Updated March 11, 2025 at 9 p.m.
The owners and operators of Denver’s biggest buildings have spent years demanding breathing room to meet local regulations requiring them to slash energy usage.
It now appears they’ll get it.
Denver Mayor Mike Johnston announced a proposal to loosen the rules, known as Energize Denver, on Tuesday. He said it came after months of negotiations with landlords and property owners, who have long complained the policy added additional economic turmoil to a real estate industry already struggling with rising costs and high vacancy rates.
“This is the heart of Denver’s brand,” Johnston said. “We are pro-business and we are pro-climate.”
The city is now moving to delay some of the early deadlines and cut penalties for buildings failing to meet the standards. Here’s some of the recent proposed changes:
- Large buildings currently must meet targets to cut their overall energy usage by deadlines in 2026 and 2030. The proposal would extend those deadlines by two years to 2028 and 2032.
- Building owners could apply for further extensions to wait until a heating and cooling system requires replacement. They could also get extensions if they face financial difficulties, such as high vacancy rates.
- The city plans to halve penalties for businesses failing to comply with the regulations
- No building would be required to cut its energy usage by more than 42 percent, which the city said ensures targets are realistic and achievable
- A new rebate program will subsidize staff training programs and energy audits to help buildings find ways to cut overall energy usage.
Elizabeth Babcock, the executive director of Denver's Office of Climate Action, Sustainability and Resiliency, will make the final decision about whether to approve the changes.
One of the first laws of its kind
Denver estimates commercial and multi-family buildings account for nearly half the city’s total greenhouse gas emissions. Approved in 2021, Energize Denver aimed to cut those climate-warming gases from large buildings 80 percent by 2040.
The city later adopted an even more ambitious goal, saying it would eliminate or mitigate local carbon emissions altogether by 2040, putting more weight on the energy efficiency regulations. Those long-term goals aren't changing, but the path to reach them is.
The plan to hit those targets depends on what’s known as a building performance standard. Energize Denver already required buildings larger than 25,000 square feet to benchmark their overall energy usage, which the city publishes on a publicly accessible website.
About 3,000 buildings across the city fall into the category. The city then set unique targets for each building to achieve a 30 percent reduction across the entire portfolio by 2030.
Smaller commercial buildings must comply by using efficient LED lighting or covering 20 percent of overall energy usage with renewables. Other compliance options are available, according to the Denver Office of Climate Action, Sustainability and Resiliency.
Denver was one of the first cities in the United States to adopt a building performance policy. About 28 percent of the city’s large buildings are currently meeting their energy performance targets, up from about 15 percent two years ago, said Sharon Jaye, the Energize Denver Policy Manager for Denver’s Office of Climate Action, Sustainability and Resiliency.
Even with the delays, Johnston said the city is “more committed than ever” to meeting its climate larger goals, which he said we’re essential to ensuring a high quality of life in Denver.
While the city has fallen behind pace to meet its ambitious 2040 climate target, he said his administration is looking for ways to make up lost ground.
The city faced a lot of pressure
Johnston made the announcement in the Midtown Medical Office Building, part of a medical complex in Denver’s uptown neighborhood operated by Intermountain Health Saint Joseph Hospital. The building operators hit their 2030 targets well ahead by automatically turning off lights in unoccupied spaces and slowing the climate control systems at night, said Simhai Natan, an energy engineer for Intermountain Health.
“It’s just a matter of figuring out how we can reduce the runtime of equipment while also still meeting comfort and ventilation requirements and keeping all the occupants happy,” Natan said.
During the tour, Johnston said the achievement proved other buildings often don’t need to make massive capital investments to meet their Energize Denver targets. In many cases, there are clear ways to cut energy usage and costs while simultaneously helping the city inch toward its climate goals.
That’s not an opinion shared by many of the city’s building owners and operators. Last spring, a coalition of trade groups representing landlords, real estate developers and hotels sued Denver in federal court, claiming Energize Denver effectively requires building owners to replace fossil-fuel-powered systems with all-electric alternatives. The suit also targets a similar Colorado building performance standard requiring large buildings statewide to cut overall energy usage.
Energize Denver gives building operators a bonus toward meeting their goals if they get at least 80 percent of their energy needs from electricity, rather than natural gas or other sources. Since a federal law gives the U.S. Department of Energy authority to regulate appliances, the lawsuit claims Denver exceeded its authority by nudging building operators away from natural gas.
Denver officials said the lawsuit didn’t play a role in the latest proposal to give building operators more time to meet the deadlines. Johnston also isn’t sure if the changes would get trade groups to drop their suit, anyway.
“We would be happy for them to do that. That would be fine, but I’m not in those negotiations” Johnston said.
Initial reaction from environmental groups was muted.
Christine Brinker, a senior buildings policy manager for the Southwest Energy Efficiency Project, said it's an unfortunate reality that buildings can't reasonably comply with the current regulations.
"With COVID hitting and increased tenancy, buildings just haven't had the resources to devote adequate attention to energy efficiency and compliance with the program."
The groups behind the lawsuit did not immediately respond to a request for comment.
The city has posted the proposed rules online and set up forms to collect public comments. Denver’s Office of Climate Action, Sustainability and Resiliency plans to hold a virtual hearing on April 1 to hear further public testimony and possibly adopt the changes.
Editor's note: This article was updated with additional comment from Johnston and SWEEP and to clarify how reduction targets are calculated.
