BERDO 2.0: Decarbonizing Existing Large Buildings in Boston
WRITTEN BY YVE TORRIE, DIRECTOR OF CLIMATE, ENERGY & RESILIENCE
On September 22, 2021, the Boston City Council unanimously approved an amendment to the City of Boston’s Building Energy and Reporting Disclosure Ordinance (BERDO), known as BERDO 2.0. While BERDO has been in place in Boston since 2013, this amendment will require large existing buildings to move from energy reporting and disclosure, to reducing greenhouse gas emissions to net zero by 2050. BERDO 2.0 targets only 4% of buildings across the City of Boston, but will address over 60% of citywide emissions, and will be an essential component of achieving the City’s net zero goals. Mayor Janey is expected to sign BERDO 2.0 into law in the coming days. BERDO 2.0 would go into effect immediately in Boston upon her signing and the owners of covered building will be required to meet emissions reductions benchmarks in 2025 and 2030.
Given that 85% of the buildings that will be standing in Boston in 2050 already exist, BERDO 2.0 is focused on decarbonizing our existing large building stock in Boston. Many of our members know more than anyone that decarbonizing existing building stock poses unique technical and financial challenges, as well as opportunities. That’s why A Better City’s Buildings Policy Coalition made up of both A Better City and Green Ribbon Commission Commercial Real Estate Working Group members has been discussing this in detail since the amendment was proposed in the fall of 2020. Our solutions-oriented engagement with the Coalition, the City of Boston’s Department of Energy, Environment, and Open Space, lead sponsor, Councilor Matt O’Malley, and his team, the Boston Green Ribbon Commission, colleagues in the business community, and advocacy organizations, resulted in submitting extensive written comments on BERDO 2.0. Our most recent comments from July 28th can be found here, and an ordinance markup from August 18th can be found here. A Better City also provided testimony at the Boston City Council’s Government Operations Committee hearings, working sessions, and listening sessions that reviewed BERDO 2.0.
Members have asked about key sections of the ordinance. The overview below summarizes answers to those questions.
BERDO 2.0: AN OVERVIEW
- Who has to report?
- Non-residential and residential buildings 20,000 square feet or over (or two or more buildings on the same parcel 20,000 square feet or over) or residential buildings greater than 15 residential units, and
- Approved building portfolios (two or more buildings, on one or more properties with the same owner or part of an approved Institutional Master Plan).
- What is the reporting deadline?
- By May 15th, 2022, and every year thereafter. For the initial reporting deadline in May 2022, building owners may apply for a one-time 6-month extension on reporting their data.
- What data needs to be reported?
- Covered buildings under BERDO 2.0 must report via Portfolio Manager or as required by the Regulations the following:
- Energy and water use, and other building characteristics necessary to evaluate CO2 emissions.
- Primary building use or multiple primary building uses.
- Renewable Energy Certificates if applicable; and
- Material terms of energy purchased via an executed Power Purchase Agreement (PPA) if applicable.
- What are the data verification requirements?
- Third-party verified reporting data is required in the first year following BERDO 2.0 passage, and every 5 years thereafter.
EMISSIONS REQUIREMENTS PATHWAYS
- What are the pathways to reduce carbon emissions to zero?
- Emissions Standards: Building owners can comply with Emissions Standards developed for 14 building uses based on kgCO2e/SF/yr (kilograms of carbon emissions per square foot per year). A table on pages 10 and 11 provides building uses with declining allowances of kgCO2e/SF/yr for 2025-2029, 2030-2034, 2035-2039, 2040-2044, and 2045-2049. For buildings or building portfolios with more than one primary use, a blended emissions standard can be used if a primary use occupies at least 10% of the building.
Note: Buildings 35,000SF and over are required to start meeting these emissions standards by 2025; buildings 20,000 SF-35,000SF will start meeting emissions standards by 2030.
- Individual Compliance Plans: Building owners can develop and seek approval of an Individual Compliance Plan from the Review Board. The plan must establish declining CO2 emissions standards in five-year increments, that decline on a linear or better basis, and that reduce emissions 50% by 2030 and 100% by 2050. The baseline year can be set from any year starting in 2005.
- Hardship Compliance Plan: Building owners can request a Hardship Compliance Plan when building characteristics or circumstances present a hardship in complying with the Emissions standards, e.g., historic buildings and pre-existing long-term energy contracts without reopeners. The Review Board can approve a Hardship Plan with alternative timelines and emissions standards.
- Are there any exemptions?
- Emergency backup generation/backup power use can be deducted from a building’s total energy use, as can electrical vehicle supply equipment until at least 2030.
ADDITIONAL COMPLIANCE MECHANISMS
- What other mechanisms can be used to comply with the Emissions standards?
- Municipal Aggregation: Buildings using electricity through the Boston municipal electricity aggregation program can have the appropriate Emissions Factor applied to that electricity.
- Renewable Energy Certificates (REC)s: Buildings can purchase unbundled RECs that meet RPS Class I requirements, are tracked by the New England Power Pool Generation Information System, are generated in the compliance period they are used, and are retired within six months after the end of the compliance period they are used.
