The Biden administration on Thursday unveiled the “National Definition for a Zero Emissions Building,” or “ZEB.” This voluntary, long-term goal for commercial and residential buildings to slash carbon emissions has been anticipated for months. It is the first definition of its kind from the U.S. government and was developed with heavy input from The Real Estate Roundtable’s Sustainability Policy Advisory Committee (SPAC). (ZEB Definition | Press Release)
ZEB Criteria
Three criteria define a ZEB asset under the new definition from the U.S. Department of Energy (DOE). To meet the guideline, a building must be:
Highly energy efficient, such as having an ENERGY STAR score of “75” or higher;
Free of on-site emissions from energy use, with an exception for emergency backup power generation; and
Powered solely from clean energy, which can be achieved through on-site renewable energy measures or the purchase of verified renewable energy certificates that increase off-site supplies of clean power.
U.S. Energy Secretary Jennifer Granholm said, “With today’s announcement, DOE is helping bring clarity to our public and private sector partners to support decarbonization efforts and drive investment—paving the way for the cutting-edge clean energy technologies we need to make America’s buildings more comfortable and affordable.” (Press Release)
The Roundtable and Nareit collaborated closely on comments in February when the ZEB definition was proposed to shape the final version. (Roundtable Weekly, February 2)
A U.S. Definition for U.S. Real Estate
A voluntary definition with standard minimum criteria for what it takes for a building to be “zero emissions” will drive innovation, attract investment capital, and support workforce development, according to DOE.
It is important for U.S. real estate to have energy and climate guidelines—like the ZEB definition—backed by the federal government that reflect building data, climate conditions, and the carbon intensity of the electric grid here at home.
Climate-related building standards “have to be granular enough to accurately reflect the power and buildings infrastructure located in the United States,” said Duane Desiderio, Senior Vice President and Counsel with The Roundtable. “We’re not getting that from the EU and global climate advocates.” (Bloomberg, June 6).
EPA Offers the “Path to ZEB”
ZEB status is best considered a long-term aspiration. Few buildings will reach zero emissions levels today.
Buildings have ways to show more immediate progress, such as through the ENERGY STAR “NextGen” program, recently announced by the U.S. Environmental Protection Agency. “NextGen” building certifications will be available starting this fall. (Roundtable Weekly, March 22)
Investors need a market signal for buildings to indicate they are taking steps now to slash emissions and energy use. NextGen, a low-carbon building label, is the intermediate step before reaching ZEB’s zero emissions guideline.
“A building has to be ‘NextGen’ before it can be ‘ZEB.’ They work together,” Desiderio told Bloomberg.
Speakers from the White House, DOE, EPA, and other leaders will discuss the ZEB definition and NextGen program at the upcoming SPAC meeting in Washington, DC on June 21.
The Biden administration recently issued a “final determination” that all new single- and multifamily homes financed with federal mortgages must be built to stringent “model energy codes.” The Department of Housing and Urban Development (HUD) estimates this federal mandate on residential construction will add at least $7,229 to the cost of building a new single-family home, effectively establishing a disincentive to increase the supply of affordable housing—a federal policy strongly opposed by The Roundtable. (Bloomberg, April 25 and National Association of Home Builders (NAHB), April 26)
Federal Compliance
The Roundtable believes this new federal regulation will reduce the supply of housing, increase home prices and rents, and make it more difficult for buyers to assemble a down payment.
The “final determination” from HUD and the Department of Agriculture (USDA) is, in effect, a new federal-level building energy code that could impact approximately 150,000 units per year.
Although the energy code update technically takes effect May 28, the dates for “compliance” are May 2025 for multifamily, Nov. 2025 for single-family homes, and May 2026 for homes in “persistent poverty rural areas.” (NAHB, April 26)
This action stands in stark contrast to a set of policy recommendations submitted this week by The Roundtable and a broad real estate coalition aimed at broadening housing supply and lowering costs. (Coalition letter to House policymakers, April 29 and Affordable Housing story, above)
Additionally, Roundtable President and CEO Jeffrey DeBoer testified on April 30 before a House Oversight Subcommittee on the need to “create more effective incentives and programs to stimulate the production of affordable housing.” (see Policy Landscape story, above)
Varying Energy Standards
The HUD-USDA notice may also conflict directly with local energy codes in jurisdictions throughout the country.
