Owners of thousands of commercial, multifamily, and larger public buildings need to modify them in order to meet new energy performance standards legislators adopted last year, but Colorado's energy office could not yet estimate how much the compliance would cost.
In 2021, legislators set large building emissions reduction targets of 7% by 2026 and 20% by 2030 and directed the state to convene a task force to come up with standards to ensure the goals are met.
While the state has yet to create the regulations, the law required a report from the Building Performance Standards task force created by the Colorado Energy Office to provide recommendations to the Colorado Air Quality Control Commission. The Colorado Energy Office sent the task force's recommendations to Gov. Jared Polis, the General Assembly, and the Air Quality Control Commission of Colorado on Tuesday.
Citing tax assessor data, the Colorado Energy Office said some 8,600 buildings would be affected by the new law. The energy office, however, could not yet estimate the cost of compliance, telling The Denver Gazette that because rule making by the Air Quality Control Commission precedes an economic analysis, “we are unable to say how much this program will cost, or what the net energy cost savings will be at this time.”
One expert said controlling cost is critical.
“Improving the energy efficiency of buildings can be one of the more cost-effective ways of saving energy,” said Randal O’Toole, director of the Independence Institute’s Transportation Policy Center. “Cost-effectiveness is key. Rule makers should try to promote practices that save energy without costing much. Generally, any policy that costs more than market prices for carbon offsets should be avoided.”
In a news release, the energy office called large building energy efficiency and electrification “important strategies in meeting the state’s ambitious GHG (greenhouse gas) pollution reduction targets.”
Colorado, under Democratic leadership, has embraced an aggressive transition to renewable energy. Supporters argue that the transition puts the state at the forefront of the technological change, reduces pollution and helps the environment. Critics counter that the transition is happening too quickly, and that Colorado needs a balanced energy portfolio to ensure a stable, predicable and cost-efficient system of powering up homes and industries.
The task force's recommendations leaned heavily on electrification and elimination of natural gas and other fossil fuels for heating, saying building electrification is a key tool to achieving goals.
House Bill 21-1286 outlined the rationale for the performance mandates, arguing energy consumption and greenhouse gas emissions associated with buildings "produce impact beyond its walls" that include "costs to utility ratepayers for increased energy production, community health associated with air pollution, and broader societal costs of anthropogenic climate change.”
Unlike similar regulations that apply to individual residences and smaller buildings that only require energy efficiency upgrades for new construction, major renovations and some appliance replacements, the new large-building energy performance standards being recommended would make emissions-reducing upgrades mandatory and create “a civil penalty structure that sets penalties somewhat above the cost of compliance and in proportion to the required energy savings that are not achieved.”
In July, Tim Walsh, a developer of multi-family housing along the Front Range and candidate for the Senate, said the "incremental gain" resulting from the new standards would place low-income earners at a disadvantage.
“We're pushing in the direction of something for an incremental gain in improving air quality that's going to have a huge economic impact, especially on the lowest economic earners or lowest wage earners in Colorado," he said.
“If somebody owns a commercial warehouse building as part of their retirement plan, now they're required to start reporting, and then there's penalties if they don't report,” he said, referring to the new law.
Will Toor, the energy office's executive director, the task force worked diligently to incorporate feedback from diverse groups.
“These recommendations will help the state establish rules that not only save large building owners money and reduce greenhouse gas emissions, but also provide resources and flexibility to ensure an easy pathway to compliance for all covered buildings in Colorado," he said in a news release.
The task force report said mandatory benchmark reporting by building owners, which is due this year by Dec. 1 – and before June 1 annually going forward – sets the baseline metric for energy use as of 2021 and provides the government with compliance data on an ongoing basis.
The proposed regulations lean heavily on Polis’ goal of energy efficiency improvements through electrification. A reduction of 80% of a building’s space and water heating through electrification is recommended as a primary compliance option for building owners.
The metric for demonstrating compliance is “site Energy Use Intensity,” which is defined as the annual energy consumption per square foot.”
Building owners can get credit towards compliance by using renewable energy, electrification of a part of a building’s energy load, and participation in a demand response program or use of automated demand response technologies that allow utilities to remotely control a building’s energy use.
