It is the policy of the State of California to minimize energy consumption. This is founded in large part on a “loading order” that prioritizes efficiency to reduce generation demand, followed first by demand response programs and then generation, with an emphasis on renewables.
There are many programs implementing the loading order. Property owners, developers, builders and their advisors should be aware of them. These programs touch new, altered and existing buildings with legal requirements, and affect every aspect of building ownership and operation, including construction, alteration, maintenance, leasing and sale. They reduce the energy use and environmental impacts of the built world. And in doing so, they create opportunities for competitive advantages by meeting market demands for sustainable construction while reducing operating costs.
California’s New Buildings Will Become Energy Neutral
The loading order was jointly established in the 2003 Energy Action Plan (“EAP”) by the Energy Resources Conservation and Development Commission (“Energy Commission”), the Public Utilities Commission (“PUC”), and the Consumer Power and Conservation Financing Authority (“CPA” – and which is now defunct). In 2007, the Energy Commission recommended the State implement every available cost-effective energy efficiency measure, to achieve zero net energy use by new residential construction by 2020, and by new commercial construction by 2030. In 2008, the PUC adopted the California Long Term Energy Efficiency Strategic Plan (Strategic Plan) of 2008, which reiterated that California utilities must focus residential efficiency efforts on “whole-house” approaches of comprehensive energy assessments, rebates, financing options and quality installation.
The building energy efficiency standards contained in the Building Standards Code are the bedrock of this policy. These standards, known as the Energy Code, are fundamentally performance-based and establish minimum levels of building efficiency. About one third of the energy used in California is consumed by buildings. Significant energy is saved from the new, re-constructed and remodeled buildings that are subject to the Energy Code, which is revised approximately every three years.
The Green Building provisions of the Building Standards, known as the CALGreen Code, also play a significant role. Initially largely voluntary, the 2010 CALGreen Code became effective on January 1, 2011; it contains both mandatory and voluntary or “reach” standards for energy efficiency, as compared with the mandatory Standards. The CALGreen Code establishes tiered energy performance levels of 15 percent and 30 percent more stringent than the current (2008) Energy Code.
Local jurisdictions may make mandatory the reach provisions of the CALGreen Code, or adopt other provisions that are more stringent than the Energy Code. Many have done so. As of December 29, 2010, twenty-six local entities had adopted more stringent codes. Nothing indicates that these will be the last to do so.
California is Reducing the Energy Use of Existing Buildings
Existing buildings are similarly reducing their energy use. In 2009, the Legislature completed the square of building standards with a bill to reduce the energy by existing buildings by adopting Assembly Bill No. 758 (“AB 758”), Stats. 2009, ch. 470. AB 758 directed the Energy Commission and PUC to improve the efficiency of California’s existing buildings, in consultation with a wide variety of stake-holders, including sister agencies, utilities, local governments, real estate licensees, builders, property owners, small businesses, financial institutions, appraisers, inspectors, energy raters, consumers, and environmental groups.
AB 758 enabled a broad range of inter-operative programs to achieve meaningful and reliable energy assessments of each building’s energy consumption level relative to other buildings; improve efficiency or energy resource utilization, and; make cost-effective energy efficiency improvements in existing buildings. These programs will be implemented through multiple approaches, including financing, outreach and education, and workforce training. These approaches will be adopted through a transparent, public rule-making process. The Energy Commission instituted its rule-making for AB 758 in February 2010.
AB 758 will be piloted with federal funding. In May 2009, California was granted $226 million of American Recovery and Reinvestment Act (ARRA) State Energy Program funding, $110 million of which will be used to develop residential and nonresidential retrofit programs across the state. The flagship program is “Energy Upgrade California”, which will serve as a one-stop hub for money-saving energy improvements and financing programs to make them.
AB 758 builds on the State’s mandatory and “reach” building standards, as well as new nonresidential energy use disclosure requirements. Assembly Bill No. 1103 (“AB 1103”), Stats. 2007, ch. 533, as amended by Stats. 2009, ch. 323, requires owners to keep and disclose nonresidential building energy consumption data to prospective buyers, lessees of or lenders that would finance the entire building. A rule-making is also underway to implement the AB 1103 program.
Voluntary Programs Help Achieve Energy Savings
Beyond the State’s programs, a number of voluntary programs promote energy efficiency. Common examples are the U.S. Green Building Council’s Leadership in Energy and Environmental Design (“LEED”) standards, the Build It Green GreenPoint rating system, and the U.S. Environmental Protection Agency’s Energy Star rating system. In January 2010, the American Society of Heating, Refrigerating and Air-Conditioning Engineers, Inc., (“ASHRAE”), published its Standard for the Design of High-Performance Green Buildings, No. 189.1. While the value of meeting voluntary standards and rating systems varies from building to building, and “sustainable” properties suffered a greater financial loss during the recent recession, they had better capital growth overall in the third quarter of 2010, partly as a result of their enhanced market appeal.