The federal action will require all HUD- and USDA-financed new single-family construction housing to be built to the 2021 International Energy Conservation Code (IECC). All HUD-financed multifamily housing must be built to 2021 IECC or ASHRAE 90.1-2019.
As Bloomberg reported, the Biden administration also issued this latest update as part of a larger effort to modernize building codes to reach its climate goals. Earlier this year, the Biden administration issued a draft of a federal definition for a Zero Emissions Buildings (ZEB). (Roundtable Weekly, Jan. 5)
RER and Nareit submitted comments on Feb. 2 to the U.S. Department of Energy (DOE) on the draft ZEB definition, which would impose no federal mandates. (Joint comments’ cover letter and addendum | Roundtable ZEB Fact Sheet, Jan. 18 | Roundtable Weekly, Jan. 5)
The Roundtable’s Sustainability Policy Advisory Committee (SPAC) will discuss the repercussions of the HUD-USDA rule during its next meeting on June 21 in Washington, DC.
The U.S. Department of Energy (DOE) announced a new financing program this week for states to access federal funds that could help real estate owners meet state, city, and county building performance standards (BPS).
State Energy Financing Institutions
An April 9 webinar hosted by the White House and DOE’s Loan Programs Office provided information on plans to make federal money available to state energy financing institutions (SEFIs).
Federal funds deployed under the SEFI program will be channeled through state agencies, which in turn will provide loans and grants to qualified building owners.
SEFIs that receive federal DOE “certification” will assist compliance with building emissions and energy efficiency limits set by a growing number of states and localities.
The LPO has released a SEFI Toolkit that describes the contours of the program.
The Roundtable supports non-binding federal guidelines that bring national consistency to the conflicting patchwork of local BPS mandates.(DOE “blueprint” to decarbonize buildings; Roundtable Weekly, Sept. 15)
Funding Criteria
States will establish eligibility financing criteria under federal guidelines. They will likely prioritize disbursements to buildings in low-income areas and low-income housing.
SEFI funds could be deployed to support commercial-to-residential property conversions in jurisdictions with BPS laws.
To scale the program, DOE stated on the webinar that federal funds channeled through the states will be geared to support energy work on a portfolio of buildings rather than single projects.
The agency also stated that DOE-sourced funds will aim to support assets that strive to meet the forthcoming national definition for a Zero Emissions Building (“ZEB”). (Roundtable Fact Sheet on ZEB, Jan. 18)
The Roundtable’s Sustainability Policy Advisory Committee (SPAC) continues to work closely with the White House and DOE on climate initiatives impacting commercial real estate.
The Real Estate Roundtable (RER) and Nareit submitted comments today to the U.S. Department of Energy (DOE) on its draft definition for Zero Emissions Buildings (ZEB). DOE’s initiative would impose no federal mandates while showing U.S. leadership on climate policy. (Joint comments cover letter and addendum | Roundtable Weekly, Jan. 5)
A “Path to ZEB”
The ZEB national definition aims to set voluntary criteria that could help building owners provide auditable, consistent statements to investors, tenants, and policy makers about long-term aspirations for a building’s decarbonization. (DOE announcement | National Definition Draft)
The RER/Nareit comments emphasize that few buildings today could meet zero emissions status. Rather, the ZEB definition can be a guideline to support lifecycle investments when boilers, water heaters, and other systems reliant on fossil fuels reach the end of their lives after years of use. (Joint comments cover letter and addendum)
Concrete actions that owners can take now to show an asset is “on the path” to zero emissions status are key to ZEB’s success as a long-term goal.
The joint comments urge DOE to recognize “NextGen”—the imminent label for low-carbon buildings from the Environmental Protection Agency (EPA)—as the intermediate step for a building that aspires to reach ZEB status.
