The Rise of Performance-Based Codes: Why Efficiency Scores Matter More Than Reports

For years, energy compliance programs across California operated on a predictable rhythm: benchmark your building, submit the report, and move on until next year. It was a system built around transparency, not performance. As long as you provided the data, you met the requirement.

That era is ending.

Cities including Los Angeles, San Francisco, Berkeley, and San Jose are shifting toward performance-based codes, where the key question is no longer “Did you report?” but “How well does your building actually perform?” The message from regulators is clear: reporting is only the starting point. What matters now is outcomes.

This shift is reshaping how building owners approach compliance, operations, and long-term planning. Here’s why this transition matters and what it means for your property.

Why reporting is no longer enough

Programs like the Los Angeles EBEWE Program, BESO Benchmarking in Berkeley, and the San Francisco Existing Buildings Ordinance started by gathering energy and water data from thousands of buildings. Regulators now have years of benchmarking information and know exactly how each building type performs.

That data exposed a gap: many buildings comply on paper but still operate inefficiently. Submitting a benchmarking report does not mean a building is running well. With this knowledge, cities are shifting toward requirements that measure results.

This is where performance-based codes come in. Compliance is no longer defined by participation. It is defined by impact.

Under these updated standards, buildings that fall below the city’s performance thresholds must complete audits, implement retrofits, or submit corrective action plans. The focus has moved toward measurable improvements rather than simple data disclosure.

Performance-based codes make efficiency a year-round responsibility

Traditional benchmarking made compliance an annual checklist item. Submit the data, keep a record, repeat next year. Performance-based standards are more demanding.

Cities now consider:

• Actual energy usage intensity

• Greenhouse gas emissions

• Equipment efficiency

• Peak demand

• Water consumption

• Progress over time, not just a static score

This shift turns compliance into a continuous operational expectation rather than a once-per-year task. It requires planning, documentation, and active management of the building’s energy profile.

For many owners, this is a major mindset shift. But it is also an opportunity to bring more discipline and visibility into building performance.

Investors and tenants now care deeply about energy scores

Energy performance once lived in the engineering department. Today, it lives in the boardroom.

Several trends are driving this change:

• Institutional investors rely on building performance data to evaluate risk.

• Tenants increasingly look for efficient buildings with transparent consumption data.

• ESG reporting has made energy benchmarks a key metric for real estate portfolios.

• Lenders often look more favorably on buildings with documented efficiency improvements.

A strong performance score signals a well-managed property. A weak one raises questions about future operating costs and potential compliance risk.

In this environment, performance-based codes are not just regulatory mandates. They influence how buildings compete for tenants and capital.

Performance expectations drive real operational improvements

One of the biggest criticisms of benchmarking programs is that many buildings submit reports without taking action. Performance-based codes eliminate that possibility. Once a building falls below the required threshold, cities require corrective steps such as:

• ASHRAE Level II Energy Audits

• Retro-commissioning

• On-site efficiency upgrades

• Metering improvements

• Fault detection and diagnostics

• Electrification readiness planning

These requirements push owners to address long-standing inefficiencies. And the benefits of these improvements often outweigh the cost of compliance.

Upgrades such as HVAC recommissioning, lighting controls, sensor-based ventilation, and equipment optimization deliver:

• Lower utility costs

• Longer equipment life

• Reduced maintenance issues

• Better tenant comfort

• Higher building value

In other words, mandatory action often becomes a financial advantage.

Why early movers will avoid future disruptions

California’s energy and carbon policies are tightening quickly. Cities are introducing:

• Shorter deadlines

• More frequent reporting

• Stricter performance thresholds

• Greenhouse gas reduction targets

• Electrification requirements

• Building emissions caps

Performance-based codes will expand, not contract.

The buildings that upgrade early will avoid expensive, last-minute projects when new rules take effect. They will also be less vulnerable to fines, mandatory retrofits, or accelerated compliance timelines.

Waiting increases cost. Acting early increases stability.

Performance-based compliance changes how owners plan budgets

Traditional compliance required almost no operational investment. Performance-based codes are different. They push owners to budget for efficiency improvements, not just reporting requirements.

Forward-thinking building owners are now incorporating:

• Five-year capital planning

• Predictive maintenance

• Energy management systems

• Electrification roadmaps

• Lifecycle cost analysis

• Utility optimization strategies

This level of strategic planning strengthens financial performance and reduces the chance of large, unexpected expenses later.

Performance is becoming the new industry standard

Across California, the shift is consistent:

• Los Angeles EBEWE uses audits and RCx for under-performing buildings.

• San Francisco is transitioning toward performance-based emissions targets.

• Berkeley BESO requires prescriptive improvements tied to audit results.

• San Jose BPO is collecting data that will feed into future performance policies.

This unified movement signals the direction the industry is heading. Buildings are expected to do more than report. They are expected to improve.

The Takeaway

Performance-based codes represent a major evolution in how cities, owners, and operators think about energy use. We are moving from transparency to accountability and from reporting to results.

For owners, the central question is no longer:

“Did we submit our benchmarking data?”
It is now:
“Is our building performing well enough to avoid mandatory intervention?”

This shift is not something to resist. It is an opportunity to build a stronger, more efficient, and more resilient property for the long term.