Navigating Carbon Emission Regulations for Businesses In The U.S. - Part 1: Boston And California

This is part one of a three-part series. For additional insights, we encourage you to visit Part 2, which explores carbon emission regulations in Washington D.C. and Washington State.

In the ever-evolving arena of environmental stewardship, businesses throughout the United States find themselves at the crossroads of a complex maze of regulations at both the state and city levels. These regulations mandate meticulous carbon emissions reporting and define specific thresholds at which mitigation is no longer optional but a requirement. This comprehensive guide ventures into the heart of these regulatory frameworks, offering detailed insights into the unique requirements each state or city has imposed. 

It illuminates the path for businesses navigating the current or impending regulations related to CO2 emissions reporting and mitigation duties and underscores the criticality of instituting a CO2 emission monitoring strategy. We aim to arm your business with the knowledge to remain compliant, sidestep possible fines, and adopt sustainable practices with finesse. Whether these mandates are already operational in your locale or poised for future enactment, our guide ensures your business is informed, prepared, and proactive in its environmental responsibilities.

As the regulatory landscape evolves, cities and states are taking decisive measures to curb greenhouse gas emissions, underlining the critical need for climate change mitigation. A key strategy in this battle is enhancing energy efficiency and conservation, especially in the building and industrial sectors. This strategic focus is driven by the understanding that commercial buildings significantly contribute to environmental degradation, responsible for around 30% of greenhouse gas emissions.

Unpacking the Complexities: Navigating Carbon Emission Regulations

In an urgent response to this environmental challenge, various jurisdictions across the United States have begun implementing stringent regulations targeting commercial buildings. These new rules not only require detailed reporting of carbon emissions but also set specific emission limits, mirroring a dedication to achieving both local and federal sustainability objectives and the broader goals set forth by the Paris Agreement. Leading this regulatory charge are cities and states like Boston, California, Washington State, Washington D.C., Denver, and New York City, which are pioneering efforts to reduce carbon footprints at the commercial level.

Adopting these regulations highlights the imperative for businesses to not just passively comply but actively measure and manage their CO2 emissions. Such proactive involvement is crucial for adhering to regulatory standards and laying the groundwork for a sustainable future. Commercial entities can play a pivotal role in driving the collective journey toward sustainability by taking steps to minimize their environmental impact.

Overview of Carbon Emission Regulations

In the first installment of our three-part series on state carbon emission regulations, we delve into the requirements for businesses in Boston and California, providing essential guidance for navigating these complex mandates. The subsequent two articles will cover Washington State, Washington D.C., New York City, and Denver regulations, offering a broader perspective on the national push for environmental compliance. While our series does not encompass every jurisdiction, the trend toward adopting CO2 emission reduction laws is clear, highlighting the growing importance of preparing businesses for these critical environmental initiatives.

Boston's Building Emission Reduction and Disclosure Ordinance (BERDO)

Boston, Massachusetts, has taken a significant step towards sustainability and reducing greenhouse gas emissions from buildings by introducing the Building Emission Reduction and Disclosure Ordinance (BERDO). Aimed at propelling the city towards net-zero emissions by 2050, BERDO enforces energy efficiency and environmental accountability among buildings through a structured approach, focusing on reporting, reduction, and verification.

Applicability: Who Needs to Comply?

BERDO casts a wide net, targeting both city-owned and non-city properties, specifically:

• Non-residential buildings of 20,000 square feet or more.
• Residential buildings with 15 or more units.
• City buildings, with a mandate for annual energy and water usage reporting and public disclosure.
  

Key Provisions: What You Need to Know

• Annual Reporting: Building owners must report their energy and water use by May 15 every year. For detailed guidance, refer to the city's reporting guide.
• Emission Standards Compliance: There are specific emission standards buildings need to meet. These standards will tighten over time (see page 10 of the ordinance document for specifics).
• Third-Party Verification: To ensure the accuracy of the reported data, buildings must undergo periodic verification by approved third parties.
• Compliance Mechanisms: Several options are available for buildings to comply with emission standards, including municipal aggregation, renewable energy certificates, power purchase agreements, or alternative compliance payments.
  

