Building owners are wondering what comes next after it appears that Joe Biden clinched the 270 Electoral votes needed to be elected the next President of the United States. Even before the election, Biden had promised to ramp up America’s fight against climate change, targeting new policies at our nation’s infrastructure, building stock and energy sector. Once inaugurated, Biden plans to transform America’s commercial real estate sector into a global leader in sustainability.
“Climate change is the existential threat to humanity,” President-Elect Biden told listeners during a podcast interview. “Unchecked, it is going to actually bake this planet. This is not hyperbole. It’s real. And we have a moral obligation.”
To achieve that, a Biden White House will need willing partners in the real estate sector. America’s 125 million residential and commercial buildings use more energy than any other sector in the United States, accounting for 40 percent of the Nation’s energy use and nearly 75 percent of its electricity consumption.
“To get to that 50 percent reduction in greenhouse gas emissions from buildings, they’re going to have to have a four-pronged approach and they’re going to have to do all four prongs in parallel,” said Cliff Majersik, director at the Institute for Market Transformation, who has worked with cities and states to design building performance standards. “Those four prongs include improving building energy efficiency, expanding renewable energy resources, electrifying buildings and implementing demand management programs.”
Biden’s plan listed on his official transition team website details how his administration will put the country on a path to net zero carbon emissions by 2050. He wants to upgrade four million buildings and weatherize two million homes over next four years, which he claims will generate at least one million jobs. The Biden plan aims to reduce the carbon footprint of the U.S. building stock by 50 percent by 2035 by creating incentives for “deep retrofits that combine appliance electrification, efficiency, and on-site clean power generation.” To address building carbon footprint, Biden has promised to create a national building standard, replacing state and local emissions standards.
The president-elect seems to understand the importance of buildings in the fight against climate change. Biden’s plan is based largely on recommendations from the U.S. House Select Committee on the Climate Crisis. The committee’s report makes special reference to building standards in New York and Washington that they said the US Department of Energy should help other states develop. The state of New York passed The Climate Leadership and Community Protection Act which was signed into law by Governor Cuomo and sets a goal to reach net-zero carbon emissions across the entire state by 2050. The ambitious law has unleashed a slew of new initiatives and committees, many targeting the state’s largest polluter; New York City. Washington’s Clean Building Act, passed in 2019, takes things even further, establishing the first statewide building performance standard. The new law incentivizes landlords and property owners to improve their building’s energy use to benefit from billions in energy savings and increased property value. A Biden administration could see such efforts reach a national scale.
That means the Federal government could soon require commercial buildings to measure and report their energy usage and emissions. The Department of Energy will likely step up research and development in energy efficiency and electrification, as well as require building owners to disclose climate risk to better inform insurers and investors, according to analysts. Such policies would put the US on par with the world’s most energy efficient nations.
To achieve the upgrades, Biden wants to mobilize a trained and skilled workforce to manufacture, install, service, and maintain high-efficiency LED lighting, electric appliances, and advanced heating and cooling systems that run cleaner and less costly. During his time as Vice President, Biden unveiled The Recovery Through Retrofit report, a multi-agency report that aimed to expand green job opportunities and boost energy saving by making the country’s existing homes more energy efficient. One key finding of the report was the US lacked a skilled workforce for retrofits.
Now may be the perfect time to go to work on America’s building stock. Working from home during a deadly pandemic means many of our biggest buildings are nearly vacant on a daily basis, clearing the way for major projects. Many owners and managers are already seizing the opportunity to improve their buildings without worrying about disturbing tenets during a busy work day.
Such an ambitious plan is sure to meet opposition. Beyond the impending political fight over Biden’s $2 trillion plan, he will need the support and buy-in of the private sector. Already there are encouraging signs that the private sector understands how critical carbon footprints have become. Global broker behemoth CBRE invested millions into UK startup Redaptive, which helps landlords find cheaper ways of reducing a building’s carbon output, Bloomberg reported. Before Biden was elected, the Energy-Efficient Building market worldwide was projected to grow by $103 billion. A Biden administration could supercharge the market.
“That could be married with building performance standards, so that not only are you seeing an influx of federal money in improving our buildings, but you could drive private investment in building owners’ own buildings,” Majersik said. “We think that could really be a good one-two punch to rev up the economy.”
On day one, Biden will enter the Oval Office with plenty of problems on his plate. Getting the coronavirus pandemic under control and the economy firing on all cylinders will be his top priorities. The Biden Administration’s commitment to issues impacting sustainability in commercial real estate remains to be seen. All plans point to green investment as being part of the recovery plan, laying out a climate action roadmap to COVID-19 recovery. The next four years may be an opportunity for the US commercial real estate sector to become a global leader in sustainability.