Legal and Financial Instruments that Support Renewable Installations on Public Buildings

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University of Eastern Finland Law School International Resource Law Master’s Thesis 3.5.2017 (date of presentation) Carmen Dupree: (263931) Supervisor: (Kim Talus)

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Author Carmen Dupree

Name of the Thesis

Legal and Financial Instruments that Support Renewable Installations on Public Buildings

Major

International Resource Law

Description

Master’s thesis

Date

03.05.2017

Pages

67

Abstract

This paper examines the question of how to incentivize the adoption and use of renewable installations on public buildings, by governments via legal and financial instruments. Energy consumption in buildings is steady increasing as population increases. At present, nearly half of the total greenhouse gas emissions in cities, and GHG’s are the main cause of climate change. Climatologist’s and policy experts agree that improving energy efficiency of building systems and operations is a very effective way to combat climate change in the long term. Currently however, despite the fact that improvements in existing buildings has the greatest potential for greenhouse gas emission reduction, most laws and regulations have focused primarily on new buildings. Therefore, improving energy efficiency in existing buildings represents a great opportunity for minimizing the effects of climate change at a global level. There have been a number of legal and financial measures put in place in both Europe and the United States to increase efficiency of buildings and decrease emissions, yet there is still room for improvement. Compared to the United States, Europe has been taking the lead on the green building initiative from a legal perspective. This paper aims to look at the effective legal measures in Europe and examine how they could be implemented in the United States. The measures are composite of conventional approaches to innovative market-based instruments. Although different proposed methods are similar to some extent, this paper will examine them with the caveat that they are constrained by specific characteristics of each region.

Key words : Public Buildings, Renewable Installations, laws, United States, European Union

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I. INTRODUCTION

With the ever increasing threat of climate change, the desire to facilitate renewable energy installations is not a revolutionary phenomenon. The weighing of environmental benefits over the upfront financial costs of renewable energy has been an uphill battle in many countries including the country with the highest GDP in the world, the United States. To someone who is unfamiliar with contemporary climate law this may be a surprise yet, it is in fact true that the worlds number two emitter of GHG’s is failing at the federal level, to use its financial advantages in a way that would efficiently combat this problem . ¹

The United States government is not the only nation struggling to implement sound climate policies at the national level. States like China, India, Brazil, and Canada, are also drag- ging their feet when it comes to implementing sustainable development policies that target their nation as a whole . However, the one commonality among all of the aforementioned States and ² really all States for that matter, is the ever expanding size of the megacities located within each of these individual regions. In today’s world, the economies and population size are growing at such a rate that the GDP of one of these megacities amounts to one third and in some countries one half of the nations over all GDP . The term megacities constitutes a metropolis reaching be³ - yond their territorial borders for example Los Angeles, extending it transit systems past San Diego into Tijuana, Mexico . In some regions such as sub-Saharan Africa, countries like Togo, ⁴

Doris, Elizabeth - Cochran, Jaqulin - Vorum, Martin. Energy Efficiency policy in the United States:Overview of

1

Trends at Different levels of government. National Renewable Energy Laboratory:Technical Report 2009.

There is currently no comprehensive policy strategy for energy efficiency in the United States. “Policies are con- ceived within narrow political constraints based on some specific need, and without a thorough consideration of the policies’ interaction with other policies. A strategic approach to improving energy efficiency in the United States would coordinate efforts across jurisdictions and sectors, as occurred under the National Action Plan for Energy Ef- ficiency.”

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2

portal/national-policy/international-scorecard.

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3

Random House Publishing, New York, New York 2016.

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4

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Benin, Ghana, are becoming suburbs of the megacity Legos, to the extent that transit systems are being built between these places.

Some have argued that in order to accurately monitor sustainable development in today’s world it is arguably more important to understand the world stage in terms of these megacities and their regional location rather than by territorial boundaries . This is because in order to at⁵ - tract more commerce and connectivity, cities have a desire to adopt global value chains and at the moment the most popular value shared among all of the worlds megacities is sustainable development. In each of these megacities there are hundreds of learning networks dedicated to sustainable urbanization via technology and policy transfer between cities . Building zero emis⁶ - sion buildings and installing renewable technologies on existing buildings, is one of the most effective courses of action to take in achieving sustainable development as buildings contribute to 1/3 of global GHG emissions . Local governments in and around these megacities have more ⁷ power than they appear to have regarding sustainable development based on the policies and methodologies they choose to enforce. Although the world’s cities appear to be increasingly dedicated to sustainability, countries that rank the highest in terms of energy efficient buildings (Germany, Italy, Austria) are those that have national energy efficient requirements . By com⁸ ⁹ - paring and assessing the national, state, and local renewable energy laws currently in place in the US and the EU, this paper aims to determine whether it is a more fast and lucrative means to achieving sustainable development goals via laws and polices at a local level than approaching it legally from national level.

