States Lead Building Performance Standards as Federal Policy Shifts: Maryland Acts, Who's Next?

As Maryland adopts Building Energy Performance Standards (BEPS), adding to a growing list of state and city regulations, commercial real estate owners nationwide watch closely. Building owners face a stark reality: similar regulations will likely arrive in their jurisdictions. What you need to know for strategic preparation:

The State-Led Emissions Movement

With buildings accounting for approximately 40% of global greenhouse gas emissions, states are taking decisive action to regulate this crucial sector. The new federal administration brings uncertainty to national climate policy and funding, yet states and major cities remain undeterred, continuing to pursue ambitious building emissions regulations. This state-level determination reflects a shift in American climate action - while federal policy fluctuates, local initiatives can drive sustained progress.

The current landscape reveals an expanding pattern of intense building performance regulations and imposing fines for noncompliance, with regions including:

• Washington D.C.: requires privately owned buildings larger than 50,000 square feet to meet emission standards, with target in 2026 or fine of $10 per square foot

• New York City enacted Local Law 97, setting emissions caps for buildings over 25,000 square feet, first targets in 2024 with steep penalties

• Boston implements BERDO, mandating emissions reductions for buildings over 20,000 square feet, first targets in 2025

• Colorado requires 7% emissions reductions by 2026, escalating to 20% by 2030 through Regulation 28, first targets in 2026

• California enacted Title 24 and the Climate Buildings Act (SB 1385), establishing comprehensive state-wide building performance standards, first targets in 2028

• Maryland targets net-zero emissions by 2040 through its new BEPS program, first targets in 2030

The Next Wave

Several indicators point to emerging building performance standards across the country in addition to state and community-wide sustainability goals:

• Rhode Island: approaching first targets for their newly approved Building Decarbonization Act of 2024 pending smooth implementation

• Philadelphia expands building energy benchmarking requirements with BEPP, opening the door for more intense requirements and penalties in the coming years

• New Jersey: State goals and climate vulnerability drive regulatory momentum with potential for individual building requirements and penalties in the near future

• Massachusetts: expanding from Boston, The Better Buildings Act proposed requiring large commercial buildings in MA to reduce their emissions by 80% by 2040

• Austin: Recent targeted sustainable building policies set a path for commercial building emissions reduction targets

• Miami responds to climate threats with enhanced building standards similar to the tune-up plan in Philadelphia

The Shifting Sands of Building Regulations

While these regulations demonstrate a strong commitment to reducing building emissions, implementation presents hurdles. New York City's Local Law 97, for example, reveals the difficulty of balancing ambitious targets with practical implementation. Many building owners find heavy fines more cost-effective than upgrades, and the city's enforcement capabilities remain uncertain. In Maryland, new legal challenges citing conflicts with federal law (Energy Policy and Conservation Act) further complicate implementation. These cases underscore the importance of strategic, gradual preparation.

Using Compliance for Profitability

While regulations drive building decarbonization, the financial advantages of improved performance provide a compelling case for proactive action, regardless of the specific policies in place. New technologies offer tangible solutions for enhancing efficiency and reducing operating costs. By implementing strategies that significantly reduce energy consumption and improve Energy Use Intensity (EUI), building owners can not only ensure compliance with evolving regulations but also realize substantial cost savings.

Proactivity is Key

Early adopter jurisdictions offer valuable insights into the challenges of implementing building performance standards. In this dynamic regulatory landscape, proactive building owners who plan ahead, innovate, and take strategic action tailored to their specific circumstances will be best positioned for success, regardless of how regulations evolve in their regions.