Market impact analysis of climate and health policies for buildings

Report memos

Two report memos with the findings from ECOnorthwest are now available:

Carbon performance standards: Background

The City of Portland declared a climate emergency in 2020 and set goals to reduce carbon emission by 50 percent by 2030 (compared to 1990 levels) and to achieve net-zero emissions by 2050. With nearly half of locally produced carbon emissions coming from heating, cooling, and powering existing buildings, we must eliminate carbon emissions from homes and commercial buildings to reach Portland's adopted climate goals.

BPS engaged with stakeholders to develop a proposal for Climate and Health Standards for Existing Buildings. This policy proposal would require property owners with large buildings to meet minimum carbon performance standards by certain dates, with the goal of achieving net-zero carbon emissions by 2050.

The ECOnorthwest analysis considered the financial implications of an initial carbon performance standard date of 2030 for commercial and multifamily buildings 20,000 square feet and larger.

Carbon performance standards: Key findings

• Due to planned rapid decarbonization of the electricity grid, buildings that rely primarily on electricity will not be as impacted by a carbon performance standard as buildings that use methane gas ("natural" gas).
• The cost of compliance largely depends upon a building's use, size, and the condition of its systems, including lighting, envelope, heating, cooling, and ventilation. Building age is also a major factor, as energy efficiency has improved over time with the advancement of State building codes.
• Multifamily properties greater than 100,000 square feet are typically all electric and built to modern energy codes. To comply with an initial carbon performance standard by 2030, a property owner could implement cost-effective carbon reduction measures, such as sealing the building envelope and installing heat pump water heaters.
• Older multifamily properties between 20,000 to 100,000 square feet are more likely to incur higher costs, because they are typically less energy efficient and more likely to use methane gas for heating. To comply with an initial carbon performance standard by 2030, a property owner could implement carbon reduction measures that retrofit existing systems, like the installation of mini-split heat pumps and upgrading electric panels.
• While the installation of heat pumps would reduce energy burden for tenants who pay their own bills, these savings may be negated by property owners who seek to recover retrofit costs. However, the analysis did not conclude that property owners will immediately or automatically pass through the entire cost of compliance to renters. Rent increases are complex individual decisions dictated by a range of market conditions and factors.
• The energy efficiency of office buildings is less dependent on building age compared to multifamily residential. To comply with an initial carbon performance standard by 2030, owners of office buildings could implement cost-effective carbon reduction measures that seal the building envelope and upgrade to LED lighting, as needed.
• There are numerous, large funding opportunities to minimize property owners' expenses to achieve potential carbon emissions performance standards. However, after accounting for the most likely federal and state funding sources and the Portland Clean Energy and Community Benefits Fund (PCEF), a gap still exists. There is no likely scenario in which 100 percent of project costs for private market buildings are covered by the public sector.

Cooling temperature standard:Background

To reduce carbon emissions while advancing racial equity, BPS collaborated with Black, Indigenous, and People of Color (BIPOC) community members to identify community priorities that intersect with building decarbonization. Through community engagement, BPS identified a need to provide access to cooling through a rental housing temperature standard.

Portlanders are already experiencing record-shattering heat and other extreme weather that is changing our lives and the city we share. The 2021 heat dome set a record high temperature of 116 degrees Fahrenheit, exceeded the previous high of 107 degrees Fahrenheit for three consecutive days, and left 62 people dead in Multnomah County alone.The impact of extreme heat events is much worse for tenants who cannot cool their homes.

The ECOnorthwest analysis considered the financial implications of a maximum temperature standard for rental housing.

Cooling temperature standard: Key findings

• Roughly 25 percent of Portland renters do not have access to some form of air-conditioning. To comply with a maximum temperature standard for rental housing, a property owner could provide cooling by installing a window air-conditioner or mini-split heat pump for each apartment unit. The cost of these two cooling measures varies widely and would increase significantly if an electric panel upgrade is necessary.
• Although renters who choose to use cooling in the summer months would experience a moderate increase in their electricity bills, heat pumps could also decrease total annual utility costs by reducing energy consumed for heating in cooler months. In addition, local, state and federal incentives help reduce the cost of retrofitting rental housing with heat pumps.
• While the installation of heat pumps would reduce energy burden for tenants who pay their own bills, these savings may be negated by property owners who seek to recover retrofit costs. However, the analysis did not conclude that property owners will immediately or automatically pass through the entire cost of compliance to renters. Rent increases are complex individual decisions dictated by a range of market conditions and factors.