Denver is modifying landmark greenhouse gas rules after landlord protests ...Middle East

Denver’s climate change and energy officials are modifying a landmark set of greenhouse gas reduction rules for big buildings after sharp challenges from landlords, but trade groups say the updates don’t go nearly far enough. 

The clashes between business and regulators will only get harder as a host of climate rules across multiple sectors of the economy kick in and business owners start seeing the bills come due. Even in good times, owners and managers of big buildings are wary of new laws that raise their costs, whether adding recycling options for apartments or updating fire codes or telling them their lawn mowing equipment must be cleaner. 

The biggest property owners on the Front Range are fighting hard to lighten big mandates on how they do business, in the form of greenhouse gas reduction and energy efficiency standards from state and city governments. 

Similar to Colorado state rules covering large buildings statewide, Denver in 2021 passed “Energize Denver,” with a target of 30% cuts to Denver buildings’ “energy use intensity” by 2030 and net zero on carbon from building energy in 2040. The city law, which started in 2023, requires owners of large buildings to get extensive energy audits and come back with plans to reduce energy use and carbon output against a 2021 benchmark. 

Though property owners had input all along the way at the state and city level, they started legal pushback against the rules as soon as they went into effect. 

“If you’ve got a multifamily apartment in the city of Denver that say has 200 or 250 units, and it’s going to cost you $10,000 to $15,000 per unit to bring them up to the standards that Energize Denver has, that’s quite a sum of money you’re spending on a property that you hadn’t intended,” said Dennis Supple, president of the Denver chapter of the International Facilities Management Association. “Rents are already high enough.”

A coalition of business groups and property owners sued the state and Denver separately over their similar rules, and the cases are still pending. The building owners and managers asked a federal judge to declare the Denver and Colorado rules preempted by the federal Energy and Policy Conservation Act and therefore unenforceable, and to permanently block state and local government from implementing the rules. 

Denver officials agreed to keep negotiating with the property owners, and have issued a revised set of rules they say eases the timelines for the energy audits and the required targets. They say that owners of 27% of the big buildings affected by the rules are already in compliance for the 2030 targets, up from 15% two years ago when the rules were put in place. 

Denver leaders know property owners have major challenges, including vacant downtown buildings cleared out by commuters fleeing, higher property taxes and more, said Sharon Jaye, policy manager for the Denver Office of Climate Action, Sustainability and Resilience, or CASR. 

“Your building is half-vacant, so you literally don’t have the cash flow to be able to do an energy audit at this time,” Jaye said, as an example. “And so what we would do is get them into the alternate timeline adjustment and work with them on a one-year rotation and say, we’ve got you approved. You’re not going to see any penalties in the meanwhile, we’ll check in with you in a year, see how you’re doing.” 

Denver’s climate office is taking feedback on the new drafts of energy rules through January. Changes do not need to go through a new City Council ordinance. 

But in tweaking the rules, Denver officials are also underlining the importance of the original law: 49% of greenhouse gases coming from Denver are attributed to the energy used in big buildings, said CASR executive director Elizabeth Babcock. Cutting energy use isn’t just good for the environment and the climate, Babcock said, it’s also good business: Many clients want greener buildings, and an efficient building is cheaper to own.

Sustainability and affordability are not mutually exclusive, CASR says.

The property owners and managers are saying to Denver, thanks for working on it, but that’s not good enough. Supple said Denver’s proposed rule changes are not being written into the past ordinance, and could be changed by a new mayor or council. They also rely too heavily still on penalties and coercion, the owners say. 

“We’re all trying to be good partners. It’s not like we drive down the street and throw used motor oil out of our car as we’re going,” Supple said. “We try to keep our buildings as efficient as possible, because that saves me money to spend more money on the things I’d like to spend it on. But when you have government overreach coming in and saying, ‘We don’t like this, you’re going to do this,’ and they have not taken into account what the capital expenditure is on doing that, that’s when we have a problem.”

In filing their lawsuits earlier this year, critics of the state and Denver rules said it will take them billions of dollars collectively to comply, which they call a “boatload” of money from owners without major gains on carbon reduction. Those involved in the lawsuits include the Colorado Apartment Association, the Colorado Hotel and Lodging Association and others. 

Scoring every building 

Denver’s rules set up an energy use index for each building. Property owners can improve their “number” in the index by, for example, changing to clean electric heating sources, installing energy-saving windows and insulation, or even adding EV charging stations. Both existing buildings and new building designs will eventually have to comply with the audits and greenhouse gas cuts. 

Some of Denver’s changes move in the right direction, Supple said, but property owners remain frustrated that Denver is not putting the rule changes into law. 

“Say Mayor Mike Johnson decides he’s going to become Senator Mike Johnston and is no longer in office,” Supple said. “Whoever takes over after that can then say, ‘No, I don’t agree with that. It’s not in the ordinance.’”

While property owner representatives seek changes at the city level, they are also hoping for action in the 2025 legislative session that could soften the impact of Air Quality Control Commission Regulation 28. The target years and percentages are slightly different from the Denver rules, but the intent is the same. 

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“We are having conversations about potential legislation to address some of the concerns,” said Carly West, of the Denver Metro Chamber of Commerce. One push from property owners is to change the baseline year as the starting point for greenhouse gas cuts to 2019, instead of 2021, to reflect actual energy use of big buildings during the more active pre-COVID economy. That would in effect give property owners more credit for changes they’ve made since 2019. 

“But those are all still conversations right now, and as you know, getting from even verbal agreement to passage of a law is a long process,” West said. 

Environmental groups that support the state and Denver greenhouse gas limits for buildings have put their voices in to support the regulators’ existing approach. Sierra Club filed briefs as an intervenor in the trade groups’ lawsuits. 

The Sierra Club said the landlord groups missed their statutory deadlines to oppose the greenhouse gas regulations, or in the city’s case, filed too early, before the rules are fully in effect and can be legally challenged.

The nonprofit also defended the very nature of the new regulations as a crucial part of economywide efforts to reduce greenhouse gases and fight climate change. State and city officials “enacted building performance standards designed to gradually reduce emissions from buildings while providing flexibility to building owners as to how they meet the standards,” the Sierra Club briefs say. And, trade groups filed the suit “rather than do their part to reduce harmful emissions.”

Denver has just completed another series of feedback sessions about the rewritten building rules, said Emily Gedeon, a spokesperson for the city climate office. “Over the past three months, we estimate that we’ve engaged more than 1,400 people in Denver who are building owners, facility managers, energy advisors or consultants, and business owners over the course of 40 public sessions and many individual meetings,” she said. The public has until Jan. 6 to offer more feedback on the drafts, she said.

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