Penalties for Non-Compliance

Failure to Comply with Reporting Requirements

For each day a building owner fails to comply with reporting requirements, it's considered a separate violation with fines as follows:

A fine of $300 per day applies to:

• Non-residential buildings of at least 35,000 gross square feet or when two or more buildings on the same parcel exceed 100,000 gross square feet.
• Residential Buildings with at least 35 units or 35,000 gross square feet.
  

A fine of $150 per day applies to:

• Non-residential buildings of at least 20,000 gross square feet but less than 35,000 gross square feet.
• Residential Buildings with at least 15 units or 20,000 gross square feet but fewer than 35 units or less than 35,000 gross square feet.
  

Failure to Comply with Carbon Emission Standards

If a building owner fails to meet the required emissions standard in any calendar year. Every day within that year and each day thereafter until the issue is resolved is considered a separate violation of this subsection, with each violation incurring a fine.

A penalty of $1,000 per day applies to:

• Non-residential buildings that are 35,000 gross square feet or larger or when two or more buildings on the same parcel cumulatively exceed 100,000 gross square feet.
• Residential Buildings with at least 35 units or 35,000 gross square feet.
  

A penalty of $300 per day applies to:

• Non-residential buildings that are at least 20,000 gross square feet but less than 35,000 gross square feet.
• Residential Buildings with at least 15 units or 20,000 gross square feet but fewer than 35 units or less than 35,000 gross square feet.
• Violations corrected within 30 days of notice are not penalized.
  

Failure to Comply with Carbon Emission Standards

If a third-party verification finds a discrepancy in a building owner's self-reported information that isn't resolved according to specified regulations. This discrepancy is considered a violation, incurring a fine ranging from $1,000 to $5,000.

Paths to Compliance

To adhere to BERDO's emission standards, buildings have several strategies at their disposal:

• Participate in municipal electricity aggregation programs.
• Purchase renewable energy certificates.
• Enter into power purchase agreements for renewable energy.
• Make alternative compliance payments.
  

This summary encapsulates the critical elements of BERDO that businesses operating within the applicable categories need to understand and act upon. With these guidelines, Boston aims to meet its ambitious 2050 net-zero emissions goal and set a precedent for environmental responsibility in urban settings.

SB 48: California's Building Energy Savings Act 

California has introduced SB 48, the Building Energy Savings Act, as part of its broader initiative to promote energy efficiency and reduce greenhouse gas emissions. This legislation enhances the framework for energy usage data collection, benchmarking, and disclosure for buildings, demonstrating a collaborative effort across various state agencies.

Applicability: Who Needs to Comply?

• State Agencies: This is led by the California State Energy Resources Conservation and Development Commission in collaboration with the State Air Resources Board, Public Utilities Commission, and Department of Housing and Community Development. 
• Utilities: Electric, gas, steam, and fuel oil utilities servicing buildings must maintain and share energy usage data.
• Building Owners/Operators: Entities that own or operate buildings with no residential utility accounts or buildings with five or more active utility accounts, regardless of being residential or non-residential. 
  

Key Provisions: What You Need to Know

• Data Maintenance and Disclosure: Utilities must record energy usage data for all serviced buildings for at least 12 months and provide aggregated data for eligible buildings upon request.
• Exemptions: Buildings with less than 50,000 square feet or 16 or fewer residential utility accounts are exempt from data collection and delivery requirements.
• Energy Management Strategy: By July 1, 2026, a comprehensive strategy for using collected data to track and manage energy consumption and greenhouse gas emissions of covered buildings must be developed, aligning with state goals.
  

Penalties for Non-Compliance

• While no specific penalties are outlined, the California Energy Commission has the authority to enforce compliance through administrative actions or other regulatory mechanisms.
• The Commission is the primary entity responsible for overseeing adherence to the act's mandates, highlighting its role in ensuring buildings contribute to the state's efficiency and emissions reduction objectives.
• SB 48 represents a significant step toward California's commitment to environmental sustainability and energy efficiency, requiring active participation from state agencies, utilities, and building operators.
  