Topline points from the RER/Nareit comments (cover letter and addendum) include:
ZEB should provide ambitious but attainable policy for individual buildings and portfolios, residential and commercial, across product types.
DOE’s national definition should be leveraged to bring consistency and uniformity to the patchwork of building related climate programs, which are imposed by state and local performance standards and pushed by international frameworks. (Roundtable Weekly, Sept. 15 and RER’s Climate and Energy Priorities, Jan. 2024)
DOE should not re-invent the wheel. It should align the ZEB definition with the ecosystem of federal data, methods, and guides that already pertain to buildings.
ZEB’s general nationwide definition mustconsider regional variables such as the climate and electric grid conditions pertinent to where a building is located.
The definition’s success depends on consistent methods for building owners to measure energy use and emissions. ZEB must reflect metrics tracked in Portfolio Manager, EPA’s free online software. (Roundtable Weekly, Sept. 15 and EPA’s Portfolio Manager Upgrade Project)
A “zero” emissions standard requires a reasonable exclusion of emissions from emergency power generators. This exclusion to protect health and safety is necessary for building operations to continue when the electric grid fails.
Many buildings have physical and regulatory restrictions that preclude onsite solar panels, wind turbines, and battery storage. DOE’s draft correctly permits valid and credible “market-based” measures, such as the purchase of renewable energy certificates (“RECs”), to meet the definition’s renewable energy criteria.
A final ZEB definition is expected later this year. The real estate sector also awaits final climate risk corporate disclosure rules this spring from the U.S. Securities and Exchange Commission. (Roundtable Weekly, Jan. 12)
SPAC members also attended a special session with EPA staff where Roundtable members provided detailed industry feedback about the first major enhancements in a decade that are under consideration for EPA’s ENERGY STAR Portfolio Manager benchmarking tool.
The Roundtable’s HSTF and RMWG joint meeting on Jan. 24 addressed China’s espionage efforts impacting American corporations; the emerging use of Artificial Intelligence as a new risk vector; and the current dynamic in pricing and coverage in commercial insurance markets. (HSTF & RMWG joint agenda | Roundtable 2024 Homeland Security Priorities)
Next on The Roundtable’s 2024 meeting calendar is the Spring Meeting on April 15-16. This upcoming meeting is restricted to Roundtable-level members only.
A confluence of mandatory rules and voluntary guidelines pertaining to real estate’s climate impacts—including a first-ever U.S. definition for the term Zero Emissions Building (“ZEB”) and an imminent Securities and Exchange Commission (SEC) greenhouse gas disclosure rule—will be a key focus of policy makers in 2024.
ZEB Definition
On Jan. 9, GlobeSt reported that The Roundtable supports the direction of the Biden administration’s recently released voluntary ZEB draft definition pertinent to private sector existing buildings and new construction. (Roundtable Weekly, Jan. 5)
The ZEB definition proposes voluntary criteria for buildings to be highly energy efficient and powered solely by clean energy sources to attain zero emissions status.
The Roundtable’s Sustainability Policy Advisory Committee (SPAC) is working on comments (due Feb. 5) in response to the Energy Department’s draft.
SEC & Scope 3
The SEC is expected to release its long-anticipated climate risk disclosure rule this spring. (Roundtable Weekly, March 10, 2023) On Jan. 11, Bisnow quoted Roundtable Senior Vice President and Counsel Duane Desiderio about the SEC’s impending rule and its impact on CRE and other industries.
Desiderio explained to Bisnow, “Let’s hope the SEC delivers some workable rules and brings rationality to this space, especially regarding Scope 3 indirect emissions” that cover sources in a company’s supply chain beyond its immediate control. Desiderio added, “The market is certainly moving in the direction of the SEC rule.” (RER Fact Sheets: SEC’s Proposed Rule and California’s Climate Disclosure bills)
179D & BPS
Another federal rule expected in the coming weeks concerns the section 179D tax deduction for energy efficient buildings, substantially revamped by the Inflation Reduction Act (IRA). (Roundtable Weekly, Dec. 1).The Internal Revenue Service will propose a regulation for comment that addresses how existing building retrofits may qualify for this incentive.
