 140
World (October, 18, 2010). http://www.renewableenergyworld.com/articles/2010/10/public-private-partnerships-can-help-finance-renewable-energy-projects.html
World Bank Group. Civil Law Systems-Key administrative Jurisprudence that can Impact PPP Arrangements. 141
Public Private Partnership in Infrastructure Resource Center (September, 2016). https://ppp.worldbank.org/public-private-partnership/legislation-regulation/framework-assessment/legal-systems/common-vs-civil-law
Office of Energy Efficiency and Renewable Energy. Tax-Exempt Bond Financing for Non-Profit Organizations 142
and Industries. http://energy.gov/eere/tax-exempt-bond-financing-nonprofit-organizations-and-industries
Chaing, John. California’s Current Credit Ratings. Office of the State Treasurer (2016). http://www.treasurer.143 -ca.gov/ratings/current.asp
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may feel are more worthy issue. One way around voter opposition would be for the State to is-
sue one large lease revenue bond which, are not subject to the same vote that a general obligation
bond faces . However, with this approach there would be multiple leases which means high 144
transaction cost for tracking and establishing each lease and payment streams for each project
would have to be combined. Many public buildings also already have lease financing attached to
their buildings which, if it is the case for that building, would make additional lease financing
nearly impossible.
The Public-Private Partnership takes the best of both worlds from the power purchase
agreement and bond financing. Here the government provides the low cost debt financing while
the private sector absorbs all of the operation and instillation risks . If kept at the regional lev145 -
el, transaction costs could remain low and the development cost associated with the transaction
could be gradually reduced over the course of several deals rather than financial burden being
concentrated on one single deal . Here the debt is issued by a county improvement authority 146
which guarantees to provide low cost capital. The bonds are then repaid by the solar develop-
ment firms or which ever firm is doing the instillation, not the government. This model was in-
spired out of a desire to obtain the tax benefits that come out of a PPA but while avoiding the
tendency of this model to lean more in favor of the private entity rather than the public sector . 147
The biggest hurdle of this approach is to insure that the burden of liability would not be put on
the local government . The overcoming this challenge takes the form of a security package 148
whose funds are inclusive of the interests of both parties, reimbursement security for the local
government and costs to the solar developer. Additionally, this model has great potential for
Legislative Analyst’s Office. An Overview of State Bond Debt (August, 29 2008). http://www.lao.ca.gov/ballot/144
2008/bond_11_2008.aspx
International Energy Agency. Joint Public-Private Approaches for Energy Efficiency Finance: Policies to Scale 145
up Private Sector Investment p.5. https://www.iea.org/publications/freepublications/publication/finance.pdf
Pearlman, Stephen and Scerbo, Ryan. Public Private Partnership for Renewable Energy: A Case Study. Decotiis 146
News (2010). http://www.decotiislaw.com/news/2010/03/01/public-private-partnership-for
Pearlman, Stephen and Scerbo, Ryan. Public Private Partnership for Renewable Energy: A Case Study. Decotiis 147
News (2010). http://www.decotiislaw.com/news/2010/03/01/public-private-partnership-for
International Energy Agency. Joint Public-Private Approaches for Energy Efficiency Finance p.6. https://148
www.iea.org/publications/freepublications/publication/finance.pdf
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benefiting cities or states that operate under municipally owned utilities like Florida, where the
power purchase agreement simply isn't an option . 149
Public-Private Partnerships not only have the potential to minimize risks and cut costs for
both parties, but they also have great potential for stimulating local economies via the creation of
sustainable jobs and the utilization of public land and buildings that would otherwise not be
tapped into . Sacramento’s Solar Highway Project has demonstrated the benefit of the Public-150
Private Partnership on its own local economy in the following areas; CalTrans acts as the Lessee
of public transportation land to be used for solar PV instillation, Sacramento Municipal Utility
District acts as the purchaser of electricity provides incentive grants, the Private developer or PV
industry team conducts project financing as well as design and construction and maintenance of
the PV instillation, the local government and community provides input to design and permitting
support.
The Los Angeles commercial building performance partnership will allow building own-
ers to access free energy assessments as well as the opportunity for financing at competitive rates
to cover up to 100 percent of the costs for their energy upgrades.
At the Manchester conference mentioned in the previous section, an appearance was
made by Adam Beck, who works in Portland, Oregon with the organization EcoDistricts. With
10 projects currently in execution in North America, EcoDistricts has touched one of Los Ange-
les’s most impoverished sections of town, little Tokyo. Going back to the earlier point made in
the section about the importance of retro-fitting buildings in the poorer sections of cities,
EcoDistrict offers a protocol that directly address this issue while also stressing the need for pub-
lic private civic partnerships.
