City eyes emissions-cap reprieve for some buildings

Cap-and-trade off table, but other paths to Local Law 97 compliance in play

NYC Mayor Eric Adams (Getty Images, iStock)
NYC Mayor Eric Adams (Getty Images, iStock)

Some property owners may get a break from the city’s stringent greenhouse gas rules.

At a City Council committee hearing Wednesday, the Adams administration laid out possible options for building owners who face an “insurmountable barrier” to complying with Local Law 97.

Such owners could have their fines reduced or their emission caps raised if they demonstrate that they have made every effort to meet the law’s caps.

The administration also floated the possibility of creating an alternative to penalties, such as allowing owners to instead help retrofit low-income housing. City officials are still working out whether that can be done under the existing law.

Carbon trading, which would allow building owners to buy credits from properties with lower emissions, will not be an option for building owners to comply with the law, at least for now.

Rit Aggarwala, the city’s chief climate officer and commissioner of the Department of Environmental Protection, emphasized the administration’s commitment to achieving the law’s goals.

“We have no intention of giving anyone a free pass or letting anyone off the hook,” the commissioner said in prepared testimony. “But we also see no benefit to the environment in punishing someone who is actually doing everything possible.”

The Adams administration has repeatedly hinted that adjustments to Local Law 97 may be needed. Under the 2019 measure, buildings larger than 25,000 square feet must meet greenhouse gas emission caps starting in 2024 and even stricter limits by 2030. Those who fail face a fine of $268 per metric ton of emissions over the limits. Some buildings would be on the hook for millions of dollars in penalties.

While some Council members were relieved that a carbon cap-and-trade program is off the table, some questioned whether building owners would be given too much leeway and if the city’s emission goals would be diluted.

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“We need a very strong stick at the end of this,” said Brooklyn’s Lincoln Restler, adding that those who fail to abide by the law should have to “pay through the nose.”

New York Communities for Change, an organization that has opposed other suggested workarounds, warned against “gutting” the measure.

In prepared testimony, the Real Estate Board of New York once again called on the administration to reconsider the metric by which Local Law 97 evaluates buildings. The trade group argues that it will unfairly punish properties that are efficient but heavily used.

The group said the metric should instead be tailored more specifically to buildings and account for density, hours of operation, and building type. REBNY has also complained that fines will go into the city’s general fund rather than toward decarbonization. The group supports the idea of using the funds for below-market housing.

The administration is also looking at how the law applies to buildings with manufacturing space. The Department of Buildings has previously indicated that it is analyzing how the law should apply to supermarkets and other properties that must consume lots of energy.

The city is also looking to add funding sources to help building owners pay for retrofits. So far, only two buildings have used the green-financing tool C-PACE, one for $28 million and another for $89 million.

The private sector is not alone in struggling to meet emission targets. Aggarwala acknowledged that the pandemic disrupted the city’s plan to reduce by 40 percent emissions related to government operations by 2025.

He noted that the state just granted the Department of Citywide Administrative Services design-build authority, a method touted as a way to save time and money on projects.

“Over the next two years, everything has to go right: Every contract has to move on schedule, every construction project has to be on time, each supply chain has to work,” Aggarwala testified. “So the risk of failure is real.”

He added, “But if we do miss this target, it will not be because this administration has not taken it seriously.”