Part of NRDC's Year-End Series Reviewing 2019 Climate & Clean Energy Developments
NYC took a tremendous leap forward this year to reduce its greenhouse gas footprint with the adoption of its landmark building decarbonization law.
Local Law 97, enacted on May 19, 2019, as part of the City’s Climate Mobilization Act, builds upon the Big Apple’s already impressive and extensive history of reducing energy consumption in buildings and tackling the emissions that cause climate change. Not only will the law result in significant local benefits, but it also lays the groundwork for similarly ambitious actions to address the biggest environmental challenge of our time in other cities around the country.
The largest proportion of greenhouse gas emissions in New York City comes from generating the electricity for lights and appliances and burning fossil fuels for heat and hot water in buildings, demonstrating why Local Law 97 is such a big step forward in reducing citywide carbon emissions.
Building Emission Limits
Local Law 97 applies to buildings that are greater than 25,000 square feet, which covers approximately 50,000 buildings and nearly 60 percent of the square footage in New York City, according to the Urban Green Council. These buildings, referred to as “covered buildings,” are assigned an annual emissions cap starting in 2024, tied to their primary energy use and square footage. This cap decreases over time to achieve the significant reduction in emissions from the buildings sector to meet the city’s overall 40 x ‘30 and 80 x ‘50 greenhouse gas reduction goals, leveling out in 2050 to an average of no more than 3.09 pounds or 1.4 kilograms of CO2e per square foot per year.
The law represents a necessary evolution in approach—after years of empowering building owners with data and information about how their buildings use and could save energy through the Greener Greater Buildings Plan and subsequent initiatives, New York City has moved to requiring that building owners take action. On July 30, 2019, New York City also enacted legislation (Local Law 147) containing technical amendments to Local Law 97.
Deep decarbonization of our building sector won’t happen overnight, which is why Local Law 97 creates progressive benchmarks:
- It establishes specific greenhouse gas limits for two initial compliance periods:
- 2024-2029, estimated to affect 20 percent of buildings covered by the law, and
- 2030-2034, estimated to affect 75 percent of covered buildings.
- By January 2023, Department of Buildings (DOB) must establish limits for compliance periods 2035 through 2039, 2040 through 2049, and 2050 and beyond.
Meeting Emission Reduction Requirements
The caps that are applicable to each building are determined by multiplying the building emissions intensity limits (metric tons of CO2e per square foot) established in the law for the applicable building category by the building’s gross floor area. (Different limits are assigned to each of ten different categories or “occupancy groups” included in the city’s Building Code.)
To determine whether a building is below its cap each year, the amount of energy consumed in the building from each energy source (think: fossil gas, fuel oil, electricity) is summed. Those amounts are then multiplied by the “greenhouse gas coefficient” (in the form of metric tons of CO2e per thousand British Thermal Units (kBTU) or kilowatt-hour) set forth in the law (for 2024-2029) or established subsequently by DOB rule (for 2030-2034 and later). Buildings can also opt to calculate their electricity emissions based on the emissions at the time-of-use to incentivize electricity use at times when the grid is cleaner, such as at night.
Buildings that are in excess of their limits will need to implement energy efficiency upgrades or adopt other clean energy measures. These upgrades will be made easier for some owners with the establishment of a finance tool, which was also adopted on May 19th through companion legislation, Local Law 96. The NYC Property Assessed Clean Energy (C-PACE) program will allow building owners to finance energy efficiency retrofits and other clean energy measures through an assessment on their property tax bills.
Local Law 97 appropriately provides some flexibility for building owners in how they comply, but reducing energy consumption should represent the lion’s share of how emissions are reduced in their buildings. Energy efficiency results in numerous benefits for building owners, tenants, and other New Yorkers beyond the reduction of greenhouse gas emissions, including energy cost savings, the creation of local jobs, enhanced grid reliability, and the reduction of other harmful pollutants.
The city, state, and utilities will need to integrate their efforts and programs to the greatest extent possible to provide much-needed resources for building owners as they work toward achieving the requirements. Utility and state programs that offer financial and technical assistance for deep energy efficiency retrofits will be critical, as will New York City’s Retrofit Accelerator, which will need to be scaled up in both scope and depth.
Building owners may also lower their calculated emissions through deductions, including through the purchase of Renewable Energy Credits (RECs), greenhouse gas offsets, or the installation of Distributed Energy Resources (DERs) such as rooftop solar.