Solar Power Rocks. States that Allow for Solar Leases and PPA’s (2016). https://solarpowerrocks.com/solar-149
lease-map/
World Landscape Architect. Sacramento Solar Highways-Sacramento USA- Bionic (2012). http://worldland150 -scapearchitect.com/sacramento-solar-highways-sacramento-usa-bionic/#.WAe1OpMrL_Q
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VII. BUILDING CODES AND STANDARDS
A. California Green Building Standards Code and Compliance Rates
California’s Green Building Standards Code also referred to as CalGreen, is the nation’s
first mandatory green building standards code. The California Building Standards Commission
(CBSC) developed the code in 2007 in order to meet the State’s initiative to reduce GHG’s to
1990 levels by 2020 . The voluntary CALGreen code was written in 2008 and went into effect 151
in 2009. The first mandatory measures were adopted in 2010 and went into effect in January
2011 . The purpose of the CALGreen code is to improve public health, safety, and welfare by 152
enhancing the design and construction of buildings via building concepts that both reduce nega-
tive impacts and have a positive environmental impact. Sustainable construction practices are
encouraged in the following areas; planning and design, energy efficiency, water conservation,
material conservation and resource efficiency, and environmental quality. The benefits intended
by the CBSC from the CALGreen code include; reduction in GHGs from buildings and from
building activities, promoting environmentally responsible, cost effective, healthier places to live
and work, and implementing the goals and directives by the governor . The CBSC has ten 153
members who are appointed by the governor and approved by the senate and must include; one
architect, one mechanical engineer, one structural engineer, one contractor, one person from or-
ganized labor, one local building official, one local fire official, three members of the general
public one of whom, must have a physical disability . 154
Guide to Title 24 California Building Standards Code: Based on the 2013 Edition of Title 24. California Building 151
Standards Commission. Chapter 1, p. 1. 2013.
National Action Plan for Energy Efficiency (2009). Energy Efficiency Program Administrators and Building En152 -ergy Codes. <www.epa.gov/eeactionplan>
Brown, Edmund, Governor. Podesta, Alexis, Secretary of Business, Consumer Services and Housing Agency. 153
Metcalf, Ben, Director of Housing and Community Development. 2016 Report to the Legislature: Status of the Cal-ifornia Green Building Standards Code: CALGreen. State Department of Housing and Community Development, September 2016, p. 6.
CALIFORNIA BUILDING STANDARDS LAW HEALTH AND SAFETY CODE DIVISION 13, PART 2.5, 154
SECTIONS 18901 - 18949.31 Effective January 1, 2017. § 18921. Appointed Members.
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The CBSC is a state agency and as such, it is within their jurisdiction to develop state
regulations . State regulations as opposed to state laws enacted through the legislative process, 155
are developed by agencies as determined necessary to implement, clarify, and carry out the re-
quirements of state law. The state agency must have authority in state law to adopt
regulations . The California Code of Regulations title 24 (CCR) is reserved for state regula156 -
tions that govern the design and construction of buildings, building facilities, and equipment. The
code applies to all state owned buildings as well as private buildings and requires measures for
energy conservation, green design, construction and maintenance, accessibility, and fire and light
safety . 157
All cities and counties are required to enforce CCR title 24 however, they are permitted to adopt
ordinances that impose more restrictive requirements than CCR title 24 . 158
Effective January 2017, for new buildings 10,000 square-feet and over, building commis-
sioning shall be included in the design and construction process to verify that the building sys-
tems and components meet the owner’s and owner representative’s project requirements . 159
Commissioning shall be performed by trained personnel who ensure that the project complies
with California’s Energy Code. The intention of this regulation is to ensure that the design and
construction of buildings reduce negative environmental impact. The compliance method for
this code pertains to the selection of qualified and trained personnel. To do so, the commission-
ing provider must be evaluated on the basis of their; technical knowledge, relevant experience,
potential conflicts of interest, professional certifications and training, communication and orga-
CALIFORNIA BUILDING STANDARDS LAW HEALTH AND SAFETY CODE DIVISION 13, PART 2.5, 155
SECTIONS 18901 - 18949.31 Effective January 1, 2017. § 18918. State Agency.
CALIFORNIA BUILDING STANDARDS LAW HEALTH AND SAFETY CODE DIVISION 13, PART 2.5, 156
SECTIONS 18901 - 18949.31 Effective January 1, 2017. § 18919. Regulation.
Hickman, Cathy. 2016 Existing Building Energy Efficiency Action Plan Update December 2016. TN # 214801. 157
Energy Commission, 12/14/2016, p.1.
Brown Jr., Edmund, Attorney General. State and Local Government Green Building Ordinances in California. 158
State of California Department of Justice, 2013, p.1.
Marvelli, Mia. Luif, Mary Lou. Guide to the 2016 California Green Building Standards Code Nonresidential. 159
International Code Council, January 2017. p. 55, Section, 5.410.2 -Commissioning.
