New York City’s Local Law 97 (LL 97) goes into effect soon: January 1, 2024. It will have a great impact on real estate in NYC. Other cities are looking at this and may copy.
What is LL 97? Starting on Jan. 1, 2024, any energy used by a subject building (virtually any building greater than 25,000 sq. ft.) will count toward a greenhouse gas (GHG) emission limit. LL 97 contains factors that convert kWh of electricity to kilograms of GHGs; factors that convert therms of natural gas to GHGs; and factors that convert the number of gallons of #2 and #4 oil used and pounds of steam purchased to GHG emissions. These get totaled up and divided by the building’s listed square footage to get a rate of GHGs per sf. This gets compared to your GHG emission limit (based on what type of building it is: an office building, a residence, a warehouse, a school, etc.) to determine whether you comply. By May 1, 2025, a subject building must submit their 2024 energy usage to the NYC Dept of Buildings to determine compliance with the site-specific limit or not. The fines for some are anticipated to be 6 figures per year.
How to comply. To meet your GHG emission limit, your building must be more energy efficient (use less energy to perform necessary functions) and/or use “cleaner” energy (defined as energy that emits less GHGs). It is critical to perform a thorough energy evaluation and see where you stand on LL 97. Are you likely to be in compliance next year or not? How high might your fine be? For example, take actual energy usage from a recent year and see if it would comply if the same energy usage would be the same in 2024. An important note: if such a study shows that you comply in 2024, but barely, do not celebrate. Things can change between that baseline year and 2024 (equipment aging, tenant behavior, and, most likely, the weather). You want to not just comply, but comply with a buffer to withstand a worse-than-expected winter or summer causing you to use more energy for tenant comfort.
If you need to make changes to avoid or reduce a potential fine, it is probably too late now to implement many strategies. But if you are facing a fine, one should have such a thorough evaluation done NOW. For example, one strategy is to stop burning oil for heating and use natural gas instead (if available). While there may be an upfront cost to upgrade your burner to burn gas, that cost will be made up in reduced fines in 2025 and beyond and that natural gas is cheaper than oil (and has been so for over a decade).
Another strategy is efficiency. Now is the time to invest in energy efficiency which will help you comply with LL 97 (reduce your GHG emissions), and also lower one’s natural gas and electricity bills, which we know has grown at rates much greater than inflation recently. A thorough energy audit will likely point out several beneficial strategies.
Final note. Some people ignored LL 97, thinking that the new mayor who took office last year would weaken and perhaps even repeal it. This did not happen. In fact, Mayor Adams is a strong proponent of LL 97 and his Buildings Dept amended the law this past January to make it more comprehensive. Don’t ignore it any longer; don’t wait for it to take effect. It would be too late then to avoid potential massive fines. See LL 97 as not just another law you must comply with, but as a way to save costs and serve your tenants better.
CCES has the experts to address LL 97 and other NYC energy local laws. We can perform the evaluation of your potential compliance status vis-à-vis this rule and develop multiple strategies to reduce or eliminate fines and provide other financial benefits, as well. CCES can also be your project manager to help implement strategies that you choose to ensure they are implemented correctly and you get the most benefit from them.