Adams Takes First Big Step on Climate Law, Yet Bigger Questions Loom

The city announced key proposed rules, making progress but also leaving a massive loophole unaddressed, our columnist writes.

Pete Sikora   ·   October 7, 2022
Mayor Eric Adams announces the appointment of chief climate officer Rohit Aggarwala (right). | Mayoral Photography Office

This article is published in our Perspectives section. Pete Sikora is the Climate and Inequality Campaigns Director at New York Communities for Change.

The entirety of Puerto Rico was blacked out as Hurricane Fiona dumped two feet of rain in 24 hours. Ian just blew apart parts of Florida. Floods in Pakistan have left millions homeless. China is baking in an epic heat wave. In New York, after a summer of miserable heat waves, the upcoming 10th anniversary of Sandy reminds us that sea level rise, flooding, and extreme weather pose an existential threat to New York City.

After decades of inaction, we’re at the precipice: Climate-heating pollution must be slashed immediately or we’ll face global catastrophe beyond anything we’ve seen. In New York City, the single most important factor in determining how much more pollution we release is how aggressively we decarbonize our buildings. Yesterday, Eric Adams began to answer that question.

Seventy percent of New York City’s emissions come from buildings. The city’s world-leading climate and jobs law, Local Law 97 of 2019, takes aim at those emissions by requiring large buildings to ratchet down their pollution. Adams is in charge of implementing it.

Adams just announced the first of the proposed major regulations implementing the law, sharing 28 pages of highly technical documents late in the day. In one major area, establishing pollution limits for a wide variety of buildings, his administration is demonstrating an impressively high degree of professionalism in a complex level-setting exercise. But in another, which will determine whether landlords can use “renewable energy credits” to buy their way out of those limits, his proposal would severely weaken or even gut the law. 

The administration has promised further study of that area and implies that it will set tighter rules. He’d better fulfill that commitment, or the law won’t produce the energy efficiency upgrades that lead to tens of thousands of jobs and massive pollution cuts.

We can count on the powerful real estate lobby — which bitterly opposed Local Law 97,  and is already bankrolling Adams’s re-election campaign — to push hard to preserve this buyout loophole. Unless ordinary New Yorkers pay attention and put up a fight, especially in these proposed rules’ 30-day public comment period, which will include a public hearing, the course of least resistance for the mayor might become letting his benefactors off the hook.

Positive Steps

The proposed rules contained one piece of enormously good news: The team at the Department of Buildings tasked with implementing the law is dead serious about setting carefully considered building-by-building pollution limits in line with its objectives. As disastrous as Mayor Adams has been for the city in other areas, that’s a credit to his still-young mayoralty.

Local Law 97’s first pollution limits, which begin in 2024, won’t make a huge dent: Only one in five buildings are currently over those limits, most of them just barely. But five years later, a much lower pollution cap takes hold: 75 percent of buildings are over the 2030 limits, often by quite a lot.

Various types of buildings are fundamentally different — a dense residential tower has a dramatically different energy profile than a dry goods warehouse. The law’s drafters assigned pollution limits to the city’s pre-existing and well-established categories of buildings, which are driven by fire and safety considerations. But they knew that was a blunt instrument. They therefore directed regulators to analyze and fine-tune the categorizations, ensuring buildings are properly sorted into more appropriate buckets, and assigned a reasonable cap that achieves the law’s objectives without unduly burdening owners.

Since the law was enacted, some real estate and other corporate interests whose properties are covered by the law have argued that large swathes of the city’s large buildings can’t economically meet its limits. They even filed a lawsuit alleging that the law is so costly to comply with it’s unconstitutional. It was always a baseless, self-interested claim. Now, it’s being thoroughly rebutted by deep, careful analysis by the city’s professionals.

The proposed rule for 2024-2029 is a masterclass in expertise put to good use. Adams’s team conducted an extensive, peer-reviewed study of New York’s buildings by type and use. Based on that research, which they should make public, they proposed a regulation to fine-tune the initial pollution caps.

Out of thousands of buildings that exceed the 2024–2029 pollution cap, only a small minority — about 90 buildings — are much affected by this recategorization. (It turns out that this part of the law was pretty well thought-out!) Some buildings’ caps will go up somewhat, some down, but there won’t be massive changes, and building owners will know the precise requirements they have to meet through 2029.

The Department of Buildings office charged with implementing the law is also setting more specific limits by building type for 2030–2050, as directed by the law. The high level of professionality on display bodes well for further analysis and regulatory action. 

Many other detailed technical issues are also dealt with in these rules, from the treatment of campuses of buildings that share a central plant to a proposed system to credit shifting energy use to overnight hours, since in the future a mostly renewable grid will often have excess zero-emissions energy generating capacity from windmills that continue to spin at night. It’ll take experts some time to assess the technical merits of these proposals, which at first reading appear to be carefully considered and sound.

But Is This a Set-Up to Gut the Law?

So far, so good — but the biggest implementation question remains unanswered.

The powerful and deep-pocketed real estate lobby, which spent big money to elect Mayor Adams and is already pouring money into his re-election campaign, is trying to gut the law by opening up a giant “buy-out” loophole in the law using Renewable Energy Credits (RECs). 