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nizational skills, reference and sample work products . Prior to the updated Energy Code, the 160
requirement for new and existing buildings to implement commissioning had already been intro-
duced April 25th 2012, in the governor’s executive order B-18-12 . 161
Code 5.410.2.1 pertains to the Owner’s or Owner representative’s Project Requirements
(OPR). The expectations and requirements of the building appropriate to its phase shall be doc-
umented before the design phase of the project begins this documentation shall include; envi-
ronmental and sustainability goals, energy efficiency goals, indoor environmental quality re-
quirements, project programs including facility functions and hours of operation and need for
after hours operation, equipment and systems expectations, building occupant and o&m person-
nel expectations . The intention of having an OPR is that it documents the functional require162 -
ments of a project and expectations of a building use and operation. In addition to this, the OPR
illustrates the physical and functional building characteristics while also establishing perfor-
mance criteria. Compliance is demonstrated by the owner developing/approving the OPR docu-
ment. The OPR can be defined as: environmental and sustainability goals as well as objectives
exceeding the code for project sustainability which may include; CALGreen voluntary measures,
specific environmental or sustainability goals such as water efficiency, CO monitoring xeriscap-
ing . 163
Methods for compliance must also include; energy efficiency goals, indoor environmental
quality requirements, project program including facility functions and hours of operation and
need for after hours of operation. OPR must describe the primary purpose of program and use of
proposed project: building size, number of stories, construction type, occupancy type and num-
ber . Building program areas including indented use and anticipated occupancy schedules, fu164 -
See, 151. Guide to the 2016 California Green Building Standards Code Nonresidential. January, 2017. p. 57, 160
Section, 5.410.2
Brown Jr., Edmund G. Executive Order B-18-12. Office of Governor. April 25, 2012. 161
See, 151. Guide to the 2016 California Green Building Standards Code Nonresidential. January, 2017. p. 57, 162
Section, 5.410.2.1
See, 151. Guide to the 2016 California Green Building Standards Code Nonresidential. January, 2017. p. 58, 163
Section, 1.
See, 151. Guide to the 2016 California Green Building Standards Code Nonresidential. January, 2017. p. 59.164
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ture expandability and flexibility of spaces, quality and durability of materials, and building life
span desired, budget constraints, applicable codes. Equipment and systems expectations de-
scribe the following for each system commissioned: Level of quality, reliability, equipment type,
automation, flexibility, maintenance and complexity desired. Specific efficiency targets desired
technologies or preferred manufacturers for building systems, acoustics and vibration. Degree of
system integration, automation and functionality for controls; i.e., load shedding, demand re-
sponse and energy management. Building occupant and O&M personnel expectations. Describe
the following: How building will be operated and by whom. Level of training and orientation
required to understand, operate and use the building systems for operation and maintenance staff,
as well as occupants. Building operation and maintenance staff location and capabilities . 165
Following the building occupant and O&M expectations, is the Basis of Design require-
ment (BOD). The BOD is a written explanation of how the design of the building systems meets
the OPR requirements, shall be completed at the design phase of the building project, covering
the following systems; HVAC, indoor lighting systems, water heating, renewable energy sys-
tems, landscape irrigation systems, water reuse systems . The BOD establishes how the build166 -
ing system will meet the OPR while also outlining design assumptions not outlined in the design
document. The Design team develops the BOD, describing why the systems were selected.
Compliance method for this regulation includes; Provide narrative description of system—type,
performance, control type, energy savings and payback period. Describe reason for system se-
lection—why chosen system is better than alternatives, issues such as performance, efficiency,
reliability, flexibility, simplicity, expandability, cost, payback period, utility company incentives,
owner preference. Sequence of operation—operating schedules, set points and storage capacity.
Describe how system meets the OPR . BOD is crucial to meeting the zero net energy require167 -
ments for new buildings and the 20% energy reduction targets for existing buildings, outlined in
Governor Brown’s b-18-12 executive order. 168
See, 151. Guide to the 2016 California Green Building Standards Code Nonresidential. January, 2017. p. 59.165
See, 151. Guide to the 2016 California Green Building Standards Code Nonresidential. January, 2017, p. 60.166
See, 151. Guide to the 2016 California Green Building Standards Code Nonresidential. January, 2017, p. 61.167
Brown Jr. - Edmund G. Executive Order B-18-12. Office of Governor. April 25, 2012. 168
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In regards to existing public buildings, the California Energy Commission implemented
the project, 2016 Existing Buildings Energy Efficiency Action Plan. Out of this, The Existing
Building Energy Efficiency Plan Update December 2016 was produced on December 14 2016.
The first goal of this document is, increased government leadership in energy efficiency. For
state and school buildings, the commission recognized that compliance on the part of state agen-
cies with the governor’s executive order b-18-12 to achieve significant water and energy use re-
ductions in state buildings, was up to par as well as their plans to continually meet performance
targets. This executive order was effective immediately April 25 2012 requiring that, all state
agencies take actions to reduce entity wide GHG emissions by at least 20% by 2020.
It was further ordered that, all new State buildings and major renovations beginning de-
sign after 2025 be constructed as Zero Net Energy facilities with an interim target for 50% of
new facilities beginning design after 2020 to be Zero Net Energy. State agencies shall also take
measures toward achieving Zero Net Energy for 50% of the square footage of existing state-
owned building area by 2025. Out of this executive order, the building action plan was insti169 -
tuted to give guidance on how to comply with the order one key direction being that, all state
buildings greater than 50,000 square feet, complete the Leadership in Energy and Environmental
Design (LEED) certification for existing buildings. State building facility managers must en170 -
sure that on-going energy related measures are as efficient as possible where resources and guid-
ance for state agencies is provided for by the Department of General Services Office of Sustain-
ability. One key component of this effort is the benchmarking of energy and water usage of state
facilities thereby establishing a reference point for performance tracking or facility comparison.
