How energy reporting can reduce emissions, create jobs and save millions

If it’s true that you can only manage what you can measure, then implementing a reporting system where owners of large buildings submit data on their building’s energy use would clearly be a useful tool to drive energy efficiency measures on a big scale.

At TAF, we decided that a wide-ranging discussion of the merits (and weaknesses) of an energy reporting requirement (ERR) policy should be the topic of discussion at our recent

Dan Leckie Forum. The forum is an annual event where we bring together stakeholders of varied backgrounds to brainstorm about ways to reduce urban-generated GHG emissions or address air pollution.

The City of Toronto is now considering adopting an ERR, following in the footsteps of many cities in the U.S. and abroad.  ERRs require owners or managers of large commercial and multi-residential buildings to measure and report once a year on their buildings’ energy consumption.  Data coming out of the U.S. has shown a positive correlation between tracking – or benchmarking – energy use and reducing energy consumption.

This is a very big deal when you consider that Toronto’s building stock contributes approximately 50% of the city’s GHG emissions, and that, further, the city has an emissions reduction target of 30% below 1990 levels by 2020.

We came away with four key insights from the discussion, moderated by Tyler Hamilton, Editor-in-Chief and Associate Publisher of Corporate Knights, and accompanied by presentations from TAF’s Bryan Purcell and Caroline Keicher of the Institute for Market Transformation, a non-profit based in Washington, DC:

1. To have a meaningful impact, energy benchmarking and reporting must be mandatory.
   If energy benchmarking and reporting is to lead to a significant reduction in city-wide emissions, the majority of large buildings must participate. The experiences of major U.S. cities suggest that the only way to achieve large-scale reductions is to adopt a city-wide energy reporting requirement.  Voluntary-based energy benchmarking along with sustainability certification programs have produced impressive results among participants, but only a very small percentage of the city’s big building owners take part in these programs.  A Toronto energy reporting requirement should build on and complement existing voluntary programs. In addition, the benefits of energy reporting are maximized when accompanied by appropriate support – for example, financial incentives or guaranteed savings.
2. In addition to being a GHG reduction priority, making Toronto’s buildings more energy efficient is also a significant local economic development opportunity. Investments in energy efficiency measures translates into local jobs for skilled workers (e.g. to perform energy audits, energy-saving upgrades and retrofits).  Moreover, TAF preliminary analysis indicates potential savings of more than $170 million by 2020 that could be re-directed into the local economy.
3. Prior to adopting an ERR in Toronto, the city should undertake a) a robust consultation process that engages a wide variety of stakeholders; and b) learn how municipal governments in U.S. cities addressed stakeholder concerns prior to adopting energy reporting policies. While energy reporting policies are simple in principle, implementation can entail complexities and a number of options – including integrating an ERR with utility-led programs and other city policies and initiatives.  We found that stakeholders are concerned about disclosing energy performance data and how that data might affect property values. Additional concerns include: fairness and accuracy in how energy performance is compared across buildings; privacy and data access in suite-metered buildings; and implementation costs for both building operators and the city. All of these issues can be addressed through thoughtful policy design.
4. The City and its partners must be committed to analyzing the data and sharing findings in a way that is of real value to building owners and the broader community.  Perhaps the most critical determinant in generating a positive stakeholder response to an ERR will hinge on whether the city presents the ERR data as useful information for building operators, utilities, city planners, and others.  Succeeding in this regard will transform energy reporting from a perceived regulatory burden to a valuable service for participants.

For more information about energy reporting requirements and how other cities have implemented them, see the 2014 Dan Leckie Forum background paper.