How Residential Carbon Trading Can Reduce NYC Co-op and Condo CMA Fines

Alternative solution. As co-op and condo boards begin to compute the costs of reducing their buildings’ carbon output enough to satisfy the Climate Mobilization Act (CMA), a recent report offers an alternative route for buildings struggling to meet their emission caps. The 171-page report, “Carbon Trading for New York City’s Building Sector,” was commissioned as a requirement of the CMA and conducted by a team of researchers at New York University, the Brattle Group, HR&A Advisors, Steven Winter Associates, and Sustainable Energy Partnerships, in collaboration with the Mayor’s Office of Climate and Sustainability.

Give and take. The report proposes two carbon trading systems. In the first, buildings that emit less than their Local Law 97 cap and their 2018 emissions levels will receive an emissions credit, which can then be sold to another building. Co-op and condo boards would work with a carbon trading expert — just as they would with a stockbroker — to buy or sell carbon credits.

The second system, called an explicit or auction system, is more complex. While carbon emissions limits have already been set for each building, the city would determine the amount of free carbon credits each building would receive according to various criteria, which have to be nailed down. The city would set up the infrastructure for buying and selling the credits and also set a base price. “The price of the credits will fluctuate, and some areas might face slightly higher costs than they would absent trading,” explains Danielle Spiegel-Feld, the executive director of the Guarini Center on Environmental, Energy and Land Use Law at the NYU School of Law and a lead author of the report. “But this approach will also result in more and faster emissions reductions.” 

Learning curve. Boards will need to work with an energy professional to set up trading accounts and facilitate transactions. While there are more than 20 carbon trading programs in operation worldwide, most deal with industrial trading; building-to-building and residential trading is relatively new. “Boards are going to have to learn on-the-go if carbon trading is adopted here,” says Michael Scorrano, the managing director and founder of the En-Power Group. “They will have to rely on experts in the field to help them make the proper decisions and evaluate the risks.”

What’s next. It’s unclear if Mayor Eric Adams and his new administration will get behind carbon trading, but the option is now on the table. Whether it will be launched successfully in New York is still up in the air, but it’s a tantalizing tool for those who will have credits to sell and others who will need them for compliance.