A Review of the Current Net-Zero Energy and Net-Zero Carbon Certification Programs

This blog was originally posted by BuildingGreen on July 7, 2020.
Written by Joshua Radoff.

Image: Joshua Radoff/WSP
For some time now, the ultimate goal for building sustainability, at least with regard to energy and carbon, has been the achievement of net-zero energy (NZE). The original definition is fairly well known and understood—that of producing all of the building’s annual energy needs with onsite renewable energy; but that original definition, which I’ll call NZE 1.0, is now all but defunct.

Until recently, there was just one game in town with regard to NZE or net-zero carbon (NZC) certification. That was the International Living Future Institute’s (ILFI) NZE standard, which, by introducing its offsite renewable procurement option several years back, started laying the groundwork for moving away from the original NZE 1.0 definition. It’s worth mentioning that there was also a DOE definition for NZE, but it wasn’t ever a certification program and isn’t widely used or referenced.

With the expansion of ILFI’s program to include NZC, the introduction of LEED Zero—which has both Zero Energy and Zero Carbon certification programs (in addition to separate Water and Waste programs), and the emergence of Architecture 2030’s Zero Code program, there are now several options for NZE and NZC certification. On top of all these, Passive House Institute US has introduced a “Source Zero badge” as an add-on to its PHIUS+ certification.

Each program takes a slightly different approach—variations on a common theme—and those approaches raise some important questions and represent a proposed response to those questions. These questions and the associated responses are important: they can serve as a blueprint for states and cities that are considering code
pathways and stretch code programs targeting zero energy and carbon at some point in the near future.

What level of energy efficiency is required?

It has always been possible to have an NZE building without it being an energy-efficient building. You just need to add enough onsite solar to offset whatever your energy consumption may be. The shorter your building, or the more parking area you have, the less efficient it has to be, given that  the building’s ratio of roof to floor area decreases with additional floors, and you can add solar on surface lots or the tops of parking garages. So it raises the question, should your efficiency be a function of the available area for solar collection? And if not, what’s the minimum level of efficiency that should be required for NZE or NZC?

LEED Zero requires LEED certification, which includes a minimum energy efficiency threshold. LEED Zero doesn’t impose any additional efficiency requirement beyond that.

Zero Code requires that projects meet ASHRAE 90.1-2016 or Title 24 2019 but doesn’t require further efficiency.

ILFI’s NZE program requirements state that projects should achieve “the highest levels of efficiency” before they can use offsite renewables. In other words, while unlikely, single-story buildings could get away with no efficiency improvements if they wanted to, as long as all of the renewable energy was located onsite. Meanwhile, for their NZC program, they require a 25% reduction from ASHRAE 90.1-2010 for new buildings, and for existing buildings a 30% reduction from CBECS (the database behind Energy Star Portfolio Manager) for similar building types.

It’s worth noting that the efficiency metrics above fall into the “percent reduction from a baseline” category and none include metrics that are focused on annual heating or cooling use, or load reduction. The latter appear in the Passive House metrics, as well as in many of the Canadian codes that use the thermal energy demand intensity metric (TEDI—like an EUI for thermal energy), or envelope-specific requirements such as weighted average U-value or max infiltration rates. These are approaches that many cities are instituting as they update their codes and may eventually enter into the NZE/NZC lexicon in future iterations.

Is combustion allowed?

This is a tricky one. There is widespread agreement that electrification is a necessary element of reaching zero fossil energy and carbon impact. The challenge is that there are grid regions in the U.S. and abroad (e.g., Australia) where the grid still contains a fair amount of coal, which translates to a higher grid emissions factor (check out what your grid is doing now at ElectricityMap). However, as more and more coal plants are retired, and more and more renewables come online, the grid is getting cleaner each year. But clean enough? Generally, yes, if we’re talking about electrical use with heat pumps, which have efficiencies greater than three times that of natural gas appliances. In some places, like New York and California, the grid is clean enough that even electric resistance uses have lower greenhouse gas (GHG) impact than gas uses. But we should be advocating for heat pump usage wherever possible.

The fact that electricity is more expensive than gas—generally around three times the cost per unit of energy—is often raised as a barrier to electrification. With also three times the efficiency gains, this ultimately gets leveled out, although it may mean that a first-cost investment to electrify HVAC systems doesn’t pay itself back, given that there are huge efficiency gains and GHG reductions without the corresponding cost savings. Of course, none of this accounts for the enhanced air quality that results when we remove combustion from buildings. This is especially significant in residential contexts and should be considered in this question as well.

