Explainer: Building performance standards & compliance — what it is, why it matters, and how to evaluate options

Buildings account for approximately 37% of global energy-related CO2 emissions and consume over 30% of final energy worldwide, according to the 2025 Global Status Report for Buildings and Construction published by the United Nations Environment Programme. Building performance standards (BPS), which set mandatory energy use or emissions intensity limits for existing commercial and multifamily buildings, have emerged as the primary regulatory mechanism for driving decarbonization in a sector where 80% of the buildings that will exist in 2050 have already been built. As of early 2026, more than 40 jurisdictions in the United States alone have adopted or proposed BPS policies, while national frameworks are advancing in the European Union, United Kingdom, Japan, and Canada. For sustainability professionals navigating this space, understanding how BPS policies work, how they differ across jurisdictions, and how to evaluate compliance pathways is essential for managing regulatory risk and capturing the financial benefits of high-performance buildings.

Why It Matters

The built environment represents the single largest source of emissions that can be addressed through existing technology. Operational energy use in commercial buildings (heating, cooling, lighting, and plug loads) accounts for roughly 28% of global CO2 emissions, with an additional 9% from embodied carbon in construction materials (UNEP, 2025). Unlike transportation or power generation, which have clear technology-driven transition pathways through electrification and renewables, building decarbonization requires action at the individual asset level across millions of structures of varying age, type, and condition.

Building performance standards address this challenge by requiring building owners to meet specific energy use intensity (EUI) or greenhouse gas emissions intensity targets by defined compliance dates. Unlike building energy codes, which apply only to new construction, BPS policies target existing buildings, where the vast majority of emissions reductions must occur. The policy logic is straightforward: set a performance threshold, require disclosure of current performance through benchmarking, and give building owners a multi-year compliance window to achieve the target through efficiency upgrades, electrification, or renewable energy procurement.

The financial stakes are significant. Non-compliant buildings face penalties ranging from $0.50 to $5.00 per square foot per year depending on jurisdiction, but more importantly, buildings that fail to meet performance thresholds increasingly face valuation discounts. A 2025 analysis by JLL found that commercial office buildings in the bottom quartile of energy performance traded at a 12 to 18% discount compared to top-quartile peers in markets with active BPS policies (JLL, 2025). Conversely, buildings that achieve compliance early and demonstrate superior performance command rental premiums of 6 to 11% and experience occupancy rates 4 to 7 percentage points higher than non-compliant peers.

Regulatory momentum is accelerating. The European Union's Energy Performance of Buildings Directive (EPBD) recast, finalized in 2024, requires all non-residential buildings to achieve at least an Energy Performance Certificate (EPC) rating of E by 2027 and D by 2030, with member states setting pathways to zero-emission building stock by 2050. In the United States, the Biden-era National Building Performance Standards Coalition, now comprising 46 state and local governments representing over 20% of U.S. building floor area, continues to drive adoption despite federal policy shifts (DOE, 2025).

Key Concepts

Energy use intensity (EUI): The total energy consumed by a building per unit of floor area, typically measured in kBtu per square foot per year (U.S.) or kWh per square meter per year (metric). EUI serves as the primary performance metric in most BPS policies and allows comparison across buildings of different sizes. A typical U.S. office building has an EUI of 80 to 120 kBtu/sq ft/yr, while top-performing buildings achieve 30 to 50 kBtu/sq ft/yr.

Benchmarking and disclosure: The mandatory reporting of building energy consumption to local governments, typically through platforms like ENERGY STAR Portfolio Manager (U.S.) or Display Energy Certificates (UK/EU). Benchmarking is the foundation of BPS: buildings must first measure and report performance before they can be held to performance targets. Over 40 U.S. cities now require annual energy benchmarking for commercial buildings above certain size thresholds.

Compliance pathways: The methods available to building owners for meeting BPS targets. Most policies allow multiple pathways including achieving the absolute EUI or emissions intensity target, demonstrating a minimum percentage reduction from a baseline year (typically 20 to 30%), implementing a prescribed package of energy conservation measures, or pursuing a performance-based pathway with an approved energy audit and retrofit plan.

