In this week’s episode, host Kristin Hayes talks with Veronique Bugnion, a climate physicist by training and the CEO of ClearlyEnergy, a provider of innovative solutions that reduce building emissions. Bugnion describes the Council on Environmental Quality’s recent efforts to develop building performance standards for federal buildings and explores challenges ahead for reducing emissions from the difficult-to-decarbonize buildings sector. Noting that no consensus exists for how to embark on creating such standards, Bugnion describes existing efforts, such as Washington, DC’s program that relies on federal Energy Star scores and Tokyo’s flexible system, which effectively functions as a carbon market for large buildings.
Listen to the Podcast
- Learning from existing performance standards: “What's interesting about the designs we have across the United States is that they're all different. There's no one design that has yet emerged as the definitive way to design a building performance standard.” (7:42)
- Federal standard will cover many buildings across the country: “What's really new and different about a federal building performance standard, which has not been explored yet, is that it's a big country. Consumption characteristics are different in different parts of the country … There are lots of types of federal buildings: There's tens of thousands of post offices in the mix, for example. There are government labs. There are lots of different types of buildings.” (12:29)
- Transparency is key to the success of federal standards: “I'd offer [the federal government] one and a half pieces of advice. The first would be to provide transparency—tons and tons of transparency. If the public can track building data across time and see the improvements, or even see which buildings are lagging, I think that would help with the credibility. The federal administration is in a unique position to innovate.” (24:24)
Top of the Stack
The Full Transcript
Kristin Hayes: Hello, and welcome to Resources Radio, a weekly podcast from Resources for the Future. I'm your host Kristin Hayes. My guest today is Veronique Bugnion, a scientist, entrepreneur, and energy industry leader. She is a climate physicist by training and spent a number of years in the private sector, focusing on energy and carbon markets. Today, Veronique is currently cofounder and CEO of ClearlyEnergy, a provider of innovative solutions to reduce building emissions. She's also an adjunct professor at Johns Hopkins University, where she teaches courses on climate finance and climate risk.
Veronique's expertise in reducing building emissions makes her an excellent guest to talk with me about federal building performance standards. The Biden administration announced on May 17 that the Council on Environmental Quality would be leading an effort to develop such a policy for federal buildings. And Veronique is joining me today to shed light on how such standards could be designed, what impact they're likely to have, and what the federal government can learn from other jurisdictions that have put building performance standards (BPS) in place. Stay with us.
Veronique, it was great to talk with you today and thank you so much for coming on Resources Radio.
Veronique Bugnion: Hi, Kristin. It's a pleasure being here today.
Kristin Hayes: Great. Let's start with some introductions. Can you tell our listeners a little bit about your background. I'm particularly curious about what drew you to eventually focusing on reducing emissions from the building sector?
Veronique Bugnion: My background is obviously a little bit of a mix between science, policy, business, and economics. I like to get involved in new and innovative policy approaches to tough climate issues, and buildings are interesting because they are a really tough nut to crack. There's over 110 million residential homes in the United States. There's 6 million commercial buildings, and about two thirds of those use fossil fuels for heating. So even if we're successful in cleaning up the electricity supply with renewable electricity and reducing the emissions associated with things like air conditioning and computers and lights, we're still stuck with emissions from heating, water usage, and cooking. I think that's going to be a really tough slog because the equipment has a long lifetime and nobody really cares, right? There's no Tesla sex appeal to one water heater over another. Maybe for solar roofs, but not so much for the equipment that's in the basement. And so it's a really tricky problem.
Kristin Hayes: I'm always impressed when people are drawn to problems that are tricky. I'm glad to hear that that's what drew you to working on this particular issue. Let's talk about the topic of federal building performance standards. I'd like to start by reading just a bit from the Biden administration’s announcement as I mentioned, made on May 17 of this year, in which they noted that the Council on Environmental Quality is launching an interagency federal sustainability effort with the General Services Administration (GSA), Department of Energy (DOE), and Environmental Protection Agency (EPA) to develop the first ever building performance standards, or BPS, for the federal government. The BPS will establish metrics, targets, and tracking methods to reach federal carbon emissions goals. The performance standards will identify progressive performance milestones as well as the resources that agencies need to meet them.
Sorry for that long intro, but I wanted to read that because there are in fact, a number of terms that are useful to define in there. Let me start with the basics. What is a building performance standard and how does it compare to other policies or techniques that might help reduce emissions from the building sector?