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7

buildings contribute as much as one third of total global greenhouse gas emissions, primarily through the use of fossil fuels during their operational phase”

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8

portal/national-policy/international-scorecard.

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national-policy/international-scorecard.

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A. Comparative Analysis of Building Laws in the U.S and the EU: United Kingdom and California

The intention of this paper is to delve deep into the current structure of the legal and financial institutions in place, that are dictating building standards and renewable energy installations on public buildings in both the U.S. and the EU. Federal and state level legal measures will be taken into account in regards to California and compared to the EU legislation implemented in the United Kingdom. This paper will also look at local government policies and issue affecting renewable installations on public buildings in the major cities of both the United Kingdom (Lon- don) and California (Los Angeles). While this paper primarily looks at renewable installations on public buildings from a legal standpoint, it will also take note of the policy initiatives currently in place, in order to paint a clear picture of the both the hard law and soft laws regarding the performance of public buildings.

The paper will begin by comparing EU legal measures on the energy performance of buildings with federal legal measures in the US and then zone in on the legal measures in the UK and California. The primary take aways from this comparison will be; determining the laws and policies in California and the UK that promote these installations and those that hinder them. In addition, Where national laws come up short, the paper will look at the actions local city governments within California and the UK, have taken promote these installations themselves. The focus is on public buildings specifically to determine the extent to which governments are taking legal action to enforce sustainable building laws on their own property and thus, leading by example.

By looking at and comparing the challenges that face renewable installations on public buildings in the U.S and the EU and subsequently the U.K. and California, a legal solution is aimed to be reached that will promote improvements in sustainable building laws. Those successful laws (or policies) will be identified by the extent to which they have resulted in sustainable renovations of existing buildings as well as sustainable design of new buildings. The goal of environmental finance is to bring the greatest environmental benefit to the greatest number of

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people at the lowest possible cost. Therefore it would be useful to examine the quality/effective- ness of sustainable building laws, with the goal of environmental finance in mind.

B. Sustainable Building Features: Including Renewable Energy and Building Design Solar energy installation in the U.S. experienced a record breaking increase of 43% during the second fiscal quarter of 2016. This rising popularity in the solar industry in the non-residential sector, is attributed to major state markets are transitioning toward more diversity in types of project development . Self-consumption projects that avoid system-size limits set under net me¹⁰ - tering programs and new community solar programs are countering continued weakness in the non-residential rooftop solar. Most notably, community solar programs in California and the Northeast are on track to drive over 100 MWdc of community solar for the first time ever on an annual basis . The non-residential sector recognizes the benefits of solar installations not only ¹¹ for the fact that it is environmentally clean and can cut energy cost, but also because the abun- dance of sunlight makes solar a practical investment in that it will not be depleted. While some regions of the world are certainly sunnier than others, all regions have the capacity to generate power from solar energy.

Unfortunately, solar technology does have its draw backs, the primary one being reliability.

Solar energy is unreliable in the sense that access to sunlight is intermittent, so to the extent that the weather is unpredictable, so too is the power to be generated by solar panels . There are bat¹² - teries that can store solar energy but they are quite costly and when it comes to renewable energy projects, cutting cost is essential. In Europe, many countries with less annual sunlight have pri- oritized investments in wind farms over solar, making wind one of the more popular forms of renewable technology in the EU . Like solar however, wind farms face similar intermittency ¹³

Solar Market Insight Report Q3 2016 Executive Summary. http://www.seia.org/research-resources/solar-market-

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insight-report-2016-q3.

See, 10. SEIA Executive Summary.

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Maehulm, Mathis. Solar Energy Pros and Cons. energyinformative.org/solar-energy-pros-and-cons/#intermittent.

