How Will Cap-and-Trade Bill Affect Real Estate In United States.

The Cap-and-Trade bill H.R. 2454, the legislation that was approved on June 26th 2009 by the U.S. House of Representatives, if passed is expected to affect the real estate sector in the country. The main provisions related to real estate are as follows –

The Department of Energy or DOE would be establishing energy efficiency targets that are linked to standards set for the commercial buildings under ASHRAE or American Society of Heating, Refrigerating, and Air-Conditioning Engineers Standard 90.1-2004. This also holds true for homes included under 2006 International Energy Conservation Code.

Within one year of the enactment of this legislation, the local government as well as the state government will be required to either revise the building codes or follow the national code so that the federal standards could be met. In those states where the local government adopts the building codes, it is mandatory for the state to document that the building codes were complied with by majority of the people residing in that state. The HUD or the Department of Housing and Urban Development would be helping in the enforcement of the same.

Real estate implication of the Cap-and-Trade bill

The Cap-and –Trade bill is expected to bring about the following changes in the real estate sector provided the bill is passed into a law towards the later part of 2009. This can be better understood by going through the following quote. This statement was made by Michael Zimmer, who is associated with American Bar Association’s Carbon and Energy Trading and Finance Committee.

He notes “The legislation, if enacted, is transformative. Residential and commercial buildings, multifamily and low income housing, new and existing buildings, development and real estate finance will all be impacted. The surprise is how quickly the time frames are proposed. The reasons appear centered on the substantial opportunity buildings offer, with almost 48 percent of all greenhouse gas emissions and 70 percent of projected electricity use over the next decade”.