Axios (Jan. 9) reported this week about trends at the local level to enact building performance standards (BPS) such as LL 97 in New York City. While Congress has not granted authority for a national emissions mandate on buildings, more cities and states are expected to run with these efforts in 2024. (Roundtable Weekly, Sept. 15).
A report from the Rhodium Group this week shows U.S. GHG emissions decreased nearly 2 percent year-on-year in 2023. The report also notes that emissions from commercial and residential buildings dropped by 4 percent, which the researchers attributed primarily to a mild winter. (PoliticoPro and The Hill, Jan. 10)
SCOTUS to Consider Federal Agency “Deference”
A wild card in the effectiveness and durability of federal regulations—not just in the climate arena, but from any U.S. agency—will be at the fore this spring when SCOTUS renders a decision in Loper Bright Enterprises v. Raimondo.
Loper will consider whether an administrative law doctrine from 1984 known as “Chevron deference,” which grants wide latitude to federal agencies when crafting rules to implement laws passed by Congress, should be overruled. (SCOTUS Blog, May 1, 2023)
The Department of Commerce stated in their brief that overruling Chevron “would be a convulsive shock to the legal system.” Oral argument will take place next Wednesday, with a decision expected by early summer. (SCOTUS Blog, Jan. 8, 2024)
Officials from the White House, the Environmental Protection Agency, the Energy Department and leading non-governmental organizations will address issues at the nexus of buildings and climate policy on January 24 at the Roundtable’s all-member 2024 State of the Industry Meeting.
The Biden administration on Wednesday issued a draft definition for the term “Zero Emissions Buildings.” The voluntary guideline would apply to non-federal, existing buildings and new construction. The U.S. Department of Energy (DOE) requested comments by Feb. 5 from industry and other stakeholders about Part 1 of the draft “ZEB” language, which is focused on “zero operating emissions.” (DOE announcement | National Definition Draft Criteria | Comments Form)
Draft Criteria
An eventual, final ZEB definition would be the first federal government guideline providing voluntary criteria for buildings that aspire to zero emissions status. DOE’s proposed draft defines a zero emissions building through three (3) criteria:
Highly energy efficient
Free of on-site emissions from energy use, and
Powered solely from clean energy
DOE will hold two public listening sessions on the draft definition. Registration is capped at the first 100 attendees:
Thursday, January 11, 2024 @ 10 a.m. ET – Register
Tuesday, January 30, 2024 @ 10:30 a.m. ET – Register
DOE’s request for information will consider stakeholder responses by Feb. 5 before version 1.00 of Part 1 of a ZEB definition is finalized. (DOE’s Building Technologies Office bulletin, Jan. 3). Future parts of a national ZEB definition will likely address embodied carbon, refrigerant, and other key elements.
National ZEB Definition
RER plans to submit comments about the draft proposal. A federal definition for ZEB could bring much-needed consistency to help CRE owners and investors establish long-term emissions goals for buildings. (Roundtable Weekly, Sept. 29, 2023)
The Roundtable and a coalition of real estate organizations sent a Sept. 14 letter to US-EPA supporting development of standard methods and metrics for buildings and tenants to quantify their emissions.
Federal standards, definitions, and tools “are the North Star though which local governments can inform their law-making, and this helps bring some sense and order to the otherwise conflicting patchwork of climate laws and frameworks developed by states, cities, and NGOs,” said The Roundtable’s Sustainability Policy Advisory Committee (SPAC) Chair Tony Malkin (Chairman, President, and CEO, Empire State Realty Trust). (Roundtable Weekly, Sept. 15)
Roundtable Senior VP and Counsel Duane Desiderio was quoted on Sept. 28 in the Washington Post about how CRE companies may welcome the idea of a single federal standard. “A workable, usable federal definition of zero-emission buildings can bring some desperately needed uniformity and consistency to a chaotic regulatory landscape,” Desiderio said. (Roundtable Weekly, Sept. 15)
Executive branch officials from the White House, federal agencies, and leading non-governmental organizations will discuss the national ZEB definition on Jan. 24 during sessions on sustainability issues at The Roundtable’s all-member 2024 State of the Industry Meeting.