Thus far 1,539 facilities have been bench marked by the state. Collectively, state agencies have
reduced energy usage by 17% with a base year of 2003 and the states Energy and Sustainability
Program has 90 state building retrofit projects in varying stages of completion.
The key aspects of the Existing Building Efficiency action plan include; doubling of
statewide energy savings, statewide public benchmarking program, and requiring that Indepen-
Brown Jr. - Edmund G. Executive Order B-18-12. Office of Governor. April 25, 2012. 169
Hickman, Cathy. 2016 Existing Building Energy Efficiency Action Plan Update December 2016. TN # 214801. 170
Energy Commission, 12/14/2016, p.4.
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dently Owned Utilities (IOU’s) provide incentives to residential and small business customers for
energy management systems. These are the strongest features of the action plan because soon
after it’s adoption in 2015, three laws were enacted that strengthened the goals and objectives of
the plan by leaps and bounds. These laws were; Senate Bill 350 (2015), Assembly Bill 802
(2015), and Assembly Bill 793 (2015). The Clean energy and Pollution Reduction Act 2015
(Senate Bill 350), includes five mandates for energy efficiency; 1. the CPUC and local publicly
owned utilities must establish annual targets for energy efficiency whilst also demanding reduc-
tion that will result in doubling of statewide energy efficiency savings in natural gas and electric-
ity by 2030. 2. The plan must be updated at a minimum of every three years by the Energy
Commission in order to achieve doubling of statewide energy reduction targets. 3. The energy
commission must adopt, enforce, and implement contractor policies to ensure that retrofits meet
high quality performance standards, reduce energy savings lost due to poor workmanship, and
establish consumer protection guidelines for energy efficacy products and services. 4. The ener-
gy Commission will develop a study on barriers for low income customers to energy efficiency
investments including disadvantaged communities and make recommendations to increase ac-
cess to these investments. 5. Gives the CPUC authority to pursue market transformation pro-
grams to achieve deeper energy efficiency savings and pay for performance programs that are
designed to link incentives directly to calculated energy savings. 171
Also included in the governor’s B-18-12, the requirement on the part of state agencies to
implement the measures described in the Green Action Plan. One of the key components of the
Energy Commission’s action plan is the local government challenge. The local government chal-
lenge is a grant program that promotes performance based efficiency improvements where grant
payments are tied to actual energy savings achieved. Eligible projects will include comprehen-
SB-350 Clean Energy and Pollution Reduction Act of 2015. Senate Bill No. 350 Chapter 547: An act to add Sec171 -tion 44258.5 to the Health and Safety Code, to amend Section 1720 of the Labor Code, to amend Sections 25310 and 25943 of, and to add Sections 25302.2 and 25327 to, the Public Resources Code, and to amend Sections 359, 399.4, 399.11, 399.12, 399.13, 399.15, 399.16, 399.18, 399.21, 399.30, 454.55, 454.56, 701.1, 740.8, 9505, and 9620 of, to amend and repeal Sections 337 and 352 of, to add Sections 237.5, 365.2, 366.3, 454.51, 454.52, 740.12, 9621, and 9622 to, to add Article 17 (commencing with Section 400) to Chapter 2.3 of Part 1 of Division 1 of, to add and repeal Article 5.5 (commencing with Section 359.5) of Chapter 2.3 of Part 1 of Division 1 of, and to repeal Arti-cle 5 (commencing with Section 359) of Chapter 2.3 of Part 1 of Division 1 of, the Public Utilities Code, relating to energy. Legislative Counsel’s Digest. Approved by Governor October, 7, 2015 and filed with Secretary of State October, 7, 2015.
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sive efficiency upgrades for public buildings, innovation in building permitting and code en-
forcement, bench marking for nonresidential buildings, and data driven community wide pro-
gramming . Any California city, county, or special district is eligible to participate in the chal172 -
lenge program. The financial resources made available via the local government challenge pro-
gram will give cities, special districts, and counties, the ability to begin energy retrofits in gov-
ernment buildings. Effective January 2017, local governments within California, have adopted
the mandatory code tiers also called the green building rating system introduced by CALGreen.
Tiers shall apply to all new construction and major renovation of existing buildings . This 173
measure is backed by the requirement in order B-18-12 that state agencies must measure, moni-
tor, report, and oversee progress on all requirements in the order. 174
Finally order B-18-12 required that any state buildings larger than 10,000 square feet
proposing new or major renovations, must use clean, on-site power generation. Such clean pow-
er sources include, color photovoltaic, solar thermal, wind power generation, and clean back-up
power supplies if it is economically feasible. The order does not exclude indoor appliances as 175
it also requires that, all state agencies purchase and use environmentally preferable products
(such as energy star) when comparing them to competing goods that serve a similar purpose. It
is the obligation of the Building Standards Commission to administer the processes of implemen-
tation of California’s sustainable building codes. Improved safety and sustainability, new tech-
nology and construction methods are necessary to the development of building codes during each
triennial and intervening code adoption cycle. During the pre-cycle phase, meetings are pub176 -
licly held and materials reviewed during meetings are available for public review and comment
on the Building Standards Commission’s webpage.