Carbon emissions intensity: A metric that measures greenhouse gas emissions per unit of floor area, typically in kgCO2e per square meter per year. Some jurisdictions, notably New York City and Washington, D.C., use emissions intensity rather than energy intensity as their BPS metric, which accounts for the carbon content of the energy source and incentivizes fuel switching from fossil fuels to electricity powered by clean grids.

Building energy codes vs. BPS: Building energy codes (such as ASHRAE 90.1 or the International Energy Conservation Code) set minimum efficiency requirements for new construction and major renovations. BPS policies are fundamentally different: they set performance requirements for existing buildings regardless of renovation activity. A building can be fully code-compliant from a construction standpoint and still fail to meet BPS performance thresholds if it operates inefficiently.

What's Working

New York City's Local Law 97 is driving retrofit investment. New York City's Local Law 97, which took effect in 2024, sets carbon emissions limits for buildings over 25,000 square feet, covering approximately 50,000 buildings and 60% of the city's building emissions. In the first year of implementation, the NYC Department of Buildings reported that 72% of covered buildings submitted compliance reports, and building owners collectively invested an estimated $1.4 billion in energy efficiency upgrades and electrification projects in anticipation of 2024 and 2030 compliance thresholds (NYC Mayor's Office of Climate and Environmental Justice, 2025). The Empire State Building, a high-profile case, reduced its EUI by 40% through window retrofits, chiller upgrades, and building automation system improvements, achieving compliance with the 2030 threshold six years early.

Washington, D.C.'s BEPS program demonstrates tiered compliance. Washington, D.C.'s Building Energy Performance Standard, one of the first in the nation, requires buildings over 10,000 square feet to meet property-type-specific EUI targets or demonstrate a 20% reduction from baseline. The program's tiered approach, with the lowest-performing buildings addressed first, has resulted in median EUI reductions of 15 to 22% among Cycle 1 buildings (those in the bottom quartile) within two years of compliance deadlines. The District's approach of providing free energy audits and technical assistance to building owners with fewer than 50,000 square feet has achieved 85% compliance rates among smaller properties (DOEE, 2025).

ENERGY STAR Portfolio Manager creates a common benchmarking platform. The U.S. EPA's ENERGY STAR Portfolio Manager platform, used by over 600,000 properties representing 50 billion square feet of floor area, has become the de facto standard for building energy benchmarking in the United States and is increasingly adopted in Canada and parts of Asia-Pacific. The platform's 1-100 scoring system, which normalizes for building type, climate, and occupancy, provides building owners and policymakers with a consistent basis for setting performance thresholds. Over 40 U.S. benchmarking ordinances require reporting through Portfolio Manager, creating a unified dataset that enables cross-jurisdictional comparison and research.

What's Not Working

Enforcement and penalty structures remain weak in most jurisdictions. While BPS policies set clear targets, enforcement mechanisms vary widely and are often insufficient to drive action. In many U.S. cities, penalties for non-compliance are modest: Boston's BERDO 2.0 sets alternative compliance payments at $234 per metric ton of excess emissions, while some jurisdictions cap annual penalties at amounts that are lower than the cost of compliance measures. Building owners in markets with weak enforcement may rationally choose to pay penalties rather than invest in retrofits, undermining the policy's effectiveness.

Small and mid-size buildings face disproportionate compliance barriers. Most BPS policies cover buildings above 10,000 to 25,000 square feet, but even within this threshold, smaller commercial buildings face higher per-square-foot compliance costs due to limited economies of scale for retrofit projects. A typical HVAC system upgrade costs $15 to $25 per square foot regardless of building size, but the energy savings in a 15,000 square foot building may not justify the capital expenditure within the compliance timeline. Technical assistance programs, like those in D.C., help but are not universally available.