Challenges and Opportunities Await to Maximize Your Building Performance
These various, competing aspects of modern building operation are changing the landscape of real estate. Almost daily, opportunities and pitfalls are presenting themselves from mandatory and voluntary measures to operate buildings better as living and breathing systems, rather than static monoliths. Real estate owners, tenants and their advisors should be aware of the rapidly evolving legal requirements and voluntary programs for reducing energy costs, improving efficiency, and disclosing performance data to minimize risks and maximize competitive advantage.
About the Authors
Pippin C. Brehler is a Senior Staff Counsel with the Office of the Chief Counsel of the California Energy Commission. He is lead counsel for the Commission’s building standards programs. Pippin previously counseled public and private clients on various aspects of land use, environmental, eminent domain and real estate law. He obtained his Juris Doctor from the University of Michigan Law School in 2003. He can be reached at (916) 654-5056 or email@example.com .
Devi Eden is an Energy Specialist in the California Energy Commission’s (CEC) Efficiency and Renewable Energy Division. She has worked in the field of energy efficiency for over 8 years, both in the State of Washington and in California. She currently works in the High Performance Buildings Unit where she is contract manager of one of the ARRA residential retrofit programs, is the Energy Commission lead on the energy efficiency sections of the CALGreen Code, reviews local ordinances exceeding Title 24 Part 6, and will work on the future AB 758 regulations. In the past, she served as Advisor to Commissioner Art Rosenfeld in 2009, and has also worked in the SB1 programs including the New Solar Homes Partnership Program. She has a Bachelor of Science degree in Energy Systems from the Evergreen State College, in Olympia, WA. She can be reached at (916) 651-0962 or firstname.lastname@example.org .
The content of this article and views expressed herein are those of the authors and not necessarily the Energy Commission. This material does not constitute legal advice or exhaustive study; applicability to any particular circumstance requires fact specific analysis.[i]
 2003 Energy Action Plan, (http://www.energy.ca.gov/energy_action_plan .
 2007 Integrated Energy Policy Report, adopted Dec. 5, 2007, pub. no. CEC-100-2007-008-CMF, pp. 4-5, available at http://www.energy.ca.gov/2007publications/CEC-100-2007-008/CEC-100-2007-008-CMF.PDF .
 California Long Term Energy Efficiency Strategic Plan September 2008, p. 18, available at http://www.cpuc.ca.gov/NR/rdonlyres/D4321448-208C-48F9-9F62-1BBB14A8D717/0/EEStrategicPlan.pdf .
 Title 24, California Code of Regulations, Part 6.
 See Initial Study/Proposed Negative Declaration for the 2008 Building Energy Efficiency Standards, April 2008, p. 9, available at http://www.energy.ca.gov/2008publications/CEC-400-2008-009/CEC-400-2008-009-SF.PDF .
 See 24 Cal. Code Regs., Part 11.
 Pub. Resources Code § 25402.1, subd. (h)(2), 24 Cal. Code Regs. § 10-106.
 For a list of jurisdictions with local ordinances, see http://www.energy.ca.gov/title24/2008standards/ordinances/
 Public Resources Code, § 25943, subd. (a).
 Rulemaking on AB 758: Comprehensive Program for Energy Efficiency in Existing Buildings, Docket No. 1O-AB758-1, Order No. 10-0224-7, Feb. 24, 2010.
 Kent Peterson, High Performance Buildings, Code Green Standard 189.1 Comes at a Crucial Time, Spring 2010, p. 18, available at: http://www.ashrae.org/publications/page/927. ASHRAE Standard 90.1 serves as a baseline for many mandatory energy codes. Mike Wapner, Clint Wheelock, Building Efficiency: Ten Trends to Watch in 2011 and Beyond, Pike Research, Winter 2010, pp. 2-3.
 Anthony Buonicore, Green Building Performance Disappoints During the Recession, Dec. 20, 2010, available at: http://blog.bepinfo.com/2010/12/green-building-performance-disappoints.html .
[i] Produced and copyrighted by Pippin C. Brehler and Devi Eden, © 2011, all rights reserved. Any use or reproduction of the article or its contents without the authors’ prior express written consent is strictly prohibited. This published material constitutes neither legal advice nor exhaustive legal study. Applicability to any particular circumstances requires fact specific analysis.
Mr. Brehler thanks his wife Janice for her love, support and insights throughout.
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