Brown Jr., Edmund G. Executive Order B-18-12. Office of Governor. April 25, 2012. 172
Brown, Edmund, Governor. Podesta, Alexis, Secretary of Business, Consumer Services and Housing Agency. 173
Metcalf, Ben, Director of Housing and Community Development. 2016 Report to the Legislature: Status of the Cali-fornia Green Building Standards Code: CALGreen. State Department of Housing and Community Development, September 2016, p. 14.
Brown Jr., Edmund G. Executive Order B-18-12. Office of Governor. April 25, 2012.174
Brown Jr., Edmund G. Executive Order B-18-12. Office of Governor. April 25, 2012.175
CALIFORNIA BUILDING STANDARDS LAW HEALTH AND SAFETY CODE DIVISION 13, PART 2.5, 176
SECTIONS 18901 - 18949.31 Effective January 1, 2017. § 18940.5. Appointed Members.
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In January 2016, The Division of the State Architect (DSA) submitted their finial express
terms for the certification of compliance regarding their proposed changes to California adminis-
trative code for public schools and collage buildings, California code of regulations Title 24 Part
1. The language amended by the DSA in the general provisions, was done so in order to focus
specifically on sustainable design of the irrigation systems. Due to the urgency of the imple-
menting procedures in response to EO B-29-15, the DSA determined that by limiting the lan-
guage specific to outdoor water use specific to irrigated landscape systems, would speed up the
verification of compliance. The California Green Building Standards Code is part 11 of thir177 -
teen am amendments to the California Code of Regulations and by its completion in January
2016, was intended to set minimum mandatory requirements for localities within the state to fol-
low and includes tiers that can be applied via the preferred methods of cities, counties, special
districts, within the state. Any local ordinances issued regarding energy standards for buildings
must be consistent with Public Resources Code 25402, and must not be designed to consume any
more energy than permitted by Part 6 while also including additional energy conservation mea-
sures where ever possible. 178
The amended 2016 California Green Building Standards Code is now applicable to all
occupancies, (not just state owned buildings as was the limitation of Executive Order B-18-12)
where no state agency has the authority to adopt green building standards applicable to those oc-
cupancies, and shall be enforced by the state/local agencies. The code does not only requires re-
newable installations and energy saving appliances, but it also requires design ammonites that
include; electric vehicle charging stations, numerous indoor and outdoor water conservation
measures (hence the urgent need for the DSA amendments to certification of compliance), waste
reduction (and proper disposal of universal waste such as electronics and lights containing mer-
cury), light conservation, bicycle parking, recycling, and of course, commissioning . As far as 179
FINAL EXPRESS TERMS FOR PROPOSED BUILDING STANDARDS OF THE DIVISION OF THE STATE 177
ARCHITECT – STRUCTURAL SAFETY REGARDING PROPOSED CHANGES TO CALIFORNIA ADMINIS-TRATIVE CODE. CALIFORNIA CODE OF REGULATIONS, TITLE 24, PART 1. State of California Building Standards Commission, December, 18, 2015.
Brown Jr., Edmund G.-Attorney General. State and Local Government Green Building Ordinances in California. 178
State of California Department of Justice. January, 1, 2011, p. 7.
See, 151. Guide to California Green Building Standards Code Nonresidential. January 2017, p. 64.179
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compliance on the part of localities in California, 25 cities have ordinances that require munici-
pal buildings/other city sponsored projects, have higher green building requirements (i.e. LEED
Silver or LEED Gold) than for private projects (LEED Certified). This reveals the impact that a
performance ranking system has on the public sector, as it informs residents and state authorities
about the commitment a locality is making to CALGreen. Additionally, 11 cities within Califor-
nia, have adopted performance based requirements exceeding title 24 by 15%. 180
Since Governor Brown’s 2012 executive order, there was a 16.15% reduction in energy
use by state agencies meaning, that they are on track to meet the 20% reduction in energy use by
2018. While collectively state agencies have not yet reached the 20% reduction target, as much
as 14 of the 31 departments have already surpassed this target. The reduction is due to a com181 -
bination of retrofits of lighting and mechanical systems in state buildings as well as an increase
in onsite renewable energy installations, both of which, were aforementioned requirements in
Brown’s executive order. As of 2015, 82 state buildings have been LEED certified, a result due
largely in part to Brown’s executive order requiring; “new buildings greater than 10,000 square-
feet and existing buildings 50,000 square-feet, must be LEED certified.”
Brown Jr., Edmund G.-Attorney General. State and Local Government Green Building Ordinances in California. 180
State of California Department of Justice. January, 1, 2011, P. 5.
Greening State Buildings for a Brighter Future. `Percent Change in Grid Energy Usage By Department from 181
2003 to 2015. Office of the Governor, 2017. www.greenbuildings.ca.gov.
