The Real Estate Board of New York to The New York City Department of Buildings on Proposed Rule Concerning Annual Greenhouse Gas (GHG) Emissions Limits for Buildings

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REBNY appreciates this opportunity to comment on the Department of Building’s (DOB) proposed rule concerning Annual Greenhouse Gas (GHG) Emissions Limits for Buildings.

This proposed rule thoughtfully addresses several, but not all, of the outstanding issues that are critical to the successful implementation of Local Law 97 of 2019 (LL 97). Among the topics covered in this proposed rule are penalties, including the way that penalties can be mitigated in accordance with the terms of the statute, and beneficial electrification.

The proposed rule generally appropriately balances the need for a rigorous compliance scheme with the reality that many buildings will struggle to comply with their given emissions limit even if taking tangible, appropriate steps to do so. Indeed, according to 2021 benchmarking data analyzed by Urban Green Council, over 500 buildings exceed their 2024 limits by more than 20%. Achieving a 20% reduction in emissions generally requires very significant effort that, for various reasons, may be out of reach for many buildings. As such, it is prudent for DOB to develop strategies to work directly with building owners who are making good faith efforts to achieve the requirements of the law.

At the same time, these penalty mitigation strategies will only be effective if building owners of various levels of sophistication understand their compliance options. Recognizing that many of the options discussed in the proposed rule are complex, it will be critical that DOB and its partners in City government educate the diverse array of building owners on the various ways they could achieve the goals of the law.

With these thoughts in mind, specific comments about the proposed rule can be found below.

Comments:

Beneficial Electrification:
Based on recommendation from the LL97 Advisory Board, the draft rule seeks to reward and incentivize building owners who efficiently electrify building systems, especially those related to heating and cooling. Under the proposal, building owners who partially or fully electrify certain building systems would be “credited” for doing so as long as the electric equipment used meets proscribed efficiency standards. Credits for so-called “beneficial electrification” could be carried over to future compliance periods if they are not needed to meet the 2024-2029 mandates. While the proposed requirements are a step in the right direction, the provisions rewarding and encouraging beneficial electrification could be strengthened with several changes.

The draft rule allows beneficial electrification that occurred as early as 2021 to be eligible for credits. This lookback should be extended to 2019, the year when LL 97 was enacted. Doing so is prudent because LL 97 was widely understood to encourage building owners to electrify building systems. Owners who began that work promptly after passage of the law should be able to obtain credit for such work.

In addition, further changes should be made to enhance the incentive for owners to promptly undertake beneficial electrification projects. The proposed rule wisely allows building owners to bank credits for use in future years. However, the proposed rule does not allow owners to use all electrification credits in more than one year. Giving owners greater flexibility by allowing credits to be used across several years will increase the value of the beneficial electrification incentive, thereby encouraging more early adoption of electric equipment and the associated emissions reductions. For the same reason, it would be prudent to allow these credits to be available for use beyond 2036.

Finally, to accrue these beneficial electrification credits, owners must demonstrate “installation of the equipment with the letter of completion for such equipment along with the DOB job number.” If there is work related to electrification that would not require a DOB filing, the rule should include an alternative means of showing compliance so that credits can be allocated to all who deserve them.

Good Faith Effort:
The most common way to follow the good faith effort path, and to enter into a mediated resolution for penalties, will be to generate a plan showing how the building will achieve decarbonization by 2050. As contemplated in the proposed rule, the plan would lay out a series of steps that could be taken to get to the eventual goal of total decarbonization. In some circumstances, following these plans until reaching compliance with emissions mandates would mean that the owner would not receive penalties. Several aspects of this proposal should be clarified.

One requirement to follow the good faith effort path is to complete an LL 87 energy audit. The rule should clarify if the most recent audit conducted under LL 87 is sufficient or if a new audit needs to be done.

In addition, to create a decarbonization plan, a building owner will need to model future emissions. This requires the owner to know various emissions coefficients all the way out to 2050. However, DOB has yet to define the various coefficients through 2050. The proposed rule should therefore provide guidance to building owners on what those coefficients would be or how to otherwise model those coefficients.

Further, the proposed rule requires owners to include in their decarbonization plan “a list of alterations and changes to operations and maintenance that will result in emissions reductions required by Article 320 of Chapter 3 of Title 28 of the Administrative Code and rules promulgated thereunder and resulting in net zero carbon emissions in 2050.” It is unclear from the proposed rule if the decarbonization plan must show compliance with each compliance period of LL 97 or only that decarbonization is achieved in 2050. This ambiguity should be clarified.

Lastly, building owners who have been in compliance during the 2024-2029 period but have fallen out of compliance may be eligible for relief. For the sake of clarity, the words “at any point” should go between “report” and “during.”

Penalties:
Under the proposal, an owner who is following a decarbonization plan as part of a good faith effort or a mediated resolution may have to pay penalties retroactive to when they were first out of compliance if they are unable to follow the decarbonization plan. While this framework is generally reasonable, there may be circumstances beyond the owner’s control that will impact the ability to carry out the decarbonization plan.

For example, in the future an owner could seek to begin electrification work only to learn that there is a constraint on the electric grid that could delay the ability to electrify. Alternatively, a significant supply chain disruption, such as happened during the COVID-19 pandemic, could inhibit the ability of owners to obtain required equipment. Under these circumstances, DOB should have the ability to not assess the retroactive penalty provided the owner continues efforts to comply as these conditions resolve.

Thank you for considering these points.