Energy Codes and Building Performance Standards

Climate Mayors CEO Kate Wright began to notice data centers popping up in conversations among mayors last summer, as AI’s rapid growth accelerated their size and the scale of their expansion. They were a hot topic during New York Climate Week and again when mayors congregated in Brazil for the United Nations Climate Change Conference, Wright said.

By this fall, the growth of hyperscalers — large-scale data centers that deliver massive amounts of storage and computing power — was changing the tenor of those conversations from concern to alarm. “We started to see a different level of impact in communities, and a lot of our cities had land-use regulations and a regulatory environment that was anticipating the data centers of the past,” Wright said. “The pace of change within the industry is really quite shocking and staggering in terms of how large these facilities are getting.”

Climate Mayors is responding to mayors’ concerns with a new report, “Data Centers and the Climate Landscape: An Actionable Resource for US Mayors,” developed with Bloomberg Associates. Intended to catalyze peer learning, support regional cooperation and advance strategies that support community sustainability and affordability, the report “focuses on how cities can influence data center development outcomes, even when authority is limited or shared with states, utilities, or regional bodies,” its executive summary states. 

“Mayors often have a lot more formal and informal levers that they can use to shape development,” said Adam Freed, a principal with Bloomberg Associates. “They’re not necessarily passive actors watching this change happen in their communities. If they’re proactive, they can really help shape what this looks like and what those impacts are within their communities.”

The report focuses on four areas where cities can negotiate data center development to reinforce climate, energy and community priorities.

1. Where and how data centers are built

Cities can guide siting, design and mitigation measures and ensure projects align with housing plans, industrial strategies and land-use goals through zoning, permitting, site plan review and conditional approvals, according to the report. 

“The primary tool that cities have is their land-use authority,” Wright said. “They can decide where data centers are developed if they’re being proposed within a municipality, and they can dictate the design approach as well.”

Mayors can take measures such as mandating that data center developers plant trees or include murals on their properties, Wright said, so “they end up looking like a resource or an asset for the community.” They can also prohibit them near schools to reduce children’s exposure to noise and pollution.

Wright points to Atlanta as a model for creating zoning and overlay districts that prioritize where it makes sense to allow data centers. Atlanta prohibits data centers within the city’s Beltline district to conserve trails and green space as well as land for housing, she said.

2. Electricity costs and grid reliability

Mayors’ ability to influence data centers’ energy use and impact on rates and infrastructure is determined by whether they have municipal or investor-owned utilities, Wright said. But in both cases, there are “creative ways” cities can partner with data centers “to ensure you’re not seeing that oversized impact to your utility and to prices.”

Cities requiring data centers to use clean energy is one example, she said. Microsoft recently signed a power purchase agreement to build 475 megawatts of new utility-scale solar in Michigan, Missouri and Illinois, for example. Wright said this is “a great example of how we do this in a way that is aligned with climate goals and not as impactful to our resources.”

3. Water use, air quality and noise

To mitigate data centers’ impact on water supply and the effects of backup generation and cooling equipment on local air quality and sound levels, cities can regulate water use, mandate monitoring and reporting, and adopt enforceable standards to limit cumulative impacts and protect public health, the report states. 

Cities can pursue levers such as energy and water-use disclosures and noise decibel limits, Wright said. The report also recommends prohibiting on-site fossil fuel generation for routine operations, restricting the use of diesel generators for backup power and updating zoning codes to increase fines for noise violations. 

4. Local economic value

“One of the things that mayors are grappling with is the potential economic benefits of data centers, and we want to make sure they’re understanding how real this is in terms of jobs created and also feel empowered to enter into community benefits agreements that can ensure that … they’re getting benefits that make it worthwhile for them,” Wright said.

Labor agreements and tax-increment financing on revenue generated by data centers can also be useful, Wright said. She pointed again to Atlanta, which is capturing revenue generated from data centers in designated districts to fund infrastructure improvements, park and street upgrades, and housing. Henrico County, Virginia, is funneling a 550% tax increase on data center equipment (from 40 cents to $2.60 per $100 of assessed value) into housing, she said.

Data centers create “an enormous amount of value,” and provide services for industries like banking and health care in addition to powering AI, Freed said. Banning or putting moratoriums on them is not the right move, he added. “Figuring out how you can shape their development in a way that meets local priorities is a very important thing to do.”