SB 253: California's Climate Corporate Data Accountability Act 

SB 253 marks a pivotal move by California to bolster transparency and accountability in the greenhouse gas (GHG) emissions reported by businesses operating within the state. California's Climate Corporate Data Accountability Act was designed to provide a clearer picture of the environmental impact of significant corporate entities.

Applicability: Who Needs to Comply?

• Reporting Entities: This includes any partnership, corporation, limited liability company, or other business forms with total annual revenues exceeding $1 billion and conducting business in California.
  

Key Provisions: What You Need to Know

• Emissions Reporting: Regulations for annual disclosure of scope 1, 2, and 3 emissions are to be developed by 2025. Reporting for scope 1 and 2 will begin in 2026 and scope 3 in 2027.
• Public Disclosure: Emissions disclosures are required to be publicly available and verified by an independent third party.
• Stakeholder Consultation: The state board is tasked with consulting a diverse range of stakeholders to develop regulations.
• Reporting Program: An emissions reporting organization will be established to facilitate the receipt and disclosure of emissions data.
• Regulatory Review: Reporting requirements are subject to review, and updates will be provided to the state board by 2030.
  

Penalties for Non-Compliance

• Administrative Penalties: Non-compliance can attract administrative penalties of up to $500,000 per reporting year, considering the entity's compliance history and good faith efforts.
• Scope 3 Emissions Flexibility: Good faith misstatements in scope three emissions disclosures are exempt from penalties between 2027 and 2030, barring non-filing cases.
  

Paths to Compliance

• Annual Fee: Reporting entities are required to pay a yearly fee to support the administration and implementation of this act.
• Digital Accessibility: The legislation mandates the establishment of a digital platform for accessing emissions data and reports.
  

SB 253 embodies California's commitment to environmental stewardship by holding large corporations accountable for their GHG emissions, ensuring that data is transparent, verified, and accessible. This legislation represents a significant step in the state's broader climate change and sustainability efforts.

California's SB 416: LEED Certification for State Agency Building Projects

SB 416 is a legislative measure adopted in California to promote environmental sustainability in the construction sector. This law sets forth new standards to reduce greenhouse gas emissions by adopting LEED certification requirements for building and renovation projects carried out by state agencies.

Applicability: Who Is Affected?

• Target Group: California state agencies embarking on new construction projects or significant renovations exceeding 10,000 gross square feet.
• Exclusions: This does not apply to district agricultural associations or projects outside the specified scope.
  

Key Provisions: What You Need to Know

• LEED Certification Requirement: From January 1, 2024, onwards, all new construction and major renovation projects by state agencies >10,000 square feet must secure LEED Gold certification.
• LEED Silver as Alternative: If achieving LEED Gold is impractical due to operational, security, cost constraints, or conflicts with the California Building Code, LEED Silver certification is the minimum requirement.
• Alternative Certifications: Projects may opt for equivalent or superior certifications to LEED, subject to approval by the Director of General Services.
  

Penalties for Non-Compliance

• Penalty Details: The legislation does not specify penalties for non-compliance, focusing instead on setting ambitious standards for sustainability in state projects.

SB 416 emphasizes California's commitment to integrating environmental sustainability and greenhouse gas emission reductions in state agencies' infrastructure development activities, highlighting the importance of LEED certification in achieving these goals.

Moving Forward: Your Path to Sustainability and Carbon Reporting Compliance

As we conclude our initial review of carbon emission regulations in Boston and California, it is apparent that understanding and navigating these regulations is not just a legal requirement but a strategic advantage for businesses aiming for sustainability, resilience, and cost savings. This guide is just the beginning, providing a foundation for businesses, facility managers, and energy professionals to actively participate in shaping a greener future. 

As we look ahead, the forthcoming installments will expand our horizon to Washington State and Washington D.C., followed by insights into New York City and Denver, further equipping you with the knowledge to navigate the evolving environmental regulatory framework. For expert guidance and personalized solutions, don't hesitate to contact us at 1-877-781-1667. Together, let's turn regulatory compliance into opportunity and lead the charge toward a sustainable future.