JUNE-JULY 2019 /
The NYC Council recently passed legislation setting new standards for greenhouse gas emission from buildings. The measure aligns with Representative Alexandria Ocasio-Cortez’s Green New Deal. The bill would cut pollution from city buildings by 40% over the next 10 years as part of New York’s overall environmental goal of reducing greenhouse gas emissions by 80% to below 2005 levels by the year 2050. In what could be the largest disruption in the history of NYC real estate, the legislation would require large buildings to cut fossil-fuel consumption by 2030 with projected costs to do this retrofitting exceeding $4 billion. The legislation is also a local response to the White House decision to do nothing about the threat of global warming. In the City Council legislation, it’s mandated that all buildings 25,000 square feet or larger conform to the new requirements. The legislation would impact more than 50,000 of the city’s one million buildings, which are responsible for approximately one-third of the city’s greenhouse gas emissions. According to available statistics, all buildings combined emit around probably two thirds of the city’s pollution.
Countrywide, environmental coalitions are urging cities and states to respond to Trump’s environmental degradations by passing protective legislation. However, the Real Estate Board of New York (REBNY) has come out against the legislation, saying the emission targets cannot be met because of the many expected exemptions to the legislation which will place the financial burden of emissions compliance on a small group of building owners, as well as on their tenants.
What’s more, extending this logic, developers could shy away from any further building of very large dense structures and landlords could decide not to lease to energy-hungry companies like Internet and media companies – imagine what that could do to development in the Flatiron District?
But time will tell. In about three years a new City Council will be sworn in and today’s skeptics are already saying that the 40% carbon reduction will not be met on schedule because of numerous exemptions and carve-outs when this new council reviews the progress of the legislation at that time.
As a building owner/manager, you need to closely monitor these developments, have internal/external professionals point out your specific areas of vulnerability, and then quantify what your worst-case exposure would be. But there is time. The legislation covering the affected 50,000 buildings will be rolled out in phases. This year an Office of Building Energy and Emissions Performance will be established at the Department of Buildings. Then, when the law fully takes effect by 2024, targeted buildings will have to reduce emissions by 40% from 2005 levels by 2030. These same buildings will be mandated once again to reduce their emissions by 80-percent by the year 2050.
The retrofitting of these buildings to consume less energy should lead to the creation of thousands of jobs for professionals who will be tasked with bringing the buildings into compliance (the $4 billion figure mentioned above). Any laggards who can’t bring their buildings up to code by deadlines can still buy Renewable Energy Credits to offset their emissions. If a building still isn’t compliant, the owner could be penalized with a fine based on actual emissions versus whatever the capped levels were determined to be.
Alternatives are few. Short of growing gills like Kevin Costner in the movie “Waterworld” to survive, we are all going to have to hunker down and become a little less reckless with our fragile environment.
United Metro Energy Corporation
P: 718-389-5800 ext. 191