New housing in Oregon must be built with energy-efficient heat pumps instead of ducted air conditioning following an update to the state’s residential energy code the Oregon Building Code Division’s Residential and Manufactured Structures Board approved.

The switch to mandatory heat pumps is expected to save residents of the newly constructed buildings an average of $125 a month in energy costs and more than $1,700 annually, per a Building Code Division analysis. The Oregon Department of Energy, local government leaders and building professionals backed the change.

Energy costs have risen 50% in Oregon since 2020, according to an Oregon Capital Chronicle report. “The increased energy savings for new construction will benefit every Oregonian who moves into one of these new homes for years to come,” Talent, Oregon, City Council President Eleanor Ponomareff said in a Sierra Club press release.

Utility rates are expected to increase for nearly 60% of natural gas utility customers across 49 states and the District of Columbia by 2027, according to an analysis last year by the Center for American Progress and Natural Resources Defense Council.

Oregon last year doubled the funding for its Energy Assistance Program to help low-income households pay utility bills.

Some climate and housing advocates see heat pumps as an energy-efficient way to reduce costs.

“Heat pumps provide both heating and cooling in one system and do so efficiently,” according to a letter to the Residential and Manufactured Structures Board signed by local government officials, climate advocates and homebuilders. “From a housing affordability perspective, it is hard to separate construction decisions from long-term utility costs. Homes that are cheaper to operate are, in practice, more affordable homes.”

Joshua Salinger, founder and CEO of Birdsmouth Design-Build, a building and design firm based in Portland, Oregon, said in a statement that the update to Oregon’s energy code would protect home buyers from rising energy costs.

“I've been installing heat pumps for years, and have seen how cost-effective they can be for both builders and homeowners,” Salinger said.

The update aligns Oregon with building standards in California and Washington, Dylan Plummer, acting deputy director of Sierra Club’s Clean Heat Campaign, said in a statement.

“As heat pump technology improves, codes like these are necessary to ensure that new buildings are taking full advantage of the benefits that these high efficiency, non-polluting appliances offer,” Plummer said.

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By Ameresco

Across the U.S., cities and states are rethinking how they regulate building energy use. Traditional energy codes, long focused on design and construction, are increasingly being supplemented or replaced by Building Performance Standards (BPS). Unlike prescriptive codes, these policies shift the focus from how buildings are designed to how they actually perform over time.

As climate goals accelerate and aging building stock puts pressure on municipal infrastructure, BPS policies are emerging as a critical tool for reducing emissions, improving building efficiency and modernizing asset management across both the public and private sectors. What began as a policy experiment in a handful of large cities is now becoming a mainstream regulatory approach nationwide.

That shift is becoming more consequential as many jurisdictions move beyond early reporting and benchmarking phases. Building performance standards are transitioning from aspirational policy to enforceable regulation, raising financial and operational stakes for owners of underperforming buildings. Even with uncertainty around federal funding and policy priorities, cities and states continue to advance BPS frameworks as a locally controlled path to emissions reduction and infrastructure modernization.

From One‑Time Compliance to Ongoing Performance

Conventional energy codes typically apply at the point of construction or major renovation. Once a building passes inspection, compliance is largely complete. BPS policies take a fundamentally different approach. They establish energy or emissions performance targets that existing buildings must meet and continue to meet over defined compliance periods.

This shift reflects a growing recognition that real‑world energy use, not theoretical design efficiency, determines a building’s climate impact. By focusing on measured performance, BPS policies aim to drive sustained improvements in operations, maintenance and capital planning rather than one‑time upgrades.

A Growing Patchwork of Policies

Jurisdictions across the country are adopting BPS frameworks, often tailored to local building stock, climate goals and market conditions. While the specifics vary, such as covered building sizes, performance metrics and compliance timelines, the direction is consistent: larger buildings are typically targeted first, with phased deadlines extending to smaller properties over time.

This variability creates challenges for owners with portfolios spanning multiple cities or states. Compliance strategies that work in one jurisdiction may not translate cleanly to another, increasing the importance of flexible planning and strong internal data practices.

Why Data and Documentation Matter More Than Ever

One of the most significant implications of BPS policies is the elevated role of documentation. Compliance extends well beyond utility bills. Building owners are increasingly required to maintain accurate, up‑to‑date records of asset inventories, system conditions, operational strategies and maintenance practices.

