Grid Reliability – The Real Estate Roundtable

President Trump issued executive orders this week for a policy agenda to develop domestic energy supplies, ensure grid reliability, and meet increased electricity demands driven by artificial intelligence (AI). (AP News, April 8)

Grid Reliability Executive Order (EO)

The EO on “Strengthening the Reliability and Security of the U.S. Electric Grid” declares the administration’s policy “to ensure the reliability, resilience, and security of the electric power grid.”

It states that America’s leadership in technological innovation “depends on a reliable supply of energy from all electric generation sources, particularly those secure, redundant fuel supplies that are capable of extended operations.” (Politico, April 8)

Building efficiency measures that yield energy savings are also key to relieving electricity grid constraints to accommodate more energy users. RER and a broad coalition of real estate organizations urged heightened focus on efficiency programs by voicing strong support for ENERGY STAR in a recent letter to EPA Administrator Lee Zeldin. (RW, April 4)

State Overreach EO

The EO on “Protecting American Energy from State Overreach” reflects the administration’s view that “American energy dominance is threatened when State and local governments seek to regulate energy beyond their constitutional or statutory authorities.” (Axios, April 9)

The EO requires the U.S. Attorney General to scrutinize state climate laws, referencing New York’s law and plan aiming for net-zero emissions statewide by 2050, and the California program for businesses to “cap” emissions and “trade” pollution allowances. (Politico, April 9)

Governors committed to reducing the use of fossil fuels and combat climate change within their borders said they were not “intimidate[d]” by the Trump order, signaling likely litigation. (E&E News, April 9; Reuters, April 9)

In February, RER submitted a letter to Congress requesting oversight of federal DOE grants that induce states and localities to require all-electric buildings and zero emissions “targets,” through onerous Building Performance Standards (BPS). (RW, Feb. 28)

RER’s peer reviewed 20-point policy guide for fair BPS mandates emphasizes that states and localities receiving federal grants should not levy fines on buildings that meet US-EPA and US-DOE high performance industry leadership standards. (RW, Oct. 11)

Tariffs and Energy

While the administration’s recent executive orders could bolster grid reliability, the potential for broad tariffs may introduce new costs and complexities undermining energy affordability and infrastructure investment. (PoliticoPro, April 8)

Tariffs on critical grid components could exacerbate supply chain shortages and drive up electricity prices. (CNet, April 4)

On Tuesday, U.S. Senators Bill Cassidy (R-LA) and Lindsey Graham (R-SC) introduced the latest version of the Foreign Pollution Fee Act (FPFA), a carbon tariff aimed at penalizing imported goods manufactured with higher CO2 emissions than domestic alternatives. (E&E News, April 9) (Press Release, April 8)

Prospects for imminent passage of the FPFA are remote. Yet, the bill signals some interest by Republican Senators to tie climate policy to tariff policy where overseas manufacturers produce aluminum, cement, iron, steel, and glass with higher carbon emissions compared to like-kind U.S. manufactured products. (American Action Forum, April 8)

RER submitted comments on the FPFA in January, raising concerns regarding the impact of a carbon tariff on affordable housing construction, rebuilding after natural disasters, and technical issues on calculating “indirect emissions” associated with product manufacturing. (RW, Feb. 7)

RER will continue engaging with policymakers to ensure federal actions promote reliable, affordable energy without unintended economic repercussions.

The 2024 election results signal a return to energy policies supported by President-elect Trump and a shift from Biden era climate programs. For the commercial real estate (CRE) industry, these changes present opportunities to emphasize the “business case” for high performance, energy efficient buildings.

Anticipated Energy Policy Shifts

De-Regulation: Former Congressman Lee Zeldin (R-NY), the pick to lead the EPA, remarked on “the opportunity to roll back regulations” on power plant emissions, abolish fees on oil and gas development, and lift rules that drive automakers to manufacture electric vehicles. (The Washington Post, Nov. 19)

Climate Disclosures: The SEC will likely withdraw its controversial rule for public companies to report climate-related financial risks in 10-K forms. (Bloomberg, Nov. 7) Companies may still need to report and disclose emissions under state laws like those in California (if they survive litigation).

Clean Energy Tax Incentives: The incoming administration has vowed to dismantle the Inflation Reduction Act (IRA) that provides credits and deductions for solar projects, battery storage, EV charging stations, and energy efficient buildings. However, many clean energy projects benefit Red States and House Speaker Mike Johnson (R-LA) said he intends to use “a scalpel not a sledgehammer” in reviewing the IRA in light of Republican support. (POLITICO, Sept 18).

City, State Grants: Federal funding will likely be eliminated to support city and state efforts to enact building performance standards (BPS). (Roundtable Weekly, Sept 6) Localities may continue to adopt these laws imposing energy use and emissions limits on buildings even without federal support, and The Roundtable will continue to urge policymakers to follow our 20-Point Guide for fair and reasonable BPS laws.

Grid Reliability: Given the increased demands on the electric grid from AI, bipartisan bills to streamline the federal permitting process to approve interstate transmission lines – carrying electricity produced in rural areas and delivering it to cities long distances away – could finally become a priority. (Roundtable Weekly, Oct. 25)

The “Business Case” for Energy Efficiency

By emphasizing the economic benefits of energy efficient buildings, the industry can remain resilient and forward-looking amid “policy volatility” arising from the power changes in Washington.

Energy efficient buildings improve our economy. They create jobs for American workers, enhance U.S. energy independence, help make the power grid more reliable, and attract overseas investments to our shores.

Non-regulatory, voluntary federal guidelines – developed and enhanced with The Roundtable’s support – help real estate companies make the case for energy efficiency.

These include public-private partnerships with EPA such as the ENERGY STAR program, the industry standard Portfolio Manager tool for buildings to measure energy use, and the landmark NextGen certification program.

They also include our collaboration with the Department of Energy and other agencies through the Better Climate Challenge, the national Zero Emissions Building definition, the Buy Clean initiative, and programs that highlight the environmental benefits of commercial-to-residential property conversions.

Tag: Grid Reliability

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