Energy labels for buildings may be key to saving energy

The U.S. needs more research into high-risk energy-related technologies, and the Energy Department is the right agency to lead it. The DOE has a dozen national labs that employ thousands of highly qualified engineers and scientists.

The Obama Administration’s proposed budget calls for $129 billion for renewable energy technology. There’s another $400 million in the stimulus package for a new DOE Advanced Research Projects Agency–Energy.

But pouring billions of tax dollars into high-tech energy projects is only a partial answer to our energy/climate change problem. As Energy Secretary Steven Chu recently told U.S. News & World Report, low-tech solutions—insulation, lighting controls, HVAC improvements, etc.—will save the most energy over the next two decades. Even the $5 billion in the stimulus package for weatherization will upgrade at best a million homes (at a measly $5,000 per job). What about the other 100 million American homes, not to mention millions of commercial buildings?

The best way to get owners to upgrade their properties is through market forces, and the best way to do that may be through energy-performance labeling.

Energy-performance labeling is a lot like the “nutrition facts” on your cereal box. It rates how well a building is performing in terms of energy efficiency and carbon emissions. For several years, the British have been labeling homes and buildings as they come up for sale or lease. The European Union will be adopting energy labeling soon as well.

The Brits go one step further. Along with your rating, they’ll give you a detailed description of how well the building’s key components—walls, roof, hot water, lighting, etc.—are performing, what kinds of improvements would have the best energy payback, and at what approximate cost.

In June, ASHRAE will unveil an energy labeling program for both building design and operations that will describe a method for rating the energy performance of buildings covered by ASHRAE Standard 90.1, list the qualification criteria for those doing the rating, and offer a process for approving alternative methods.

Next year, the District of Columbia will require all buildings of more than 200,000 sf to report their energy use (based on Energy Star Portfolio Manager), and the D.C. government will make the data public.

D.C.’s mandatory program goes too far. Energy labeling should go into effect only when there is a sale or lease transaction, to give the acquiring party as much useful information as possible about the property. Owners whose buildings got low ratings would not be required to take remedial action. Rather, they alone would decide whether to improve their properties in the hope of gaining higher rents or sales prices. With energy labeling, market forces, not government regulation or handouts, would push property owners to invest in energy-saving improvements.