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May 12, 2014

Wind In power: 2015 European Statistics. The European Wind Energy Association. windeurope.org/wp-content/

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upload/files/about-wind/stastics/EWEA-Annual-Statisitcs-2015.pdf

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problems in that, when wind patterns are unpredictable so is the production of energy it gener- ates. This is where the benefit of examining Geothermal installations comes in because unlike wind and solar, the power output of a geothermal power plant can be accurately predicted. Geo- thermal energy can therefore meet base load energy demands where as weather dependent renewable technologies, cannot. One concern about geothermal energy is that it has been linked to some GHG emissions such as suffer dioxide and silica emissions . While significantly less ¹⁴ harmful than emissions associated with coal/fossil fuels, geothermal energy still receives criti- cism because of this. So what solar and wind lack in reliability, geothermal makes up for and what geothermal lacks in terms of being emission free, solar and wind make up for. Together these three technologies equate the perfect renewable energy investment for public buildings in terms of reliability and cleanliness.

Maehulm, Mathis. Geothermal Energy Pros and Cons. energy informative.org/geothermal-energy-pros-and-cons/

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June, 01, 2013

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II: LEGISLATION CONCERNING THE ENERGY PERFORMANCE OF BUILD- INGS

A. The European Legal System:Brief History of Sustainable Building Laws

Prior to the 1999 Treaty of Amsterdam, the objective of sustainable development was not as much of a priority as it is today, in the European Union. This treaty stressed the necessity for ¹⁵ sustainability and environmental protection by including these objectives into article two of the EC treaty. By 1998, the Commission recommend to the European Council that environmental ¹⁶ concerns be inserted in to all policies within European institutions via the Fifth Community Ac- tion Programme on the Environment entitled, Toward Sustainability. Article 174-176 of the EC Treaty, explicated the Community’s competence in the implementation of environmental legislation by introducing; the principle of preventative action, the stipulation that polluters should pay, co-decision legislative procedure, and the ability of Member States to introduce more stringent environmental measures than those standards provided by the EU. When it comes to the inter¹⁷ - pretation of environmental cases in the EU, the European Court of Justice (ECJ) invokes the pre- cautionary principle laid out in article 174 section 2 of the EC Treaty, in conjunction with the polluters pay principle and the principle that correction should occur at the source. In the EU ¹⁸ there are various types of legislative acts that the Union can impose upon Member States, creating rights and obligations that each state must comply with. The legislative acts that are adopted jointly by the European parliament and Council can take the form of either, directives, regulations, or decisions. Depending on the nature of each of these legislative acts, they are designed to be applicable to each Member State regardless of their legal system. There is no gradation ¹⁹ of importance between regulations, directives, or decisions, as compliance with each of these

Rawworth, Phillip. European Union Law Guide. Volume 7, Part XIX, p. 38:2. Thompson Reuters 9/2016.

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Rawworrth, Phillip. European Union Law Guide. Volume 7, Part XIX, p. 38.2. Thompson Reuters 9/2016.

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The Single European Act. Articles 174-176. 1987

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Robinson, Nicholas, A. International Environmental Legal Trends: Factors Shaping the Practice of Environmental

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Law. p. 527, 531

Rosas, Allan - Armati, Lorna. EU Constitutional Law: An Introduction. p.49. Oxford and Portland, Oregon,

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2010.

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forms of legislation on the part of Member States is obligatory . However, the ways in which ²⁰ Member States are required to apply each of the forms of legislation, is where the true distinction lies.

Of the three forms of legislation, regulations have the greatest direct impact because they are directly applicable in the domestic legal order of each Member State . This means that re²¹ - gardless of conflict that the regulation has with domestic law, it must be put aside so that the regulation may be applied. On the other hand, Directives while still binding in their entirety, the results to be achieved from this legislative act constitutes an adoption of measures that are con- sistent with the domestic law of each member state . What this means is that directives lay out a ²² number of measures that are binding and must be complied with, but it is up to each Member State to decide how to apply these measures in a way that is complementary to their domestic legal system. There is a deadline for compliance with each directive that is issued and only when a Member State fails to apply the measures at the prescribed deadline, does the directive become directly applicable. Decisions like regulations are binding in their entirety, however they may only apply to a specific set of people and therefore do not share the broad nature of regulations and directives . ²³

The setting of norms, standards, and prohibitions in EU environmental legislation can take the form of target standards, performance standards, and specification standards . While ²⁴ target standards are not always binding and do not directly regulate industry, they do guide member states into the direction of long term environmental goals and obligate Member States to comply by establishing limits on specific types of pollutants. The targets that are most related to the energy performance of buildings are the 2020 targets where 20% of consumption in the EU comes from renewable sources and GHG’s are reduced by 20%. The 2012 Energy Efficiency

Rosa, Allen. Armati, Lorna. EU Constitutional Law: An Introduction p.50. Oxford and Portland, Oregon, 2012.