For many organizations, especially those managing older facilities, this reveals gaps in institutional knowledge. Legacy systems, undocumented upgrades and staff turnover can complicate compliance efforts. As a result, BPS policies are pushing organizations to formalize asset management practices, treat facility data as a living resource and align energy planning with long‑term capital strategies.

Financial Risk—and Opportunity

Most BPS programs include enforcement mechanisms such as penalties for noncompliance or missed deadlines. In some jurisdictions, fines escalate quickly if owners fail to demonstrate progress or submit required documentation, turning underperformance into an ongoing financial liability.

At the same time, many cities and states are pairing BPS requirements with incentives, grants and financing programs designed to help offset upgrade costs. Utility incentives, public funding and alternative compliance pathways are becoming increasingly common, particularly for projects that deliver measurable energy savings or emissions reductions. Organizations that proactively track performance, plan upgrades and align projects with available funding are better positioned to manage both compliance risk and capital investment.

Operational Change, Not Just Technical Upgrades

While BPS policies often drive investments in efficiency measures, controls and electrification, their broader impact is operational. Successful compliance typically requires coordination across planning, engineering, operations and finance teams.

Preventive maintenance programs, commissioning practices and building automation strategies all play a role in sustaining performance over time. In this way, BPS policies are encouraging a more holistic view of building operations, where energy performance, resilience and lifecycle cost considerations are increasingly intertwined.

Looking Ahead

As cities continue to refine and expand Building Performance Standards, these policies are likely to become a defining feature of the built‑environment regulatory landscape. For municipalities, they offer a way to align climate goals with real‑world outcomes. For building owners and operators, they represent both a compliance challenge and an opportunity to modernize aging assets.

Ultimately, BPS policies signal a broader shift. Energy performance is no longer a one‑time checkbox. It is an ongoing responsibility that is reshaping how buildings are managed, financed and valued in cities nationwide.

New York City was one of the first cities to formally address the effects of climate change with PlaNYC in 2007. The most recent iteration, PlaNYC: Getting Sustainability Done, includes more than 85 initiatives, and the city is on track to accomplish more than 90% of them, Elijah Hutchinson, executive director of the New York City Mayor’s Office of Climate and Environmental Justice, said during a session at NYC Climate Week.

Hutchinson said PlaNYC, which covers everything from energy and jobs to open space and large-scale infrastructure projects, “also serves as a blueprint for New York City.”

Under PlaNYC, the city released its first long-term energy plan, first urban agriculture plan and first environmental justice plan, Hutchinson said. “So, while PlaNYC provides this overall framework, we're finding that there is a lot more need and demand for information and thinking about these problems holistically,” he said.

The Mayor’s Office of Climate and Environmental Justice brought together existing offices of sustainability, resilience, and climate policy with newly created offices of urban agriculture, utility coordination, environmental coordination and environmental remediation, Hutchinson explained. “Now we have climate policy and programs and climate operations coming out of the mayor’s office under one umbrella.”

One important and tangible result of this coordinated effort is a flood-monitoring program called FloodNet NYC, a real-time tool that includes socioeconomic data across neighborhoods “so that we can start to describe how people experience climate change in their communities,” Hutchinson said. His team is also working on the city’s first urban forest plan with a goal of covering at least 30% of New York City with tree canopy.

Local Law 97, which requires buildings over 25,000 square feet to reduce their emissions by 40% by 2030 and reach net zero by 2050, is crucial to helping the city fulfill New York State’s commitment to reach 100% carbon-free electricity by 2040 and economy-wide net-zero emissions by 2050, Hutchinson said. But that law, which passed in 2019, is just the beginning, he added.

“The success of it will be, how do we follow up the law with resources and support for building owners to actually achieve compliance and over time?” he said.

Among those resources is a revamped New York City Accelerator, a “one-stop shop for building owners to go to, to start to develop a plan, identify incentives and start to put together service providers that could help them with this work.” The updated program will include both sustainability and resilience resources, Hutchinson said, and will allow every large building owner in New York City to track and plan their emissions targets and progress.

“One of the things that we're trying to do is make the law palatable and make it work so that we aren't just driving people toward fines,” Hutchinson said. “And what we're saying to people is, ‘We don't want your money. We want your carbon.’ And that's a tricky line to work.”