The Mayor’s just-announced proposal is wildly inadequate when it comes to limiting RECs. The proposed rule, explained below, may destroy Local Law 97 if it isn’t followed by a tight further limit.

This column is meant to ring the alarm: If the Mayor doesn’t tightly limit RECs and leaves only this proposed rule in place, the law will be severely weakened or even gutted.

RECs are credits derived from renewable energy generation. One REC represents one megawatt hour of renewable energy. It’s not literally the energy itself; it’s a financial tool for supporting renewables. 

Local Law 97 tasks the city with determining under what circumstances RECs can be used to offset pollution from a building. The idea is to help a landlord who might have an unusually difficult-to-upgrade building comply with the law by allowing a limited purchase of RECs, and in the process to help support renewable energy development.

As part of the compromises in the final horse-trading before the law passed the Council, the real estate lobby won provisions in the law that punted those decisions to administrative rule-making. But the intention of the law’s drafters, like prime sponsor Costa Constantinides, was that RECs would be a marginal practice and the rules governing their use would be adjusted to reflect changing circumstances.

The problem comes if there’s a flood of RECs from new renewable projects, but the use of RECs to meet the law’s requirements isn’t tightly limited by the city. In that case, building owners would just buy cheaper RECs rather than upgrading their buildings. 

That flood is now coming, thanks to the state’s approval of two vital large transmission projects into New York City, among other projects bringing renewable energy to the city’s grid. Instead of proposing a properly tight limit on landlords’ use of RECs to account for their buildings’ pollution, the administration’s draft rule would limit RECs only to offsetting pollution generated through electrical use. The administration separately says it will study the issue further and perhaps propose tighter limits. 

An electric-only limit matches RECs, which come from electricity generation projects, to the pollution generated from electricity use. But if that’s the only limit on their use, many buildings — especially commercial buildings, like office towers in Manhattan, whose energy use is usually about three-quarters electricity — would likely buy RECs and get out of needing to do anything to upgrade their buildings through 2035. Energy efficiency projects won’t happen. Fossil-fueled boilers and furnaces won’t be replaced. Deadly pollution won’t be reduced. Many thousands of jobs in design, renovation, and construction won’t be created. 

The rules proposed yesterday also include new limits on pollution from 2030 to 2035, which may alleviate this problem, but likely don’t remedy it. Further analysis of these complex proposed rules in the coming days and weeks will shed light as spreadsheet-wielding experts pick them over, but RECs will need to be tightly limited beyond just this proposed limit in further rule-making.

The city should add an REC limit capping use to either only up to 10 percent of total pollution or only up to 30 percent of the pollution by which a building is over its individual pollution cap. Capping total REC use in addition to an electrical-only limit would ensure that RECs could not become a massive loophole for building owners to “buy out” of upgrading their buildings to high energy efficiency — and off fossil fuels. Building owners would be obligated to clean up their polluting buildings, not just buy RECs and call it a day.

Mayor Adams must go beyond the loose REC limits proposed yesterday. Otherwise, he will hand a giant gift to the real estate lobby and a disaster for the city’s future. The world’s most important city-level climate and jobs law could flop. 

People or Real Estate?

Councilmembers, unions, experts, industry practitioners, and advocacy organizations, including New York Communities for Change, where I work, support a tight two-part limit on Renewable Energy Credits for Local Law 97: RECs should only be allowed to be used for pollution derived from electrical use, and only up to 30 percent of the pollution by which a building is over its cap or only up to 10 percent of total pollution. Yesterday, the administration announced the first part, an electrical limit, but not the tight limit.

It’s fine to study the REC issue more, as the administration promises, though the clock is ticking towards the law’s first requirements in 2024. The city can and should undertake its own analysis. But the conclusions of other analyses are already clear: A tight limit on RECs is absolutely necessary. 

In addition, the administration must set other future rules and regulations properly. The city and the state will need to allocate real money in the coming years and decades to help buildings, like NYCHA and some categories of affordable housing owned by working class people, slash their pollution and comply with the law. 

Adams will also need to enforce Local Law 97 by assessing the penalties set under the law to ensure compliance. He can’t lower penalties, allow landlords to delay, or create loopholes for them to avoid doing the necessary work on their buildings.

Adams must not let deep-pocketed donors in the real estate industry, who funded his campaign and are pouring money into his re-election, off the hook.

Local Law 97 can’t become another toothless, unenforced housing law that exists only on paper. It must be fully implemented and enforced. These vital decisions will come in future rule-making and enforcement actions. 

Under the city’s rule-making process, the current set of proposed rules goes to a 30-day comment period, which will include a public hearing, online, on November 14. New Yorkers should raise their voices loud and clear: While we appreciate the progress that today’s announcement represents, the Mayor must tightly limit Renewable Energy Credits and enforce the law, or New York City will not slash its climate-heating pollution, won’t improve air quality, and will not create tens of thousands of jobs our communities need.

If Eric Adams guts Local Law 97, it might then be appropriate to name the next major storm to hit New York City after him.

Pete Sikora is the Climate & Inequality Campaigns Director at New York Communities for Change.
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