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Who Bears the Cost of Greening Our Built Environment?

Assessing Denver’s realities and challenges as Energize Denver is set to take effect  

No one is immune to the impacts of climate change, and we all know we need to be working to reduce our dependence on fossil fuels and shrink our carbon footprint. While many new buildings are, by and large, light years more efficient than their older counterparts, a number of communities are exploring both incentives and mandates to electrify existing building stock and replace aging systems with more efficient models. 

Here in Denver, where we have the second-oldest steam system in the country powering many of our downtown buildings, the city is rolling out a plan to mandate a series of greater building efficiency standards. The wheels were set in motion with the Energize Denver plan approval in 2021. The plan has different requirements depending on the building size, with the biggest buildings (over 25,000 square feet) facing the most scrutiny.  

That same year, Colorado’s Air Quality Control Commission enacted a new building performance standard. This rule applies to sizeable structures, targeting those exceeding 50,000 square feet. By 2026, these buildings must slash greenhouse gas emissions by 6%, with a further reduction target of 20% by 2030. The new regulations are expected to impact approximately 8,000 buildings across Colorado. 

Which brings us to a lawsuit filed last month by The Colorado Apartment Association, the Apartment Association of Metro Denver, the Colorado Hotel and Lodging Association and NAIOP challenging the Energize Denver mandates.  

The group, which includes building owners and developers of 817 commercial buildings, office towers, hotels and apartment complexes, argues that the requirements outlined in Energize Denver will be too expensive and are at odds with federal regulations. They say the rules would force building owners to make expensive and unnecessary upgrades that ultimately would increase rents for tenants and cause utility bills to rise – counter to the City of Denver’s goals of ultimately reducing tenant utility bills. 

As a firm that works closely with both private and public stakeholders on issues and opportunities related to the built environment here in Denver, our team here at SideCar is watching this issue closely.  

Across the board, there is strong understanding for and acceptance of the need for more efficient buildings in the future.  

The biggest questions for the CRE industry revolve around how we get there – and who bears the cost. Is real, meaningful and systemic change going to come as the result of a carrot or a stick? How much of it should be mandated and how much market-driven? What will it take to get our energy grid ready for full electrification? And is there room for a little more discussion and collaboration here?  

We’ll be digging into this layered issue over the coming weeks and months, but we’re curious to hear what you think. Right regulations, right time? If you were in charge, what would you change? What do you think the impact will be on our built environment? 

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