December 7, 2023
, Focus on Efficiency: One-on-One With the DOE’s Better Buildings Initiative Director – What is a Ground Lease?, Robert Khodadadian

Launched in 2011 by the Department of Energy, the Better Buildings Initiative addresses barriers to greater energy efficiency across the U.S. economy and aims to accelerate decarbonization across the country. Several programs run under its umbrella, including the Better Buildings Challenge, the Better Plants Challenge and the Better Climate Challenge.

The first two are part of the initial launch, offering organizations that enrolled the vehicle to share the results of their commitments to reduce energy consumption, as well as their solutions. The third program was added in 2021—with enrollment very strong despite the harsh pandemic years—and was designed to add focus on portfolio-wide greenhouse gas emissions.

Maria Vargas, the program’s director, talked to Commercial Property Executive about the initiative’s milestones and goals.

What inspired this initiative and how are all the programs connected?

Maria Vargas has been the director of the U.S. Department of Energy’s Better Buildings Initiative since 2011. Image courtesy of the DOE

Vargas: The U.S. spends about $200 billion each year to power commercial buildingsand another $200 billion for industrial energy. On average, between 20 and 30 percent of that energy is wasted. There are many cost-effective solutions to make buildings more efficient, and greater energy efficiency is the first step to decarbonizing our buildings, plants and homes.

How impactful is the $18.5 billion, 190 million metric tons of carbon dioxide emission cut DOE’s partners managed to save to date? Tell us more about the overall performance in annual terms.

Vargas: These numbers are roughly equivalent to the combined annual emissions of 24 million homes. The public sharing of solutions is just as important as these cost, energy and emissions savings. On the Better Buildings Solution Center, our partners have shared more than 3,000 proven solutions and strategies that other organizations can harness to act more quickly and easily.

In terms of year-over-year progress, partners with energy goals have, on average, been steadily achieving and surpassing the 2 percent per year reduction needed to stay on track with their Better Buildings Challenge goal. While it is much newer, Better Climate Challenge partners are reducing 21 percent of their Scope 1 & 2 emissions from base year on average, which also puts them on track to meet the 50 percent reduction goal within 10 years.

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How has the Better Buildings Initiative changed since its launch?

Vargas: The fundamentals of the initiative have stayed constant: accelerating the pace of energy efficiency and decarbonization by addressing barriers, convening leaders, demonstrating what works and highlighting the success of our partners. Moreover, technical and organizational topics continue to evolve as new strategies, priorities and technologies come into play.

We listen to learn from our hundreds of partners and stay connected with the real-world challenges they face. We tailor our working groups, webinar topics and the sessions of our annual Better Buildings Summit to address these needs, and we help get proven strategies into the broader market through a variety of means such as the Better Buildings Solution Center, national and regional convenings, and tangible and fun ways for organizations to see what others are doing, including through the Better Climate Challenge Road Show video series.

Who can participate in the program?

Vargas: Any organization willing to make an aggressive and portfolio-wide commitment to energy efficiency or emissions reduction can sign on to the Better Buildings Challenge or Better Climate Challenge. To help organizations achieve their goals, the DOE provides direct technical assistance, hosts working groups on key topics and assists with creating or refining emissions reduction plans.

How many companies and organizations have joined the initiative since its launch? Which sectors are most responsive to the Better Building Initiative?

Vargas: There are more than 900 public and private partners that work with the DOE in the broader Better Buildings Initiative from across the economy, including commercial real estate firms, multifamily organizations, state governments, utilities, industrial corporations, retailers, health-care providers, and more. These organizations represent almost every sector of the American economy: nearly 30 of the country’s Fortune 100 companies, nearly 20 of the top 50 U.S. employers, 14 percent of the U.S. manufacturing energy footprint and 13 percent of total commercial building space, as well as more than 90 state and local governments spanning the nation. We have more than 170 partners in the Better Climate Challenge, more than 265 Better Buildings Challenge partners, and more than 270 industrial partners in the Better Plants Challenge.

Commercial real estate partners represent the largest number of commercial organizations participating in the initiative, as well as retail, food service and grocery. Local governments are our largest group of public sector partners, and affordable housing organizations are our largest group of multifamily partners. We have a wide range of industrial sectors represented, including food manufacturing, chemical manufacturing, plastics and rubber products, motor vehicle manufacturing, utilities and more.

Is the current economic landscape impacting enrollment?

Vargas: We have partners joining in any economy. When the economy is strong, organizations have additional funding to invest in sustainable projects; when the economy is struggling, organizations recognize the benefits and cost-savings potential of energy efficiency and emissions reduction, and pursue work in these areas. Our partners know that energy efficiency and emissions reduction remain a constant, effective and advantageous business strategy.

What are presently the main challenges to improving properties’ energy efficiency?

Vargas: Energy efficiency is a proven, low-risk investment. The remaining challenges we hear about for greater energy efficiency are financial and organizational. Eliminating the most energy waste—deep energy efficiency—can cost more upfront. Organizationally, leading partners understand that energy efficiency is an ongoing effort because it is such a key part of a broader decarbonization plan and requires ongoing vigilance and action. To be successful, organizations need support for this work from the top down, and the team in charge of this work needs to be empowered and funded. As we work to build on the work organizations have done to be more energy efficient, organizations need help with emissions reduction planning across their portfolios.

Electrification is another key focus area, and many organizations have identified financing opportunities and strategies as a priority needing attention. Based on this feedback we develop resources that are designed to help any organization, whether they are a partner or not. For example, we recently released the Framework for Greenhouse Gas Emissions Reduction Planning and the Funding and Incentives Resource Hub. We also have more than 3,000 free solutions on the Better Buildings Solution Center to help organizations across sectors achieve greater efficiency and decarbonization.

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What about opportunities?

Vargas: This is an important moment for the U.S. economy and the planet. The climate crisis demands our collective and immediate action. To meet our nation’s ambitious climate goals, public and private organizations need real-world, proven pathways to decarbonize—and that’s exactly what they get from DOE’s Better Buildings Initiative.

There are always opportunities to make buildings, plants and our homes more efficient and less carbon-intensive, from leveraging new and innovative technologies to engaging and educating tenants and occupants in more sustainable behavior. Some of the key opportunities our partners are exploring include heat pumps, vehicle and fleet conversions, tracking Scope 3 emissions, and more efficient refrigeration. It’s often easiest to find reductions earlier in the process when taking advantage of the low-hanging fruit of energy efficiency such as installing LEDs and replacing old and inefficient equipment. Our program is useful in helping organizations at every stage of their effort continue to progress and find savings.

How can the real estate industry make more significant progress in decarbonization and energy efficiency?

Vargas: The DOE works with commercial real estate partners through the Better Buildings Initiative to identify, implement and share proven pathways with the market to reduce emissions and increase energy efficiency. Our focus areas include portfolio-wide emissions reduction planning and implementation, technical pathways for electrification, overcoming barriers related to data transparency and Scope 3 emissions, as well as strategies for accessing tenant data. Organizations are encouraged to get involved in the Better Climate Challenge or Better Buildings Challenge and be a part of the climate solution!

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In the simplest form, a ground lease is a long-term net lease (usually 49 years or 99 years) of land including any improvements on the said land. Assets that can be subject to a ground lease include but are not limited to, vacant land, office buildings, and large residential buildings.

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Read MoreExecutive Insights, National, Sustainability, #CPETalks, Better Buildings Initiative, Department of Energy Resources Commercial Property ExecutiveSince 2011, more than 900 public and private partners have joined the program. Maria Vargas reflects on its performance so far.
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