Understanding California's New Requirements for Energy Efficient Buildings

The State of California established itself as a leader in energy policy with groundbreaking climate legislation, the first Low Carbon Fuel Standard and aggressive Renewable Portfolio Standards. The State continues on the path of supporting and incentivizing improvements in energy efficiency with two measures taking effect in 2011. First, California's Green Building Standards Code (CalGreen), which took effect on January 1, 2011, requires all new buildings to meet more stringent environmental and energy efficiency standards. Second, Assembly Bill 1103 (AB1103) mandates the disclosure of commercial building energy consumption data to buyers, lenders and lessees.

CalGreen

CalGreen is part of the California Energy Code and represents a significant first step towards making green building part of the mainstream construction business. The code seeks to reduce the environmental impact of both residential and commercial buildings and applies to all new construction.

For residential buildings, the new code regulates five areas: planning and design; energy efficiency; water efficiency and conservation; material conservation and resource efficiency; and environmental quality. The California Energy Commission (CEC) establishes the mandatory requirements for energy efficiency. But the California Building Standards Commission highlights the CEC's stance that for buildings to be considered green they should realize 15% energy savings or more compared with the state regulatory requirements.

CalGreen encompasses four regulatory subjects for commercial buildings: planning and design; energy efficiency; water efficiency and conservation; and material conservation and resource efficiency. CalGreen requires that new buildings reduce water consumption by 20%, divert 50% of construction waste from landfills, and use materials that emit minimal pollutants, among a myriad of other provisions.

Some parties have raised concerns about the possibility that CalGreen will discourage the use of more exacting standards like Leaders in Energy and Environmental Design (LEED). However, as Phil Williams, vice president of Webcor Builders and chairman the Green Building Task Force puts it, "CalGreen sets the floor and LEED sets the ceiling . . . you have to start somewhere."

AB1103

The California State legislature passed AB 1103 in 2007, mandating energy benchmarking and disclosure for non-residential buildings. The CEC is responsible for implementing the provisions of AB1103 and current draft regulations require compliance beginning in 2011. When AB1103 goes into effect the owners and managers of commercial properties will be required to disclose a building's energy data and the energy rating of the previous year to prospective buyers of the property, lessees and lenders financing the building.

Legislators designed AB1103 to place a value on energy consumption in commercial real estate transactions and to motivate building owners and property managers to improve energy efficiency performance. CEC mechanical engineer Martha Brook stated that AB1103 seeks to create "commercial valuation of energy usage" in the same way that square-footage is valued.

CalGreen and AB1103 have the potential to interact and create powerful synergies. The combination of higher basic standards and growing awareness and availability of data surrounding the energy efficiency performance ought to bring energy usage to the top of building owners' priority lists.

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