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Regulations, Directives, and Other Acts. European Union Law. europa.eu/europan-union/law/legal-acts

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Regulations, Directives and Other Acts. European Union Law. europa.eu/european-union/law/legal-acts

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Rosas, Allen. - Armati, Lorna. EU Constitutional Law:An Introduction. Oxford and Portland, Oregon. 2010 p.50

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Economidou, Marina. Energy Performance Requirements for Buildings in Europe. RHEVA Journal, March 2012.

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p. 16-18.

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Directive (EED) was the legislative result of this 2020 target, as it is referenced consistently throughout the document. Performance standards are more binding in that, they prohibit certain poor quality conditions such as emissions standards which, apply to buildings as well as vehicles, waste, and other sectors. Specification standards include requirements for best available technology (BAT) and best available technology not entailing excessive costs (BATNEEC). Direc- tives that establish these types of standards are often used to establish standards for use by Mem- ber State regulators . On the basis of the polluters pay principle include energy charges and tax²⁵ - es, non-compliance fees and performance bonds are enforcement incentives used by Member States that can take various forms.

The performance based requirements in building codes have been increasingly become more stringent in the past decade but a number of Member States began instituting thermal performance requirements for building codes much earlier. Some Scandinavian countries have had performance requirements for buildings dating back to the mid 1940’s and other Member States began to follow suit during the 1970’s oil crisis . These 20th century building codes constituted ²⁶ a prescriptive based approach to energy consumption in that, they focused on specific elements of a building rather than focusing on the building as a whole. The shift from a prescriptive based approach to a performance based approach occurred when the Energy Performance of Buildings Directive 2002/91/EC was introduced. The performance based requirements for new buildings vary from Member State to Member State depending on the definitions and calculation methods each country chooses to use. The setting of building code requirements with legally based performance targets are typically expressed by an absolute value (kilowatt hours) or on a percentage improvement requirement . ²⁷

The non-domestic new buildings code requirements in the UK apply the latter via the Target Carbon Dioxide Emission Rate (TER). TER is based on achieving a percent reduction in

Rawworth, Phillip. European Union Law Guide Volume 8, p. 41C-55. September, 2016.

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Economidou, Marina. Energy Performance Requirements for Buildings in Europe. RHEVA Journal. March 2012.

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Table 2 p. 16.

Economidou, Marina. Energy Performance Requirements for Buildings in Europe. RHEVA Journal. March,

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2012. p. 17.

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CO2 emissions over a notional building of the same size and shape. To address environmental health in addition to energy requirements, many Member States have instituted performance requirements for ventilation, including technical requirements for heat recovery. This is because insufficient ventilation leads to both energy wastage and poor air quality and in the UK, they have introduced requirements to limit the air tightness of buildings; Maximum n50=10 m³/h m² . ²⁸

In 2009 the 2020 targets were enacted via the Climate and energy package, designed to facilitate the reduction of energy consumption (one of many of the EU’s main Objectives) . Set ²⁹ in 2007 by EU leaders, the targets indented to help meet the EU’s international commitments to the Kyoto Protocol, a treaty that pertains specifically to the threats of climate change. The main legislative instruments that are related to the 2020 targets include; the energy strategy 2010 which defines energy priorities for the next 10 years (including measures on the energy performance of buildings), and the 2012 Energy Efficient Directive which, establishes a common framework of measures that promote energy efficiency in each Member State (amending directive 2009/125/EC and 2010/30/EU). The latter Directive addressed the fact that the measures outlined the previous directives, would be insufficient in meeting 2020 targets and there for must be amended to include more ambitious measures, including those related to the energy performance of buildings . Since the EU regulation of the energy efficiency of buildings is based on ³⁰ directives rather than regulations, there implementation of the measures will slightly vary from Member State to Member State. While the 2012 Directive does set minimum requirements for energy effect standards for new and existing building stock, building energy codes are developed at the national level, adopted at the state level and then enforced by local governments. In order for the directive to be effective, Member States must meet the minimum requirements for the en-

Economidou, Marina. Energy Performance Requirements for Buildings in Europe. RHEVA Journal. March

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2012. Table 2 p. 20.

