Reaching Net-Zero Greenhouse Gas Emissions from Buildings
Buildings account for 16% of Maryland’s greenhouse gas (GhG) emissions. To address this, Maryland’s Climate Solutions Now Act of 2022 requires covered buildings to reduce these GhG emissions over time with the goal of reaching net zero by 2040. This is an ambitious increase over previous goals, but it’s in line with the scientific consensus of what we need to do NOW to limit global warming to 1.5°C above pre-industrial levels to avert the worst impacts of climate change.
A pillar of the Climate Solutions Now Act is a state-wide Building Energy Performance Standard (BEPS), which will significantly impact many condominiums and cooperatives. In this article, we’ll break down the scope of Maryland’s BEPS law, which buildings are covered, what they must do, and when.
BEPS laws are proliferating across the county. BEPS requires certain existing buildings to first benchmark their energy performance and then make improvements over time or face financial penalties. Importantly, BEPS doesn’t tell building owners how to reach those goals. That remains market-driven, and we’re already seeing the creation of new technologies, services, and jobs to meet this challenge. Instead, BEPS is intended to galvanize and speed private industry action.
The BEPS Opportunity
Maryland’s BEPS law has been met with predictable groans and complaints in public information sessions and condo board meetings across the State. Most managers and condo boards are looking at these laws and thinking, “Shoot, this is going to be complicated and expensive.” Complicated? Perhaps, but you can always engage competent professionals to solve problems. Expensive? That depends.
Energy efficiency isn’t a technical or a financial challenge; it’s a people challenge. BEPS can be the catalyst that brings together all of us working in the built environment to stop treating energy as a problem without a solution (a.k.a. a fact of life). So don’t think about BEPS strictly in terms of compliance, or you’ll miss the broader opportunity. Instead, think about it as an opportunity to do better—financially, socially, and environmentally.
Step One, Benchmarking!
BEPS covers all commercial and multifamily buildings (including condominiums and cooperatives) in the State that are 35,000 square feet and greater. While the regulations are not final, other jurisdictions have typically defined the square footage threshold as being applicable to single buildings (i.e., high rises), connected buildings (i.e., garden style), and groups of buildings under common utility meters or HVAC systems (i.e., campus-style communities with central boiler plants).
Starting in 2025, covered buildings must start annually benchmarking their utility data. The State will likely use EPA’s Portfolio Manager tool. Benchmarking with Portfolio Manager starts by inputting standard building information like size, type, year built, and utility information. The tool then weather-normalizes the data, compares it to similar buildings, and reports on various metrics, including an ENERGY STAR score, energy use intensity (EUI), energy costs, and GhG emissions.
Now, I can already hear groans, but there is good news. First, buildings that consistently benchmark typically show a steady reduction in energy use, simply as a function of paying attention to their energy use. Second, Montgomery County and the Building Innovation Hub have lists of local companies that can easily handle this for you!
Step Two – Reducing GhG Emissions
Covered buildings must achieve a 20% reduction in “net direct GhG emissions” by 2030, compared to their 2025 baseline. Then, they must be net zero by 2040. While this sounds like a long time away, it’s sooner than you may think. We’re already less than 20 years from 2040, and a new boiler or chiller is an investment that is expected to pay off over a 20+ year lifespan, so the time to start thinking about these things is now.
What are “Net Direct GhG Emissions?”
These are directly related to the combustion of fossil fuels burnt on-site from things like boilers, furnaces, water heaters, and dryers. Getting to net zero means moving away from gas/heating oil/propane altogether and electrifying. The BEPS law does not consider offsite emissions (i.e., the natural gas or coal used to generate the electricity your property consumes), but this will be dealt with through other parts of the law.
So what’s IN and what’s OUT?
OUT: Gas boilers, steam plants, gas furnaces, gas water heaters, gas dryers, and gas stoves.
IN: Heat pumps, VRF, geothermal, rooftop solar, PLUS energy efficiency
As utility costs continue to rise, energy efficiency is an increasingly important hedge. After all, the cheapest energy is the energy you don’t consume. Standard energy efficiency techniques will be vital, particularly those focused on more robust HVAC control systems paired with smart analytics, smart thermostats, insulation, and building envelope improvements. Building technology is evolving rapidly, so watch this space!
What Happens if My Property Doesn’t Meet its Requirements?
There will be ways to request exemptions or special considerations, but absent that, non-compliant buildings will face fines based on the “Federal social cost of carbon,” which is revised from time to time.
What can I do now?
Given the capital equipment lifespan, the time to start planning is NOW! Don’t wait to start benchmarking. It’s cheap, easy, and helps save energy. Once you know where you stand, you can work with engineers to conduct an energy audit and condition assessment. Use that data to inform your long-term capital reserve planning. The more you do now, the less you’ll have to do later!
So, What’s the Good News?
There are lots of incentives available to help building owners meet the BEPS challenge and turn it into a cashflow-positive opportunity. The utilities offer a wide range of incentives under the EmPower Maryland Program. The Maryland Energy Administration provides grant opportunities and super low-interest loans, which are open to all Maryland businesses, including community associations. MDE will launch additional supporting programs in 2023.
Most importantly, energy efficiency is its own reward that will pay for itself. It yields multiple benefits, including but not limited to lower energy and maintenance costs, higher property values, improved HVAC reliability, decreased liability, increased staff productivity, and happier and healthier residents.