District of Columbia Mayor Muriel Bowser signed two significant pieces of legislation recently to build on the success of the Clean Energy DC Omnibus Act of 2018 and to further help transition the District to a new energy future. Both acts build on and accelerate the District of Columbia’s commitment to obtaining renewable energy and becoming a better environmental steward.
The first piece of legislation is the Climate Commitment Act of 2022 (A24-0527) (the “Climate Commitment Act”). The Climate Commitment Act codifies in law the District of Columba’s greenhouse gas reduction goals. In sum, the Climate Commitment Act:
- Accelerates earlier climate commitments to reach carbon neutrality by 2045;
- Establishes certain interim targets for reductions in greenhouse gases every five years between 2025 and 2045;
- Commits the government to achieve carbon neutrality in its operations by 2040 and establishes a task force to develop an action plan to achieve this goal;
- Requires the government to cease purchases of fossil-fuel burning building-heating equipment (such as natural-gas-powered furnaces and water heaters), in favor of more efficient electric heat pumps by 2025;
- Requires the government to stop purchasing gas-powered vehicles and to begin purchasing or leasing only zero-emissions vehicles starting in 2026; and
- Establishes a more rigorous goal for carbon emission reductions by reducing 2006 carbon emission levels by 60 percent by 2030.
The second legislation is the Clean Energy DC Building Code Amendment Act of 2022 (A24-0528) (the “Clean Energy Act”). The Clean Energy Act requires that by the year 2026, all new construction buildings and substantial improvements to covered buildings in the District be constructed to a net-zero-energy standard.
In sum, the Clean Energy Act:
- Instructs the mayor to establish the new net-zero-energy building codes no later than December 31, 2026;
- Requires that the renewable energy used be generated at the building site whenever feasible;
- Prohibits buildings from using fossil fuels such as natural gas for furnaces and/or water heaters (except for backup power generators in buildings that are “essential to protecting public health and safety” and are exempt);
- Applies the new requirements to all buildings that are subject to the District of Columbia Energy Conservation Code, including to all commercial buildings, residential condominiums and apartment complexes, in addition to residential homes exceeding three stories above grade plane; and
- Requires an independent audit every three years, starting in 2029, to show the percentage of new buildings in compliance.
It is critical that developers and commercial landlords understand what actions will trigger the requirements of the Clean Energy Act, particularly if commercial landlords make alterations and improvements to current spaces.
Both the terms “new construction” and “substantial improvements” under the Clean Energy Act have the same meaning as provided in the Green Building Act of 2006.
- The term covered buildings means “all buildings that are subject to the District of Columbia Energy Conservation Code - Commercial Provisions.” (D.C. Mun. Reg. tit. 12I)
- The term New Construction means “the construction of any building whether as a stand-alone building or an addition to an existing building. The term ‘new construction’ includes new buildings and additions or enlargements of existing buildings, exclusive of any alterations or repairs to any existing portion of a building.” Section 2(33) of the Green Building Act of 2006, effective March 8, 2007 (D.C. Code § 6-1451.01(33)).
- The term Substantial Improvement means “any repair, alteration, addition, or improvement of a building or structure, the cost of which equals or exceeds 50% of the market value of the structure before the improvement or repair is started.” Section 2(40) of the Green Building Act of2006, effective March 8, 2007 (D.C. Code § 6-1451.01(40)).
- Finally, net-zero buildings can be achieved through a combination of lowering energy demand and generating renewable energy. According to the Clean Energy Act, a net-zero-energy standard means a standard under which a “building conserves an amount of energy attributable to building operations that is equal to or greater that the amount that would be required” (lowers energy demand for the building) and “a building that obtains energy from renewable sources in the amount that would be required” for the building operations.
Both acts were unanimously approved by the District of Columbia Council and now move to the U.S. Congress for review and approval. Barring a joint resolution disapproving the acts, the acts are projected to become effective on September 21, 2022.
The renewable energy sources and onsite production can be solar. Because of the new requirements, we anticipate an uptick in the deployment of rooftop solar energy systems. As mentioned in our earlier post, Solar Rooftop Leasing Can Offer a Win-Win-Win for Commercial Building Owners, Energy Developers & the Environment, building owners have several options to install and utilize rooftop solar photovoltaic systems, either through direct purchase or through a leasing model. Either way, rooftop solar will play a vital role in the District’s energy future.
Several other municipalities, such as New York City, have made similar efforts over the last few years. As the District of Columbia takes the lead, expect to see more such legislation from the Council and the Executive Office of the Mayor that strengthen the District’s climate commitment.
Opinions and conclusions in this post are solely those of the author unless otherwise indicated. The information contained in this blog is general in nature and is not offered and cannot be considered as legal advice for any particular situation. The author has provided the links referenced above for information purposes only and by doing so, does not adopt or incorporate the contents. Any federal tax advice provided in this communication is not intended or written by the author to be used, and cannot be used by the recipient, for the purpose of avoiding penalties which may be imposed on the recipient by the IRS. Please contact the author if you would like to receive written advice in a format which complies with IRS rules and may be relied upon to avoid penalties.
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