Senate Committee Passes Energy Bill

Fall 2011

The Senate Energy and Natural Resources Committee fast-tracked a bill that creates new standards and efficiency targets for new construction of residential and commercial buildings. Unlike past drafts of similar legislation, S.1000, The Energy Savings and Industrial Competitiveness Act of 2011, approaches the issue by calling on the Department of Energy (DOE) to set efficiency targets through a formal rulemaking process. This would allow affected parties, including the development community, to comment on the proposed changes before they are enacted.

NAIOP was a lead influencer of the bill, working closely with Senate staff to ensure that the position of commercial development was understood. The bill includes valuable improvements to the previous direction of the bill, thanks to NAIOP’s constant communication with members of the committee and expressed willingness to work with the committee on this important issue. As Congress continues to debate the role of the federal government and private sector energy efficiency, NAIOP believes that it’s more important than ever that commercial real estate engages with lawmakers and has a seat at the proverbial table.

Among the chief successes of NAIOP’s efforts is the removal of zero-net-energy (ZNE) goals and targets from the legislation. Creating ZNE buildings by 2030 was the original underlining goal of the bill and the basis for setting efficiency targets for all new codes. Because this standard is not attainable in the foreseeable future, especially without defining the role of onsite power generation, NAIOP successfully lobbied to have the goal omitted from the legislation.

Co-sponsored by Senators Jeanne Shaheen (D-N.H.) and Rob Portman (R-Ohio), the bill doesn’t force states to update their building codes to reach arbitrary efficiency targets by specific dates. Instead, the bill takes a more practical approach that incorporated the majority of the provisions NAIOP negotiated, including:

Economic considerations. DOE must consider the economic feasibility of achieving new targets for building codes, including costs and savings for consumers and building owners and a return on investment analysis. Currently, DOE only has the obligation of determining if a new code is more efficient than a previous code.

Rulemaking to determine targets. DOE will, in concert with the current consensus driven code process, establish a formal rulemaking policy that allows for comment by interested and affected parties in lieu of enshrining specific code targets in legislation. Previous proposals considered by this committee have set targets and dates without first determining the feasibility of those targets or seeking input before establishing new codes.

Separation of commercial and residential targets. DOE can now recognize the significant differences in commercial and residential buildings and establish specific targets practical to achieve certain efficiencies for residential, the same efficiencies often do not apply to commercial, and vice versa.

Inclusion of retrofit loan guarantees. DOE will be authorized to create a loan-guarantee program for existing building retrofits, meeting NAIOP’s position that existing buildings are where the majority of energy is consumed and the most energy efficiency gains can be achieved. New buildings account for a very small percentage of overall building stock, and newer construction is developed by standards that are vastly more energy efficient than the majority of existing buildings.

Removal of retrofits from the compliance section. Initial drafts of the bill contained language that included retrofits within the compliance section. Because major renovations are often already required to comply with current code regulations, depending on a state’s building code, their inclusion with compliance could have created a new definition and yielded an unintended consequence of inhibiting building owners from making improvements to their properties for fear of triggering new regulations.

Consideration of plug loads and other strategies. Plug loads account for a significant amount of the energy used and attributed to buildings, are typically not controllable by a developer, and fall outside the scope of building codes. DOE recognized NAIOP’s position that plug loads must be considered before code targets are developed because not all efficiencies can be achieved during the development process, and other strategies are needed to maximize the amount of energy efficiency.

S.1000 was passed by the committee by a vote of 18 to 3 and is now cleared for a full Senate vote, though further action has not yet been scheduled. If the Senate does pass S.1000, the House of Representatives would have to move similar legislation, or take up S.1000 for the bill to become law.

NAIOP is encouraged with the bi-partisan approach of S.1000 and will continue to educate Congress on the development process, working towards creating practical energy policies and building code changes.