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B. United Kingdom Building Control Performance Standards and Compliance Rates
Commonalities related to compliance with green building legislation in the UK and Cali-
fornia have been observed. For instance, the UK was listed by the European Commission as an
example of best practices in it’s efforts for to harmonizing EPC calculation methodologies
which, is the 12th recommendation made by the Commission for compliance with EPBD Direc-
tive. The UK compliance rates for all three MEP requirements reported by building control 182
experts, calculated a score of 89% for existing buildings undergoing major renovation in the UK
and a score of 95% compliance for new buildings. The UK also received notoriety for estab183 -
lishing the competent persons scheme where that person is party to either the British Board of
Agrèment or the British Standards Institution, to ensure that buildings being retrofitted are in
compliance with MEP standards and to also reduce costs to building owners. 184
In the 2014 Concerted action EPBD Build Up Skills Report (CA EPBD BUS) suggested
that financial incentives were tested among a number of other support schemes out lined in the
EPBD, as its level of effectiveness in ensuring building compliance with MEP standards. The
CA EPBD BUS report showed that financial incentives required by article 10 of the EPBD, tar-
geted around 17% of public sector buildings in the EU while 69% of financial incentives, target-
ed private residential buildings. In England & Wales, the most relevant fiscal instruments that
are currently in place are the Carbon Emissions Reduction Target and the Community Energy
Savings Programme. In future, it will be the Green Deal and the Energy Company Obligation
and of these incentives, the Green Deal has had the greatest impact on improvements for public
buildings. Penalties are another support scheme required by Member States in article 27 of
EPBD and in the UK these are financial penalties for failing to have the appropriate documents
and cost vary based on building sector; public sector buildings result in a 500 pound fine.
Energy Performance of Buildings Directive (EPBD) Compliance Study. Contract No. MOVE/ENER/SRD.182
1/2012-409-Lot3/ENER/C3/2014-542/S12.701648. Luxembourg Publications Office of the European Union, 2015. In the UK, in the Zero Carbon Hub (UK) has produced the “Builders Book” which illustrates detailed technical and practical solutions to help overcome those construction challenges which have a significant impact on building ener-gy performance, See Compliance Study, p. 9.
See, 182 EPBD Compliance Study. Figure 3.5, p. 29, Office of the European Union, 2015. 183
See, 182 EPBD Compliance Study. p. 33 Section 3.3.2, Office of the European Union, 2015. 184
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The requirement for Member States to provide technical support and set up a national
fund and financing in article 20 of the Energy Efficiency directive, is paramount to Member
States achieving compliance with MEP standards. This is because a lack of skilled enforce185 -
ment bodies or local authorities was an issue among many Member States including Poland and
Slovenia. For instance, skilled architects planners and engineers are needed to achieve sustain-
able building design. Likewise, building control inspectors who check and enforce compliance
on site and via documented evidence, are crucial to MEP standards being met. According to 186
the European Commission, the UK has achieved best practices in regards to technical support to
the building industry where the Zero Carbon Hub produced the Builders Book. The Builders
Book, illustrates detailed technical and practical solutions to any construction challenges that
impact a buildings energy performance. The European Commission assessed seven key fac187 -
tors that resulted in their analysis of the strength of Member States MEP regimes where states
were ranked under the following categories; very high, high, medium, low. The UK was ranked
high under this analysis while other Member States were ranked very high ( Germany was the
only Member State to achieve 100% followed by Belgium, Finland, and Spain at 93%). Of 188
the seven key factors that the Commission used in their assessment of Member States MEP
regimes, those that affected compliance the most were; the date that the requirements were intro-
duced, the penalties enforced by Member States and the characteristics of those penalties, and the
financial and technical support systems in place. Some Member States such as Italy, scored a
low level of strength for MEP regimes yet achieved high level of compliance rates for new build-
ings (87% Italy). This is largely due to the fact that in Italy MEP requirements are not yet cost
optimal and are therefore less stringent.
Directive 2012/27/EU Of The European Parliament And Of the Council of 26 October 2012 on energy efficiency, 185
amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC OJ 14, 11, 2012. L 315/1.
See, 182 EPBD Compliance Study. p. 35, Section 3.3.4.2. Office of the European Union, 2015.186
Dollard, Tom - Edwards, Pollard. Builders Book: An Illustrated Guide to Building Energy Efficient Homes. 187
Hayden House, London, UK. 2015. p. 4.
See, 182. EPBD Compliance Study. p. 36, Section, 3.3.5. Office of the European Commission, 2015.188
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Prior to the implementation of the EPBD recast and its Energy Performance Certificate
requirement stated in article 11, in 2007 the UK established domestic and non-domestic registers
to make it mandatory for all EPC’s and DEC’s to be lodged on the appropriate register. This 189
is in conjunction with the fact that all property advertisements must include the EPC rating and
as of 2012, it has been mandatory to lodge air-conditioning inspection reports into the non-do-
mestic register. While energy performance certificates reveal the calculated energy performance,
Display energy Certificates are used in England and Wales to show the operational rating of a
building (i.e. how much energy is being used) on a rating scale of A-G. The EPBD requires that
DEC’s and their Advisory reports be updated every 10 years but since 2008, it has been mandato-
ry in England and Wales that it be updated annually. EPC compliance rates in the UK report190 -
ed by estate agents for buildings constructed, sold or rented, scored 70% compliance while those
reported by owners, scored 85% compliance. There was also an 85% compliance rate with 191
EPC advertisements being displayed on properties for rent or sale. In an interesting field study,
one estate agent from seven different Member States (Gr, Be, Pl, Es, Se, Ie) were asked if ten-
tants/ buyers understood the value of an EPC rating and the estate agent from the UK said that
EPC is not a factor taken into consideration in the sales market and that while most tenants are
interested in EPC, very few ask.
