Sustainability Committee – Advocacy Update
(SEPTEMBER 2023)

State Regulation Definitions

The State of Colorado has published Regulation 28, “Building Benchmarking and Performance Standards”. These rules have been approved by the State Air Quality Control Commission (AQCC) and will be administered by the Colorado Energy Office (CEO). The Regulation rules were created to satisfy the requirements of State House Bill 21-1286. This law directs the AQCC to adopt rules to achieve a reduction in greenhouse gas emissions in buildings of 7% by 2026 and 20% by 2030 (based on a 2021 baseline). Here are some basic definitions for buildings that fall under this regulation.

• This regulation applies to “Covered Buildings” with a gross floor area of 50,000 ft2 or more, occupied by a single occupant or group of tenants.
• This regulation does not apply to covered buildings that are storage facilities, stand-alone parking garages, an airplane hanger, a single family home, duplex or triplex. It does not apply to a building in which more than half of the gross floor area is used for manufacturing, industrial, or agricultural purposes.
• A “public building” is a covered building owned by the state, a local government, a special district regulated by Title 32, a state or private institution of higher education, a school district and a charter district defined by Title 22 (Colorado Revised Statutes).
• Public buildings are subject to benchmarking but not to building performance standards unless it undergoes a renovation project with an estimated cost over $500,000 and impacts at least 25% of the covered building’s gross floor area.
• Under-resourced buildings are buildings with limited access to resources, including revenues, funding, grants or gifts that can assist with complying with the requirements of this regulation. This includes buildings owned by organizations that qualify as tax exempt under Section 501(c) of the Internal Review Code.

Benchmarking

Owners with buildings over 50,000 ft2 are required to report their previous calendar year energy use. The first deadline to report 2021 benchmarking data was December 1, 2022. The next deadline to report calendar year 2023 benchmarking data is June 1, 2024. Benchmarking data is required to be submitted each year, not just once. Benchmarking data must be submitted through Energy Star Portfolio Manager.

The reported benchmarking data is available on the state’s website, at https://maps.touchstoneiq.com/colorado/.

The ASHE Energy to Care program offers a free dashboard tool that connects to Portfolio Manager data. The dashboard provides energy and cost data reporting for a facility, as well as utility bill fault detection. For more information on the ASHE Energy to Care dashboard, please click on https://www.ashe.org/energytocare/dashboard.

If you have any questions or need assistance completing your benchmarking submittal, please contact our committee by sending an email to sustainability@cahed.org.

Building Performance Standards

Building performance standards (BPS) are being established for all existing facilities over 50,000 ft2 to establish GHG reduction targets of 20% by 2030. There are currently four compliance pathways:

• Option 1. Building must meet an Energy Use Intensity (EUI) target. The EUI targets are established for different property types and are summarized in the following table:

Property Type	2026-2029 Site EUI (kBtu/SF)	2030-2050 Site EUI (kBtu/SF)	2026-2029 GHG (kg CO2e/SF)	2030-2050 GHG (kg CO2e/SF)
Hospital (General Medical & Surgical)	217.6	172.0	13.5	7.7
Other – Specialty Hospital	217.6	172.0	13.5	7.7
Ambulatory Surgical Center	79.2	63.5	4.9	2.8
Medical Office Building	76.7	64.9	4.8	2.9
Outpatient Rehab/Physical Therapy	79.2	63.5	4.9	2.8
Residential Care Facility	68.0	57.7	4.2	2.6
Urgent Care/Clinic/Other Outpatient	76.7	64.9	4.8	2.9

• Option 2. Buildings can achieve a standard site EUI percent reduction of 13% in 2026 and a reduction of 29% in 2030 (both compared to a 2021 baseline).
• Option 3. Building could also achieve a greenhouse gas emission (GHG) intensity as listed in the table above. GHG emissions will be calculated through an emissions calculator that is provided within Energy Star Portfolio Manager, which is the same tool that is used for benchmarking.
• Option 4. Similar to Option 2, buildings can also achieve a GHG reduction of 13% in 2026 and a reduction of 29% in 2030 (both compared to a 2021 baseline).

