Do You Eat in Restaurants With a C Grade?

New York City buildings, including most co-ops and condos, will soon sport conspicuous A to F letter grades at their public entrances. Modeled after the city’s restaurant ratings, Local Law 33 requires buildings to post letter grades that reflect their energy efficiency. Starting in 2020, the law applies to buildings over 25,000 square feet.

The grades are based on a building’s Energy Star rating, which is generated using data submitted annually under the city’s energy benchmarking law (Local Law 84). You can find your building’s rating on sites like Metered.nyc.The Environmental Protection Agency computes Energy Star numbers by using a nationwide database to compare the energy consumption of buildings that have comparable size, usage, occupancy, hours of operation, location, and other factors. An A grade will be awarded to buildings with an Energy Star score of 90 or above, meaning they’re more energy-efficient than 90 percent of comparable buildings nationwide. The grade of B will be awarded to buildings that score 50 to 89; a C for 20 to 49; a D for 0 to 19; and an F for buildings that are required to submit benchmarking information but failed to do so. There will also be an N grade for buildings that are exempted from Local Law 84 or are not covered by the Energy Star program. The new law also requires the city to conduct spot audits of this information to guard against the temptation to fudge data.

There’s Always Room for Improvement

Could Local Law 33 be improved? Yes. It seems fair to question scoring ranges in which only buildings in the top 10 percent nationally get an A and the next 40 percent get a B. This departs from approaches in many other countries and likely deserves a second look. There are also legitimate concerns about how Energy Star creates its grades. It has only been in use for a few years for multifamily buildings, and we may not yet know all the wrinkles. One concern is that Energy Star aims to treat densely occupied buildings the same as sparsely occupied ones. Some argue that density should instead be rewarded with a higher score.These concerns aside, the city’s approach builds and improves upon what has been used in Europe since 2002. There, most countries use energy labels that are not based on actual water and energy usage (that is, benchmarking), as the New York City law requires, but on a physical assessment of the building. This “asset rating,” according to an analysis by Jones Lang LaSalle in the United Kingdom, has shown no relationship to actual energy usage. This tells us that a rating based on actual energy consumption is more meaningful than a rating based on a building’s construction.

Keeping Up With the Joneses

Just as people who own restaurants strive to keep an A rating, co-op and condo boards will strive to keep an A energy-efficiency rating – while those with poor grades will be motivated to do better. We hope that the market will reward better-performing buildings through higher sale prices or lower vacancies.

Energy grades are a powerful tool for promoting energy efficiency by harnessing the basic human desire to keep up with the Joneses. That’s why the Urban Green Council has promoted energy grades for years. We advised the City Council on the legislation, urging lawmakers to base the letter grades on buildings’ actual, rather than theoretical, energy use. And it bears repeating that energy efficiency reduces operating costs and makes buildings more comfortable for residents. Overheating that causes you to throw open a window during the winter is a major waste of energy. Solve these problems and you don’t merely eliminate uncomfortable temperature swings, you save real money – and improve your letter grade. In the bargain, you do the planet a favor. There’s nothing like a little healthy competition to get New Yorkers going. We hope your co-op or condo board will join the push in the coming years toward greater energy efficiency, health, comfort – and affordability.
Russell Unger is executive director of the nonprofit Urban Green Council, which works to transform New York City buildings for a sustainable future.