LEED and Zero Code take the approach that onsite gas combustion is still ok. ILFI has never allowed it. None use a current or near-term projection of the local grid emissions factor as a determining factor. But given that the grid is already clean enough—or likely will be in the next ten years in most of the U.S.—to yield GHG reductions with heat pumps relative to gas, simply requiring electrification is likely the simplest approach. Program efficiency requirements would then keep projects from finding a loophole and using electric resistance as their heat source.

Performance versus design?

Most people would likely agree that a building that achieves NZE or NZC in actual operation is better than one that is just designed to do so. The former provides a level of accountability requiring a year of actual data collection to demonstrate achievement, while the latter allows for some general assumptions around occupancy, weather, equipment performance, and, most importantly, user behavior. As a result, both USGBC and ILFI take a performance-based approach, while Zero Code’s is design-based. The reason for the Zero Code approach is that it is intended to be just that: a code; to be used in permitting projects, so it makes sense for it to take a design-oriented approach.

What Scope 3 aspects are required to be accounted for?

This is where things really start to get interesting. If a project wants to claim to be zero carbon, must it holistically address its biggest sources of emissions? In the GHG accounting world, Scope 3 emissions are those that are not directly attributable to a given organization, but for which the organization has some control or influence. In the building space, this typically includes transportation-related emissions (if you locate a building in a place that requires everyone to drive to it, then you’re causing emissions to take place) and embodied material emissions (all of the steel and concrete that make up the building require a lot of energy and cause significant emissions of GHG in their sourcing, production, transportation, and disposal). This idea could also be broadened to include any building use that has significant upstream or downstream emissions. For example, if I certify an NZC restaurant, should I include the GHG impact from the food? Doing so would motivate me to source locally and organically and reduce meat consumption. Or should this be outside the scope of our GHG accounting?

Currently, both LEED Zero Carbon and ILFI’s Zero Carbon programs require the accounting for and offsetting of some Scope 3 emissions. ILFI requires that embodied carbon (from materials) be included and reduced by at least 10%, while LEED requires that transportation-related emissions be included and offset. USGBC has indicated that embodied carbon from materials will be included in future LEED Zero Carbon updates, and it may be that ILFI will follow suit on transportation.

What about refrigerants? Interestingly, refrigerant emissions are not Scope 3; they are Scope 1, meaning they are directly emitted by a project via leakage from HVAC systems. And while LEED BD+C includes a credit for Enhanced Refrigerant Management, the LEED Zero programs, as well the rest of the programs described, all omit the accounting of refrigerant emissions. This becomes increasingly important as VRF systems, which use much higher refrigerant charges than hydronic systems, become more and more popular, in part to support electrification goals. Given this, it is likely that these programs will all address refrigerant emissions in their updates going forward.

How much onsite renewable energy is required (versus offsite)?

Most projects will need some quantity of offsite renewables to reach their net NZE or NZC goals. Shorter, unshaded buildings; buildings that have surface parking that can be used for solar; or buildings that can use novel façade solar might be able to achieve 100% onsite NZE or NZC, but most projects will likely need to explore an offsite renewables option. USGBC simply states that onsite options, which they label Tier 1, should be pursued first. Once those are exhausted, offsite options may be used. They go on to define additional tiers, with Tier 2 being the highest valued offsite renewable option.

ILFI takes a different approach for NZE and NZC. For NZE, it requires that 75% of the roof be used for solar before offsite options are used. For NZC, it doesn’t stipulate how much onsite is required. Zero Code, meanwhile, calculates the amount of onsite renewable energy that can be installed, which is roughly tied to a percentage of roof area being used for solar.

All programs encourage offsite renewables to be relatively close to the site, generally within the same grid region. However, given that there are grid regions in the country that could badly use some more renewables to displace coal, namely in the Midwest and Southwest, USGBC also has a provision in its Tier 2 definition that accepts renewables in grid regions that are less clean than your own as well.

