It’s been dubbed by many as the most aggressive climate bill to have passed in the nation, while for others, it remains a complete unknown.

Local Law 97, which was overwhelmingly approved by the New York City Council on April 18, caps the greenhouse gas (GHG) emissions of large, energy-intensive buildings, and hits non-complying building owners with steep fines.

The bill, which is the first of its kind in the country, seeks to address the fact that buildings make up the largest percentage of emissions in the city, responsible for about two-thirds of its overall emissions in 2017. Heating, cooling, and lighting buildings all require significant energy, and many skyscrapers are particularly inefficient. While the city has pressured owners to make energy efficiency upgrades, it had not legally mandated them to do so until now, resulting in insufficient emission reductions from the sector.

Recognizing this issue, councilman Costa Constantinides, the chair of the city’s Environmental Protection Committee, introduced a groundbreaking piece of legislation. The bill mandates that buildings 25,000 square feet or larger make energy-efficiency upgrades in order to meet declining emissions caps (these caps will vary according to the building’s occupancy group). This means that almost 50,000 of the city’s one million buildings — accounting for about 30% of the city’s overall GHG emissions — will have to either reduce emissions or face penalties.  

“It will be the largest emissions reduction policy ever, in any city,” said Constantinides.

How does it work?

Starting in 2024, buildings in various “segmented occupancy groups” will need to comply with published emissions intensity limits per square foot (that’s a point of controversy for some, who maintain emission levels should not be primarily based on building footage — more on that below).

Many large buildings have been tracking their energy use for years, a process known as benchmarking. This has allowed the city to calculate the per-square foot GHG emissions for individual buildings.

For example, the Empire State Building currently produces 6.27 kilograms of carbon dioxide per square foot each year, but the newly-passed cap would require it to emit just 4.53 kilograms of carbon dioxide per square foot yearly by 2030 (the emission reduction requirements don’t stop in 2030, but they have not yet been delineated beyond that date). If the building doesn’t make mandated reductions, its owners will be forced to pay hefty fines.

The statute ultimately calls for a penalty of $268 per ton of carbon emissions over the cap each year, which could quickly add up to millions of annual fines for the city’s top emitters. The bill language does allow for some flexibility when it comes to assessing penalties; owners with a lack of “access to financial resources” or those that have made “good faith efforts” to comply with the caps may be let off with less than the steep, delineated penalty.

It’s also important to note that the bill exempts some buildings from regulation, including apartment buildings with at least one rent-controlled unit or other type of affordable housing, as well as places of worship. These buildings are still required to reduce emissions, but will not have to comply with the same stringent caps.

What does it mean?

The building emissions cap is part of the city’s larger plan to reduce overall GHG emissions by 40% by 2030, and 80% by 2050 (below 2005 levels). The cap is just one of a suite of bills collectively known as the Climate Mobilization Act, which city officials are touting as their own, local version of a Green New Deal. The legislative package also requires:

• Some new, smaller buildings, particularly those less than five stories tall, to be equipped with solar panels or green roofs (Int 276 and Int 1032)
• An assessment of the feasibility of replacing the City’s gas-fired power plants with battery storage powered by renewable energy sources (Int 1318)

Why is the bill controversial?

While its nearly-unanimous passage is a tremendous victory in the fight against climate change, some have expressed concern regarding the bill’s implementation. Real estate groups worry that because exemptions are given to thousands of large buildings, the burden of reducing emissions will be even higher for those that are regulated.

Ed Elmer, the board president of four apartment buildings in Jackson Heights, Queens, told the New York Times he has invested hundreds of thousands of dollars installing computerized boiler controls to make the 1950s-era buildings more energy efficient.

“To get down to even 20 percent from where I am today, with the technology that exists, there’s nothing more that I can do,” Ermler said. “It’s not like there’s this magic wand.” He added that he worried about placing a severe financial burden on his apartment owners, most of whom are retired and on a fixed income.

An alliance of property owners and unions also oppose the bill’s complicated formula for capping building emissions – the fact that emissions are measured based on a buildings square footage, rather than its use. In a letter to Constantinides, they argued it would penalize dense and people-packed buildings and called for more stakeholder meetings on the legislation.

While other cities have made concerted efforts to look at building performances, most have not taken steps beyond tracking and disclosure. More than 25 cities have adopted energy-benchmarking policies — making it mandatory for building owners to report their energy use  — but buildings that don’t meet voluntary standards don’t pay a fine. New York is the first city to attach a price to these disclosure figures, making the capping program unique.

Could a cap-and-trade program for NYC buildings be next?

Perhaps the most notable part of this policy is that it sets the stage for a carbon-trading market between buildings and authorizes a study for implementing a real estate carbon market by 2021. Under such a program, building owners could trade allowances in order to meet the cap, and the owners of large portfolios could trade between their buildings to meet targets.

The cap-and-trade program could benefit low-income communities, provided that extra credit is given to energy efficiency upgrades performed in these neighborhoods. For example, larger companies like FirstEnergy could meet with building owners in low-income communities and offer to do building upgrades in exchange for credits. If emission reductions made in disadvantaged neighborhoods would be worth more than those made in wealthier parts of the city, the program could, in theory, be equitable.

It remains to be seen if and when this emission trading would come into effect, but for now, New York City is making the critical first step in reducing emissions in its most energy-intensive sector. Like any ambitious and groundbreaking proposal, the program could potentially become administratively difficult and burdensome. However, if such a program works the most populated city in the country, it could work anywhere, and pave the way forward as the beginning of a movement toward meaningful and widespread emissions reductions.