Split incentive problems persist in leased buildings. In commercial properties where tenants pay utility bills, building owners lack direct financial incentives to invest in energy efficiency improvements because the savings accrue to tenants rather than to the entity bearing the capital cost. This split incentive problem affects an estimated 60% of U.S. commercial floor area. Green lease provisions that share energy savings between landlords and tenants are emerging but remain uncommon, covering less than 10% of new commercial leases in 2025 (IMT, 2025).

Data quality and reporting gaps undermine benchmarking. Accurate benchmarking depends on complete and consistent utility data, but many building owners struggle with data collection. Issues include whole-building vs. tenant-metered utilities, gaps in sub-metering for mixed-use properties, and inconsistent reporting of fuel types. A 2025 audit of New York City benchmarking data found that approximately 18% of submissions contained errors significant enough to affect compliance determinations (Urban Green Council, 2025).

Key Players

Established Companies

• Siemens Smart Infrastructure: provides building automation systems and energy management platforms deployed across 15,000+ commercial buildings globally, offering BPS compliance analytics
• Johnson Controls: offers OpenBlue building management platform integrating HVAC optimization, energy monitoring, and compliance reporting for portfolio-scale operations
• Honeywell Building Technologies: delivers building performance optimization solutions including Forge Enterprise Performance Management for benchmarking and compliance tracking
• Schneider Electric: provides EcoStruxure Building platform combining IoT sensors, analytics, and energy management for commercial building portfolio compliance

Startups

• Measurabl: SaaS platform used by over 15 billion square feet of commercial real estate for ESG data management, energy benchmarking, and BPS compliance tracking
• Audette: AI-powered building decarbonization platform that generates asset-level retrofit plans and compliance pathways using utility and building data
• BlocPower: electrification-as-a-service provider focused on upgrading heating and cooling systems in small and mid-size commercial and multifamily buildings
• Turntide Technologies: develops smart electric motor systems and building management software that reduce HVAC energy consumption by 30 to 64%

Investors and Funders

• Breakthrough Energy Ventures: invested in building decarbonization technologies including BlocPower, Turntide Technologies, and advanced heat pump systems
• Fifth Wall: largest venture capital firm focused on real estate technology, with investments in building performance and sustainability platforms
• Urban Land Institute (Greenprint Center): provides research, benchmarking tools, and member network for commercial real estate sustainability performance improvement

Key Metrics

Metric	Current State	Target (2030)	Unit
U.S. jurisdictions with active BPS	40+	80+	jurisdictions
Commercial building benchmarking coverage (U.S.)	~50 billion sq ft	80+ billion sq ft	square feet
Average EUI reduction from BPS compliance	15-22%	30-40%	% reduction from baseline
Non-compliance penalty range	$0.50-5.00/sq ft/yr	$2.00-10.00/sq ft/yr	$/sq ft/year
Green lease adoption rate	<10%	25-30%	% of new commercial leases
Covered buildings meeting LL97 2030 targets (NYC)	~35%	100%	% of covered buildings

Action Checklist

• Identify all jurisdictions where your building portfolio is subject to current or proposed BPS requirements and map compliance timelines
• Establish energy benchmarking for all covered buildings using ENERGY STAR Portfolio Manager or equivalent regional platforms
• Conduct ASHRAE Level II energy audits on buildings in the bottom quartile of performance to identify the most cost-effective retrofit opportunities
• Evaluate electrification pathways for space and water heating, prioritizing buildings with aging fossil fuel equipment approaching end of useful life
• Implement building automation system upgrades and retro-commissioning as low-cost, high-impact first steps that typically achieve 10 to 15% EUI reductions
• Negotiate green lease provisions in new and renewing commercial leases to align landlord and tenant incentives around energy performance
• Explore available financial incentives including utility rebates, federal tax credits (25C/179D), state programs, and green financing products such as C-PACE
• Develop a portfolio-level compliance strategy with phased investment plans that prioritize buildings closest to compliance deadlines