- Power Purchase Agreements (PPAs): Buildings may enter renewable PPAs if the energy purchased is generated during the compliance period and the RECs are retired within six months after the end of the compliance period.
- Alternative Compliance Payments (ACPs): Based on the average cost per metric ton of CO2e to decarbonize buildings, ACPs can be used to mitigate emissions from energy used at an initial cost of $234 per metric ton of CO2e. ACPs will go into a newly established Equitable Emissions Investment Fund which the Review Board is responsible for expending. These funds will support the City’s emissions reduction goals, prioritizing projects that benefit Environmental Justice Populations, and populations disproportionally affected by air pollution.
- How are violations issued?
- A notice of violation will be issued which can be corrected by complying or sending a hearing request to the Review Board. A hearing must be heard within sixty days; an additional thirty days will be granted to correct the violation.
- What are the penalties that will be issued for non-compliance?
- Reporting Requirement Fines: Each day a building owner is out of reporting compliance, fines ranging from $150 to $300 a day will be issued, the amount determined by the building or the number of units.
- Emissions Standards Fines: Each day of a calendar year and each subsequent day a building owner does not comply with the Emissions standard, fines ranging from $300-$1,000 a day will be issued, the amount determined by the building or the number of units.
- Inaccurate Reporting Information Fines: A discrepancy with a building owner’s self-certified reporting will be fined $1,000-$5,000, as determined by the Review Board.
- Can I appeal these penalties?
- Penalties are subject to reductions or waivers by the Review Board.
- What is the purpose of the Review Board?
- The Review Board may draft Regulation revisions, approve Individual and Hardship Compliance Plans, issue fines and penalties, and appropriate funds from the Equitable Emissions Investment Fund. Staff support will be provided by the City’s Environment Department.
- How many are on the Review Board and how are they appointed?
- A nine-member Review Board appointed by the Mayor and approved by the Boston City Council will be convened with expertise in environmental justice, affordable housing, labor, and workers’ rights, workforce development, building engineering and energy, real estate development and management, public health and hospitals, and architecture and historic preservation.
- The chair of the Boston City Council’s Environment, Resiliency and Parks Committee, or designee, will also be on the Board.
- Two-thirds will be nominated by Community-Based Organizations.
- What are the requirements for members of the Review Board?
- All Review Board members must be residents of the City of Boston.
- Members will serve for three years; successors or renewals will be nominated as per the original Review Board appointments.
- The Board will meet at least four times/year; more if necessary.
- Compensation may be requested.
- Are additional working groups or technical advisory groups allowed?
- Working groups may be convened for Regulation changes or sector specific criteria for Hardship Compliance Plans. For example, a working group will be convened for the needs of healthcare institutions connected to district energy systems.
A BETTER CITY COMMENTS INCLUDED
As mentioned above, thanks to robust and solutions-oriented engagement with decision-makers and partners alike, A Better City submitted extensive written comments, an ordinance markup, and testimony at working and listening sessions. The final ordinance language includes many of A Better City’s recommendations including:
- Adding technical expertise that is supplemental to the Review Board, when necessary, i.e., working groups.
- Establishing a working group to address the specific needs of healthcare institutions connected to district energy systems.
- Clarifying the use and reporting of Power Purchase Agreements and Renewable Energy Certificates.
- Adding transparency and public reporting to anticipated allocations from the Equitable Emissions Investment Fund.
- Ensuring data reporting requirements include a defined methodology for calculating emissions that allow for the most up-to-date and accurate emissions factors customized to generation sources serving the local grid in Boston.
- Allowing a one-time, six-month reporting deadline extension in 2022 after BERDO 2.0’s passage.
- Allowing reporting as a portfolio for owners with multiple buildings in one or more properties.
- Reviewing ACPs every five years, not at least every five years.
- Allowing an exemption from emissions requirements for emergency backup generation/backup power to at least 2030.
A BETTER CITY COMMENTS NOT INCLUDED
Some recommendations A Better City made throughout this process were not included in the final ordinance, including the following:
- The City’s Environment Department take responsibility from the Review Board for all functions relating to compliance and enforcement.
- The Equitable Emissions Investment Fund include deep energy retrofits and electrification of large commercial buildings.
- Professionals employed by building owners be considered as data verifiers with appropriate precautions.
- Data discrepancy with a margin of error of less than 5% not be subject to fines.
- An assessment be conducted every five years to ensure that utilities are compliant with GHG requirements so building owners are not penalized for utilities’ noncompliance.
- Carbon offsets, with a focus on carbon removals, be re-evaluated in 2025 and every five years thereafter to address unavoidable building emissions and how they might relate to the ACP.
Once signed by Mayor Janey, the City will refine needed regulations and establish the Review Board and its members. A Better City will continue to engage its members throughout this process to ensure the continued advancement of innovative and equitable climate solutions to decarbonize the built environment.
A Better City is grateful for the robust engagement over the past year. The thoughtful input from many of our members, including those who testified and provided comments, helped improve BERDO 2.0. This is a landmark achievement for the City of Boston and we remain ready and eager to ensure that BERDO 2.0 is implemented effectively and in partnership with the business community, building owners, and Boston’s communities.
For any questions or comments on BERDO 2.0, please contact Yve Torrie.