Veronique Bugnion: Right now if you think of building energy efficiency programs, the odds are you're probably thinking of appliance standards—which are great—or you might be thinking of incentive programs. But if we look at commercial building emissions over the past 30 years, they're pretty flat, which isn't great. It's not bad, because it's obviously a mix of improved efficiency, more square footage, and more buildings, but we still haven't had great success. The idea behind building performance standards is simply to tell building owners “here's the target, go and meet it.” The targets also get more stringent every couple of years. So it resembles a very basic carbon market-like approach to things. The target metric itself can be energy consumption per square foot of building space, it can be emissions per square foot, it can be emissions per building. The targets can go all the way out to 2050 and say that, “hey, by 2050 by the way, we expect buildings to be net-zero emissions,” for example.
But what's really interesting about building performance standards is that they can be designed on a spectrum, from plain vanilla to markets. So plain vanilla means that every building has to meet the target, and the target can be by type of building. It doesn't need to be one target for all buildings, because hospitals might have a different type of footprint from office buildings. It could be a hybrid approach—which we have a couple of cases of—where groups of buildings together have to meet the target. Those groups could be university or hospital campuses, but they could also be all of the buildings owned by a corporate owner or it could be a market.
New York City is studying trading for its building performance programs, essentially turning it into a market. That would allow one or both of the following mechanisms. It could allow buildings that over-comply to put the excess in a piggy bank to use for later. This is a positive because it incentivizes early, very strong compliance. It could also allow buildings to trade, which would mean that the buildings that are most efficient or that are over-compliant could sell that excess to those that are under-complying. The goal of the flexibility is to allow buildings to deal with different financing timelines, or tenant constraints, or equipment renewal time. So there's a lot of reasons to build flexibility into a basic building performance approach.
Kristin Hayes: Fascinating. So you mentioned New York State, and I wanted to circle back to where this already exists. The Biden administration in its announcement characterized their initiative as leading by example. Saying they’re leading by example indicates they're ahead of the curve in implementing this type of standard. So is that right? Where are there other building performance standards currently in place already?
Veronique Bugnion: There are a couple of examples in the United States and around the world, but I think it's also fair to say that anybody putting together building performance standards still has a lot to figure out. What's interesting about the designs we have across the United States is that they're all different. There's no one design that has yet emerged as the definitive way to design a building performance standard. What we have in the United States is the DC Building Energy Performance Standards (BEPS), which has started, and it's interesting because it sets an Energy Star score target to divide the buildings into those that meet the targets, and those that have to go through either consumption reductions or an approved list of efficiency improvements.
New York City has Local Law 97, and their program is in greenhouse gas reduction units. St. Louis has a program in energy units, so energy consumption targets. Reno might be my favorite because they are targeting both water and energy reductions at once in their program. So that's the cities. Then we have two states that have passed building performance standards-enabling legislation, and that's Washington and Colorado. Then there’s a number of cities that are working on it. That includes Boston, Cambridge, Montgomery County in Maryland, and probably others, which I apologize for.
Kristin Hayes: We will not slight anyone who is working on one. This actually does spark a follow up question for me though. As a resident of the District of Columbia, I do feel like I probably should have been more aware of this particular policy. One thing about the federal buildings is that they are all office space. I don't think that there's anyone living in federal office buildings, but for cities which are dealing with both commercial buildings and residential buildings, am I right that the building performance standard could cover all of those types or none of those types? If so, how are the jurisdictions dealing with that differentiation? It seems to me that those would require very different types of education, outreach, and engagement. I'm just curious about that difference.
Veronique Bugnion: I probably should have clarified at the outset that building performance standards are really only a tool for large commercial buildings. Generally speaking, they are designed to bring in the largest buildings first, gradually working their way down to smaller buildings. There is an owner’s reporting requirement that goes along with a building performance standard. You need to know what the building consumes in order to calculate reductions. It's really commercial buildings, mainly the largest commercial buildings. If you think of greenhouse gas footprints in cities—depending on the city— anywhere from 60 to 80 percent of the total greenhouse gas footprint of the city is from buildings. That's why cities are out there first. It's because it's pretty obvious to them that if they are setting city-wide greenhouse gas goals, they're going to have to target the emissions or the consumption from their largest buildings.
Kristin Hayes: Thank you for that clarification. Another piece of the announcement that I wanted to just spend a tiny bit of time on is the fact that it mentions a number of federal agencies by name, including the EPA, the DOE, and the GSA, which is the government agency that really is primarily responsible for the physical infrastructure of the federal government. That's alongside the Council on Environmental Quality, which is the organizing entity. So that's a lot of agencies. Certainly there was no shortage of interagency cooperation across the federal government. But I just want to ask, what does that number of players, or what does that diversity of players tell us about the expertise that might be needed to develop a really robust standard for the federal government buildings?
