International agreements like the Paris Climate Agreement and federal regulations like the Clean Power Plan dominate news reports about climate change.  But cities are increasingly taking the lead in reducing greenhouse gas emissions.  In fact, many U.S. cities have set emissions reduction targets that are far more aggressive than federal goals.  For example, the Chicago Climate Action Plan sets a target of 25% below 1990 GHG emissions by 2020.  While cities initially focused on voluntary measures, regulatory powers are increasingly used to reduce emissions.  These regulations—which so far include emissions reporting requirements and building efficiency standards—may affect a wide variety of businesses in cities across the country.

Buildings, and the energy they consume, account for  a large percentage of greenhouse gas (GHG) emissions in large cities.    As a result, buildings are often the primary regulatory target for cities seeking to cut emissions.  Many cities have adopted two specific measures to address building energy use.  First, cities require certain buildings to report their GHG emissions annually.  Second, cities have added “green” standards to their construction codes, requiring new and renovated buildings to utilize efficient design principles, materials, and equipment.

Chicago, New York, and San Francisco are just a few of the cities that require large buildings to track and report their annual GHG emissions.  These programs follow a similar pattern across the country.  Large buildings—typically those larger than 50,000 square feet—are required to estimate their emissions through EPA’s online ENERGY STAR program using information like building use, occupancy, and electricity consumption.  This information is then reported to city officials, who eventually make emissions data public.  Buildings that do not participate can often be fined.

Chicago, for example, enacted an ordinance[1] in 2013 that requires reporting by all municipal, commercial, and residential buildings larger than 50,000 square feet.  Industrial buildings and warehouses, however, are exempt.  Covered buildings must report by June 1st each year and results are made public by the following March.  Chicago’s program allows small fines to be assessed against buildings that do not comply.  New York City created a similar program[2] in 2009, with reporting requirements for all buildings over 50,000 square feet and penalties of up to $2,000 per year for buildings that fail to report.  San Francisco’s reporting regime,[3] enacted in 2011, goes a step further.  In addition to annual reporting, building owners must complete an “energy efficiency audit” every 5 years, identifying actionable steps to reduce each building’s energy consumption.  Buildings are not required to implement these steps, but must hire an expert to prepare the audit.

Many cities are also adopting building codes that impose strict efficiency standards on new construction and renovation projects.  Some cities have updated their building codes to require specific measures, such as more reflective roofs, efficient lighting, and increased insulation.  Other cities use more flexible standards, like the U.S. Green Building Council’s LEED program, which allows buildings to earn “points” and attain certifications by choosing from a wide range of available efficiency measures.

Chicago and New York are two examples of cities that have taken the approach of updating their building codes to require specific efficiency building measures.  Chicago first added the “Energy Conservation Code”[4] to its building rules in 1999, and has regularly updated the code since then.  This code is based on the model International Energy Conservation Code, and applies to all new buildings as well as to renovated portions of existing buildings.  New York has followed a similar approach, passing the “Green Building Code” in 2009.[5]  This code builds on the New York State Energy Code, and has been updated several times to follow national efficient building standards.  In addition to requiring specific measures, New York’s Green Building Code requires each project to submit an “energy analysis” detailing the building’s compliance with the code.

San Francisco and Washington, D.C., are examples of cities that have taken a different approach, by requiring new buildings to be LEED certified.  The LEED program has certain mandatory prerequisites, but then also includes optional measures that buildings can use to gain “points.”  These points enable buildings to reach 4 certification levels, ranging from “LEED Certified” to “LEED Platinum.”  First enacted in 2006, Washington D.C.’s “Green Building Act” now requires all private buildings over 50,000 square feet to be LEED Certified.  San Francisco’s Green Building Code is perhaps the strictest, requiring new large commercial buildings to be LEED Gold certified and residential buildings to be LEED Silver certified.  In addition to LEED certification, San Francisco also requires new and renovated buildings to meet the requirements of the California Green Building Standards Code.

Buildings are likely to remain a regulatory target as cities continue to pursue significant reductions in GHG emissions.  Businesses should expect building efficiency standards to become increasingly stringent.  Further, cities will surely find creative new ways to require businesses to contribute to sustainability efforts.  For example, beginning in 2015, businesses in Seattle were subject to fines for violating an ordinance banning recyclables from the waste stream.  San Francisco has enacted new rules for companies participating in public works programs, like requiring them to use high efficiency engines and equipment fueled by biodiesel.  As climate change regulation continues at all levels of government, businesses may soon find that the emissions rules most likely to impact them are the ones from city hall.

Schiff Hardin’s environmental group counsels building owners on the calculation of energy use and GHG emissions and its construction and real estate practices can advise owners on making energy efficient modifications.

[1] Municipal Code of Chicago, Chapter 18-14, “Building Energy Use Benchmarking”.

[2] Administrative Code of the City of New York, Title 28, Chapter 3, Article 309, “Benchmarking Energy and Water Use”.

[3] San Francisco Environment Code, Chapter 20, “Existing Commercial Buildings Energy Performance”.

[4] Municipal Code of Chicago, Chapter 18-13, “Energy Conservation”.

[5] Administrative Code of the City of New York, Title 28, Chapter 10, “The New York City Energy Conservation Code”.