Municipal policies that encourage energy-conscious building upgrades are the most powerful catalyst for accelerating retrofits, a new report from Economist Impact and JLL found.

An Economist Impact survey of 1,000 senior executives from across the built environment in 12 cities worldwide found that 63% are aware of their city’s retrofitting policies; 55% believe stricter codes would accelerate retrofitting in the next five years, while 52% believe more generous incentives would do so.

“Momentum is growing for demand-driven retrofitting, but adoption is far from where it needs to be,” Cynthia Kantor, CEO of project and development services at JLL, states in the report.

Building retrofitting to reduce or decarbonize energy use “is central to cutting emissions, improving energy efficiency, nurturing public safety and well-being and optimizing urban space,” the report states. In addition to their carbon footprint benefits, retrofits are “providing robust premiums for developers and investors, and creating better spaces to live and work.”

Nearly half — 47% — of survey respondents said retrofitting is more effective than new construction to meet urban space needs.

The ways people work and what they want when they’re occupying buildings is changing, Kantor said in an interview. Available space that fits those needs and works within current regulatory environments is increasingly less available.

“The demand is there for sustainable space, but the largest reason it hasn’t progressed in a greater velocity is because of the near-term financial [impacts] for the investor,” Kantor said. “So, the regulatory environment has to have incentives that go with it and a more comprehensive view of return on investment as well.”

The survey found that mandatory building performance standards and public financial incentives are significantly accelerating commercial and residential retrofits. Cities that integrate these with public sector retrofit leadership and targeted incentives “are better positioned to close the retrofit gap,” according to the report. 

Mechanisms like green bonds, energy performance contracts and shared savings agreements are critical to mobilizing private capital, the report states. But inadequate policy frameworks in many markets are hindering retrofits; 43% of survey respondents said unclear or insufficient regulation and standards get in their way.  

Because a building’s location is a key reason it can lose value, revitalizing entire sections of a city might be necessary to make the math on a retrofit work, Kantor said. “The need to intermix live, work and play is a more and more important trend for the future. This challenge and this opportunity are bigger than an asset, and I think the city leaders who get that and can build strategies with partners in their cities are going to win.

A new building decarbonization road map from Climate Mayors and Veolia North America aims to help public and private stakeholders cut carbon emissions while reducing costs.

The road map helps city officials establish baselines, set goals aligned with the Paris Agreement and state climate targets, secure funding and partnerships, create policy incentives and develop and train a work force that can help meet decarbonization objectives.

The new guide “meets mayors where they’re at on building decarbonization and provides a comprehensive and clear step-by-step guide to what they should be doing,” said Climate Mayors Deputy Director Laura Jay.

Buildings are responsible for about 40% of energy-related carbon dioxide emissions globally. Building decarbonization reduces these emissions through greater energy efficiency as well as by shifting heating, cooling, electricity and other building operations from fossil fuels to electrification and renewable energy.

“The No. 1 reason why city officials want to decarbonize their assets is because the constituency wants it,” said Jack Griffin, senior vice president, sustainable buildings and industries, for Veolia. “When you have a constituency that’s concerned about the future, they’re going to be concerned about decarbonization.”

The Trump administration’s energy policy could slow progress toward building decarbonization by eliminating federal tax incentives for solar and wind, slashing funding for industrial heat pump and efficient boiler programs, rolling back appliance and building code energy efficiency standards, and fast-tracking approval for fossil fuel-based electric plants.

As a result of these policies, the U.S. is on track to add 7 billion metric tons more greenhouse gas emissions to the atmosphere between now and 2030, according to a Carbon Brief analysis.

Funding for building decarbonization “is a changing landscape right now,” Jay said, “but there’s still a lot of opportunity there.” The road map helps cities make up for loss of federal funding by tapping into self-funding, tax-based funding, grants and incentives, public-private partnerships and green bonds.

Decarbonizing city-owned assets can save taxpayers money by lowering those buildings’ utility bills, Jay said. “Mayors are so eager right now to make changes that are going to help the daily lives of people within their city by lowering their utility costs, and that’s really where they’re trying to dig in and learn from each other.”

