The Enacted Local law 97 by New York City to aid in Climate protection.
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The Enacted Local law 97 by New York City to aid in Climate protection.

December 1, 2022
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To reduce carbon emissions from buildings, New York City enacted local law 97 in 2019 as an integral part of climate mobilization. The groundbreaking law raises the bar on carbon caps for commercial and residential buildings larger than 25,000 square feet to approximately 50,000 square feet throughout New York City. The enforced caps will initialize in 2024 and become more restrictive in time, with a target of decreasing carbon emissions by 30% in 2030 and 80% by 2050.

The proposed rule incorporates numerous recommendations for building partnerships. The partnership is a collaboration between energy stakeholders and New York building front liners, to develop smart policies designed to curb climate change. These policies include green power purchasing alternatives, feasible timelines, future refinements through robust board advisory processes, and provision for carbon trading within buildings, as a blueprint for efficiency. With these partnerships, the stakeholders can set viable recommendations for New York City to optimize the design of buildings, in alignment with the energy reduction policy.

The local law offers standards for determining the energy use of every building, with an annual allowance on the amount of emitted greenhouse gas. New York City's implementation of Local Law 97 is critical, since its implications are enormous for reducing pollution and creating thousands of jobs.

New York City relies on electric power generated through fossil fuels. Building owners can comply with the law by purchasing renewable energy credits (RECs), generated from wind and solar projects, to tackle their carbon emissions relating to the supplied electricity consumption. As reported by DOB, New York City has used its properties as a case test for local law 97, with more than 10,000 energy-efficient projects since 2014.

Local law 97 allows landlords unlimited use of RECs,, so that buildings can comply with the guidelines without reducing their carbon emissions, thereby avoiding penalties. The challenge for property owners will be to secure local sources of renewable energy, as opposed to remote sources. Although local law 97 allows unlimited RECs, deductions from reported emissions for RECs are limited to emissions attributed to the consumption of electricity. In 2021, emissions of carbon dioxide from electricity only accounted for about 32% of total carbon emissions in the US. These REC requirements are expected to change by 2030, and the Urban Green Council projects that sufficient RECs will be available to exceed the maximum demand.

Most greenhouse gas emissions are generated by equipment that produces hot water and heat, so credit purchases can help owners comply with proposed laws. In addition, to comply with the caps, managers, and owners of buildings should replace gas and oil-burning furnaces with more efficient electric brands. That will ensure energy is conserved in the residential and commercial sectors.

Owners will ultimately be able to buy credits related to enormous energy transmission projects in the running, to assist and connect electricity to the city, even though the projects are projected to come online earlier. 

Local law 97 requires the City of New York to undertake a feasibility study of carbon trading within buildings, as an effective compliance mechanism. The carbon trading study must include means of equitable investment and is beneficial to environmental justice communities. Also, urban green initiatives offer better approaches for enhancing local resilience, promoting sustainable lifestyles, quality of the urban setting, and improving the health and well-being of urban residents.

 Climate protection initiatives can set the pace for new climate solutions in the property industry, which has since embraced technology.

The looming deadline

As the deadline for drafting building rules approaches rapidly, property owners strive to comply with the caps on carbon emissions. Building owners are riding on the rules as they brace for the new law and identify methods of compliance, before yearly fines amounting to millions are imposed.

Since the proposal allows property owners to buy credits for products generated from solar and wind farms, it aims to counter greenhouse gas emissions from machines using electricity. Residential properties have heating systems powered with fossil fuels. This is a big blow to buildings using natural oil and gas, rather than electricity. Also, commercial properties using enormous electricity such as trading floors and data centers, have yet to be exempted.

Even though the draft rules would minimize competition from residential buildings for using renewable energy credits, limited credits would be available when the law is implemented. This is because energy credits will have to be connected to the national grid of New York City. By projection, solar farms and wind turbines will serve as energy sources, and projects outside the city that connect to the national grid will also be eligible.

Currently, there are two proposed projects: the Champlain Hudson power express and clean path New York, costing $11 billion. The task here is that property owners using renewable energy should not double-dip offsets in order to generate clean energy onsite. This means property owners utilizing energy credits generated through solar panels on their premises are not eligible for deductions, provided they produce clean energy on the site.

The real estate industry finds the proposal to be appropriate, laying out procedures for calculating a developing carbon footprint. The calculations can be complicated, but the rules will help property owners avoid exposure to fines from local law 97 and comply with set statutes.

Consequences of noncompliance to the law

The department of the building (DOB) estimates that 20-25% of qualified buildings will surpass their emissions limits by 2024. As such, if the property owners will not ensure compliance and efficiency, they will be subject to a penalty in 2025.

Failure to file a greenhouse emission report and exceeding emission limits will be considered a breach of law. Also, misrepresenting energy usage is categorized as a misdemeanor, and current fines are as follows.

  • Surpassing carbon emission limits; fine of $268 for a metric ton on a designated building
  • Failure to compile a report; a monthly fine of $0.50 per square foot
  • Issuing false statements; a fine of $500,000

The emission from the building is based upon its type and size. For instance, supermarkets emit more than condominiums, as they need enormous refrigerators to ensure food does not spoil. On this subject, the fine attached to each building is the same.

For decades, the real estate industry has sought ways to modify the law, with objections arising from many commercial property owners. However, many buildings can achieve compliance by making minimal adjustments for their unsafe habits and best practices. Moreover, premises will have to adjust their electric, gas, and water systems, or replace them entirely. The strategic part here is the valuable assistance through utility benchmarking programs, developed and administered by an energy consulting firm in the city - Leidos.

The utility program assists buildings assemble and analyze how they use their energy through the Environmental Protection Energy Agency in maintaining compliance and countering inefficiencies. The consulting firm Leidos has extensive expertise and experience working with residential, commercial, and governmental buildings because its consultants strive toward energy efficiency, for the future goal of attaining zero carbon emission. 

The energy assessment program provides recommendations for areas of improvement, which include;

  • Prescriptive incentives on heating equipment and boilers
  • Custom incentives are available for projects that are not covered by existing rebates. Incentive amounts are based on the measured and verified therm savings from the energy efficiency project. Eligible projects typically involve improvements to existing systems or processes which result in a permanent reduction in natural gas usage
  • Free installations on energy-saving and high-efficiency devices like aerators.

The rise of glass skyscrapers

As New York City's skyscraper silhouette expands, compliance will become complicated. In 2010, New York City initialized its first energy code to make construction more efficient by reducing fuel usage by half compared to apartments built before 1980, according to Urban Green Council. 

The city also enacted more efficient measures to encourage builders to shift to green technology, such as tighter building wrappers and better insulation. Ancient architects developed tall structures with small apexes and wide bases to increase their stability. But with today's designs, the old pyramid developments have been scrapped to conserve space. Even with modern techniques and contemporary taste, it is hard to determine appropriate measures that suit the environment.

Concrete is a preferred material for building resilient and stable structures, because it is solid, with its emission being minimal. Concrete is responsible for 5-8% of global fossil fuel expenditures. 

Glass towers that run to several hundred feet high in the air and are unobstructed by direct sunlight need enhanced air conditioning systems. Air conditioning systems account for 10% of the U.S. emissions. However, the unfortunate part is that retrofitting old buildings is extremely expensive, since correctional procedures must be undertaken.

Wrapping up

Local law 97 is a proposed rule for environmental conservation to reduce carbon emissions. The law aims at embracing renewable energy by using credits from solar and wind farms to achieve energy efficiency retrofits. Therefore, as the looming deadlines approach, property industry managers and owners of buildings must strive to address the standards of compliance with the proposed caps.