Energy-Efficiency Letter Grades Don’t Predict Your Risk for Fines

Counterintuitive. With fines looming in 2024 for buildings that fail to meet carbon-

emission goals under the Climate Mobilization Act, many boards with A and B energy-efficiency letter grades are operating under the assumption that they won’t face fines. But there’s not really a correlation between the grades — which are based on required annual benchmarking data on water and energy usage — and fine risk.

Explanation, please. How is that possible? Benchmarking data compares a building’s energy and water usage with similar buildings nationwide, but the resulting letter grade does not take into account how that energy is produced, which is a prime determinant of carbon emissions. “Bigger buildings with more square footage per person — less density — tend to get good letter grades,” says Ben Milbank, a senior project development engineer at Ecosystem Energy Services, an engineering and construction company. “They can be burning #2 oil and still get an A grade — and yet face a fine in 2024.”

The flip side. The good news is that many co-ops and condos with D grades — which constitute more than half of the buildings that fall under the law — aren’t necessarily facing crippling fines. Ecosystem is now running a $7.7 million project at a 13-story, 172-unit prewar co-op near Union Square that suffered from chronic heat imbalances, thanks to aging boilers and absorption chillers that operated in either heating or cooling mode, never both. Ecosystem is removing the massive cooling tower from the roof and installing nine air-source heat pumps that are powered by electricity — until the outdoor temperature dips below 40 degrees, when a natural-gas boiler will provide supplemental power. This hybrid system reduced the required number of heat pumps by two-thirds while making maximum use of limited roof space.

Now comes the disconnect. “The building has a low D energy-efficiency grade,” Milbank says. “And even though this project will cut the building’s natural gas consumption by more than 80% and make it fully compliant with the Climate Mobilization Act beyond 2050, we might optimistically get it up to a C grade. That’s because of the disconnect between letter grades — how much energy and water you use per square foot — and the building’s carbon emissions. But this co-op is going to be a very efficient, low-carbon building.” His conclusion: “The letter grade is semi-irrelevant.”