Regulation 28 & Energize Denver
Colorado Regulation 28 : Building Benchmarking and Performance Standards
• Adopted by Air Quality Control Commission on August 17 , published in the Colorado Register on September 25 and became effective on October 15
• Requires “ covered buildings ” 50,000 square feet or larger to slash emissions to achieve buildingsector-wide carbon reductions .
• Requires 7 percent reduction by 2026 and 20 percent by 2030 from a 2021 baseline .
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In order to hit these overall metrics since some buildings already meet Reg . 28 standards , buildings pursuing “ flat percent reduction ” compliance pathway will need to reduce their Energy Use Intensity ( EUI ) by 13 percent in 2026 and 29 percent in 2030 .
Energize Denver ( Denver Ordinance No . 20211310 )
• Extends the Reg . 28 “ covered buildings ” to 25,000 square feet or larger for carbon reductions in the City and County of Denver .
• Requires buildings to meet 2030 EUI standards by drawing a “ straight line ” from the building ’ s 2019 EUI baseline to the 2030 EUI standards set by the Denver Office of Climate Action , Sustainability , and Resiliency .
“ Covered Buildings ”
Reg . 28 is estimated by the CDPHE to impact 8,000 “ covered ” buildings statewide , including :
• Multifamily housing
• Office buildings
• Hospitals , nursing homes and surgical centers
• Hotels , event spaces and large venues
• Grocery stores and large retailers
• Warehouses
• Shopping malls
• Private schools and colleges
• Churches
• Reg . 28 and Energize Denver will impact Colorado ’ s natural gas providers by effectively outlawing natural gas in “ covered ” buildings over 50,000 square feet ( State ) and 25,000 square feet ( Denver ).
• Energize Denver ’ s 25,000 square-foot requirement will impact many more “ covered ” buildings .
Financial Impacts
• Reg . 28 and Energize Denver come with significant impacts to buildings and ultimately Colorado ’ s economy .
• Conversions will be costly , time consuming and disruptive .
• Colorado ’ s natural gas sector may experience significant adverse effects in the form of losing customers across the state , costing the energy sector thousands of jobs and reducing local tax revenue generated by energy production .
• Significant concerns that Colorado ’ s electric grid will not be capable of handling significantly increased electrical load if both regulations are enforced and electrification of buildings continues .
. 0007 PERCENT
Estimated impact on the global climate with 100 percent Reg . 28 compliance across Colorado .
Reg . 28 Compliance
To meet the 2026 and 2030 Reg . 28 reduction goals :
• New and existing buildings will be forced to convert to fully electrified systems , including HVAC systems , very quickly .
• Given the tight deadlines , building owners will need to immediately begin hiring consultants to conduct energy audits and start designing , purchasing and scheduling for retrofitting from natural gas to electric .
• For existing buildings , retrofitting costs are estimated to be $ 1 million or more per building , not counting the significant engineering and consultant fees .
$ 6 to $ 8 BILLION
Current cost estimates for the state ’ s 8,000 buildings to comply with Reg . 28
Compliance & Penalties
Non-compliance , including missing the deadlines , will subject “ covered building ” owners to civil fines and enforcement actions forcing them to retrofit .
Reg . 28 Penalties
Energize Denver Penalties
• First time offenses — including not submitting an annual benchmarking — result in a $ 500 fine , with $ 2,000 for each subsequent violation .
• Failure to meet a building performance standards are tracked on monthly basis after each compliance year .
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Penalty for not meeting the building performance standards is $ 2,000 for a first offense and then $ 5,000 for each subsequent offense
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Each month not meeting the standards is a subsequent occurrence and a new $ 5,000 fine .
• “ Covered building ” owners are subject to civil penalties for violating any provision of the ordinance of up to $ 0.70 per year for each required kBtu reduction that the covered building ’ s owner fails to achieve in that year .
• Failure to pay any civil penalty within 180 days is considered a debt to the City and County of Denver until paid in full , and the debt represents a perpetual lien on the property superior to all other liens , except for liens for general taxes and prior special assessments
• Energize Denver has a compliance deadline in 2024 … just a few months away .
Energize Denver Example :
1200 Humbolt Street Size : 99,000 square feet Use : Apartment building
2021 energy usage reported : 7.2 million kBtu
Energize Denver requirement : Needs to get from a 73.2 Energy Use Intensity ( EUI ) score to 44.2 EUI by 2030
Overall energy reduction : 2.8 million kBtu or 40 % reduction
Penalty with no improvements : $ 2 million ($ 0.70 times 2.8 million kBtu ) www . aamdhq . org NOV / DEC 2023 TRENDS | 7