Last week New York City finalized the rules around Local Law 97, the city's restriction on greenhouse gas emissions for buildings over 25,000 square feet. The law has been around since 2019 but there were still some important details that needed to be clarified, particularly what would qualify as "good faith efforts" and what the fines would be.

Under the new rules building owners have until May 1, 2025 to file a Decarbonization Plan in order to qualify as a good faith effort. Fines vary depending on the infraction but some examples are $1,500 for failing to file a plan, $500 for each tenant space where a sub-meter has not been installed, and $268 per year for each unit of greenhouse gas above the emissions limit.

But what the new rules did not change is the ability for buildings to use renewable energy credits as a way to offset carbon emissions. This was criticized as a “corporate buy-out loophole” by some local groups who said in a statement: “The Real Estate Board of New York won and New Yorkers lost today as Eric Adams put the demands of his largest donors over working New Yorkers’ needs. Under Mayor Adams’ rules for real estate, owners of New York City’s most polluting buildings will opt to delay or entirely avoid pollution reductions, leaving New Yorkers breathing more pollution, losing good jobs, and paying higher utility bills.”

As valid as these concerns about buying their way out of compliance might be, they are not completely founded in fact. There are rules in place that don’t allow these credits to be used for greenhouse gasses produced on-site, like those from a gas fired boiler. The law also prohibits anyone filing for a good faith effort extension from using them.

Even still, allowing renewable energy credits does create a loophole. Theoretically, buildings could buy these credits rather than upgrading their systems or finding ways to reduce their (dirty) energy usage. If those credits were purchased from a renewable plan out of state it wouldn’t do anything to achieve one of the reasons the law exists in the first place, to improve air quality for citizens. Even New York’s Department of Buildings, the agency that enforces the regulation, acknowledges this in this clause in the new rules: “DOB is working to monitor New York’s Renewable Energy Credit market and assess the availability of any Renewable Energy Credits that meet the requirements of the law. The Department will revisit this policy as necessary to best achieve the goals of LL97 and associated air quality improvements.”

This law only affects buildings in NYC but its impact is felt far and wide. NYC’s Local Law 97 was one of the first and is certainly the most high profile of any building energy reduction law in the country. Other cities will be looking at the effectiveness and popularity of this law when considering their own regulations. Renewable energy credits are a good way to give as many options as possible to help buildings comply with green regulations, as long as they don’t create a loophole that is environmentally and politically unsustainable.

👁 L.L.SEE: Back in August we reported on a proposal that would require the disclosure of owners of LLCs involved in the purchase of real estate. Now that proposal has reached the White House and, if passed, could be put into place as soon as 2024.

📦 Cubecore: Acid-washed jeans, neon colors, fanny packs, fashion from the 80s is so hot right now. So too seems to be the very 80s office product: the cubicle. The question is, will it be here to stay or is it just another fad that will fade into absurdity again?