A couple of comments related to these targets:

• Option 2 provides a cap for maximum EUI reduction for facilities that are operating well above the 2030 target (i.e. more than 30% above target).
• If a hospital employs an approach to install customer-owned renewable electric generation or reduces carbon emissions by substituting a substantial amount of their annual fossil fuel heating hours with heat pump technology, then Option 3 may be the preferred approach. Renewable energy requires that Renewable Energy Credits (RECs) are retained. An energy audit is also required to show that efficiency and electrification are not sufficient to meet the requirements.
• Option 3 includes alternative or custom credits for greenhouse gas emissions other than energy use-based reductions. This is a custom program and requires approval from the CEO but could include measures such as Nitrous Oxide use reductions.
• Building property types are defined by Portfolio Manager. If a building or property has multiple uses, for the purposes of benchmarking, the property type is based on the use that accounts for more than 50% of the building gross floor area. If there is not one single use type that represents 50% or more of a building’s gross floor area, the property type is classified as mixed use. Option 1 and Option 3 pathways will have a standard Target Adjustment process which will allow mixed use buildings to establish a weighted average EUI Target.

Penalties

According to the current rules, penalties will be applied starting January 1, 2024.

• Benchmarking. A building owner that does not submit a benchmarking report will be subject to a fine up to $500 for a first violation and up to $2,000/year for each subsequent violation.
• Building Performance. A building owner that fails to meet the building performance standards is subject to a fine up to $2,000 for a first violation and up to $5,000 for each subsequent violation. If compliance is not achieved, the building owner must submit monthly reports to demonstrate progress towards meeting the building performance standards. If these monthly requirements are not met, the $5,000 violation could be incurred monthly.
• Public building owners are not subject to penalties unless the building undergoes a renovation project with an estimated cost over $500,000 and impacts at least 25% of the covered building’s gross floor area.
• The State has noted that a building owner may be subject to additional civil penalties if they fail to demonstrate progress towards compliance.

Timeline or Target Adjustments

A building owner can request an adjusted timeline or a performance target adjustment. Applications for these adjustments must be submitted by December 31, 2025 for the 2026 target and by December 31, 2029 for the 2030 target. 

Standard Target Adjustments will be available to all buildings based on specific operating characteristics, primarily defined by the EPA. Submitting for a Standard Adjustment will require Data Verification by a licensed professional and a summary of the approved characteristics. Additionally, Under Resourced Buildings (URBs) will have the option to submit for a Custom Target Adjustment based on the building’s unique characteristics and financial considerations. Custom Target Adjustment will require an energy audit completed by a certified professional and a custom CEO form.

If a compliance plan is submitted and approved, the building owner must submit monthly reports to the CEO in order to demonstrate compliance. If the building owner does not demonstrate progress towards compliance, they are at risk of the monthly building performance penalty.

What are the Next Steps?

CAHED has been following the formation of State of Colorado Benchmarking and Building Performance standards. More technical guidance documents are expected from the CEO in the coming weeks. Now that the building performance standards are published, here are some next steps in this process.

• Benchmark. Make sure to complete utility benchmarking for all facilities over 50,000 ft2. In 2022, about half of the hospitals in the state were able to submit their data. Benchmarking data is required to be submitted each year, not just once. Fines will start in 2024 for facilities that do not submit. The benchmarking data must be checked for accuracy. CAHED and the State of Colorado can provide resources to help you walk through the process.
• Organizational Status. Healthcare organizations should review the details of "Public Buildings" and "Under-resourced buildings" to determine if they fall under those categories. It is possible that community based or tax-exempt facilities would have some relief.
• Training. CAHED and the State of Colorado are planning to provide training sessions starting this fall to define the BPS regulation and to provide resources to help healthcare organizations comply with these state rules. Please watch for these training opportunities and plan to attend.
• Planning. A major first step in complying with these rules is to perform energy audits and facility condition assessments of your facilities to create a compliance plan and preliminary budget. Consider adding these engineering and economic evaluations to your budget for the upcoming year.

CAHED will provide information on technical and financial resources to healthcare organizations for guidance in reducing GHG emissions in their facilities. Please send an email to sustainability@cahed.org to answer any questions and to provide consultation.