In 2019, the City Council passed Local Law 97 with ambitious goals to tackle climate change by putting carbon caps on the city’s biggest source of greenhouse gas emissions: buildings.
But for the past three years there’s been little guidance on how owners and managers could achieve the aggressive targets.
On Thursday, the Department of Buildings finally released a series of draft rules that regulate how property owners are able to comply with the law.
But even as some property owners began to figure out how to comply with the law, the lack of specific regulations made it hard for them to move forward. The proposed rules offer some clarity.
“There was a lot of uncertainty until now about any number of issues that are going to be really important to determining how to calculate your emissions, when you have to start doing that in 2024,” said Zachary Steinberg, senior vice president of policy for the Real Estate Board of New York, who emphasized that the rules require further review.
Most building owners the law applies to must comply with the law starting in 2024, and the emissions limits ratchet down in 2030 and 2050. If not, owners could face fines of $268 for every ton of emissions above the limit.
The proposed rules put forth ways to determine each building’s energy use and yearly allowance for the amount of greenhouse gasses it can emit.
The DOB also published a preliminary list of buildings that are subject to the law. Local Law 97 applies to all buildings bigger than 25,000 square feet, including some grocery stores, distribution centers, offices and several kinds of apartment buildings.
The DOB will finalize the rules by the end of the year, after a public hearing on Nov. 14. And in collaboration with a series of working groups, the agency will craft more rules governing how the law works moving forward.
“It’s a major overhaul of New York City’s physical infrastructure over the coming decades so its implementation is critically important,” said Pete Sikora, climate and inequality campaigns director at New York Communities for Change. “The implications are just massive: thousands of jobs and huge pollution cuts at stake.”
Big Targets
The goal of Local Law 97 is to cut buildings’ emissions 40% by 2030 and 80% by 2050 across the five boroughs.
The city has been using its own properties as a test case for the law, taking on more than 10,000 energy efficiency projects among 2,000 buildings since 2014, according to the DOB.
A 2022 report from Center for an Urban Future noted that while those buildings have shown an overall decrease in emissions of nearly 10% since 2014, eight of 25 city agencies’ buildings have actually increased their emissions.
One way building owners can comply with the law without actually making any changes is to buy renewable energy credits generated from solar and wind projects to offset their buildings’ carbon emissions related to utility-supplied electricity consumption. Most electricity that powers New York City is generated from fossil fuels.
The option to purchase renewable energy credits, which the proposed rules don’t limit, will likely benefit the commercial sector — where electricity is a larger share of energy used — than the residential sector. For most residential buildings, the bulk of greenhouse gas emissions come from equipment that provide heat and hot water, meaning credit purchases will only help owners comply so much.
Owners will eventually be able to purchase credits related to two massive energy transmission projects underway to help bring clean electricity to the city, but the law kicks in before those projects are slated to come online.
The energy efficiency rating sign on an office building at 50th Street, Nov. 5, 2021.
Hiram Alejandro Durán/ THE CITY
To physically comply with the caps, building owners can, for instance, replace oil- and gas-burning furnaces and water heaters with more efficient, electric models.
At Luna Park, a Mitchell-Lama co-op of five buildings in Coney Island with more than 5,000 residents, the board is looking to install energy efficient heat pumps, which can keep an apartment warm in the winter and cool in the summer.
“We’re planning to go green and not have a boiler system,” said board president Roman Grinberg. His development, like other income-restricted rental and co-op buildings, won’t have to comply with the law until 2035.
Up in the Air
Without the rules finalized, property owners have questioned what to do to comply with the law, especially since its regulations are up in the air.
“Until all the variables are fixed, it is difficult to make any decisions,” Durst Organization spokesperson Jordan Borowitz said. Durst had previously indicated its One Bryant Park skyscraper in Manhattan might incur $2.4 million of fines under the law.
Several questions about how the law works still remain, and some are expected to be addressed in future rule proposals. For instance, the DOB indicated it would reduce fines for owners who show “good faith efforts,” as the proposed rules state, or face hardships, but has yet to define what those are.
And little information is available about enforcement mechanisms, including how the DOB will mete out penalties and how property owners can seek relief or appeal those.
“These rules don’t directly address those questions about enforcement,” said Danielle Spiegel-Feld, executive director of the NYU’s Guarini Center on Environmental, Energy and Land Use Law.
The city has touted to property owners its NYC Accelerator program, which offers them guidance and resources to make buildings emit less carbon and become more energy efficient.
Laurie Schoeman, director of climate and sustainability in the capital division at Enterprise Community Partners and a member of a group helping to draft the Local Law 97 rules, highlighted the significance of the federal funds poised to flow to New York from the Inflation Reduction Act.
“We as a city need to use that moment and leverage some additional financial support from the feds and the state to help commission these buildings, to help these buildings adapt,” she said. “We’re at a really important inflection point for the city. We have to take advantage of this.”
