San Francisco is Gridium’s home town, our first market, my local BOMA chapter and in many ways where our journey started. Always a leader in energy efficiency, San Francisco has surprisingly been a laggard in local regulations of building emissions, behind other cities like New York or Boston that implemented strict Building Performance Standards (BPS).
That is changing. Unlike traditional codes that apply only to new construction, San Francisco’s BPS policies also apply to operating buildings. Moreover, they focus on outcomes rather than technology mandates, measuring emissions against targets and leaving flexibility in how owners comply.
Unlike other BPS laws around the country, San Francisco assumes 100% renewable electricity, which therefore have no associated greenhouse gas emissions. The BPS therefore is laser focused on reducing direct carbon emissions from natural gas and other sources.
Put simply, the gas boiler in the basement of your building has no future in San Francisco. Under the city’s goals, emissions from gas have to decrease by 40% by 2035 and be entirely gone by 2040. This is yet another local (not federal) effort that casts doubt on the future of gas for commercial buildings.
The details are in the newly released 2025 Update to the Climate Action Plan (CAP), out for public comment. The goals in the CAP portend a BPS that marks a major development for the West Coast, outlining a concrete path to net-zero GHG emissions by 2040 with specific interim deadlines starting in 2028. Through my volunteer work at BOMA SF, I participated in the two-year stakeholder process. Given what we know, this plan demands attention and strategic planning now:
- The mandate: A BPS policy requiring performance improvements in existing commercial buildings (> 20,000 sq ft), likely adopted by 2026.
- The metric: 100% focus on direct GHG emissions, primarily natural gas. Efficiency gains from electricity use (already mandated to be 100% GHG-free) won’t count towards compliance. District steam usage is currently expected to get a pass.
- The timeline:
- 2028: Deadline for submitting a decarbonization plan
- 2032: First performance target (30% emissions reduction or demonstrated investment)
- 2035: 40% city-wide goal
- 2036: Second performance target (60% emissions reduction or demonstrated investment)
- 2040: Net-zero GHG emissions
- The stakes: Fines for non-compliance, though significant flexibility and potential in-lieu payment options are expected.
Statewide context: SF’s regulations inform California policy
This local effort is a bellwether for statewide action. California’s Senate Bill 48 (2023) instructs the California Energy Commission (CEC) to develop a statewide BPS framework by January 1, 2026. San Francisco’s experience, along with that of other cities like Berkeley and Los Angeles, will directly inform this statewide standard. What happens in SF is likely a preview of broader state requirements, so anyone with California real estate exposure should be tracking this, even if you don’t own in SF.
Asset implications
Whatever the trend in national politics, all real estate is local. San Francisco’s proposed BPS signals a significant shift towards decarbonizing existing buildings, focused squarely on reducing fossil fuel use. Take these practical steps in your organization to help prepare:
- Assess your footprint: Understand your building’s direct GHG emissions now, primarily from natural gas. Gridium users can find this directly in the performance analysis section.
- Assign ownership: Clearly communicate that the risk stays with the landlord, regardless of who controls the meter or energy use. That suddenly makes energy important in triple net scenarios, especially in life sciences.
- Study electrification: As we’ve long said, full electrification is a major economic and technical challenge. A BPS provides a firm timeline, but each building will have to make and commit to a plan.
- Plan capital cycles: Align future boiler replacements and major retrofits with decarbonization goals and BPS timelines.
- Stay engaged: Follow developments closely through resources like Gridium and industry groups like your BOMA chapter.
While details remain to be fleshed out, the trajectory is clear. San Francisco is setting a significant precedent on the West Coast. We’ll keep Gridium customers up to date, and let us know if you want to chat through your building’s plans.
