Market Drivers for Benchmarking Energy Performance

Alison Liaboe

Energy is the largest contributor to a building’s environmental footprint. The energy consumed during the lifetime of a building (typically 40-50 years) exponentially exceeds the energy and cost of fuels consumed for the building’s materials and development. Additionally, energy use is the single largest controllable cost in commercial buildings. Effective energy management can bring financial and environmental savings. But understanding what market forces drive these savings is the first step to benchmarking energy performance.


Energy costs, greenhouse gas emissions and potential energy legislation are market drivers that get the most publicity. However, there is a growing community of state and local governments across the United States who use and promote the EPA’s ENERGY STAR® program as a way to lower energy consumption in commercial and industrial facilities. Public utilities serving customers in California and Washington are required to provide ENERGY STAR ratings. And some cities, like New York City and Washington D.C., take it one step further. They require building owners and managers to benchmark their performance using EPA’s online portfolio manager benchmarking tool.

The Greener Greater Building Plan in New York City requires public and private buildings to track energy and water consumption using the EPA’s Portfolio Manager. Private buildings greater than 50,000 square feet are now required to benchmark their performance, and this data is published for all to see.

Additionally, the number of voluntary initiatives to provide energy performance information to help building owners measure and better manage their energy consumption is on the rise. In some cases incentives are linked to the benchmarking system as in New Mexico where a tax credit is available. In New Jersey, the pay for performance programs offers cash incentives for measured energy savings using these benchmarking tools. Online public listings are also starting to incorporate ENERGY STAR recognition.

Dollars from some no or low cost energy saving projects, like efficient lighting retrofits, can be reallocated as these projects provide a very strong return on investment. The money saved from energy efficiency projects can also fund sustainable and green design. Buildings applying for LEED use the EPA’s Portfolio Manager tool to make sure they meet the program’s minimum energy performance rules.

buildingsReducing greenhouse gas emissions is another key market driver to energy savings. Some companies located in the Northeast are required to reduce their greenhouse gas emissions through a program that’s first of its kind. Called the Regional Greenhouse Gas Initiative (RGGI), this market-based regulatory program is a collaborative effort by Connecticut, Delaware, Maine, Maryland,Massachusetts, New Hampshire, New York, Rhode Island, and Vermont to require states to cap and reduce CO2 emissions 10 percent by 2018.

As part of the program, states are required to auction their emission allowances and use these proceeds to invest in energy efficiency, renewable energy, and other clean energy technologies.

Finally, the potential for cap and trade legislation and/or federal/state tax incentives while limited in today’s current climate, is another market driver for benchmarking energy performance. Many companies already volunteer to produce a carbon disclosure report, the first step to proactively protecting themselves from any future cap and trade legislation that could jeopardize their image and operations.

Register for our September 13th “Benchmarking with ENERGY STAR” webinar where we will discuss the importance of energy performance metrics and benchmarking with ENERGY STAR.

Learn how Ecova helps commercial and industrial clients benchmark energy performance.

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