Despite this unenthusiastic assessment on the part of the UK estate agent, EP indicators
were found to be clearly displayed on windows on all properties, leaving the UK with the highest
score out of the seven Member States in the field work study. This is because as previously men-
tioned, the UK requirements align with the Directive in that, EPC should only be displayed in
large buildings not occupied by a public authority but frequently visited by the public, only if an
EPC has been produced (buildings constructed sold or rented after the requirements came into
force). The UK unlike the majority of Member States, relies on regional authorities for EPC
Bramhall, Jonathan. Recast of the Energy Performance of Buildings Regulation. Department of Communities 189
and Local Government. Impact Assessment No. DCLG 1031, 08.11.2012.
See, 189. Bramhall, Jonathan. Impact assessment p. 18, 08.11.2012.190
See, 182. EPBD Compliance Study. p. 47, Figure 4.1. Office of the European Commission, 2015.191
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quality assurance and when it comes to the administration of compliance systems, accreditation
bodies are responsible as opposed to central government bodies. 192
Among the four major elements that are considered by the commission to have a major
impact on compliance levels; The qualified experts license to operate, the software and database,
the penalty system in place, and the compliance system in place/ the introduction of an indepen-
dent controls system (ICS). Software tools have been produced in all Member State in the pro-
duction and issuing of EPC’s and in the UK, the uniform interpretation and implementation of
the calculation procedure that is guaranteed by an accreditation process and is organized at the
government level. This calculation system is designed to build customer confidence and ensure
constant and accurate results.
Going back to the penalty system required by article 27 of the EPBD recast, Member
States must set rules on penalties that are conducive to the infringements of the regulation. In the
UK, penalties have been imposed in the form of fines; existing dwelling 200 pounds, public
buildings 500 pounds, public building advisory report 1,000 pounds, non-domestic buildings
500- 5,000 pounds, air conditioning inspection report 300 pounds. These regulations reflect the
minimum requirements and as such, gold plating has been removed. Penalties may be imposed 193
in a variety of circumstances examples of common circumstances include; the EPC is not issued
for a new building or major renovation, an EPC is not handed over during a sale or rental trans-
action, an EPC is not displayed in advertisements in commercial media, and EPC quality is
poor. In regards to ensuring that qualified experts have a license to operate, the UK has estab194 -
lished a National Occupational Standard that describes the knowledge, skills, and understanding
an individual needs in order to be competent at his job. The skills and competences required 195
for the different types of energy assessors (on construction, existing dwellings, commercial and
public buildings, air conditioning inspectors) guidance and training shall cover the following ar-
eas; the importance of improving energy performance, the consideration of the optimal combina-
See, 182. EPBD Compliance Study. p. 57, Section 4.3.1. Office of the European Commission, 2015. 192
See, 189. Bramhall, Jonathan. Impact Assessment. p. 28-29, 08.11.2012. 193
See, 182. EPBD Compliance Study. p. 59, Section 4.3.4. Office of the European Commission, 2015.194
See, 189. Bramhall, Jonathan. Impact assessment. p. 28, 08.11.2012. 195
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tion of improvements in energy efficiency, use of energy from renewable sources, and use of dis-
trict heating and cooling when planning, designing, building and renovating.
The requirement for Member States to have an Independent Control System (ICS) and a
compliance checking system, is stated in article 18 of the EPBD recast . Checking systems, 196
requirements, and selection methods for assessment, vary from Member State to Member State.
In the UK, assessment for compliance is done via random selection as opposed to targeted selec-
tion. Only qualified Energy Assessors may lodge EPC’s onto the Central Registers which is
done through accreditation schemes or approved organizations bound by standard operating re-
quirements . A stipulation of these requirements is that accreditation schemes must randomly 197
select and audit a sample of at least 2 percent of the EPC’s lodged in a year. This random selec-
tion process is designed to ensure that the Energy Assessor who produced the EPC, is unaware of
which certificates they are selecting to audit at an amount no lower than 2 percent of EPC’s per
quarter . Additional auditing is also a feature of the UK’s implementation of the ICS and com198 -
pliance checking requirement where, independent auditors are appointed in England, Wales,
Scotland and Northern Ireland, to regularly audit accreditation schemes to make sure that they
comply with DCLG’s SORs. If and when schemes fail to meet the minimum standards, Disci-
plinary Notices may be issued imposing time limited remedial actions. Failure to comply will
result in suspension or termination to practice as an approved accreditation scheme. 199
The ICF assessed the strength of compliance checking systems for EPCs in each Member
State where strength is defined as a composite score of each Member State’s ICS, Software,
penalty system, and licensed qualified experts. On this front, the UK received a score of very
high strength along with six other Member States (Belgium, Cyprus, Lithuania, France, Den-
Directive 2010/31/EU Of The European Parliament And of The Council of 19 May 2010 on the energy perfor196 -mance of buildings (recast) OJ 18.06..2010, L 153/13.