Parejo-Navajas, Teresa. A Legal Approach to the Improvement of Energy Efficiency Measures For the Existing

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Building Stock in the United States Based on the European Experience. Seattle Journal of Environmental Law.

Volume 5 Issue 1, Article 14. May, 31, 2015. p.375

DIRECTIVE 2012/27/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 25 October 2012

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on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC. OJ L 315/1, 14.11.2012.

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ergy performance of buildings by transposing them into their domestic legal system with either equal or more ambitious standards. ³¹

In regards to public buildings specifically, Article (5) of the Directive 2009/28/EC on the promotion of energy efficiency, required Member States to ensure that new public buildings that are subject to renovation must lead by example in the use of RES-H projects. Directive ³² 2010/31/EU sets requirements for intelligent calculation of energy consumption metering systems for new buildings and the renovation of existing buildings. Members must insure that installations are optimized and cost effective, ensure that all new buildings are nearly zero energy buildings by 2020 and for public buildings by 2018 . In the year prior, the 2009/72/EC directive ³³ concerning the common rules for the internal market in electricity states in Annex I that, “Mem- ber States shall encourage the use of intelligent metering systems whenever a building is con- structed. Further Member States must encourage the installation of active control systems such as automation control and monitoring systems.” The directive also required that Member ³⁴ States inspect heating and air conditioning systems older than 15 years with regards to their energy performance, and finally that Member States must implement Energy Performance Certifi- cate schemes accordingly with the requirements outlined by the directive. The commission delegated Regulation EU No 244/2012 established a comparative methodology framework for calculating cost optimal levels of minimum energy performance requirements for buildings and building elements . As previously mentioned, Directives 2009/25/EC and 2010/30/EU both consti³⁵ -

Building Codes for Energy Efficiency, EPA (Mar. 27, 2015), epa.gov.

31

DIRECTIVE 2009/28/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 23 April 2009 on

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the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC. Article (5). OJ L 140/16, 5.6.2009.

DIRECTIVE 2010/31/ EU of the European Parliament and of the Council on the energy performance of buildings.

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Article 9 (a). OJ L 153/13, 18.6.2010.

DIRECTIVE 2009/72/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 13 July 2009 con

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cerning common rules for the internal market in electricity and repealing Directive 2003/54/EC. OJ L 211/55, 14.8.2009 Article (9) Nearly-Zero Buildings.

COMMISSION DELEGATED REGULATION (EU) No 244/2012 of 16 January 2012 supplementing Directive

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2010/31/EU of the European Parliament and of the Council on the energy performance of buildings by establishing a comparative methodology framework for calculating cost-optimal levels of minimum energy performance requirements for buildings and building elements. OJ L81/18, 21.3.2013.

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tute legislative measures regarding the energy performance of buildings. Yet since the Directive 2012/27/EU energy efficiency directive amends the aforementioned two, the next section looks at this particular directive more closely.

B. Directive of the European Parliament on Energy Efficiency: United Kingdom Imple- mentation

Directive 2012/27/EU: Article (3) European 2020 strategy implemented at a national level a strategy for smart sustainable growth via national reforms programs MS are required to set national targets and in close dialogue with the commission, indicate how they will achieve these targets.

On February 7 2011, the European council determined that the sustainability targets for 2020 were not on track and thus concluded that more effective action be taken on the part of member states to ensure higher energy savings . The areas in which the council sought to see increased ³⁶ energy savings included buildings, transport, products and processes . ³⁷

Implementations of energy targets by member states were then reviewed in 2013. States would be following the instruction of the 2011 Energy Efficiency plan which, emphasized the importance of the role of the public sector in energy efficient buildings and appliances. The total volume of public spending 19% of the EU’s GDP, hence the need for the public sector to be a catalyst for market transformation towards more energy efficient products, buildings, and services. the 2011 Energy efficiency plan pointed out that 40% of the EU’s energy consumption came from buildings. With this in mind, the 2012 directive stated that Member States should establish a long term strategy for investments in the renovation of commercial and residential

Directive 2012/27/EU, Having regard to the opinion of the committee of the regions (2). The Conclusions of the

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European Council of 4 February 2011 acknowledged that the Union energy efficiency target is not on track and that determined action is required to tap the considerable potential for higher energy savings in buildings, transport, products and processes. Those conclusions also provide that the implementation of the Union energy efficiency target will be reviewed by 2013 and further measures considered if necessary.

