NYC Climate Mobilization Act – Relief in Sight?

Farrell Fritz, P.C.
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Local Law 97 of New York City’s Climate Mobilization Act (the “Act”) is the City’s aggressive greenhouse gas emission reduction plan for buildings.  The City has published figures indicating that approximately 70% of greenhouse gas emissions are attributable to the City’s building stock.  The Act sets lofty emission reduction goals for existing buildings, with emission limits that become stricter over time.  Failure to comply with the Act, either in reporting building emissions or achieving emission limits could result in harsh penalties. Compliance with the Act, through benchmarking and implementation of emission reducing retrofits, will come at an initial capital expenditure for building owners (and potentially tenants).

The Act, which was signed into law on Earth Day 2019, establishes ambitious greenhouse gas reduction goals for covered buildings.  Specifically, the Act seeks a 40% reduction in 2030, and 80% by 2050 in carbon emissions (relative to 2005 levels) through mandatory building emission limitations effective in 2024, 2030, and 2035.

The Act generally applies to buildings that exceed 25,000 square feet, with increased thresholds for certain multi-building lots and condos, and exemptions for certain building classes and uses.  The Act is estimated to impact between 40,000 and 50,000 buildings, comprising approximately 60% of the City’s square footage.

In 2024, the Act will require building owners to reduce emissions below a specific annual carbon emission limit.  An individual building’s carbon emission limit is calculated using prescribed building use/occupancy factors and the specific building’s square footage.  Covered buildings will be required to report certified emission reports by May 1, 2025 and each May 1st thereafter.  Failure to meet the yearly emission limit will result in fines of $268 per ton over the building’s annual emission limit.

In addition to retrofitting and other efficiency measures, the Act authorizes the use of renewable energy credits (“RECs”) to off-set greenhouse gas emissions.  However, the Act limits qualifying RECs to those that are generated in, or deliverable to, the City’s electric grid.  This limitation significantly compromises the use of RECs as a compliance tool due to the current lack of a compliant REC supply and the incredible demand for such RECs anticipated to be triggered by the Act.

In response to concerns related to the anticipated financial burden imposed on building owners and tenants by the Act, the State as part of its 2022 budget proposal, attempted to expand the availability of compliant RECs to those generated at renewable energy projects outside of the City.  The proposal failed after interest groups advocated that expanding the availability of RECs beyond those tied to the City would frustrate the purpose of the Act.  Despite the ultimate failure, the proposal signals the search for potential relief measures.  As the May 1, 2025 certified emission reporting deadline looms, it will be interesting to see whether any relief to the Act can be agreed upon.

In May, the New York City Department of Buildings released its NYC Sustainable Buildings website touted as a one-stop shop for owners and property managers of buildings covered by the Act.  The website links to certain financing and technical tools to assist in reducing the compliance burden imposed by the Act.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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