Will Eric Adams Let Landlords Buy Their Way Out Of Energy Upgrades?

Relatively simple, low-cost energy efficiency measures like replacing lightbulbs and fixing leaks start in the range of $5 per square foot and typically shave off a small fraction of a building’s energy use, Stigge said. Many building owners are already moving forward with those kinds of upgrades. But for a deeper retrofit—replacing windows and heating systems throughout an apartment complex, for example—just the first step of hiring an expert to assess what is needed can cost more than the annual Local Law 97 fines.

A retrofit is “kind of like open heart surgery,” Stigge said, and most residential landlords are not ready for the “cost and pain and complexity.”

Given those hurdles, Stigge sees RECs as a necessary tool in the broader push to decarbonize, buying building owners time for the massive effort of going fully carbon-free.

In that time, they could scoop up anywhere from 5-13 million RECs—a level of demand that CHPE and Clean Path would likely satisfy.

The total RECs from the two projects would dwarf the number expected from a previous REBNY-backed proposal to water down Local Law 97 by expanding access to RECs. The proposal, inserted in last year’s state budget by then-governor Andrew Cuomo, was strongly opposed by climate groups and ultimately defeated in the legislature. (RECs allowed under the proposal would have funded existing clean energy across the state, overriding the law’s requirement that RECs go strictly toward new renewables delivered into New York City.)

CHPE and Clean Path could be even more consequential, allowing landlords to avoid major retrofits well into the 2030s. The REBNY-commissioned study projected that only 5 to 10 percent of required emissions reductions for the 2030–2034 period would come from energy efficiency upgrades.

‘The work needs to be done’

Climate organizers want to see that scenario flipped. Sikora says they had hoped to see a cap on RECs written into the law from day one, but lost that battle to real estate. Now, they are pushing the Adams administration to make good on that ambition through rulemaking, not only capping REC use at 10 percent but also ensuring the credits only count against emissions from a building’s electricity use—not from fossil-fueled appliances on site, such as boilers.

“RECs are only relevant to electricity supply. So to have an electricity REC being used to offset gas consumption, that is not apples to apples,” said Jasmine Graham, energy justice policy manager at WE ACT for Environmental Justice.

The push to limit RECs has support on the New York City Council, where Sanitation Committee chair and former climate organizer Sandy Nurse is among those opposing any measure that would allow landlords to “simply buy their way out” of upgrading their buildings.

“It is important that the City limit the number of RECs available,” Nurse told New York Focus by email. “We don’t need more carbon credits or offsets, we need the buildings to be retrofitted—the work needs to be done.”

But, as Local Law 97 is written, the decision rests with the city’s executive agencies, not the council. When Nurse raised the issue at a council oversight hearing on the law last month, Chief Climate Officer Aggarwala said that the city was still drafting its guidelines but that it aimed “not to allow RECs to be used overly broadly.”

The Department of Environmental Protection did not provide more specifics when reached for comment.

Real estate groups have long sought flexibility in meeting Local Law 97 targets. “Local Law 97 does not limit the extent to which a building owner can use eligible renewable energy credits to comply with its emissions limit,” said Alexander Shapanka, assistant vice president of policy at REBNY, in a statement. “We look forward to continued discussions with all stakeholders about how to help building owners comply with this law and invest in the green economy rather than pay fines to the City’s general fund.”

Some analysts point out that the lift required of building owners already looks much smaller than it did when Local Law 97 passed in April 2019. That’s in large part because, a few months later, the state passed its own landmark climate law, requiring New York to entirely decarbonize its electric grid by 2040. If the grid decarbonizes at that pace, research suggests the owners of half of the city’s major real estate won’t have to do anything at all—even buy RECs—to follow Local Law 97 for the next decade or so.

For climate advocates, that’s just one more reason for the city to limit REC use and ensure that landlords still have enough of an incentive to upgrade their buildings.

“New York has the oldest building stock in the country,” said Graham, of WE ACT. “Our buildings are so massively inefficient. There are so many jobs to be created in New York City, and everywhere…. That’s one of the beautiful things about buildings—that they are everywhere, and so they can create jobs everywhere.”

Beyond jobs, upgrading New York City buildings could also reduce the burden of pollution on working-class communities of color, who disproportionately live in buildings with outdated heating systems relying on dirty energy like fuel oil. And it could help rein in spiking energy bills, which are already higher—and rising faster—in New York than in all but a handful of other states.

“When you put it together with the fact that these BIPOC and low-income communities live in old, inefficient housing, you’ve got your hard-earned money going right out those drafty windows,” Graham said.

The city’s recently passed budget offers a sign that the Adams administration is willing to at least compromise with advocates, adding five staff at the Department of Buildings office tasked with overseeing Local Law 97 implementation. (Advocates say the office needs at least ten more staff; Adams’ preliminary budget had added none.)

Questions also remain around the extent that the city will enforce fines that climate organizers and Aggarwala alike have described as giving the law teeth—fines that now also face a court challenge from three building owners.

Despite the growing pains, even some Local Law 97 skeptics say it has pushed the real estate sector toward decarbonization in an unprecedented way.

“I’ve been in the business for 25 years now, and it really feels like a sea change after Local Law 97 was passed,” Stigge said. “It’s got people talking more, and more seriously, than ever. So that’s a good thing.”