We have previously discussed the value of proper management of Scope 1 and Scope 2, the emissions category attributed to the building where manufacturing occurs as a reduction of operating expenses beyond an ESG Report. There is another benefit to proper management of the facility itself: mitigation of noncompliance with local regulatory requirements. Although at a national level, there is no requirement regarding the efficiency of a building, more cities, counties, and states are adopting stricter standards. As local jurisdiction set goals to transition toward net zero, a new regulatory tool has moved to the forefront: Building Performance Standards (BPS). While traditional building codes dictate how a structure must be built, BPS mandates how it must perform throughout its life. For manufacturers, this shift represents a double-edged sword—offering a new market for high-efficiency products while simultaneously imposing strict operational requirements on their own industrial footprints. What Are Building Performance Standards? Building Performance Standards are state or local laws that require existing buildings to meet specific targets for energy use or greenhouse gas (GHG) emissions. Unlike "benchmarking" laws, which only require owners to report data, BPS laws require measurable improvement. If a building exceeds its carbon or energy "budget," the owner faces significant financial penalties. As of 2026, the policy landscape has matured, with numerous major jurisdictions moving from data collection into active enforcement. Active BPS Jurisdictions The following 17 jurisdictions are among those that have enacted Building Performance Standards:

1. New York City, NY (Local Law 97)


2. Washington, D.C. (BEPS)


3. Boston, MA (BERDO 2.0)


4. State of Washington (Clean Buildings Act)


5. State of Colorado (HB 21-1286)


6. Denver, CO (Energize Denver)


7. Seattle, WA (Clean Buildings Performance Standard)


8. St. Louis, MO (Building Energy Performance Standard)


9. Montgomery County, MD


10. State of Maryland (Climate Solutions Now Act)


11. Portland, OR


12. Cambridge, MA


13. Chula Vista, CA


14. Ann Arbor, MI


15. State of Oregon


16. Evanston, IL


17. West Hollywood, CA

It is important to note that additional markets have made commitments to implement BPS requirements in the next few years. A good organization to monitor to track these upcoming requirements is IMT.org The Price of Non-Compliance: Fines and Penalties The penalties for failing to meet BPS targets are designed to be more expensive than the cost of the upgrades themselves, effectively "forcing" the market toward efficiency. In New York City, buildings that exceed their carbon limit face an annual civil penalty of $268 per metric ton of CO2 over the limit—a figure that can result in million-dollar fines for large-scale industrial or commercial facilities. Other jurisdictions, like Washington, D.C., may levy fines up to $10 per square foot, while cities like Seattle and Boston utilize daily fines ranging from $150 to $1,000 per day for continued non-compliance. Beyond direct financial hits, many laws include "public shaming" provisions, where non-compliant buildings are listed on public databases, potentially damaging the brand reputation and asset value of a manufacturing firm. How BPS Affects Manufacturers The impact on the manufacturing sector is twofold: it transforms the demand for manufactured goods and changes how manufacturing facilities are managed. A Surge in Demand for Efficiency Technologies BPS creates a "forced" market for building components. To avoid the penalties mentioned above, owners are investing heavily in:

• High-Performance HVAC: A shift away from fossil-fuel boilers toward industrial-scale heat pumps and VRF (Variable Refrigerant Flow) systems.


• Envelope Materials: Increased demand for high-R-value insulation, smart glass, and advanced sealants.


• Automation & Controls: Sensors and Building Management Systems (BMS) that use AI to optimize energy loads in real-time.

Operational Pressure on Industrial Facilities Manufacturers are not just suppliers; they are also building owners. Large-scale manufacturing plants often fall under the square-footage thresholds of BPS (typically buildings 20,000 to 50,000 sq. ft. or larger).

• Retrofit Mandates: Manufacturers must audit their own facilities and implement "Operations and Maintenance" (O&M) programs to meet 2026 targets.


• Process vs. Building Energy: While some BPS laws provide exemptions for industrial process energy, the "building shell" (lighting, heating, and cooling for the workforce) is increasingly under scrutiny.

Supply Chain Transparency Because BPS focuses on carbon impact, there is a growing trend toward analyzing Embodied Carbon. Manufacturers are now being asked for Environmental Product Declarations (EPDs) to prove that their products aren't just efficient to use but were also produced with a low carbon footprint. Conclusion Building Performance Standards have shifted the conversation from "green building" as a voluntary badge of honor to a mandatory financial necessity. For U.S. manufacturers, the winners will be those who can provide the hardware and software required to decarbonize the nation's infrastructure, while simultaneously modernizing their own facilities to remain compliant.