Potential 2026 budget implications for the District’s buildings
As the Mayor’s FY2026 budget is released, questions and confusion are circling about the future of the Building Energy Performance Standards (BEPS) and Net-Zero Energy (NZE) code. In this blog, we aim to clear up any misconceptions and lay out what is not yet known.
On 5/27/2025, the District of Columbia’s Office of the Chief Financial Office (OCFO) released Mayor Muriel Bowser’s proposed budget, the Fiscal Year (FY) 2026 Budget Support Act (BSA) of 2025, which is the legislative vehicle used to implement the District’s budgets for FY2026 through FY2029, and the BSA’s Fiscal Impact Statement (FIS). The BSA includes some substantial changes to the Building Energy Performance Standards (BEPS), as well as the proposed Net-Zero Energy (NZE) code, which would impact the requirements of both regulations.
So… will the BEPS go away?
While the Mayor’s press release mentions pausing the BEPS, which might suggest a stop and start period, the BSA only proposes delaying the BEPS. And importantly, the BSA does not eliminate them altogether. The Council typically amends the BSA and is expected to do so again. Although the language used in the BSA and the FIS is a bit confusing, the budget is specifically proposing that:
- The BEPS 1 compliance deadline be effectively pushed from December 31, 2026 to December 31, 2032;
- BEPS Period 2, which covers private buildings 25,000 square feet and up, starts January 1, 2034 (currently it is scheduled to start January 1, 2028);
- BEPS Period 3, which covers private buildings 10,000 square feet and up, starts January 1, 2040 (from January 1, 2034);
- DOEE changes the compliance cycle from a fixed length to ending one year before the start of the next cycle. If a building does not meet the BEPS, the deadline for compliance is established as January 1 of the year preceding the beginning of the next compliance cycle. By pushing out the start of BEPS Period 2 this creates a delay of the current BEPS compliance deadline year from 2026 to 2032.
Current BEPS Timeline
| Buildings | First Year of Cycle | Last Year of Cycle | Evaluation Year | |
|---|---|---|---|---|
| Cycle 1 | >50,000 GFA | 2021 | 2026 | 2027 |
| Cycle 2 | >25,000 GFA | 2028 | 2032 | 2033 |
| Cycle 3 | >10,000 GFA | 2034 | 2038 | 2039 |
Proposed BEPS Timeline
| Buildings | First Year of Cycle | Last Year of Cycle | Evaluation Year | |
|---|---|---|---|---|
| Cycle 1 | >50,000 GFA | 2021 | 2032 | 2033 |
| Cycle 2 | >25,000 GFA | 2034 | 2038 | 2039 |
| Cycle 3 | >10,000 GFA | 2040 | 2044 | 2045 |
The BSA made no changes to the BEPS legislation, which states: “In developing energy performance standards, DOEE shall seek to help the District achieve its short- and long-term climate commitments, including reducing greenhouse gas emissions by 60% by 2030 and carbon neutrality by 2045.”
This is notable because a BEPS delay, as proposed, would make it difficult for the District to meet these climate goals.
In the OCFO’s memo to the DC Council, the BEPS changes outlined above were deemed to have no fiscal impact: “DOEE is able to manage the bill’s changes to the compliance timelines within its approved budget” (see pages 54-55).
While this regulatory uncertainty may raise questions about project decisions, the Hub strongly recommends that building representatives continue to move forward with BEPS-related work because the current deadlines and requirements remain in effect.
I didn’t know D.C. had an NZE code. How do the proposed changes affect me?
We don’t have a full net-zero energy code…yet. Currently, the DC Energy Conservation Code includes a voluntary net-zero energy option called “Appendix Z”. Final regulations for an NZE code must be issued by December 31, 2026 or Appendix Z becomes mandatory as required by the Clean Energy DC Building Code Amendment Act of 2021, passed by Council and signed by the Mayor.