Directive 2012/27/EU Article (7)

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buildings. It is because of these requirements within the 2012 directive that constitute the driving force behind the London refit program.

The Kyoto protocol demands that ratified members reduce GHG’s by 80-90% by 2050 compared to 1990. Therefore in the 2012 directive, the European Council recognized that renovating and ³⁸ construction of nearly zero buildings are crucial to meeting the 2050 targets outlined in the protocol.

In regards to policy sharing initiatives, the directive explicitly encourages that municipalities par- take in policy sharing initiatives and makes reference to the covenant of mayors are an example of a policy sharing outlet . According to the 2013 report from the commission to the European ³⁹ Parliament and Council on the progress of member states towards nearly zero buildings, the UK was included among 15 of the 27 Member States to have set intermediary goals. In fact, the UK went beyond the nZEB requirements in it’s reported objectives stating plans for zero carbon standards.

The encouragement of energy management systems to be the driving force behind energy saving plans is another way in which, the directive recommends public bodies to manage their energy consumption. There is no explicit requirement for Member States to purchase specific energy saving products in new and renovated buildings but rather, entrusts the administrative departments within each Member State to make responsible purchasing decisions when it comes to energy saving appliances and technologies . ⁴⁰

When making reference to said administrative departments, the directive is talking about those departments whose jurisdiction extends over the entire member state. However, it goes on to say that in State’s that have no such administrative body, then it shall apply to a group of ad-

Kyoto Protocol to the United Nations Framework Convention on Climate Change, Kyoto, 10 December 1997, in

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force 16 February 2005, 37 International Legal Materials (1998) 22. (Kyoto Protocol)

DIRECTIVE 2012/27/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 25 October 2012

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on energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC. Article(18). OJ L 315/1, 14.11.2012

Directive 2012/27/EU: OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 25 October 2012 on

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energy efficiency, amending Directives 2009/125/EC and 2010/30/EU and repealing Directives 2004/8/EC and 2006/32/EC. Article (19). OJ L 315/1, 14.11.2012

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ministrative departments whose competence collectively covers the territory of a Member State.

This is significant to the UK since it is made up of England, Wales, Scotland, and Northern Ire- land. In the 2013 Commission reports on the UK National targets, each of the four countries have set their own targets but were collectively required by the directive to meet the national energy savings target of 9% by 2016. As a whole, RES in UK public buildings were required to increase from .03% in 2010 to .16% in 2020. In regards to the forms of shared-RES technologies for heat to be installed in UK buildings by 2020, geothermal energy in not even accounted for at 0.00% while solar is barely targeted at 0.5%. Instead, the UK 2013 commission report has biomass and heat pumps making up the bulk of renewable heating sources with biomass at 63.1%

and heat pumps at 36.3% . ⁴¹

As mentioned previously, the UK made a proposal for zero carbon buildings for new public and residential buildings however, no real numerical definition of a nearly zero energy performance standard was made. The UK commission report outlined the combination of economic incentives and financing instruments for nZEB, that slightly varied for each country within the UK. In regards to retrofits for public buildings in England and Wales, the green deal was ⁴² described as the “flagship policy” for promoting such renovations. In Northern Ireland, the Pub- lic Sector Building Demonstration Program was the financial instrument created to target government buildings within the territory. In addition to this, the UK department of environment, ⁴³ proclaimed the giving of an annual prize for development of sustainable public buildings as a means of meeting the demonstration requirement outlined in the 2012 directive. Finally in regards to the education and training of Member State citizens in the 2012 directive, the UK Commission report committed to the development and maintenance of education and training by

Steel, William. UK Seeks Compromise on Biomass Head and Power Tariffs. Renewable Energy World, No

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vember, 4, 2016.

Hans Erhorn - Heike, Erhorn - Kluttig,Fraunhofer. Towards 2020 Nearly Zero Energy Buildings: Overview and

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Outcomes. Energy Performance of Buildings Concerted Action (August 2015) p. 8.

