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New Energy Efficiency Labeling Program in Boston

The City of Boston introduces a new use of energy score in attempt to reduce greenhouse emissions.

Mayor Thomas M. Menino and the Green Ribbon Commission of business leaders are working together on a new effort to cut greenhouse gas emissions in the city of Boston. Local leaders base their program on a similar law model that has been used previously in New York, Seattle, San Francisco, Philadelphia and Washington D.C. However, this innovative "energy efficiency labeling" may cost up to $838 million to property owners and their tenants, the Boston Herald reported.

The City's Building Energy Disclosure Ordinance will mainly target condominiums, multifamily residential apartments and commercial buildings. Owners of those properties will be essentially obliged to complete energy audits, report and disclose the results that will be later compared against other properties. Based on the evaluation by government regulators, buildings will be energy 'labeled/scored', in other words, properties will receive either a "green" or "brown" score.

Certainly, cutting emissions is a worthy and noble goal but the City's draft law raises many questions about its effectiveness and potential impact on property's value.

  • Building scores may affect property values. Buildings that receive a higher 'green' score will have a higher market value, whereas others' with 'brown' score may depreciate in their value.
  • Labeling programs may put a big burden on landlords and their tenants. Property owners will have to collect energy and water use data from all their tenants. Gathering and analyzing these data is costly, thus, landlords are more likely to raise rent prices.
  • 'Energy inefficient buildings' will be required to raise their energy performance. However, there is no guarantee that those investments will 'produce greater reductions in energy costs.'

There is no doubt that the City of Boston does its best to create a more environmentally friendly city in the US, and the implementation of the new law will certainly help to reduce greenhouse emissions. But current economic conditions and costliness of the program make it fairly difficult to execute. 'High upfront costs, capital costs, prolonged payback periods and split incentives remain significant barriers to more energy efficiency.'

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