Applying to new construction and substantial improvements, the law requires that any building permit submitted starting January 1, 2027 will have to be designed to net-zero-energy standards. Under the Greener Government Buildings Amendment Act of 2022, publicly owned and funded buildings were required to start meeting net-zero energy compliance in 2023. Many buildings actually already follow the requirements, either in part or in whole.
The Mayor’s proposed FY26 budget would delay the requirement to adopt a new NZE code or, in lieu of that, mandatory Appendix Z requirements, to December 2032. Other proposed changes include:
- Changing “net-zero-energy standards” to “net-zero energy ready standards.” This would mean that private new construction and substantial improvements be designed only to “net-zero energy ready,” rather than full NZE. This change would also be applied to the Greener Government Buildings Amendment Act (GGBA) of 2022;
- Requiring onsite renewable energy, while authorizing the Department of Buildings (DOB) to allow the use of onsite fossil fuel combustion in cases where there is “practical” infeasibility;
- Pushing back the date to 2035 (from 2019) by which building inspections, via the DOB, must be conducted to ensure compliance with the standards;
- Removing the requirement for nonresidential District government buildings to maintain net-zero energy operations;
- Changing key definitions related to alteration scope, floor area, and more. Depending on the specific changes, which are not yet known, this could mean major shifts in how the requirements apply to planned projects (either more lenient or more restrictive).
In the OCFO’s memo to the DC Council, it was determined that these proposed changes will have no fiscal impact (see pages 55-56).
What other proposed changes should I be following?
The Sustainable Energy Trust Fund (SETF) is collected from all District commercial, institutional, and residential customers as a surcharge on electric and gas bills (some customers are exempt). The SETF funds programs such as the DOEE, DC Sustainable Energy Utility (DCSEU), the DC Green Bank, BEPS support programs, job training, the Healthy Homes program, and more. The BSA proposes significant changes to the funding of these programs, elimination of the requirement that 30% of the SETF benefits low-income residents, increased energy cost spending by the Department of General Services (DGS), and more.
The BSA also proposes changes to the Renewable Portfolio Standard (RPS), including extending the current DC government’s exemption to 2029, and removing a limitation on the types of Renewable Energy Credits (RECs) that can be purchased by the DGS.
For more details on these, and other proposed changes, read the full budget and the Fiscal Year (FY) 2026 Budget Support Act (BSA) of 2025.
What does this mean for my building and my projects?
These proposed pauses will make it more difficult for the District to meet its own climate goals and to remain a regional- and national- leader in high-performance buildings.
The data shows that over 70% of offices and 68% of multifamily buildings are already meeting the BEPS thresholds, as of March 2025, with many more projects currently underway to meet the 2026 deadline. If you have a building that’s in the middle of the BEPS 1 Compliance Cycle, or you’re a service provider that has adjusted your business model around the current timeline, deadline shifts may feel frustrating and confusing. If you made investments of time and money into improving your building or business, you may be wondering if they were worthwhile.
The answer is ‘yes’ because BEPS and the other programs and regulations described above are still the laws of the land. As of this blog’s publication, nothing has changed related to what you need to do and by when. Even better news: no matter how this shakes out, you’ve invested in energy savings, carbon reductions, improved buildings for occupants, and an increase in knowledge, skills, and services about high-performance buildings.
How can I get involved and stay informed?
The DC Council’s Committee on Transportation & the Environment will hold hearings on these proposed changes:
- June 6, 2025 Budget Oversight Hearing, government witnesses only: on the Department of Energy and Environment, Green Finance Authority, and DC Water
- June 13, 2025 Budget Oversight Hearing, public witnesses only: on the Department of Energy and Environment, Green Finance Authority, and DC Water: Submit testimony, register to testify, or save date to listen in on the conversation.
Of course, stay tuned in to the Hub for the latest developments. Follow us on LinkedIn, where we’ll be posting updates, and make sure you’re signed up for our newsletter.