McNamara, Hannah. Reply From the UK: Energy Performance Of Buildings Directive - Recast (Article 18). 197
Letter to Paul Hodson, Director General Energy C3 European Commission: In Response to Requirement on Infor-mation on the Independent Control System Completed Annexes for UK Authorities. United Kingdom Department of Communities and Local Government, 09.23.2014.
See, 197. McNamara, Hannah. United Kingdom Department of Communities and Local Government, 198
09.23.2014.
See, 193. McNamara, Hannah. Reply from the UK. United Kingdom Department of Communities and Local 199
Government, 09.23.2014.
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mark, Italy). Of these seven Member States, Lithuania was the only one to receive a percentage
score of 100% while the remaining six Member States received a percentage score of 92%. It 200
is considered by the Commission, that EPC compliance checking systems have a great impact on
EPC quality and subsequent compliance rates. Therefore the strength of EPC compliance check-
ing systems within Member States, directly translates in the increased accuracy and reliability of
EPC’s. The more reliable an EPC the greater its value thus, the ICF adjusted compliance rates by
combing the results of the strength of EPC compliance checking systems with compliance rates
for new, sold, and rented buildings where the UK received a score of “very High” or greater than
85% compliance.
See, 182. EPBD Compliance Study. p. 62, Figure 4.2. Office of the European Commission, 2015.200
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VIII. Concluding Remarks
From a legal perspective, Energy Efficient regulations for buildings are far less ambitious
at the national level, in the United States compared to the European Union and it’s Member
States. However, the UK is not without its own obstacles nationally with cuts in green funding
as well as the recent Brexit vote both of which, could potentially stifle progress for energy effi-
cient buildings . Meanwhile, now that the most recent application round of CREB’s has ex201 -
pired, federal tax credits seem to be virtually the only financial aid available for energy im-
provements on buildings in the United States and they can not even be accessed by local and
state governments. In the U.S. these sub par financial institutions at the federal level are coupled
with weak environmental policies and GHG targets as opposed the UK who at least has mandato-
ry EU legislation to comply with and many more funding options to lean on. Yet despite these
discrepancies, the megacities within these two nations have seemed to demonstrate the same val-
ues and policy initiatives related to sustainable development. One important fact that was point-
ed out during the UK Green Building Conference was that, during the industrial revolution in the
early 1800’s, three percent of the worlds population lived in cities, now cities make up over 50%
of the worlds population. In addition to this, the worlds cities generate 80 % of global wealth
and emit more than 70% global total greenhouse gases.
Megacities are at the center of both economic power and innovation and it is because of
this that cities have such an advantage in terms of policy and knowledge. Since cities are more
in touch with local demands and challenges, they are the best outlet for delivering quick policy
implementation. That being said, the top down legal approach to energy efficiency at the union
level is without a doubt the reason why the EU is out performing the U.S. in energy efficiency.
While pricing measures and market mechanisms are a fine attempt for facilitating sus-
tainable building performance, they are not as sufficient than programs and regulations estab-
lished via EU directives. If more ambitious standards and codes for buildings are to be imple-
Klare, Michael, T. Will Trumpism, Brexit, and Geopolitical Exceptionalism Sink the Planet. The Energy Collec201 -tive (September-23-2016) http://www.theenergycollective.com/energy-post/2388595/will-trumpism-brexit-and-geopolitical-exceptionalism-sink-the-planet.
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mented and compliance with said standards is the expectation, the federal government must en-
force standards that apply nation wide. The harmonized nature of the EU Energy efficiency di-
rectives and regulations has proven to be a very effective way to achieve significant sustainable
building improvements, particularly in the public sector. At the national level, energy perfor-
mance of public buildings would improve in the U.S if laws were harmonized at the national lev-
el. For instance, if national model building codes were set, minimum energy efficiency require-
ments for buildings, labeling requirements for appliances, consistent auditing of building per-
formance and energy standards, and sufficient penalties (fines) for non-compliance. While
grants and subsides are not as accepted in the U.S. as they are in the EU, federal grants and sub-
sides for renewable investments would significantly benefit renewable installations on public
buildings. In regards to funding, the federal government should expand and encourage the use
of public-private partnerships wherever grands/subsides are not politically accepted in a particu-
lar region. It is necessary that any improvements made in the U.S national building efficiency
laws, be coupled with adequate and independent compliance checking systems like those best
practiced in EU Member States. Finally, having competent and skilled labor involved in building
renovation and renewable installation, has proven a crucial element to upholding and complying
with mandatory building laws. As job creation tends to be a popular phenomenon, It is unlikely
that the training and employment of U.S citizens would face any significant political or legal op-
position, if it were orchestrated by the U.S. government.