Veronique Bugnion: It's obviously a complicated landscape because the federal government owns buildings but it also leases buildings. Some are managed by GSA, but some are managed by the agencies directly. The Department of Defense is obviously going to be a big chunk of the puzzle, but we don't necessarily have their data upfront. What's really new and different about a federal building performance standard, which has not been explored yet, is that it's a big country. Consumption characteristics are different in different parts of the country. It's funny that you said, federal buildings, specifically office buildings, because there’s lots of types of federal buildings: there's tens of thousands of post offices in the mix, for example. There are government labs, there are lots of different types of buildings. But yeah, a post office in Minnesota is going to worry about heating in the winter, while a post office in Arizona is probably going to be worrying about air conditioning in the summer.
So quite different things. One way around that is to do what Tokyo started—and what a couple of jurisdictions in the United States are looking to follow—and that's to set building-specific starting points. So instead of trying to say, well, there's 12 categories of buildings and 8 climate zones, and therefore we're going to set 100 standards, they say, every building gets its baseline, its starting point. You use recent data—though probably not 2020 or 2021 data—and then you tell every building, “here's your starting point. Now go knock off 10 or 20 percent every five years,” based on whatever the timeline might be. I think that that's probably a good approach for something like the federal administration, which has such a complex landscape of buildings. If it seems unfair to the most efficient buildings which have already done a lot of work, then you exempt them from the first compliance period or two, and that's easy enough as well.
Kristin Hayes: Is that also something where the flexibility mechanisms that you mentioned at the beginning could actually reward the folks who had been ahead of the curve, or is that flexibility not as compatible with this building-by-building benchmarking that you mentioned?
Veronique Bugnion: No, it absolutely is. In particular for something like the federal administration, they have big portfolios of buildings. We're talking a billion square feet. It's even hard to wrap your head around it. What we've learned from an energy savings standpoint is that it's better to go all in rather than to do one or two things: change the lights one year, or change the windows another year. If a federal program is designed to let federal agencies, or even agencies at a regional level, optimize how they're going to tackle the program, giving them flexibility to precisely do that is key. Some buildings might over-comply, and some might need a few years because things like efficient heating equipment is still relatively new. That seems to make a lot of sense in that context.
Kristin Hayes: Another thing that you've mentioned a couple of times is the importance of starting with good baseline data. It sounds like that's really a critical foundational block for any of these building performance standards. How would you characterize where the federal government is now in terms of having that good starting data? I will be the first to admit that I wasn't really thinking about all of the types of federal buildings that could fall under this mandate, and you're right. That's a huge number of buildings, and they might not necessarily have the data that they would need to be collecting to date. So are there other steps that the federal government would really need to take just in order to establish that baseline data, and then from there to establish these metrics and targets and tracking methods?
Veronique Bugnion: The good news is the federal government has data, which is a start. There are actually requirements for the largest federal buildings to report their energy consumption annually, and even for buildings to be audited every couple of years. There's actually a trove of the data out there though. It definitely does need some tidying up. What's interesting is federal buildings actually had energy efficiency improvement goals. Their target was 30 percent by 2015, and they actually got to about 25 percent, but those targets have now lapsed and are not being renewed. What the data does tell us is that there are relatively few very, very big buildings, which are really big consumers of energy. That means those are the ones to start with, because the overall data is not perfect, but if you're going to scrub data then it's easier to start with a specific subset of buildings and then gradually improve reporting requirements and systems to bring in smaller buildings over time.
Kristin Hayes: Something else that's been on my mind is that sometimes it can be difficult to have enough longevity and access to data to really understand how successful they've been. What do we know about the success of the building performance standards that have been implemented in other jurisdictions? Do we have enough of a track record to be able to draw conclusions, and are there ways that the federal government could potentially learn from those experiences, make modifications, and really maximize their chances for success?
Veronique Bugnion: That's a great question. The only place where we really have a long track record is Tokyo, and maybe a few cities in China, which include buildings and their carbon markets. When we talk about the Tokyo carbon market, it's really a building performance standard for the largest buildings in Tokyo, which happens to allow trading. That's what makes it a carbon market. The Tokyo program started in 2010 and by 2018—so in 8 years—the buildings had reported 27 percent lower emissions. 27 percent is actually their 2025 goal, which means the buildings are pretty far ahead of the targets or the targets could become more stringent faster. What's important to note is that essentially all the buildings are complying, and knocking down a quarter of emissions in eight years, even if there was some low-hanging fruit in there, is pretty good.
