Decarbonization Program Updates

Jun

Energize Denver Ordinance 2.0 and Colorado Building Decarbonization Program Updates

ABOUT: In 2021, Denver adopted the “Energize Denver” ordinance requiring large commercial and multifamily buildings to meet strict energy performance targets to help the City and County of Denver meet emissions reduction goals. Shortly after, the State of Colorado passed HB21-1286, establishing statewide Building Performance Standards. Together, these two programs created overlapping, and at times, conflicting, compliance requirements for building owners, prompting the need for further clarification.

NAIOP has been actively engaged in these policy conversations to ensure our members who are directly impacted by these mandates, can meet requirements without facing unreasonable burdens.

While there have been some positive changes aimed at making the policies more practical to implement, significant concerns remain. Alongside other industry groups, NAIOP recently refiled our lawsuit against the City and County of Denver and the Colorado Energy Office, challenging both the Energize Denver Ordinance and Regulation 28. You can read more about the lawsuit in the Denver Gazette.

Below, we have provided a summary of the most recent updates to both of these building decarbonization policies to help keep you informed.

Energize Denver

Compliance Deadlines: Final targets have been moved from 2030 to 2032, with more time extensions available.
Penalty Structure: No penalties will be enforced until 2029, and when they start, they will be reduced by 50%.
Target Flexibility: There are now custom targets and special credits (e.g., for adaptive reuse projects) which will not require buildings to cut energy consumption more than 42%.
Financial support: More rebates, loans and grants for building upgrades will be offered.
Compliance options: There are new phased upgrades allowed through the new rule changes which will allow more alternative paths for meeting requirements, especially for unique situations like old buildings, lease turnovers, and equipment lifespans.
Reporting Process: There will be a new portal for benchmarking checklist with clearer rules and guidance.
Support Infrastructure: A new, dedicated Business Hub will be stood up to provide coaching services and enhance training programs.
Electrification Requirements: Unless it makes sense financially, there is no longer a mandated HVAC electrification requirement.
Special provisions: They have expanded holds and extensions for end-of-life equipment, steam loop planning, HOA reserves, lease turnover and more.

Remaining Issues: The Energize Denver Ordinance is still rigid with hard deadlines and limited exemptions. Any further changes, the lawsuit aside, would require action from City Council or Denver voters. Given the political environment, these regulations could change. We encourage members to actively engage to stay up-to-date with the latest information.

Colorado Building Performance Standards

House Bill 25-1269 which amended the original Building Peformance Standards created by HB 21-1286 and Regulation 28

Performance Targets: Removed strict emissions targets from state law; future standards must be feasible, tailored, and cost-effective.
Compliance Deadline: Status reports required 2026-2030; enforcement begins in 2030.
Benchmarking Requirements: Annual reporting data by building owner due November 1 instead of July 1.
Benchmarking Baseline: Baseline has been redacted to 2019 instead of 2021.
Alternative Compliance Pathways: Individual compliance metrics and timelines available for specific buildings.
Local Government Equivalency: New law allows buildings to be considered in compliance if they meet similar local requirements. Certificates of compliance will be issued.
Penalty Structure: Penalties are slightly higher than original proposals in Regulation 28 and now capped at $2,300-$5,800/month starting only in 2031.
Special Building Accommodation: Ensures buildings using extra energy for electric vehicle charging are considered compliant. It also allows energy use exceptions for data centers and telecom facilities based on state guidelines.
Enterprise Creation & Fees: Creation of an enterprise with $400/year per building with specifications for how the funds can be used. Industry now gets oversight on the board.
Task Force & 2040 Planning: The task force has been expanded to include more stakeholders, must consider costs and feasibility when setting 2040 goals.

Bottom Line: What’s next?

Both Denver and Colorado have made their building decarbonization rules relatively more flexible and business-friendly compared to original versions.
The programs still bring significant costs and complexity which means compliance will still remain challenging.
Meaningful long-term reforms will be hard to achieve given strong political support for aggressive climate policies in the state.
NAIOP will continue to advocate along with other business groups for practical, evidence-based improvements.
For more specific details, be sure to bookmark these two websites: Energize Denver and Regulation 28 and check them frequently.
As always, annual benchmarking is still required by both the city and state.
Be proactive. While compliance timelines were extended, they are short.