The Digital Transformation of Carbon Policy for Buildings
At my last “regular” job, I was leading two corporate priorities for a national corporate real estate firm. The first was our corporate ESG strategy, and the second was our digital transformation initiative. My background is in policy development, and I was hired as the ‘sustainability guy,’ and was then ‘volunteered’ for the digital transformation part by our CEO later on. This experience has really shaped the way I look at things. Fighting climate change is the big job, policy has a role, and implementing new technology and new processes based on that technology is the method to increase our effectiveness.
The thing is when we discuss new technology and its role in decarbonising the building sector, the first thing we often talk about is the hardware that goes into buildings: Heat pumps, Solar panels, EV Chargers. If there is a second thing we talk about in this conversation it’s usually how technology can make buildings “smarter.” How software can better control the hardware that’s in there. Think internet of things, and smart thermostats.
What we rarely talk about is how software can transform the industry through digitizing access to information and resources, and how we can build new processes on top of that access.
What I find interesting is that when we look at the biggest changes technology has had on our lives in the past decade most of them are in that last category. Software that shows us information in a different way or motivates us to do something different has shaped much of our modern economy. These platforms have changed the way we consume goods. They have changed the way we communicate, socialize, and do business. They’ve even changed how we find our life partners and consume culture. I note not all of these changes can be viewed as positive but there is no reason why platforms like this couldn’t reshape how we decarbonise buildings in a productive way.
If you are reading this you probably know buildings are a big deal when it comes to climate change. To put the necessity of action in buildings into context, when we look at global emissions, building operations are responsible for 27% of total emissions annually. That’s ten times what aviation is. I know a lot of us latte drinking lefties feel the palpable guilt of international travel (as we probably should); I am pretty sure very few of us feel that same climate shame when we go inside on a cold winter’s day.
So buildings are a big deal. Buildings are owned, regulated, and operated by people. So how do we shape a platform that changes how people invest in, and operate, buildings to achieve the necessary reductions?
First of all policy needs to change, and it is. Building Performance Standards (BPS) are already being adopted in leading jurisdictions such as New York City, Washington DC, and Vancouver BC. According to the Institute for Market Transformation there are currently 40 jurisdictions in North America that are committed to implementing, or have already implemented, BPS.
What is a BPS you may ask? It’s like a regulated fuel efficiency requirement for buildings. These standards set minimum performance requirements for all buildings and then gently ratchet them up over time. A well designed BPS will both push and build the market for GHG reductions over time. This is done by targeting the worst performers initially, and then gradually working through the full spectrum of the market as we progress to 2040 and beyond. Markets need signals, just as threats to human wellbeing – and climate change is certainly such a threat – need regulation. The analogy I like is that it took a law to get seatbelt use universal and culturally expected, and a similar regulatory approach will drive a market and culture shift toward emissions reductions in the building sector. And as with seatbelts, once the practice is normalized society will have a chance to see that the benefits are clear and broad, and the costs minimal.
Building Performance Standards are always built upon building energy and carbon reporting requirements, also called benchmarking ordinances. The saying goes that a problem has to be measured in order to be managed. So how does digital technology shape or change this approach? Technology has already provided a free-to-use way for building owners to consistently track and compare emissions through ENERGY STAR Portfolio Manager, an open-source tool supported by the Federal Governments of the United States and Canada. The other way technology comes in is that benchmarking programs and BPS require the submission of thousands of reports annually to cities. For this to be successful, the process for submissions and review needs to have as little friction as possible. The commercial real-estate market is lean and competitive, and energy reporting is a new discipline for property managers. In order to have buy-in from the market there needs to be a low barrier to entry.
The creation of elegant, user-friendly platforms that make it easy for building owners to submit their annual energy and carbon reports is critical to raising compliance rates in these jurisdictions. Utilities also need to have integrated billing systems that automatically update ENERGY STAR Portfolio Manager accounts. This is technically easy to do but as of yet not widely done. It has the double benefit of reducing the reporting burden on owners, while also reducing the opportunity for human error.
When it comes to compliance, how cities manage it also has to change. As building performance standards come into effect staff will have to process and review thousands of reports: which buildings have provided full building and performance data; which buildings show data gaps or probable errors; which buildings are within vs. outside of regulated performance levels? Here technology will also help. I have read that technology is most transformational in business when it automates and eliminates mundane tasks, but also magnifies the impact and productivity that an individual can have. In the context of managing a building performance standards technology can achieve both of these outcomes. For example, digital solutions can help provide greater value to individual building owners through benchmark scores and performance analytics, and to policy makers through analyzing the aggregated dataset.
Building benchmarking platforms like GRID from OPEN (shameless product plug!) have logic in them that vets suspicious reports, and identifies missing data. This greatly streamlines the review for the program manager who then just needs to review the files that have already been vetted by the technology. Not only does this significantly reduce the administrative burden but it also speeds up the process by allowing staff to focus only on the problematic files where they can provide most value. Additionally, automating and tracking correspondence for data issues at scale is a leverage point for productivity.
Cities can also provide portals and dashboards to applicants so that they can review for themselves how their files are doing. This further reduces the burden on staff from having to answer calls or even send correspondence. It allows building owners to directly access the status of their files and resolve issues with submissions as soon as they are identified.
Technology also has a role in supporting building owners in taking action to meet these building performance standards. Typically if you are going to decarbonize your building it starts with a costly and time consuming audit of your existing equipment. These are traditionally done by professional engineers who are in short supply. Here technology through the development of virtual auditing tools (like those found in GRID!) have the capability to provide clear decarbonization road maps to thousands of buildings instantly. Most building owners just don’t know how to start to reduce emissions. There is a lot of confusion between energy efficiency upgrades and emissions reductions. It’s important to note that efficiency does not always lead to carbon savings. This is surprising to a lot of building owners. So providing plans that show how best to decarbonize can radically improve the capacity of the market to act. Besides there just aren’t enough engineers available to perform all the decarbonization audits needed to achieve the GHG savings required. So using AI and machine learning based auditing tools can help to fill this gap and focus precious engineering time where it’s most needed- designing and implementing projects.
Finally, technology can help to accelerate the cycle of innovation. As noted above, new tools can help to drive performance standards by bringing a positive user experience to regulation and compliance. These tools can also start owners on the journey to decarbonizing their buildings, but what if these same tools could also be configured so that building owners could share data on what they did to achieve GHG savings, and how much it cost them to do it? If we did this, we could aggregate this data, anonymize it, and reshare back with industry to further improve retrofit planning and micro target policies and programs to where they would have the most impact. Information cycles like these are at the heart of every good digital transformation initiative.
There is a lot to do. So much. And change is hard. The good news, in this context at least, is that we have seen technology drive massive change in our society. When aligned with good policy, these software tools can magnify our impact and accelerate the change we need. It could drive a pace of change we previously thought unimaginable. That’s the mission here at OPEN Technologies.
If there is one big obstacle I see that needs addressing to make this happen, it’s that policy makers working on climate issues need to think about how their policy can be enabled and accelerated by software tools. How we implement matters as much as what we implement.