Energy future: Insights into the U.S. energy portfolio and consumption patterns

Measuring commercial buildings’ energy use is the key to curbing energy waste.

By Jean Lupinacci, U.S. Environmental Protection Agency, Washington, D.C. December 1, 2010

From the smallest school to the tallest skyscraper, buildings are powered most often with energy generated by the burning of fossil fuels. The burning of fossil fuels releases greenhouse gases into the atmosphere and contributes to climate change. In fact, the nearly five million commercial buildings in the U.S. where we work, play, and learn are responsible for nearly 20% of both the nation’s energy use and greenhouse gas emissions at a cost of over $100 billion per year.

While buildings are part of the problem of climate change, they are also an important part of the solution, because it is possible to reduce the energy waste found in buildings in a cost-effective way. Buildings don’t have to use as much energy as they do. The EPA estimates that 30% of the energy used in a typical building is either used unnecessarily or inefficiently.

Despite tremendous progress, a great deal of work remains to be done to make building more energy efficient. Climate change continues to be one of the most important environmental challenges facing our generation. Experts predict that greenhouse gas emissions from commercial buildings are projected to grow faster than any other sector over the next 25 years. While energy demand continues to grow, a struggling economy is placing further strain on organizations grappling with rising energy costs and increased demand.

Investing in energy efficiency has quantifiable financial and cash flow benefits. And today, with market volatility and uncertainty, reducing energy costs can reduce risk, increase cash flow, increase the asset value of buildings, and improve the overall financial value of organizations pursuing energy management.

Measuring energy use

A recent report by McKinsey & Company concluded that “energy efficiency offers a vast, low-cost energy resource for the U.S. economy—but only if the nation can craft a comprehensive and innovative approach to unlock it.” To understand where to look to unlock the savings, it helps to understand how buildings currently use energy.

It is surprising how many building owners, designers, and service providers don’t have a good understanding of how much energy existing buildings use. Many don’t know how to set an expectation of how much energy they expect a building to consume, or how to measure energy on a continuing basis to see the results of energy-efficiency improvements.

Without an energy use context, it is impossible to funnel resources to poorer-performing buildings, learn from the better-performing buildings, and recognize the success of high-performing buildings. Benchmarking energy use is an important first step because there is an enormous variation in the amount of energy used in U.S. buildings, after accounting for the differences from climate and business activity. Based on DOE’s Energy Information Agency commercial building survey, the difference between the best and worst buildings equates to roughly $2/sq ft for office buildings, not taking into account rising energy prices. And the startling thing about this distribution is that the age of the building and the presence of efficient technologies do not predict where the building will fall on this distribution. New buildings with efficient technologies are as likely to be among the worst-performing buildings as among the best.

Finding the waste

Through EPA’s ENERGY STAR program, some key issues were identified that lead to energy waste:

Buildings may be designed with good technologies but not to be low-energy-consuming buildings. Designing buildings solely on the basis of technologies or exceeding code requirements isn’t well correlated with energy use. Such techniques can make a building better than it would have been otherwise, but not one that is intended to have an aggressive energy use target. Checklists, activities, and technologies are useful guides but need to be checked and measured for their effectiveness against the expected energy use of the building.

Buildings may be designed, integrated, and fully intended to perform well but are often not commissioned or operated properly. While buildings may be built using excellent designs, they might not be constructed as intended or operated with a strong energy management plan in place.

Organizations don’t always understand the business value of energy efficiency or commit to capturing energy waste as part of their business strategy. There are essential elements of successful energy management, and most of them are not found in a checklist or a piece of technology. The EPA promotes a strategy that starts with top leadership, engages appropriate employees throughout the organization and outside the organization, uses standardized measurement tools to prioritize efficiency investments and track continuous improvement, and recognizes results.

When put into action, this plan can deliver results, and quickly. At the heart of finding the waste is measuring energy use. Thousands of organizations and tens of thousands of buildings are tracking and improving the energy performance of buildings through the ENERGY STAR program. EPA’s Portfolio Manager software tool is available to any organization to measure, track, and compare the energy use of all its buildings online with just a few clicks using its own private account, and more than 20% of the commercial building floor space is currently being tracked.

Some building types are assigned a 1-100 score, which indicates how a building performs relative to similar buildings nationwide. The scores are automatically adjusted using standardized methods to take into account differences in building attributes, operating characteristics, and weather variables. An ENERGY STAR label is awarded to those buildings in the top 25% nationwide. Close to 12,000 buildings have earned the ENERGY STAR label at least once, and these buildings are using 35% less energy than typical buildings.

Successful strategies

Great progress is being made to measure and reduce energy use in commercial buildings, but more buildings improving at a faster pace are necessary to unlock the savings still available from existing buildings. New strategies are emerging to leverage existing success and create more momentum to reduce energy waste. One approach that is taking hold across the county is to make energy information more transparent to building owners, prospective owners, and tenants and employees who work in buildings.

Individual organizations are already tracking and disclosing energy use. The retail chain JC Penney communicates each store’s energy performance rating across the management chain. The company ranks each store and region by energy use, sharing this information with store, regional, and corporate managers. The company also links management incentives to energy performance. Council Rock School District in Pennsylvania improved its average EPA energy performance rating across all schools from a 16 (fourth percentile) to 55 (second percentile) within 2 years.

State and local governments are playing an active role in setting new policies to require the public disclosure of the energy used in buildings. In California, energy disclosure is to be required during the time of a real estate transaction, like the sale, lease, or finance of buildings. In other jurisdictions such as New York City and the District of Columbia, privately owned buildings will need to disclose energy use on an annual basis. Many of these new requirements are using EPA’s Portfolio Manager to generate standardized energy use metrics.

With increased urgency to address climate change, energy use from commercial buildings is under greater scrutiny. Do you know how your buildings compare?

Lupinacci is chief of the Energy Star Commercial and Industrial Branch in the Climate Protection Partnerships Division at the U.S. EPA, where she develops and manages voluntary energy-efficiency programs. She led ENERGY STAR’s expansion into buildings and plants, and the rapid adoption of energy management programs by U.S. businesses and institutions.