Building Environmental Performance Standards (BEPS) - What You Need to Know

The construction industry is undergoing a significant transformation towards sustainability and energy efficiency. With a growing focus on reducing carbon footprints, conserving resources, and creating healthier living environments, Building Environmental Performance Standards (BEPS) have emerged as important guidelines, and in some jurisdictions, mandates, for builders and developers. Let's delve into what BEPS are, why they matter, and how they are shaping the future of construction.

What are Building Environmental Performance Standards (BEPS)?

Building Environmental Performance Standards (BEPS) are outcome-based policies and laws aimed at reducing the carbon impact of the built environment by requiring existing buildings to meet energy and/or greenhouse gas emissions-based performance targets. They establish targets for energy consumption, often based on factors such as building size, type, and use. These standards aim to reduce greenhouse gas emissions, lower energy costs, improve occupant comfort, and promote sustainable building practices.

When BEPS are combined with building codes that regulate performance for new construction or major renovations, they provide a lifecycle approach to building performance to help state and local governments to deliver on their energy and carbon goals for the building sector.

Why Do Builders/Developers/Building Owners Need to Know About BEPS?

Governments around the world are implementing BEPS as part of their efforts to address climate change and promote sustainable development. This includes jurisdictions within the United States as shown in the above map. Builders, developers, and building owners should stay informed about local, state, and national environmental performance standards to ensure compliance with regulations. Failure to meet these standards could result in fines, penalties, or delays in project approvals. Even if you do not build or own properties in one of the above jurisdictions, BEPS are expanding rapidly to promote a more sustainable future.

Do BEPS have benefits for the real estate industry?

As with most regulations, BEPS have benefits and disadvantages for builders and owners.

The main benefit of enforcing BEPS requirements is their function as a roadmap toward realizing a zero-emissions future, an essential measure in tackling the issues of climate change. While BEPs are primarily adopted to reduce a community’s overall energy use and GHG emissions, builders and property owners are positioned to benefit from the improved understanding of building operations and efficiency gains.

The biggest challenge with BEPS is that they can add significant cost to construction and building operation. While each local entity customizes the BEPS requirements to fit its needs, in general, a BPS policy contains:

A Performance Target that requires buildings to meet a specific level of energy use on a per square foot basis and/or other level of performance. Performance targets typically become more rigorous over time.
Benchmarking requirements to assess and analyze the building’s energy and water use and then compare it to the building’s past performance, similar buildings, and/or modeled simulations of a reference building at a certain standard (such as ASHRAE 90.1). Benchmarking can present a challenge because the data is sometimes difficult to collect, especially for multifamily properties where the residents pay their own utility bills and the building owner may not have access to the data and because much of the data is publicly searchable providing unfettered visibility into the property operations
Timeframe by which buildings must meet the Performance Target(s); likely there are interim target timeframes as well.
Fines/Penalties for non-compliance. Penalties vary, some jurisdictions have relatively low annual penalties, whereas others have heavy penalties. Penalties are intended to level the playing field for market participants.

There are some property/builder specific benefits to BEPS:

Cost-Savings: Efficient buildings consume less water and energy for heating, cooling, lighting, and other operations.
Investor Interest: Buildings that exhibit superior quality and performance are appealing to numerous institutional and international investors that prioritize Environmental, Social, and Governance (ESG) criteria for their funds.
Risk Mitigation for Higher Building Codes: Builders that embrace high performance building metrics gain valuable expertise and experience in sustainable construction practices, making them better positioned for future building codes and standards.
Competitive Advantage: BEPS-compliant buildings offer improved indoor air quality, comfort, and overall wellness for occupants. This can lead to higher tenant satisfaction and retention rates.
Property Valuation: Properties that meet BEPS criteria are likely to command higher valuations, higher sales prices, and for commercial buildings, higher rental rates.
Leveled Playing Field: Unlike building codes, which largely impact new development and gut renovations, BEPS impact all buildings, which helps to spread the compliance costs across all properties.

BEPS regulations typically includes multiple standards, each aimed to increase efficiency for a different aspect of a building. Below are the five performance standards commonly included in BEPS regulations:

Energy Efficiency
Water Efficiency
Renewables
Electrification
GHG Reductions

Where do Green Building Certifications Fit In?

Green building certifications, such as NGBS Green, complement BEPS; can help buildings be BEPS compliant; and can help building developers and owners finance the green features needed to be BEPS-compliant. Green certified buildings are designed, constructed, and verified to be higher performing so they are typically closer to also being BEPS compliant than a code-minimum building. Further, green building rating systems often award points toward certification for ongoing benchmarking of energy and water, which most BEPS programs require. HUD’s Green MIP offers a substantial reduction in the mortgage insurance premium for buildings that earn NGBS Green certification and commit to benchmarking energy and water use. Buildings can save millions over the life of the mortgage, and these savings can in turn be used to reach higher performance targets and significantly reduce GHG emissions. The Green MIP reduction can be stacked with Inflation Reduction Act tax credits and deductions to provide additional financial incentives to reach higher performance levels. Last, many states and localities have additional incentives, some originating from the Inflation Reduction Act, which can help defray the additional costs of zero emissions buildings.

BEPS are the Future of Sustainable Real Property Building

Building Energy Performance Standards (BEPS) are more than just guidelines—they are integral to the future of sustainable construction. Builders, developers, and owners that familiarize themselves with BEPS, incorporate energy-efficient design principles, and stay updated on emerging standards are poised for success in a rapidly evolving industry. By constructing buildings that meet these standards, builders not only contribute to a greener future, but also reap the benefits of cost savings, market demand, regulatory compliance, enhanced reputation, and innovative practices. As the world moves towards a more sustainable future, BEPS serve as a compass guiding builders towards responsible, efficient, and environmentally friendly construction practices.

Filed Under:

Green Home Building

Tagged:

Building Practices, Energy Performance, Green Building