The program is complex. It collects a lot of data, which means we know pretty well how buildings are reducing their consumption. It's a good mix of what's happening inside the building, anything from optimizing lighting and heating systems to heat pumps to external purchases of renewable electricity. The Tokyo program has really interesting flexibility mechanisms. It allows buildings from outside the region to voluntarily opt in. It allows smaller buildings to opt in. It allows buildings to purchase renewable energy to knock off their emissions. It does offer us a number of lessons and it has a good track record. If any criticisms are levied against it, it is that the typical issue of carbon markets that are doing too well is that. The idea is that buildings are over-complying, so they’re building up this big oversupply of banked up reductions that they can use later. But my view on that is, so what? The track record to date is pretty good, and that means that they can become more stringent down the road.
Kristin Hayes: Out of curiosity, why would a small building opt into a system like that?
Veronique Bugnion: Probably for two reasons. One might be the altruistic view of this puts me in a program. This puts me on a path that I want to be on. The other is, well, I'm actually an efficient building. If the building is part of a portfolio of lesser efficient buildings, for example, that allows a portfolio owner to increase flexibility to even things out, or it allows the building to sell its excess into the marketplace.
Kristin Hayes: Great. The more I hear you describe the types of data that needs to be collected, the types of solutions that are being implemented in places like Tokyo, it seems to me that there's a tremendous amount of relatively new expertise that really would come into play in helping make something like this successful. So people who really understand on a fairly deep level where the opportunities for these types of reductions are. Is that really the case? Does the successful implementation of a building performance standard of this scale really require some new industries to grow around it? And if so, do we have those industries, or is this really an opportunity for job creation as well?
Veronique Bugnion: It's a really interesting space because on the one hand, you have building engineers or even building models that say, “well, you can do X, Y, Z, and that'll reduce consumptions by so much.” That space historically hasn't really overlapped with policymakers who designed programs, especially ones with compliance flexibility. If you’re a big institution, say Howard University in DC, and you have several buildings, it becomes a complicated puzzle to figure out what to do with what building and on what timeline in order to comply with the overall DC BEPS program. As you said, this is new, there's going to have to be a lot of innovation and a lot of thinking about how to combine this engineering approach with policy requirements to help buildings comply effectively, efficiently, and cost- effectively. That's partly what makes these programs quite interesting.
Kristin Hayes: I will be very interested to see how this evolves at the federal level. So as the team is putting together these standards for the federal government, If you, as someone who has looked at these programs in a fair amount of detail, could offer them one piece of advice, what would it be?
Veronique Bugnion: I'd offer them one and a half pieces of advice. The first would be to provide transparency. Tons and tons of transparency. If the public can track building data across time and see the improvements, or even see which buildings are lagging, I think that would help with the credibility. The federal administration is in a unique position to innovate. It will have to, because it would be the first broad geographic building performance standard. I think it can innovate in particular when it comes to smart buildings. So if you think of big commercial buildings, they are big energy consumers. If they can design programs that incentivize buildings to move consumption from higher emissions hours to lower emissions hours, then they can really help improve grid operations and improve the overall system. So there are ways to build that into a federal building performance standard that would be unique, and they can play around and experiment with that as part of a federal program.
Kristin Hayes: Well, I hope that they're all listening and I am sure that every good piece of advice they get is much appreciated as they put together a very complex but also potentially very impactful new policy. So we'll see what happens. Thank you so much for sharing this with our audience, and helping ground us all in what this means. So I'll close with our regular feature, Top of The Stack. I'd love to ask you for your recommendations on good content, whether on this topic, or again, just about something of interest to you that you'd like to share with our listening audience. So Veronique, what's on the top of your stack?
Veronique Bugnion: Well, I'll admit that I mostly read climate policy papers, but my Top of The Stack is a new book called Icebound by Andrea Pitzer. It has an awesome cover of a polar bear. My husband and I met doing climate field work in the Arctic. So we like to dig up books about Arctic and Antarctic explorers. Icebound is the adventures of Willem Barentsz at the end of the 16th century, so a fair while ago. Barentsz Sea is named after him. His curse was too much ice all the time, but it's an amazing survival story. It’s a refreshing counterpoint to today's world of drought and wildfire, right? It's been a while since people worried about too much ice, and their explorations being thwarted over and over again by too much ice.
Kristin Hayes: Well, thank you. I imagine we'll have a number of listeners who would be intrigued by that. So that's great. Well, Veronique, thanks again. It's been a pleasure to talk with you and I look forward to hearing more about your work in the future.
Veronique Bugnion: Thank you, Kristin. It's been a pleasure.
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Resources Radio is a podcast from Resources for the Future. RFF is an independent, nonprofit research institution in Washington, DC. Our mission is to improve environmental, energy, and natural resource decisions through impartial economic research and policy engagement. The views expressed on this podcast are solely those of the podcast guests and may differ from those of RFF experts, its officers, or its directors. RFF does not take positions on specific legislative proposals. Resources Radio is produced by Elizabeth Wason, with music by Daniel Raimi. Join us next week for another episode.