All NZE/NZC programs also grapple with the question of additionality with regard to offsite renewables. Additionality attempts to determine whether a project would have happened or not without your influence; that is, whether it is additional to what would have happened in a business-as-usual scenario. It’s a bit of a unicorn of a metric since it’s very hard to determine what would have happened in different scenarios. But it’s important since projects and NZE/NZC programs generally want their offsite renewable energy resources to be credible and adding as much environmental value to grid as possible. This is a departure from the previous generation of unbundled renewable energy credits (RECs), whose credibility was often questionable.

USGBC takes the simple approach that if a renewable installation is relatively new, then they’re willing to call it additional. If it’s been around for a while, then your interest in purchasing a share of it certainly wasn’t the push that caused it to come online. This doesn’t take into consideration that fact that there are lots and lots of new wind and solar projects coming on all the time because the economics are there to make it work (but that’s true for onsite renewables as well). USGBC considers anything built within the last five years new and designates it as either Tier 2 (local) or Tier 3 (non-local), which are the highest value tiers of offsite renewable energy. USGBC takes the approach that each tier should be explored before moving to the next one. So if you can install onsite solar, you should start with that. Then if you can use Tier 2 for the balance of your offsite renewable energy needs, you need to do that. If not, you move on to Tier 3, and so on.

ILFI takes a slightly different approach to offsite renewables. For NZE, as well as for the full Living Building Challenge and Energy Petal certifications, there is an Offsite Renewables Exception document that describes the requirements, which include being local, additional, and not ecologically harmful (and no unbundled RECs). In their NZC guidance on the subject, the options are slightly broader: they exclude a requirement for the offsite renewables being local, but they maintain the additionality requirements. They further define the specific types of offsite renewables that qualify, including outright ownership, power purchase agreements, community solar, renewable energy investment funds, or “other forms approved by the ILFI which are consistent with the intent of the certification.”

Finally, Zero Code takes yet another approach, and it includes an exhaustive guidance document on the topic. Their general approach is to define the various offsite procurement options (similar to ILFI), define a few minimum requirements such as minimum term (15 years), renewable energy technology, and project location, and then apply a discount factor to each option to denote diminishing value relative to onsite renewables. Discount factors range from 0.75 for self-owned offsite installations, community solar gardens (CSGs), or virtual power purchase agreements (VPPAs), a score of 0.55 for Green Tariffs (i.e. utility renewable purchase programs), and 0.20 for unbundled RECs. That means that the less additional your resource, the more of it you need to zero out your project. For a CSG, you’d need about 1.3x the amount of annual building consumption energy since CSGs have a discount factor of 0.75 to be Net Zero Energy (0.75 x 1.33 =1.0), or 5x the renewable energy from REC purchases with a discount factor of 0.2.

Which programs include Time of Use (TOU) carbon accounting?

TOU carbon accounting is going to be an increasingly important trend in the world of NZE and NZC programs, as well as for corporate-level GHG accounting activities. The current practice is to use a single average emissions factor for your grid region for the entire year. This would be ok if your building used a uniform amount of energy year-round. However, buildings have load profiles that vary hourly, daily, and seasonally, as do renewable resources. Therefore, the actual impact of your building depends on what the grid is doing when your building is using electricity or when your solar installation is producing it. If you are in a grid region where there is already a lot of solar, then that grid will likely have a low emissions factor in the middle of the day when the sun is shining. As a result, adding more solar offsets only a very low hourly emissions profile. However, if you store that solar until evening, it may be offsetting a much higher emissions factor. In fact, projects could be NZC with less solar than it would take to be NZE if storage or other load shaping were used to optimize the TOU carbon impact of energy consumption or renewable production.

USGBC’s NZC program allows for either TOU or annual average emissions factors to be used. This is in part due to the lack of a widespread and free source of TOU emissions data. USGBC references EPA’s AVERT tool, which is serviceable, but clunky, and the data it references is a few years old. WattTime offers paid data that is either an average of the three years or a real time API. ElectricityMap also offers a paid data source. Lastly, NREL is developing a dataset called Cambium, which will have current and projected hourly grid emissions factors, which could be a gold mine for designing future-oriented buildings. Eventually, grid operators will start publishing this data and making it easier for projects to access and use it. Even better, utilities may start structuring their rates to incentivize load shifting for maximum GHG reduction impact. For now, USGBC’s perspective seems to be that if you don’t want to wade through the morass of data sources, it’s ok to use the clunky annual average eGrid numbers published by the EPA. ILFI is silent on TOU emissions factors.