Blog Post

The Benefits and Administrative Costs of Local Building Efficiency Policies: Q&A

April 27, 2022

As cities work to meet their climate commitments, they are increasingly adopting policies to reduce existing buildings’ greenhouse gas emissions and energy use. Despite this encouraging progress, cities considering adopting these policies still have limited data available on the costs to run these programs or the benefits of doing so. An ACEEE topic brief and accompanying fact sheets released today share new data—and insights some cities have learned about designing and implementing such policies.

The brief and fact sheet series are based on ACEEE’s interviews with nine cities that have efficiency policies for existing buildings, including policies requiring owners of single-family homes to provide prospective buyers with energy information (time-of-sale disclosure policies), building owners to make certain tune-ups (retrocommissioning or tune-up policies), or building owners to track and disclose energy use to the municipality (benchmarking policies).

We chatted with Alexander Jarrah, lead researcher and ACEEE research analyst for local policy, to learn more.

Why did you focus on these particular policies? What is their importance for cities?

These policies are important tools for cities for several reasons, ranging from reducing energy use, energy costs, and greenhouse gas emissions to offering consumer protections for renters and homebuyers seeking properties with more affordable energy bills. Such policies can prompt building owners to pursue energy efficiency upgrades and participate in incentive programs. A growing number of U.S. cities are adopting these policies, and we’ve heard from several others wanting to know about the costs and benefits involved.

Looking at these policies as a whole, how would you summarize their costs to cities?

There are real costs to cities, many of which are resource constrained, but your perspective matters. In too many cases, sustainability offices have small staffs and are tasked with doing more with less. If you are thinking in terms of a city’s sustainability office budget, the costs of designing and implementing these policies can be significant. But when compared to a city’s overall budget, they are really fairly modest. Some cities will need to increase their budget to design and run these policies. We believe it’s a manageable amount for many, though. And frankly, to run programs that achieve energy savings and greenhouse gas reductions, cities inherently need to make some level of additional investment.

Designing these policies generally costs more than implementing them. One of the highest costs for cities is the required staff time. The cities we interviewed used 1 to 2.5 full-time equivalent employees during the design phase, but that number went down during implementation. Some cities hire consultants, which can be costly. IT support is another cost for implementing some policies, like benchmarking. To help with costs, cities can often take advantage of opportunities to receive low- or no-cost support from nonprofits, national labs, and other organizations.

You found that the cities implementing these policies have been tracking their benefits only in limited ways. Can you explain why that’s the case and what we know about the benefits?

Cities need to be diligent about how they spend time and funds, and most are going to prioritize implementation of a policy over evaluation. The policies we looked at take different levels of commitment to evaluate. Evaluating time-of-sale disclosure policies for greenhouse gas emissions reductions would require a lot of time and effort on the city’s part, for example, and so these are less commonly evaluated.

In those few cities that are tracking benefits, we see that benchmarking and retrocommissioning policies can result in greenhouse gas emissions reductions of more than 5% in compliant buildings. Other benefits cities reported included job creation and reductions in energy use and costs.

Do we know if these policies are achieving equitable outcomes by benefiting marginalized community residents?

There’s not much information on how these policies are benefiting marginalized groups. Because of concerns among some that the policies would increase rent prices, a number of the cities we looked at exclude the multifamily and affordable housing sectors from new efficiency requirements altogether. That’s not the best approach, as it restricts or eliminates the potential for the policies’ benefits to reach these residents, who are some of the most in need of these benefits. For example, the median energy burden of low-income households is 3.5 times higher than that of non-low-income households. Cities can better address this issue by offering these sectors financial assistance, relaxed compliance schedules, and support with compliance to address affordability concerns.

What are some trends or similarities in the ways cities implement their policies?

Cities find that creating lists of the buildings covered by the policies is essential for benchmarking and retrocommissioning policies. This can be a time- and labor-intensive process, but indicating which buildings need to comply with the policy and which are exempt is an important step that helps with compliance. Cities also need to stay on top of buildings’ points of contact, as these can change frequently. Several cities we looked at used spreadsheets to manage data collection at first but soon realized that this wasn’t the best way to go. Many switched to more advanced—and costlier—software, such as customer relationship management programs with more functionality. And another trend we found is that cities often assist resource-constrained building owners, such as nonprofit organizations and houses of worship.

What advice would you give cities considering these policies?

There are a few things they can keep in mind. Some cities we interviewed noted that it’s helpful to keep elements related to implementation out of the legislation language. This allows more flexibility in the rulemaking process, and the simplified legislation can result in increased compliance. Second, the number of full-time equivalent employees dedicated to implementing the policy was insufficient in some cities, so if you’re a city considering one of these policies, it’s worth planning for scenarios where you’ll need to hire additional staff. Third, committing to program evaluation early on will allow you to begin to identify which processes need to change. Lastly, as we’ve already discussed, providing support to the multifamily and affordable housing sectors can help residents in these buildings reap the benefits of these policies.

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Local and Community Initiatives Energy Efficiency and Climate Change Commercial Buildings Homes and Multifamily Buildings
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