NYC Buildings Complying With Emissions Law Faster Than Expected

New York City’s biggest buildings are complying with a landmark emissions law at a much faster rate than the city expected, undermining the real estate sector’s claims that the rules will be too hard to meet.

A preliminary review by the city’s Department of Buildings shows that 11% of New York’s buildings aren’t on track to meet the requirements of Local Law 97, Rohit Aggarwala, commissioner of the New York City Department of Environmental Protection, told Bloomberg Law. That’s a better noncompliance rate than the 20% projection the city forecast for the initial compliance period, which runs from 2024 to 2029.

The law requires structures larger than 25,000 square feet to cut their carbon emissions starting in January 2024. Buildings that don’t comply will have to pay up to $268 per ton of carbon equivalent over their limit. For the worst emitters, that could add up to millions of dollars per year.

“This shows that the law is having its desired effect, that building owners are finding the resources and the technologies to come into compliance, and that they are taking it seriously,” Aggarwala said.

The progress is partly the result of retrofit work and sustainability upgrades that have already been done at large buildings across the city, according to a DEP spokesman.

It’s also the result of a city-run accelerator program that advises buildings on how they can become more energy efficient, as well as the fact that “a lot of these things pay for themselves,” Aggarwala said.

Pete Sikora, climate and inequality campaigns director at New York Communities for Change, said buildings that were very wasteful have the biggest opportunity to cut emissions through simple fixes such as insulating exposed heating pipes, tuning their boilers, operating their HVAC systems properly, or switching to LED light bulbs.

“It’s really basic stuff that they should have already been doing,” Sikora said. “In many buildings, people don’t do it because inertia takes over and you just run the building like you always have. It’s human nature. But the law gives them a kick in the pants to get this done.”

For that reason, Sikora said the city’s findings didn’t strike him as a big surprise.

“It’s a fair, pretty easily achievable initial limit, so it makes sense,” he said. “But there is a part of me that’s breathing a little easier. On this present trend, the law will be a spectacular success.”

John Mandyck, CEO of the Urban Green Council, agreed, saying the new findings show that “Local Law 97 is working. It’s sending a market signal and the market hears it.”

Disadvantaged Communities

Aggarwala expressed dismay that many of the buildings that aren’t in compliance are in disadvantaged communities.

Fines under Local Law 97 could be ruinous to middle- and low-income tenants, because the costs may be passed down in the form of increased rents and other fees, according to Geoffrey Mazel, a board member and an attorney with Homeowners for a Stronger New York.

But Local Law 97 contains provisions for buildings that are making a good faith effort to comply, and City Hall under Mayor Eric Adams (D) is now developing rules on how those efforts will be assessed. Those draft regulations are expected within “a few weeks,” Aggarwala said.

He also said most of the buildings that are out of compliance are only short by 10% to 20% of their goals. The emissions caps vary across 60 property types, as well as a given building’s size.

But many more buildings are out of compliance with the next set of reduction targets that start in 2030, “so they have much more difficult, much more expensive, deep retrofits that they will have to do,” Aggarwala said. “And unfortunately, some of those do not pay for themselves.”

Opposition From Real Estate

The law has come under fire from the city’s real estate sector and Republican lawmakers, who have consistently said many buildings will struggle to comply, often echoing Aggarwala’s observation about buildings in disadvantaged communities.

To help buildings facing stiff fines, city council member Vickie Paladino (R) recently introduced a bill that would delay the financial penalties by seven years.

The powerful Real Estate Board of New York said in January that fines on property owners could exceed $900 million each year by 2030.

Zach Steinberg, senior vice president of policy at REBNY, said the group is encouraged that more building owners are taking steps to reduce emissions, but that it also wants to review the city’s data before the fines start kicking in.

“With financial penalties on the horizon for many buildings next year and tens of thousand more in 2030, we look forward to reviewing the City’s data as we work to effectively fulfill the goals of Local Law 97,” he said.

A handful of other cities have building performance laws on the books, but New York stands alone because of the number of buildings it contains. More than two thirds of the city’s 56.5 million tons of annual carbon emissions come from its buildings sector, mostly linked to lighting, heating, cooling, and appliance usage.

“You can fix any building—it’s a matter of how much money you want to deploy to get that building up to code,” said Adam Kramer, CEO of nZero, a software company that has been working with New York property owners to understand their Local Law 97 compliance obligations. “In some cases it’s going to be incredibly difficult because you’re not looking at just one thing.”

One concern for local Democratic officials and their allies in the environmental world is that the Adams administration may weaken the law when his administration issues the next set of implementing regulations.

The law gives Adams some discretion to relax penalties, although he could also face legal challenges from environmentalists if he attempted that. The mayor doesn’t have the authority to alter Local Law 97’s formula for calculating penalties.