This week, the White House’s climate policy chief announced the imminent release of voluntary, uniform federal-level criteria for “Zero Emissions Buildings.” The “ZEB” definition could bring much-needed consistency to help CRE owners and investors establish long-term goals for buildings that align with varying climate programs adopted across numerous jurisdictions and international frameworks. (Washington Post, Sept. 28)
A CRE coalition of real estate organizations including The Roundtable sent a Sept. 14 letter to US-EPA supporting development of standard methods and metrics for buildings and tenants to quantify their emissions.
Federal standards, definitions, and tools “are the North Star though which local governments can inform their law-making, and this helps bring some sense and order to the otherwise conflicting patchwork of climate laws and frameworks developed by states, cities, and NGOs,” said Roundtable Sustainability Policy Advisory Committee (SPAC) Chair Tony Malkin (Chairman, President, and CEO, Empire State Realty Trust). (Roundtable Weekly, Sept. 15)
A Climate Priority for CRE
Roundtable Senior VP and Counsel Duane Desiderio was quoted yesterday in the Washington Post and Popular Science about how CRE executives welcome the idea of a single federal standard. “A workable, usable federal definition of zero-emission buildings can bring some desperately needed uniformity and consistency to a chaotic regulatory landscape,” Desiderio said. (Roundtable Weekly, Sept. 15)
Yesterday, The White House also released a National Climate Resilience Framework in anticipation of an eventual White House Climate Resilience Summit. The Framework identifies climate resilience principles and specific actions to expand and accelerate progress towards six objectives that includes, “Expand adoption of the latest consensus-based building and energy codes and high-performance standards.” (White House Fact Sheet, Sept. 28)
The Roundtable will continue to work with our partner organizations and develop comments on the ZEB definition upon its anticipated release next month.
# # #
Not all real estate assets will be able to reach a level of “zero emissions.” But an overarching and workable term—developed with feedback from industry and other stakeholders—can bring greater uniformity and consistency to:
Related federal programs like EPA’s anticipated “NextGen” building label – to serve as a transition point toward ultimate zero emissions (Roundtable Weekly, March 3);
A CRE coalition of real estate organizations including The Roundtable sent a Sept. 14 letter to US-EPA supporting development of standard methods and metrics for buildings and tenants to quantify their emissions.
Federal standards, definitions, and tools “are the North Star though which local governments can inform their law-making, and this helps bring some sense and order to the otherwise conflicting patchwork of climate laws and frameworks developed by states, cities, and NGOs,” said Roundtable Sustainability Policy Advisory Committee (SPAC) Chair Tony Malkin (Chairman, President, and CEO, Empire State Realty Trust). (Roundtable Weekly, Sept. 15)
A Climate Priority for CRE
Roundtable Senior VP and Counsel Duane Desiderio was quoted yesterday in the Washington Post and Popular Science about how CRE executives welcome the idea of a single federal standard. “A workable, usable federal definition of zero-emission buildings can bring some desperately needed uniformity and consistency to a chaotic regulatory landscape,” Desiderio said. (Roundtable Weekly, Sept. 15)
Yesterday, The White House also released a National Climate Resilience Framework in anticipation of an eventual White House Climate Resilience Summit. The Framework identifies climate resilience principles and specific actions to expand and accelerate progress towards six objectives that includes, “Expand adoption of the latest consensus-based building and energy codes and high-performance standards.” (White House Fact Sheet, Sept. 28)
The Roundtable will continue to work with our partner organizations and develop comments on the ZEB definition upon its anticipated release next month.
# # #
Not all real estate assets will be able to reach a level of “zero emissions.” But an overarching and workable term—developed with feedback from industry and other stakeholders—can bring greater uniformity and consistency to:
Related federal programs like EPA’s anticipated “NextGen” building label – to serve as a transition point toward ultimate zero emissions (Roundtable Weekly, March 3);
A CRE coalition of real estate organizations including The Roundtable sent a Sept. 14 letter to US-EPA supporting development of standard methods and metrics for buildings and tenants to quantify their emissions.
