The Real Estate Board of New York to The New York State Joint Legislative Budget Hearing on Environmental Conservation

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REBNY strongly supports Part R of the FY 2022 New York State Executive Budget Transportation, Economic Development and Environmental Conservation Article VII Legislation. This thoughtful proposal accomplishes three important policy objectives: (1) it reduces costs on ratepayers, (2) it unlocks private capital to be invested in New York renewable generation, and (3) it ensures City law conforms to New York State policy as established in the CLCPA. For these reasons, we encourage the adoption of this proposal.

Building owners in New York City are increasingly looking to obtain New York generated renewable power. This is the case for several reasons include demand from tenants, to fulfill the owner’s own environmental commitments, and to comply with local law mandates. Unfortunately, today, there are relatively few sources of New York generated renewable energy credits (RECs) for city building owners to buy. While this reality will change as the Tier 4 and Offshore Wind programs come online in future years, in the short-term the only viable way for a property owner to secure renewable power is to look to existing generators in New York who conceptually can sell a building owner a “Tier 2” REC.

However, city building owners are currently discouraged from investing in Tier 2 RECs because the building owner cannot use those credits to comply with local obligations. In other words, even if a building owner purchased these RECs, the City of New York would not consider those RECs to be proof that the building was using renewable power.

This unfortunate reality results in some building owners being unable to comply with local law mandates and means that instead they will very likely have to pay significant fines to the City of New York’s general fund. Unfortunately, if this happens, the City is under no obligation to use that penalty revenue – which could be many millions of dollars as soon as 2025 – to further environmental goals.

Part R address this problem head on by providing New York City’s building owners with the temporary ability to use Tier 2 RECs to help comply with local obligations until such a time as there is more renewable power directly reaching New York City. Once there is a more robust supply of New York City associated RECs, the provision ensures that city building owners invest in those prior to utilizing Tier 2.

This modest practical change provides multiple benefits.

First, it protects ratepayers. Currently, the costs of procuring RECs are socialized across all ratepayers in New York. By allowing city building owners to procure RECs, however, those costs are not borne by ratepayers but rather by private businesses. As a result, this reduces the overall cost burden on New Yorkers, saving money for all ratepayers while shifting the cost on to those more able to pay.

Second, it incentivizes city building owners to invest in New York renewables more aggressively. As mentioned previously, City law does not allow a building owner to use a REC toward their local carbon reduction mandate unless that REC is associated with renewable power from a capacity resource generated in or directly entering the electric grid in New York City. The simple truth is that there are no sources of these RECs available today, nor is there likely to be a meaningful supply available in 2024 when these local mandates begin. For certain buildings – particularly very large, densely occupied buildings that contain energy intensive operations – this challenge makes compliance with the local requirements practically impossible and means that they will almost surely be paying significant financial penalties to the City of New York for whatever purpose the City deems fit.

Part R addresses this problem by providing a pathway for city building owners to comply with the law – and avoid penalties – by investing in renewable power in New York. In doing so, it will help ensure that existing renewables remain in New York State, helping to reach the goals set out in the CLCPA. It is simply good policy to encourage building owners to invest in renewable power, particularly if the alternative is paying penalties. In addition, by reducing the overall burden on ratepayers for Tier 2 RECs, it frees up additional options for ratepayer investments in other renewable projects.

Finally, it is clearly a matter of State interest that local policies align with and support the goals of the CLCPA. Recent changes to the Clean Energy Standard provide a mechanism for NYSERDA to resell Tier 2 RECs to voluntary buyers who could include building owners. As stated previously, this policy was designed to both support ratepayers and provide a means for New York entities to buy RECs associated with New York power (which was not previously possible until these changes were made). Part R ensures that New York City law appropriately accounts for these changes – aligning City policy with the overall framework established by the State of New York.

For these reasons, REBNY strongly supports adoption of Part R of the FY 2022 New York State Executive Budget Transportation, Economic Development and Environmental Conservation Article VII Legislation.

Part Q: Technical changes to the Accelerated Renewable Energy Growth and Community Benefit Act

REBNY supports Part Q of the FY 2022 New York State Executive Budget Transportation, Economic Development and Environmental Conservation Article VII Legislation, which would make technical changes to the Accelerated Renewable Energy Growth and Community Benefits Act.

REBNY was proud to join with many other organizations across New York in supporting the Accelerated Renewable Energy Growth and Community Benefits Act. This Act establishes an important new framework to hasten the deployment of renewable energy projects, which must be done to accomplish CLCPA targets.

To ensure the effectiveness of this Act, Part Q would exclude siting permit applications from the Office of Renewable Energy Siting from the State Environmental Quality Review Act (SEQRA). Ensuring a more expedited transition away from fossil fuels is consistent with the widely recognized public policy benefits of renewable energy related to equity, health, and sustainability. As the underlying statute includes strict environmental review standards, this change will not erode environmental protections.