The parameters associated with these deductions are as follows:
- Renewable Energy Credits:
- The renewable energy resource that generates the RECs must either be located in or “sink” into New York City’s electricity load zone
- RECs must be solely owned and retired by, or on behalf of, the building owner
- RECs must be created in the same year that the building owner uses them
- The building that hosts the system producing the renewable energy cannot also receive a deduction for clean DERs, as described below
- Clean Distributed Energy Resources:
- Clean DERs include energy generated from hydropower, solar PV panels, wind, geothermal, tidal, waves and energy storage systems
- Clean DERs must be located on or directly connected to the building
- Electricity generated from a DER cannot also receive a deduction as a REC
- Greenhouse gas offsets:
- Offsets must exhibit environmental integrity principles, including additionality, meaning that the offset project isn’t already required
- Offsets must be purchased, publicly registered and retired on or on behalf of the owner according to the offset standard that will be developed by DOB
- Offsets can only count as a deduction for up to 10 percent of a building’s annual emissions limit
The law also requires that a study be conducted on the feasibility of a citywide trading program that would provide building owners with greater flexibility in achieving compliance through the trading of greenhouse gas emissions credits. The Office of Long-term Planning and Sustainability must submit a report and implementation plan with its findings from the study to the mayor and speaker of the Council by January 2021.
Alternative Requirements and Adjustments
Within its sweeping scope, Local Law 97 treats some buildings differently, outlining alternative requirements and adjustments for certain sectors.
Rent-regulated housing, certain elderly and low-income housing, and places of public worship are given a choice on whether to comply with the emissions limits set forth for 2024 or implement an alternative series of prescribed energy efficiency measures, such as installing temperature controls for heating systems, insulating heating and hot water pipes, and repairing heating system leaks.
These measures wouldn’t trigger a rent increase pursuant to New York’s Rent Stabilization Law, which provides that landlords may raise rents for “Major Capital Improvements” that are undertaken in a property, including many energy efficiency upgrades. Affordable multi-family buildings are often the ones most in need of upgrades and in which tenants could benefit from reduced energy costs. We will continue to work through our Energy Efficiency for All initiative and with other partners to ensure that all New Yorkers reap the utmost benefits from energy efficiency and the new policy.
Any building may also apply to DOB for an “adjustment” if it meets certain criteria. If a building’s 2018 emissions are more than 40 percent higher than its cap due to special circumstances (like 24-hour operations or high-density occupancy) and other requirements outlined in the law are met (including submitting a plan that would ensure compliance with the 2030-2034 building emissions limits), the cap may be adjusted to 70 percent of the building’s 2018 emissions for the compliance years 2024-2029. This adjustment can be extended if owners show they are taking measures to reduce emissions to 50 percent of a building’s reported 2018 emissions by 2035. Not-for-profit hospitals and healthcare facilities could receive a larger adjustment, with the 2024-2029 cap for these buildings set at 85 percent of their 2018 emissions levels and their 2030-2034 cap set at 70 percent of these levels.
Local Law 97 is far-reaching and ambitious, requiring a new implementation framework to achieve the included targets. And while the law creates mechanisms to do this, it also acknowledges the complexity of some issues, that knowledge about them will continue to expand, and that some framework elements would benefit from more extensive input and discussion as they get crafted.
The Office of Building Energy and Emissions Performance (OBEEP) will be the new entity created in the DOB, responsible for overseeing the implementation of the program, in addition to other NYC building energy performance laws. Among other implementation components, they will need to monitor and validate building emission reports and review applications for exemptions and alternative compliance.
A Climate Mobilization Act Advisory Board, composed of a wide range of technical experts and key stakeholders, including NRDC, is charged with providing recommendations to the DOB Commissioner and the Office of Long-Term Planning and Sustainability on some key aspects of the Local Law 97 framework, particularly for the years 2030 and beyond. The Board will convene in 2019, 2029 and 2039 and is required to issue two reports to the mayor and speaker of the Council in January 2023. These reports must include, among other things, recommendations for improvements to metrics and the structure of greenhouse gas limits, incentives for reduction of peak energy demand, methods for a “leading by example” approach for city-owned buildings, credit for beneficial electrification, input on the creation of a trading program, and recommendations for addressing tenant-controlled energy usage and reducing emissions from rent-regulated housing.
Looking to 2020
Local Law 97 is not only key to meeting the city’s climate goals, it will also play an important role in the state’s achievement of its ambitious greenhouse gas reduction and energy efficiency goals, codified in the Climate Leadership and Community Protection Act (CLCPA), adopted in July. New York state is mandated to take deep decarbonization measures over the next 30 years to reach 85 percent emissions reductions by 2050, on a path to carbon neutrality.
As with any law, implementation will be key. As we move into 2020, the establishment of OBEEP, the Climate Mobilization Act Advisory Board framework, extensive outreach and education, and integration of state and local efforts will all play a critical role in ensuring the legislation’s success.
As the federal government continues to block and roll back critical environmental protections, it’s more important than ever that cities take the lead. Local Law 97 sets an important example for doing that, showing how cities can play a big role in fighting climate change through building decarbonization.