UK Green Building Council. Response to the consultation on changes to Part L of the building regulations – con

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sequential improvements for existing buildings (2013). p. 1

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sector skills councils, universities and colleges, as well as independent experts who must be members of a special accreditation team approved by the government. ⁴⁴

Compliance with the 2010 and 2012 EU directives is no doubt the main reason why the EU as a whole is ranked number three in suitability (behind Germany #1 and Italy #2) . While ⁴⁵ the U.S sustainability efforts for buildings continues to improve with each passing year, the lack of an equivalent legal obligation to comply with sustainable building requirements at the federal level, has left it lagging behind. However, looking at the Member state requirements for nZEB in the 2012 directive, the U.S. could benefit from adopting similar legal instruments perhaps at the national level, state level, or at the very least the local level.

C. Cost Optimal Levels of Energy Performance Requirements: EcoDesign Directive, Re- newables Directive: UK Compliance

According to Article 5 of Directive 2010/31/EU, the European Commission must establish a comparative methodology framework for calculating cost optimal levels of minimum energy performance requirements for buildings and building elements. Member States must take ⁴⁶ necessary measures to ensure that minimum energy performance requirements are set within the parameters of the established cost optimal level and subsequently, Member States are not required to set minimum energy performance requirements that are not cost effective. Therefore ⁴⁷ the Commission Delegated regulation EU No. 244/2012, requires the setting of minimum requirements to be set from either a macroeconomic perspective regarding investments in energy

The Building Regulations 2010. Conversion of Fuel and Power in New Buildings Other Than Dwellings Docu

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ment L2B: 2013 Edition Incorporating 2016 Amendments. Department of Communities and Local Government, 2016. Article 3.25 p.10.

Parejo-Navajas, Teresa. Volume 5 1 Issue I Article 14. A Legal Approach to the Improvement of Energy Efficien

45 -

cy Measures for the Existing Building Stock in the United States Based on the European Experience. The Seattle Journal of Environmental Law. May, 31, 2015

DIRECTIVE 2010/31/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 19 May 2010 on

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the energy performance of buildings, OJ 18.6.2010 L 153/13

DIRECTIVE 2010/31/EU OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 19 May 2010 on

47

the energy performance of buildings, OJ 18.6.2010 L 153/13. Article 4 (1)

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efficiency, or a strictly financial perspective that only considers the investment itself. Further, Regulation 244/2012 (2) states that national minimum energy performance requirements should not be more than 15% lower than the outcome of cost optimal results of the calculation taken as the national benchmark. The key legislation used by the Commission to establish this comparative methodology include the Energy Performance of Buildings Directive (EPBD), the Energy Efficiency Directive, the Renewables Directive, and the Eco-design and labeling Directive. ⁴⁸

The UK was one of five Member States (France, Estonia, Germany, Portugal) that set minimum requirements for energy performance of new buildings that were more ambitious than the cost optimal level for their country. The UK was also one of 11 Member States whose ⁴⁹ compliance with Regulation/244/2012 on cost optimal level was set at no more than above 15

%. The compliance of the UK with EPBD, Regulation/244/2012, and Directive 2009/EC on ⁵⁰ Labeling and Building Design for new buildings were considered by the European Commission to be more ambitious than the minimum requirements. This is in part, due to the fact that prior ⁵¹ to the issuing of the EPBD regulation, the UK already had set challenging energy standards for new buildings through part L of the UK building regulations. Part L of the UK building regula⁵² - tions requires that, designers consider the range of options they have available to them including, decentralized renewable energy sources, district block heating, combined heat and power and heat pumps, and all new buildings including dwellings must follow the Target CO2 Emission Rate (TER). Considering that the primary intention of Directive 2009/EC on labeling and de⁵³ -

Boermans, Thomas. Assessment of the Cost Optimal Calculations in Context of the EPBD (ENER/C3/2013-414).

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November, 19, 2015 p. 2.

European Commission. Report From the Commission to the European Parliament and the Council: Progress By

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Member States in Reaching Cost Optimal Levels of Minimum Energy Performance Requirements. Commission (2016) 464 finial. Brussels 29.7.2016.

See, 49. Report from Commission. Section 5.2. Brussels 29.7.2016

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See,49. Report from Commission. Section 5.1. Brussels 29.7.2016

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Bramhall, Jonathan. Recast of the Energy Performance of Building Regulations. Department of Communities

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and Local Government. Impact Assessment, 08.11.2012. IA No. DCLG1051.

The Building Regulations 2010. Conversion of Fuel and Power in New Buildings Other Than Dwellings Docu

53 -

ment L2A: 2013 Edition Incorporating 2016 Amendments. Department of Communities and Local Government, 2016.