FAQ

Q: What is the difference between a building energy code and a building performance standard? A: Building energy codes set minimum efficiency requirements for new construction and major renovations at the time of permitting. They apply at the point of design and construction and do not require ongoing performance verification. Building performance standards apply to existing buildings during ongoing operations, requiring them to meet energy or emissions intensity targets regardless of when they were built or last renovated. A building can be fully code-compliant from its original construction but still violate BPS requirements if it operates inefficiently due to poor maintenance, outdated equipment, or changes in occupancy. BPS policies are specifically designed to address the performance gap in existing building stock, which represents the majority of built environment emissions.

Q: How much does it typically cost to bring a non-compliant building into BPS compliance? A: Compliance costs vary significantly based on building type, current performance, and the depth of retrofits required. Low-cost measures such as retro-commissioning, LED lighting upgrades, and building automation improvements typically cost $2 to $8 per square foot and achieve 10 to 20% EUI reductions. Moderate interventions including HVAC system replacements and envelope improvements (window replacements, insulation) range from $15 to $40 per square foot with 25 to 40% reductions. Deep energy retrofits involving full electrification and envelope upgrades can cost $50 to $100+ per square foot. For most buildings in the bottom quartile, a phased approach starting with low-cost measures can achieve initial compliance thresholds for $5 to $15 per square foot, with deeper measures planned for subsequent compliance cycles.

Q: Which jurisdictions have the most stringent BPS policies currently in effect? A: New York City's Local Law 97 is widely considered the most ambitious, covering buildings over 25,000 square feet with carbon emissions limits that tighten in 2030 to levels requiring significant retrofit investment for most covered buildings. Washington, D.C.'s BEPS program covers buildings over 10,000 square feet with property-type-specific EUI targets. Colorado's state-level Benchmarking and Performance Standard covers buildings over 50,000 square feet in municipalities above 100,000 population. In Europe, the Netherlands' mandatory EPC C requirement for office buildings took effect in 2023, and France's Decret Tertiaire requires 40% energy reduction by 2030 for commercial buildings over 1,000 square meters. The EU EPBD recast will create the most comprehensive framework, requiring all member states to establish minimum performance thresholds for existing non-residential buildings by 2027.

Q: How should sustainability teams prioritize buildings within a large portfolio for BPS compliance? A: Start by benchmarking all covered buildings and ranking them by current performance relative to applicable BPS thresholds. Prioritize buildings in three categories: first, buildings that are already non-compliant or will become non-compliant within the next compliance cycle, which face immediate penalty exposure. Second, buildings with aging mechanical systems (HVAC equipment beyond 15 to 20 years) where equipment replacement aligns with compliance needs, maximizing return on investment. Third, high-value or high-visibility assets where green premiums in rental rates and asset valuation justify proactive investment ahead of compliance deadlines. Within each category, prioritize buildings where low-cost measures (retro-commissioning, controls optimization, lighting) can achieve compliance, reserving capital-intensive retrofits for later phases.

Sources

• United Nations Environment Programme. (2025). 2025 Global Status Report for Buildings and Construction. Nairobi: UNEP.
• JLL. (2025). Building Performance and Asset Valuation: The Impact of Energy Efficiency Standards on Commercial Real Estate Markets. Chicago: JLL Research.
• NYC Mayor's Office of Climate and Environmental Justice. (2025). Local Law 97 First Year Implementation Report. New York: City of New York.
• U.S. Department of Energy. (2025). National Building Performance Standards Coalition: Progress Report and Best Practices. Washington, D.C.: DOE.
• District of Columbia Department of Energy and Environment. (2025). BEPS Cycle 1 Compliance Results and Lessons Learned. Washington, D.C.: DOEE.
• Institute for Market Transformation. (2025). Green Lease Adoption and Building Performance: National Survey Results. Washington, D.C.: IMT.
• Urban Green Council. (2025). New York City Energy Benchmarking Data Quality Audit 2024. New York: Urban Green Council.