Bipartisan energy efficiency law: The beginning of something good

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On April 30, President Obama signed into law a new bipartisan energy efficiency bill consisting of pieces of a larger bill that had been bogged down in Congress over the Keystone XL pipeline fight.

Utility BillThe modest but symbolic Energy Efficiency Improvement Act of 2015 (S. 535) sets up a new energy efficiency recognition program for commercial buildings—similar to the Energy Star program—and requires development of an energy efficiency best practices model for federal leasing.

The new law also calls for changes in standards for grid-connected hot water heaters, and requires a study of the economic and privacy effects of energy efficiency measures and data disclosure for commercial buildings.

Split incentives and hot water heaters

Under Title I, the law authorizes creation of “Tenant Star,” a voluntary program to encourage energy efficiency by tenants and landlords of commercial buildings. The program will recognize those who achieve high levels of energy efficiency, either through design and construction, or through use of energy efficient equipment and methods.

Title I also addresses the problem of “split incentives” which occurs when building owners pass utility costs through to their tenants. The law calls for developing leasing policies and best practices that will “align the interests of building owners and tenants” to improve efficiency by splitting the cost of investment in energy and water efficiency measures between the two parties.

Once developed, this aligned approach will be required of federal agencies, and will be made available to state and local agencies for voluntary compliance, as well.

Under Title II, the law exempts hot water heaters that connect to the electrical grid as part of an electrical thermal storage or demand response program from energy efficiency standards that will apply to regular hot water heaters.

Energy benchmarking

Title III of the law requires energy benchmarking and data disclosure for owners and tenants of federally leased commercial buildings which don’t have an Energy Star label. It also calls for a study of benchmarking policies and best practices for increasing efficiency in high energy-use commercial spaces, such as restaurants and data centers (click here to read our white paper on restaurant energy efficiency).

The law’s two sponsors, Sen. Rob Portman (R-OH), and Sen. Jeanne Shaheen (D-NH), have been working together since 2011 to develop a comprehensive national energy efficiency bill, and vow to continue their effort.

The same day the president signed the bill into law, the Senate Energy and Natural Resources Committee held a hearing on an array of additional energy efficiency bills, covering retrofitting of schools, smart building technologies, upgrade loans, gas furnaces, weatherization, data centers, and a host of other topics.

According to Steven Nadel, executive director of The American Council for an Energy-Efficient Economy (ACEEE), who presented testimony and worked on sections of the new law, it “will have modest impacts on energy consumption.”

But Nadel and others believe the bill’s significance lies in the very fact of its bipartisan passage after years of effort by Shaheen, Portman, and many others.

Interested in learning more about managing energy use in small commercial facilities?