Insight

Energy Efficiency and Local Law 97 in New York City

In April of 2019, the New York City Council passed the Climate Mobilization Act (CMA). This act is arguably the most aggressive piece of local legislation across the country to combat climate change, and at the time, was the first of its kind in any large city in the world. The act pledges and outlines the strategy for NYC to reach carbon neutrality by 2050, which marries with the 2017 announcement by the city to align with the Paris Climate Agreement. The CMA incorporates several Local Laws aimed at combating climate change through the city’s buildings: 92, 94, 95, 96, and 97:

Local Laws 92 & 94 require green roofs or solar PV systems on certain new construction and renovation projects.
Local Law 95 focuses on adjusting the metrics used for letter grades assessing building energy performance.
Local Law 96 establishes clean energy financing tools for building owners (PACE Financing).
Local Law 97 requires most NYC buildings to meet new energy efficiency and greenhouse gas emissions limits by 2024 and beyond.

The most important of these local laws is Local Law 97 (LL97). This piece of legislation requires most buildings over 25,000 square feet to meet specific energy efficiency and greenhouse gas emissions limits by 2024. Some exemptions to these requirements are places of worship and buildings owned by the New York City Public Housing Authority. The initial emissions limits will be in effect from 2024 to 2029. By 2030 the emissions limits become stricter and run through 2034. Nearly 60% (3.15B sq. ft.) of NYC building area is covered by LL97. Failure to meet either of the limits will result in a fine of $268 per ton of carbon dioxide equivalent (tCO2e) emitted by a covered building per year. This fine is set to be capped at $5 million per year per building.

Initial reports estimate 20% of buildings subject to these emissions limits will be out of compliance in 2024. That number may jump to 75% when the caps tighten in 2030. The stated goal by the New York City Council is to reduce building-associated emissions in the city by 40% by 2030 (2005 baseline) and by 80% by 2050. As of 2019, buildings are responsible for two-thirds of NYC’s annual emissions. To put the 40% reduction target by 2030 in context, that figure is equivalent to San Francisco’s citywide emissions.

Renewable energy credits (RECs) and greenhouse gas (GHG) offsets can assist building owners to comply with LL97. However, each approach has limitations. RECs can 100% offset building emissions but must output directly into the New York City electric grid zone. The New York City electric grid zone is notoriously difficult to connect directly to clean energy because of the lack of available space for solar and wind. GHG offsets are capped at 10% of a building’s annual emissions limit. Both of these limitations mean the main focus for building owners will have to be on creating meaningful change to their building’s energy consumption.

NYC is reserving the right to set emissions limits for 2035 and beyond at a later date. Renewable energy sources are expected to account for an increasing percentage of NYC’s electric grid over the next few decades, indirectly helping NYC building owners comply with LL97 by reducing the amount of carbon emitted per kilowatt-hour of electricity. Unfortunately, the near term story looks quite different. The carbon intensity of NYC’s grid has recently increased significantly due to the shutdown of the Indian Point Energy Center (IPEC) in April of 2021. The IPEC – a nuclear power plant – was previously the largest provider of carbon-free energy for the city, accounting for 25% of electricity. With the IPEC offline, less “clean” sources of electricity have filled the gap. New York has 4,300 MW of offshore wind projects currently in development - the largest offshore wind pipeline in the nation. These sources are not expected to come online for at least a few more years, making it difficult for building owners to accurately forecast compliance with LL97. New York City has already published greenhouse gas coefficients for the 2024-2029 period. Coefficients for the 2030-2034 period will be published in 2023, and may be affected by the IPEC closure.

LL97 will have a profound impact on New York City’s buildings and their owners. Annual investment in energy savings and retrofits must significantly increase. In 2018, $235 million was spent on energy retrofits in the city. Urban Green Council is estimating that number may increase 13x by 2030 ($3 billion in annual spending). New York City and its buildings are ripe for energy efficiency improvements, but these upgrades can’t stop with simple fixes like replacing old equipment and installing LED light bulbs. Deep energy cuts are necessary. To reach the city’s long-term climate goals, the building envelope must be addressed in hundreds of NYC’s buildings. Windows represent the most vulnerable place on a building when it comes to retaining a tight building envelope, and that is why Andluca is hard at work to improve smart window technology and make a significant dent in building emissions across the US.

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