The road map includes accounts of how cities large and small are decarbonizing their assets. Detroit has committed to reducing carbon emissions in all city-owned buildings by 75% by 2034, while Boston is requiring all large buildings to incrementally reduce emissions with a goal of reaching net zero by 2050. Madison, Wisconsin, is working with local and state housing agencies to reduce energy use in and add rooftop solar to affordable housing; it also has a commercial building emissions benchmarking program.

The report suggests policy incentives that promote building decarbonization, including city ordinances, incentives and fees, and green building recognition and reporting. It cites examples such as Seattle, which passed building codes requiring electric heating in large new buildings, and New York City and Cambridge, Massachusetts, which have implemented emissions reporting requirements along the lines of Boston’s.

Policy incentives for decarbonization can encourage “longevity across mayoral terms and across political terms within the city,” Jay said. 

Charlie Sidoti is the founder and chief executive of InnSure, a mission-driven nonprofit focused on catalyzing a bold insurance response to climate change.

As climate-related disasters become more frequent and severe, the conversation around community resilience has never been more urgent. At the heart of this discussion lies a critical question: How can the U.S. build communities and infrastructure that will not only survive but thrive in the face of natural hazards?

The answer may lie in a fundamental shift in how communities approach building codes, moving beyond one-size-fits-all solutions toward more nuanced, performance-based frameworks that unlock innovation and investment in resilience.

Prescriptive codes don’t account for today’s challenges

Historically, building codes have followed a prescriptive approach, providing detailed specifications for materials, construction methods and design requirements. These types of codes tell builders exactly what to use and how to use it — from the type of fasteners required for hurricane straps to the specific fire-rated materials needed.

While prescriptive codes offer clarity and ease of enforcement, they don’t account for changing hazards, emerging technologies or unique hyperlocal conditions. As our understanding of climate change increases and advancements in fields like wildfire risk management and structural engineering provide deeper insights into building performance, it becomes crucial to incorporate these new findings into new and pre-existing community structures.

Stronger building codes save lives, reduce property damage and create more resilient communities. Yet many communities continue to operate under outdated codes that leave them vulnerable to predictable hazards.

Performance-based codes offer a solution

Performance-based codes focus on desired outcomes rather than specific building methods. Instead of mandating particular materials or construction techniques, these codes set performance standards — such as wind resistant levels, urban conflagration resistance or seismic performance criteria — and allow builders, architects and engineers to choose how to meet those standards. With this approach, communities open the door to innovative solutions, alternative materials and construction methods that may be more effective, cost-efficient or better suited to local conditions than traditional codes allow.

Performance-based codes also provide the flexibility to account for differences in communities and hazards. A coastal community facing hurricane risk has different needs than a wildfire-prone mountain town or an earthquake-vulnerable urban area. Similarly, a house next to a lake warrants different construction than one a mile away from the waterfront. And of course, what works today may also prove to be inadequate tomorrow as hazards constantly change and evolve. These realities demand flexibility in code development, allowing for innovation and adaptation rather than rigid adherence to uniform standards.

Because performance-based codes dictate the end result instead of the building process, there’s a misconception that they reflect less stringent standards. Nothing could be further from the truth. With performance-based codes, if builders elect to deviate from traditional prescriptive approaches, their new building methods can be required to undergo rigorous performance testing and receive certification. In this way, communities can ensure new methods are capable of withstanding potential hazards while providing quality assurance and professional accountability.

When codes focus on outcomes rather than methods, they encourage new materials, construction techniques and design approaches that may exceed traditional standards. This innovation can lead to more cost-effective resilience solutions and, when properly implemented and enforced, can establish a foundation for community-wide resilience that protects not just individual buildings but entire neighborhoods. 

A new approach to building codes can pave the way for weather resilience

Updated codes benefit communities’ financial resilience as well. This could result in reduced insurance rates, increased access to bond markets and ultimately a stronger economic safety net and foundation to rebuild from in the event of a disaster. This is especially critical given reductions in federal funding for prevention and recovery for weather-related disasters.

Collaboration is essential. Code officials need support in developing and implementing standards that account for local conditions. Builders and designers need incentives to exceed minimum requirements and invest in innovative approaches. And communities need access to technical assistance and financing to support code upgrades and enforcement.

By embracing performance-based building approaches, supporting innovation and maintaining flexibility in building methods, we can build communities that aren’t just stronger than they are today but also capable of growing in the face of natural catastrophes.