Friday, May 13, 2011

Death Knell for Energy Star Building Benchmarking or Another Opportunity for the Commercial Real Estate Industry?

On April 28, 2011, U.S. DOE’s Energy Information Agency (EIA) announced that due to budget cuts, work on the 2011 Commercial Buildings Energy Consumption Survey (CBECS) has been suspended. As if this was not bad enough for our industry, a short time later, they shocked the industry even more by saying that they will not be releasing the long-awaited results of the 2007 CBECS, apparently due to “statistical” problems.

As may of you know, the CBECS is a national sample survey that collects information on U.S. commercial buildings, their energy-related characteristics and energy consumption. The survey, which began in 1979, is conducted every four years. The most recently published data is based upon the survey conducted in 2003.

The specific reason given by EIA for not releasing the 2007 CBECS data is that it “has not yielded valid statistical estimates of building counts, energy characteristics, consumption, and expenditures.” In a paper I published in April of 2010, The Formidable Challenge of Building Energy Performance Benchmarking (see link at the end of this blog), I pointed out several shortcomings in the CBECS data and why many of us in the industry did not believe it represented a statistically valid building energy performance database for use in benchmarking, particularly when local regulation requires benchmarking results to be publicly disclosed. With the spiraling growth of city and state-initiated building energy performance disclosure legislation, there simply is too much at stake for building owners in the highly competitive commercial real estate industry to accept anything less than unquestionably reliable, statistically supportable benchmarking. As such, I have long advocated for EIA to expand significantly the number of buildings included in the 2011 CBECS. I also made this recommendation as a working group chair on DOE’s Zero Energy Commercial Building Consortium. Unfortunately, the 2011 CBECS is now a mute issue, and the data void will remain a growing challenge for the commercial real estate market.

The problem created by these announcements is even more complicated. The building benchmarking methodology EPA uses in its popular Energy Star program is based upon the CBECS data. As such, Energy Star’s benchmarking has been relying for years on the outdated 2003 CBECS data. This is one of the reasons why the commercial real estate industry was so very much looking forward to the release of the 2007 CBECS data. Moreover, many of the cities and states with existing and pending building energy performance disclosure legislation rely on Energy Star for benchmarking. It is clear now that they have been left in a lurch. What are they to do? (It is my opinion that they should eliminate the benchmarking requirement (using Energy Star) from their legislation and instead only require disclosure of the building’s energy use following ASTM E 2797-11, Standard Practice for Building Energy Performance Assessment (BEPA). Over time, cities and states on their own will accumulate a considerable building energy use database, confidently knowing that energy use information has been collected in a standardized and reliable manner. Eventually there will be sufficient data for all major building types such that statistically valid benchmarking will be possible. Only at that time, in my opinion, should benchmarking results be added to the public disclosure process. Notwithstanding, I am also absolutely confidant that as soon as only building energy use alone is required to be publicly disclosed, private industry will rise to the occasion, well before the government, to provide the public with an answer as to what the numbers being disclosed mean and provide a perspective.)

Since ASHRAE’s Building EQ and U.S. Green Building Council LEED building labeling initiatives rely on Energy Star benchmarking, these programs will clearly be adversely impacted by the effective demise of CBECS. This is also true of other building labeling programs that have incorporated Energy Star benchmarking, such as the Architecture 2030 Challenge and Capital Markets Partnership Green Value Score.

As with any new and emerging market, I strongly believe it will ultimately be those from within the industry that is impacted who will ultimately respond and coalesce around any new challenge to further evolution and innovation. Recognizing the need to have a standardized methodology for building energy use data collection and that this process must be consistent, transparent, practical and reasonable, the industry did respond by working with ASTM to develop such a standard. This was accomplished earlier in the year with the publication of the ASTM E 2797-11 BEPA Standard. There is now a need for the industry to again rise to the occasion and respond to the building benchmarking data void created by the loss of CBECS. This unquestionably represents a unique opportunity for entrepreneurs servicing the commercial real estate industry.



Greg said...

I think Energy Star label is/has been over hyped for years! Your "Formidable challenge.." paper from April 2010 opened my eyes to the weakness of Energy Star and CBECS. On to BEPA!

Maura said...

EPA’s ENERGY STAR program provides a platform for strategic energy management that is based on a variety of performance indicators, many of which do not rely on data derived from CBECS. For example, these additional indicators include greenhouse gas emissions and weather normalized energy use intensity (EUI), which is the primary metric required for reporting by the majority of local and state benchmarking and disclosure mandates. The success of the ENERGY STAR program lies in the power of collaborative partnerships and the ability to deliver flexible, innovative solutions that work for the industry. EPA uses data from CBECS when and where it is relevant, available, and reliable, and continually evaluates the data presented in the periodic surveys. Based on this analysis, EPA has found that the key drivers of energy use in commercial buildings have remained largely consistent over the past 10 years and, as a result, believes that the ENERGY STAR energy performance scales remain the best representation of commercial building energy performance in the market. Nevertheless, when necessary, EPA has gone beyond what is available through CBECS and worked with industry partners and associations to gather rigorous, statistically valid data sets for specific market sectors, such as senior care and data centers, that have been used as the foundation for ENERGY STAR certification. EPA’s ENERGY STAR program is and will continue to be based on the best-available and most rigorous energy performance data in the commercial marketplace.
-Maura Beard, Director
Strategic Communications, Commercial Buildings

Tony said...

Maura, I do appreciate your response. However, the facts remain that: (1) Energy Star relies on 2003 CBECS data which is clearly outdated and one of the reasons why the industry was so looking forward to the 2007CBECS data; (2) the 2003 CBECS relies on approximately 5,000 buildings to represent the marketplace in the U.S. - or another way of looking at it is that fewer than 500 office buildings (after small office buildings were removed by EPA from the CBECS data set to eliminate an EUI bias here), 1,500retail establishments, 260 lodging facilities, etc. are used in the benchmarking to represent all office, retail and lodging buildings located throughout the country (a fact which has been questioned by many experts in the commercial real estate industry); (3) it has already been acknowledged that there has been confusion in the reporting of gross floor area in CBECS, which can significantly impact the EUI used in EPA's benchmarking dataset; and I can go on. There is no question that EPA's Energy Star program for building performance was a great starting point for the industry to build awareness in this important area. But there can be no question that when information is being publicly disclosed (as is beginning to occur by legislation and regulation) and therefore can impact a building owner's business, the information must be up-to-date, reliable and accurate. If my building is being compared to a benchmarking database, the buildings my building is being compared against better truly be "comps." There simply is too much at stake today. That is part of the reason why the 2007 CBECS release was so anticipated. As you may also know, I was part of a DOE Consortium that recommended significantly expanding the 2011 CBECS to increase the confidence level. But of course, now that appears to have been wishful thinking. The bottom line is that many in our industry believe the government (DOE and EPA) let us down and it is a shame. Considering the relatively small dollars involved, it is inconceivable that the CBECS program can not be funded (and even expanded) somehow!

Teresa said...

Can I have your permission to post a link to this article on my Linkedin Group blog that I just started for CORE Energy Group?

Thank you,

Tony said...

Of course.