Federal standards, definitions, and tools “are the North Star though which local governments can inform their law-making, and this helps bring some sense and order to the otherwise conflicting patchwork of climate laws and frameworks developed by states, cities, and NGOs,” said Roundtable Sustainability Policy Advisory Committee (SPAC) Chair Tony Malkin (Chairman, President, and CEO, Empire State Realty Trust). (Roundtable Weekly, Sept. 15)
A Climate Priority for CRE
Roundtable Senior VP and Counsel Duane Desiderio was quoted yesterday in the Washington Post and Popular Science about how CRE executives welcome the idea of a single federal standard. “A workable, usable federal definition of zero-emission buildings can bring some desperately needed uniformity and consistency to a chaotic regulatory landscape,” Desiderio said. (Roundtable Weekly, Sept. 15)
Yesterday, The White House also released a National Climate Resilience Framework in anticipation of an eventual White House Climate Resilience Summit. The Framework identifies climate resilience principles and specific actions to expand and accelerate progress towards six objectives that includes, “Expand adoption of the latest consensus-based building and energy codes and high-performance standards.” (White House Fact Sheet, Sept. 28)
The Roundtable will continue to work with our partner organizations and develop comments on the ZEB definition upon its anticipated release next month.
# # #
National Climate Advisor, Ali Zaidi, stated in yesterday’s keynote address at the Greenbuild 2023 conference in Washington, D.C. that the proposed federal ZEB definition will be released next month.
Zaidi noted The Real Estate Roundtable in his comments as an important group for addressing the need to transform buildings at scale.
When the U.S. Department of Energy (DOE) announces the proposed ZEB definition it will kick-off an anticipated 30-day public comment period. The Environmental Protection Agency (EPA) ENERGY STAR program is coordinating closely with DOE. A final ZEB definition could be published by the end of this year.
Federal Consistency is Essential
DOE’s ZEB definition would not be mandatory on the private sector. It will be a voluntary, aspirational guideline at the federal level.
However, a definition from the U.S. government can finally build a uniform understanding of what it takes for a building to achieve “zero emissions” over time, along a realistic and achievable pathway.
Not all real estate assets will be able to reach a level of “zero emissions.” But an overarching and workable term—developed with feedback from industry and other stakeholders—can bring greater uniformity and consistency to:
Related federal programs like EPA’s anticipated “NextGen” building label – to serve as a transition point toward ultimate zero emissions (Roundtable Weekly, March 3);
A CRE coalition of real estate organizations including The Roundtable sent a Sept. 14 letter to US-EPA supporting development of standard methods and metrics for buildings and tenants to quantify their emissions.
Federal standards, definitions, and tools “are the North Star though which local governments can inform their law-making, and this helps bring some sense and order to the otherwise conflicting patchwork of climate laws and frameworks developed by states, cities, and NGOs,” said Roundtable Sustainability Policy Advisory Committee (SPAC) Chair Tony Malkin (Chairman, President, and CEO, Empire State Realty Trust). (Roundtable Weekly, Sept. 15)
A Climate Priority for CRE
Roundtable Senior VP and Counsel Duane Desiderio was quoted yesterday in the Washington Post and Popular Science about how CRE executives welcome the idea of a single federal standard. “A workable, usable federal definition of zero-emission buildings can bring some desperately needed uniformity and consistency to a chaotic regulatory landscape,” Desiderio said. (Roundtable Weekly, Sept. 15)
Yesterday, The White House also released a National Climate Resilience Framework in anticipation of an eventual White House Climate Resilience Summit. The Framework identifies climate resilience principles and specific actions to expand and accelerate progress towards six objectives that includes, “Expand adoption of the latest consensus-based building and energy codes and high-performance standards.” (White House Fact Sheet, Sept. 28)
The Roundtable will continue to work with our partner organizations and develop comments on the ZEB definition upon its anticipated release next month.
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