The Real Estate Board of New York to The Energy Efficiency & Housing Advisory Panel on Its Preliminary Draft Recommendations

Download the Testimony

The Real Estate Board of New York (REBNY) is New York City’s leading real estate trade association representing commercial, residential, and institutional property owners, builders, managers, investors, brokers, salespeople, and other organizations and individuals active in New York City real estate. REBNY thanks the Advisory Panel for the opportunity to provide comments on its preliminary draft recommendations to the Climate Action Council on policies, programs, and actions that can help achieve the statewide emissions reduction goals set forth in the Climate Leadership and Community Protection Act (CLCPA).

REBNY applauds the Panel for its efforts to help inform the State’s path forward to achieve the nation-leading targets set by the CLCPA, which requires an 85% reduction in greenhouse gas (GHG) emissions as well as a carbon neutral economy by 2050. Decarbonizing the built environment is an essential step in realizing New York’s climate targets and is a goal REBNY shares. To do so we will need both clean, reliable electricity, the elimination of fossil fuel powered systems from buildings, as well as greater energy efficiency. Though these steps are seemingly straightforward, accomplishing these objectives requires a nuanced understanding of the diverse building stock combined with clear requirements, practical compliance timeframes, and meaningful financial assistance.

Achieving the decarbonization of New York’s building is doable, but a one-size-fits-all approach is destined to fail because different segments of the building stock present different challenges. Regulation must account for the variety of building typologies, including use and size as well differentiate between existing buildings and new construction.

For example, emissions from single family and multifamily residential buildings mostly result from the use of on-site fossil fuel systems. Efforts to decarbonize these buildings will therefore need to focus on replacing fossil fuel systems with those that are powered by renewable sources, whether that be electricity sourced entirely from renewables or renewable natural gas. The key issues in this transition are timing and cost. Beyond syncing such a policy with the development of a reliable renewably powered electric grid, regulations must consider when such requirements should become effective to lessen the cost burdens and physical disruptions on the people who call these buildings home.

Unlike residential buildings, commercial buildings in New York City are less reliant on fossil fuels for direct energy inputs and are already mostly powered by electricity. For this reason, it is more appropriate to impose heightened energy efficiency requirements on this segment of the building stock to gain the benefits of reduced energy consumption at the same time as the electric grid is decarbonized as opposed to a mandate to reduce on-site fossil fuel use. Importantly, for the commercial sector, any standards must account for the difference in use type for commercial spaces and create appropriate regimes for different types of space uses. For example, a financial institution with a trading floor and data servers on-site should not be held to the same standard as tenant who has sparser occupancy and less energy intensive demands.

These differences must be incorporated into any effective regulatory regime.

At the same time, the backbone of these efforts must be the continued development of clean, reliable electricity. This includes not just new renewable generation but also the transmission connections to make it available throughout the state, especially New York City, which accounts for more than 60% of the state’s electrical consumption. REBNY commends the State’s recent efforts to do so and encourages this work to continue as rapidly as possible. With the enactment of the CLCPA and adoption of the revised Clean Energy Standard, New York has made statutory the ambitious and aggressive actions needed to decarbonize electricity and ensure reliability of power service, which will only become more imperative as the demand for electricity grows. As the transportation and building sectors transition more toward electricity, the State will need to redouble its work to ensure the grid can reliably meet the demand. REBNY stands ready to help the State build out the infrastructure needed to produce and deliver ample clean power.

The realities of the electric grid must be kept in mind as a framework to decarbonize buildings is developed. Mandates that rely on electrification of building systems – such as those put forward by the panel – must be tethered to the improvements of the electric grid. Asking buildings to electrify systems would see an immediate improvement local air quality, but if the electricity is not sourced from renewables, the benefit comes at the expense of air quality surrounding the fossil fuel plants that generate the power, which are often located in our most socially and economically disenfranchised communities. Moreover, if the State incentivizes or compels electrification before the grid can reliably handle the increased demand, it will lead to strain and potential power disruptions.

Furthermore, we believe a number of other key principles must be kept in mind as the panel and Climate Action Council consider these issues.

First, in any regulatory regime building owners should not be held financially responsible for the carbon emissions that result from the generation of electricity or district steam. Building owners are not ultimately responsible for the fuels/resources used to create these types of power and should not pay penalties to regulators simply because they use electricity and/or steam.

Second, relatedly, the panel will need to find a solution to the decarbonization of district steam. Similar to the electric grid, cleaning the steam is out of the buildings’ control, but is a critical component to any chance of successfully decarbonizing commercial buildings as the replacement of steam systems will likely result in the adoption of less efficient systems and impose significant cost on property owners. Furthermore, converting buildings served by district steam to all-electric will add significant additional burdens on the grid at extremely high cost.

Third, the panel must be mindful that the City of New York has already adopted a local law that imposes a rigid cap on carbon emissions of certain buildings over 25,000 sqft as this local law will need to be harmonized with any recommendations issued by this panel. New State rules combined with punitive City penalties will sow confusion and make it harder to achieve the ultimate objective. Buildings that comply with State rules should not be subject to annual penalties under New York City law. Significant work will need to be done to educate building owners and other regulated entities of their State-imposed obligations.

Fourth, as we plan the transition of buildings, regulators must take a broader view of the economic factors involved in the operation of buildings. This includes a buildings capital cycle and the jobs supported by its operations. Where ever possible, new mandates should align with the capital cycle of a building in order to reduce costs and minimize disruption to the lives and business activity of its tenants. Any regulations and associated support programs should be designed in a way to ensure they protect the industry-standard wages and benefits of workers and to not erode the compensation for hardworking New Yorkers. In addition, workers who operate and maintain buildings will need to be provide with ample training opportunities to help ensure compliance with any new rules or regulations.

It is with this overall framework in mind that we offer comments specific to some of the panel’s preliminary draft recommendations.

To read the full testimony, please click here.