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sign was to establish a Community wide eco-design requirements for energy related products, already having these standards included in domestic building regulations, really gave the UK a leg up in terms of potential amendments needing to be made to building codes and standards. ⁵⁴

DIRECTIVE 2009/125/EC OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 21 October 2009

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establishing a framework for the setting of eco-design requirements for energy-related products. Official Journal of the European Union L285/10 (31.10.2009).

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III. U.S. ENERGY EFFICIENCY MEASURES A. Federal Level

Policy and programs enforced at the state level, have been the most effective means for reducing energy consumption in the U.S. for the past several decades. However, there are federal regulations in place that enforce energy efficiency requirements as well. For instance, the En- vironmental Protection Agency (EPA) and the Department of Energy (DOE) are two federal agencies that have joined forces in facilitating energy efficiency measures in states all across the U.S via the creation of the State Energy Efficiency Action Network (SEE). In regards to public buildings, the SEE is designed to help states achieve maximum cost effective energy efficient renovations in buildings by 2020. The SEE aims to do this via the use of energy audits and retro- commissioning practices . Other recent federal regulations include the establishment of mini⁵⁵ - mum efficiency requirements for appliances as well as types of equipment used by industries.

Prior to this, the late 1970’s was when the majority of federal laws regarding energy efficiency, were created with the adoption of the Clean Air Act (CAA) . During this time, significant in⁵⁶ - vestments were made in the development of energy and research, the development of financial incentives and grants, and finally the setting of energy efficiency standards. In 1976, attempts were made to set national building energy efficient standards but it was opposed by the building industry. Thus the 1976 legislation was transposed into voluntary guidelines that states may or may not choose to follow. In 1990, the acid rain trading program amended the CAA creating more ambitious requirements for the energy sector in reducing CO2 emissions and remains the most recent federal legislation to be implemented at the national level . ⁵⁷

As mentioned earlier in the previous section, had the United States ratified the Kyoto Protocol, this would have constituted the most ambitious federal energy efficiency law in history

EPA and DOE Join States to Speed Energy Efficiency Progress in the United States, DEPARTMENT OF ENER

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GY (Feb. 2, 2010), available at http://energy.gov/articles/epa-and-doe-joinstates- speed-energy-efficiency-progress- united- states.

Benedick, Richard. Ozone Diplomacy:New Directions in Safe Guarding the Planet. Harvard University Press,

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1998.

Leggett, Jeremy. The Carbon War: Global Warming and the End of the Oil Era. Rutledge, New York, New York.

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2001

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as treaties are the supreme law of the land. In December 2015 the U.S. did ratify the Paris Cli- mate Agreement which some would argue is a significant leap towards more ambitious national climate laws. However, some attendees of the Pairs conference claimed that much of the original language in the Paris agreement had to be altered before President Obama would agree to it.

For instance, changing the words “shall” to “should” was a must because in U.S. national law, the word “shall” is mandatory where as “should constitutes a recommendation . From a legal ⁵⁸ perspective, the U.S. ratification of Paris agreement constituted a very successful set of national recommendations rather than legal requirements. Despite the drawbacks at the national level for green buildings, there are two policy instruments that are available; "National Action Plan for Energy Efficiency Vision for 2025: A Framework for Change," 2008, and the Energy Efficiency and Conservation Block Grant (EECBG) Program, funded for the first time by the American Re- covery and Reinvestment Act (Recovery Act) of 2009. The former constitutes a set of recommendations for 2025 building targets that 120 organizations thus far, have agreed to comply with.

These recommendations are not binding and therefore compliance with its measures is not mandatory . The later provides states and local governments with information about how to ob⁵⁹ - tain funding and develop strategies for energy efficiency projects . ⁶⁰

Asselt, Harro. Lecture on the December 2015 United Nations Climate Change Conference in Paris. January, 16,

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2016.

National Action Plan for Energy Efficiency Vision for 2025: A Framework for Change, EPA (November 2008),

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http://www.epa.gov/cleanenergy/documents/suca/vision.pdf.

Energy Efficiency and Conservation Block Grant Program, CATALOG OF FEDERAL DOMESTIC AS

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SISTANCE https://www.cfda.gov/index?s=program&mode=form&tab=core&id=lfbO0162365c82d9b123b52- ca3a6ce43f (last visited Mar. 30, 2015).

Legal and Financial Instruments that Support Renewable Installations on Public Buildings

TABLE OF CONTENTS

LIST OF REFERENCES