How Washington, D.C. Is Using Building Energy Performance Standards to Incentivize Green Construction
By Emmy Marlatt, Impact Associate
Washington, D.C. faces a structural challenge common to dense urban environments: the majority of its greenhouse gas emissions come not from cars or power plants, but from buildings. With buildings responsible for more than 70% of citywide emissions, the District has set an ambitious target of reducing greenhouse gas output and energy consumption by 50% by 2032. To meet that goal, D.C. has moved beyond voluntary green certification programs and enacted one of the most comprehensive mandatory building performance regimes in the United States. The Building Energy Performance Standards (BEPS) program, established under Title III of the Clean Energy DC Omnibus Act of 2018, represents the nation's first building performance standard of its kind. Understanding how BEPS operates, and how it is supported by a layered architecture of financial incentives, offers a valuable case study in the design of urban climate policy.
BEPS sets a minimum energy performance threshold based on property type and local energy star scores. It applies to most buildings over 10,000 square feet and is rolled out in three six-year compliance cycles. The first cycle covers privately owned buildings over 50,000 square feet, with enforcement starting in 2027. Buildings that meet the standard only need to keep submitting energy data, while those that fall short must choose a compliance pathway and show improvement. Non-compliance can result in penalties up to $10 per square foot, capped at $7.5 million per building.
To balance penalties, D.C. offers financial and technical support. The DC Sustainable Energy Utility (DCSEU) and the DC Green Bank jointly offer technical and financial assistance to building owners navigating compliance pathways. For the most vulnerable segment of the building stock, the District has designed a targeted program: the Affordable Housing Retrofit Accelerator (AHRA), a partnership between the DCSEU, DOEE, and the DC Green Bank, offers enhanced technical and financial assistance to owners of qualifying affordable multifamily buildings that do not meet BEPS. Federal funding from the Department of Energy further supports energy efficiency upgrades for these buildings.
The alignment between BEPS and federal tax incentives adds another dimension to the incentive architecture. The Inflation Reduction Act's updated Section 179D deduction now allows existing commercial buildings to claim deductions based on actualized energy savings, ranging from $2.50 to $5.00 per square foot. Because EPS compliance steps, like creating a retrofit plan and documenting energy reductions, match 179D requirements, building owners can offset costs and even turn compliance into a financially smart investment.
Large institutions in the city are affected too. Georgetown University, which houses buildings that cover a large sum of land, must plan upgrades to meet BEPS standards. While the university has sustainability programs in place, BEPS adds binding targets, encouraging retrofits in areas like HVAC, insulation, and electrification. Georgetown can also leverage DCSEU support and federal tax incentives to help offset costs.
Despite its design strengths, BEPS is not without tension. Equity concerns remain the program's most persistent challenge. Under D.C.'s rent control law, buildings that undertake capital improvements can increase rents by up to 20% to recover improvement costs, meaning that BEPS compliance, even when financially supported, carries the risk of displacing the very low-income tenants the AHRA program is designed to protect. The expiration of key federal incentives adds further uncertainty: Section 179D is now only accessible for projects that begin construction by June 30, 2026, after which the deduction ends for new projects. Whether D.C. can sustain the momentum of its carrot-and-stick model without the federal revenue flows that currently underpin it is an open question, and one that other cities watching the BEPS experiment will be asking closely.
Sources:
https://www.dcseu.com/resource-library/beps
https://doee.dc.gov/publication/dcseu-quarterly-and-annual-reports
https://doee.dc.gov/service/federal-dollars-work-district
https://buildinginnovationhub.org/special-update-beps-rules-released/
https://doee.dc.gov/service/building-energy-performance-standards-beps
