Proposed regulations to create a benchmarking system and strict carbon emissions levels from buildings of more than 35,000 square feet in Maryland face tough criticism from real estate interests concerned with the cost, feasibility and timeline of compliance.
The Building Energy Performance Standards (BEPS), required by the state’s Climate Solutions Now Act (CSNA), passed in 2022, cover about 9,000 buildings, which would have to begin reporting emissions and electricity use in 2025 as part of a benchmarking program.
The rules also require that from 2030, owners take steps to comply with a three-step set of increasingly restrictive carbon emissions standards. The standards vary for different categories of buildings, but, by the third phase in 2040, require that buildings reach zero emissions. Certain categories of buildings, such as schools, water treatment plants and fast food restaurants, are exempt from the emissions standards, as are historic buildings and manufacturing and agricultural buildings.
Environmental groups were among speakers in an Oct. 9 hearing that lauded the standards, drafted by the Maryland Department of the Environment (MDE), as essential to combating climate change.
“Electrifying buildings is the only way to reap the benefits of transitioning our electricity grid to cleaner energy,” said Brittany Baker, Maryland director of Chesapeake Climate Action Network. “These regulations must be moved forward without any delay and without any weakening provisions.”
Several owners of apartments in condominiums or cooperative buildings, however, said complying with the emissions reduction rules would create an excessive burden on their owners.
Lawrence Bernard, an owner and a resident of a Chevy Chase condominium, urged the MDE to redraft the rules to create special conditions for “common ownership communities,” with less stringent standards than the general multi-unit buildings standards.
“We have limited financial resources to achieve substantial reductions in our greenhouse gas emissions and energy use,” he said, adding that to do so would “substantially deplete our financial resources so that we cannot meet legal requirements for maintaining our building.”
Jeanne Anderegg, president of the association at another condominium, said the organization had looked at converting the 413-unit high-rise building from gas to electricity and found the “net benefits versus the costs are totally out of line.”
“The costs are astronomical and the physical barriers an impossibility,” she said. “Converting our boilers is not feasible, no matter how much money we throw at it, because we don’t have available space to house the boilers that would be needed.”
She said the building would need “four times the electrical capacity we currently have. Even doing something as modest as converting glass stoves to electric ones would cost between $5 [million] and $8 million and displace residents for unknown numbers of weeks.”
Financial Burden
Buildings are the third-largest source of emissions in Maryland, and the CSNA requires the building sector covered by BEPS to cut emissions by 20% by Jan. 1, 2030, and reach zero emissions by 2040.
The MDE cites a study by the U.S. Department of Energy’s Lawrence Berkeley National Laboratory that concluded that about a third of the buildings covered by BEPS already meet the 2040 emissions standards.
“As building owners implement these measures, they or their tenants may begin to save money,” said Zachary Berzolla, building decarbonization section head for MDE.
But several speakers said they expect some building owners to take a severe financial hit under the BEPS regulations.
Rick Briemann, owner of Atlantic Realty Group, a family-owned business that owns and operates about 2,000 multi-unit apartments, said the rules would put an “unnecessary financial burden on multi-family owners and the residents they service.”
Compliance would cost upward of $40,000 per apartment, resulting in an increase of $600 for rents, and there are “not enough subsidies available to property owners in order to lower the investment and to keep rent levels affordable,” he said.
Brian Anleu, a lobbyist for the Apartment and Office Building Association (AOBA) branch that represents 133,000 apartment units and more than 23 million square feet of office space in the Washington, D.C. area, expressed concern the BEPS rules would “result in deeper emissions reductions” in the first five years than does CSNA.
“This creates a near-term crisis for building owners,” who would have to conduct “deeper levels of retrofit work than otherwise necessary.” He urged the MDE to reduce the early emissions reductions targets so building owners could “implement less costly efficiency measures in the short term while planning for electrification to meet the subsequent targets.”
Setting Goals
BEPS supporters expressed confidence that building owners would adapt to the required changes.
Jeannie Morris, vice president of government affairs for Vicinity Energy, which owns and operates district energy systems (which provide heat and hot or cold water from a central location to nearby buildings), said the company “fully supports” the rules. About half of the energy used by Vicinity, which serves 35 million square feet of commercial space used by hospitals, universities and other clients in Baltimore, is renewable energy, and the company expects to reach zero emissions by 2045, she said.
That will be done through the installation of “centralized electric boilers and industrial scale heat pumps,” she said, suggesting the efficiencies from centralized systems could help meet the requirements of BEPS.
“Electrifying every building individually in Baltimore would place a tremendous strain on the electric grid,” she said.
Chris Parts, director of the American Institute of Architects Maryland branch, said the association’s analysis of 23,000 member projects showed they already had cut emissions by 48%, and could reach a 60% emissions reduction by 2031.
“Having goals arms us with the information and goals to meet the targets,” he said. “Hesitation to adopt the BEPS program simply prolongs the needed transition.”
Two speakers from religious organizations echoed the need to commit to the BEPS standards.
Aaron Mintzes said it would cost $2.5 million to comply with the regulations at his 118,000-square-foot synagogue in Baltimore, but “we’re going to get it done.” He urged state officials to make sure buildings like the synagogue have access to federal funds from the Inflation Reduction Act and matching state funds.
Maddie Smith, Clean Energy Shepherd at the Interfaith Power and Light for Washington, D.C., Maryland and Northern Virginia, said there had been discussion leading up to the passage of the CSNA of exempting houses of worship, which she had not supported.
“Our faith communities want to be part of the solution,” she said. “They want to be leaders on this, and especially they want to save energy and money so that they can use their limited resources to serve their community.”
The benchmarking data required under BEPS can help economically strapped houses of worship with their financial planning, she said.
“It incentivizes efficient electrification, which lowers energy bills and makes sure that upgrades made are done with the newest and most efficient technologies available,” she said.
