New York City passed the most aggressive climate bill in the nation in April, and the city got it done in a truly New York way.
The Climate Mobilization Act is the city’s effort to abide by the Paris climate-change agreement even after the Trump administration withdrew the U.S. from the global accords. Before its abrupt about-face, America’s plan had been to cut carbon emissions by 80 percent by the year 2050. New York is taking up that pledge by introducing new regulations to address the energy performance of buildings.
Buildings contribute a huge share of New York’s carbon emissions—nearly 70 percent, thanks to normal everyday use, but exacerbated by inefficient heating and cooling systems—so they’re an obvious target for regulation. But it’s less obvious how the building sector will answer this charge. There’s a fundamental mismatch in expertise: The people who know how old buildings really work aren’t the same people designing energy-efficient retrofits. Only a big push will get them in the same room (at great expense to landlords).
The city’s new “80-by-50” law prescribes several benchmarks along the way to the ultimate goal in 2050. Some buildings will need to produce real results soon; different types of buildings will be subject to specific targets. The city’s first big milestone arrives in 2030: By then, New York buildings will need to have collectively cut their carbon emissions by 40 percent. Any buildings larger than 25,000 square feet will be subject to the cap (with some key exceptions), which means around 50,000 buildings in total. For landlords and building owners, this is an enormous lift in just over 11 years. That’s by design.
“There’s still a lot of details to figure out as to how this gets implemented,” says Lindsay Robbins, a director for strategy and implementation at the Natural Resources Defense Council, which hashed out this policy’s compromises with the Real Estate Board of New York. “I don’t think any city has done this on this scale before.”
The hope is that New York’s climate law is awesomely burdensome. No, that doesn’t mean a ban on glass skyscrapers. But a law that turns over the everyday dealings of real estate in New York has a great deal of promise for upsetting how buildings work everywhere. That’s what this represents, according to supporters like John Mandyck, CEO of the Urban Green Council, a nonprofit devoted to making New York buildings sustainable. “This law could possibly be the largest disruption in our lifetime for the real-estate industry in New York City,” he says.
New York’s new law is an effort to make the road by walking: It’s not something anyone knows how to do until everyone commits to doing it. The fact that this legislation is sweeping in its scope is why it stands a chance of succeeding, its supporters say. It’s the first plank in the suite of legislation that Mayor Bill de Blasio describes as the city’s own Green New Deal. The idea is to build a durable industry in energy retrofitting, one that benefits everyone involved—and by doing so, establishing a model for other cities around the world. And the city can’t get there with a measure that asks building owners to simply swap out light bulbs.
“New York City is going to spend billions and billions of dollars to meet this new law. When we do that, New York Harbor is still going to flood if the rest of the world doesn’t enact aggressive climate reduction strategies as well,” Mandyck says. “Our point all along has been that if we’re going to spend the billions of dollars, let’s make sure we come up with policies that are exportable.”
New York is going it alone here. Other cities are looking at building performance, to be sure. Every city has an incentive to level up the energy efficiency of buildings: In New York, buildings alone account for 95 percent of electricity use for the city, according to the Urban Green Council. But most cities have not taken steps beyond tracking and disclosure.
More than 25 U.S. cities have adopted various energy-benchmarking policies, as have the states of California and Washington. These laws make it mandatory for building owners to report their energy use (namely their electric and gas bills). Disclosure laws have guided net-zero building codes and voluntary agreements. Philadelphia and Washington, D.C., were early signers.
It’s worth noting the limits of disclosure. Building owners who don’t meet voluntary standards don’t pay any price. Importantly, disclosure is not supposed to be a shaming tool: Benchmarking in New York might show a range in energy consumption by hotels, for example, with usage calculated per square foot so as to compare big hotels with small ones, without naming any specific buildings.
What New York is doing is more strident: It’s the first city to attach a dollar value to these disclosure figures. Washington, D.C., passed a building-energy performance standard in December for buildings over 50,000 square feet, and when buildings in the District fall out of compliance, those landlords will be moved into an advisory lane to get back on track. San Francisco passed a law this month requiring big buildings to switch to renewable electricity, an easier goal for a city with a forgiving climate located in a state with a cleaner grid.
In New York, building owners who don’t meet their carbon reduction requirements will pay fines. Potentially very large fines: The statute calls for a penalty of $268 per every assessed ton of carbon over the cap. For landlords just over the line, the fine will be nominal. But the city’s worst offenders could be looking at annual penalties of more than $1 million.
It’s a policy with teeth, in other words. Fortunately for landlords, there’s a lot of room for buildings to improve, according to Vivian Loftness, professor at Carnegie Mellon University and the Paul Mellon chair in architecture.
“Buildings in the U.S., and certainly commercial buildings, have been incredibly sloppy in their energy use,” Loftness says. “We’ve got [older] mechanical systems that are running at 50 percent efficiency, where there’s things on the market that will run at 95 percent efficiency. We’ve got a lot of room for upgrades for boilers and chillers, air-handling units, control systems—there’s so much room in just the hardware of buildings.”
New York’s strict standard may work for landlords. The Climate Mobilization Act sets deep reduction targets over a fairly short period. Since the law establishes 2005 as the benchmark year—meaning building energy consumption needs to fall 40 percent below 2005 levels by 2030—landlords who have made some strides in energy reduction will get credit for their work. The poorest performers will need to show improvement sooner, by 2024, but about one-quarter of buildings won’t require substantial changes. Taking the progress already made into consideration, New York will need to level up its building-energy-performance game by 26 percent over the next 11 years.
Still, it’s significant, especially for New York landlords with multiple buildings in their portfolio. The Real Estate Board of New York, which represents many large developers, has vocally opposed the legislation. The legislation “does not take a comprehensive, city-wide approach needed to solve this complex issue,” said John H. Banks, the board’s president, in a statement. The group objects in particular to exemptions that they say put a greater strain on the building owners subject to this regulation.
“A coalition of stakeholders including environmental organizations, labor, engineering professionals, housing advocates and real estate owners came together and proposed comprehensive and balanced reforms that would have achieved these goals,” Banks said. “The bill that passed today, however, will fall short of achieving the 40 x 30 reduction by only including half of the city’s building stock.”
Douglas Durst, the chairman of the Durst Organization, wrote in a letter to Crain’s New York Business that under this legislation, “empty buildings score better than occupied ones, and hundreds of thousands of inefficient and energy-intensive smaller, city-owned and [New York City Housing Authority] buildings have significantly less stringent standards.”
“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,” Ed Ermler, the board president for a group of condo buildings in Queens, told The New York Times. “It’s not like there’s this magic wand.”
It will take work, no question, says Lane Burt, managing principal for Ember Strategies, a consultancy and strategy firm. But it will not take a wizard. For starters, not every individual building needs to make the 40 percent mark: That’s an aggregate goal. And buildings don’t need to hit their target tomorrow.
“If you’re a building owner and your engineers are telling you, it’s impossible to get 20 percent carbon reduction or 30 percent carbon reduction, really, you need better engineers,” Burt says. “What I interpret from that concern is that the owners are saying, ‘It’s financially impossible for me to do this right now.’ And that I believe completely.” He adds, “The good news is, it might be financially impossible for them to do right now, but we’re not necessarily talking about right now. We’re talking about three decades.”