Co-ops and Condos to Get Letter Grades for Energy Efficiency

When the New York City Council passed a law last week that will require large co-ops and condos to post letter grades reflecting their building’s energy efficiency, some of the earliest and loudest applause came from the Urban Green Council (UGC). This nonprofit promoter of green initiatives had been an ardent supporter of the bill, known as Intro 1632, from its introduction until its passage during the city council’s last meeting of the year. 

Russell Unger, the UGC’s executive director, is now eagerly anticipating the law’s implementation in 2020, when all co-ops and condos 25,000 square feet or larger will be given a letter grade, from A to F, based on their water- and energy-use data collected annually under Local Law 84’s benchmarking rules. The grades must then be posted near all entrances to the building – a signal to residents, brokers and potential buyers just how efficiently the building’s systems work. 

“There are two reasons why we’re excited,” Unger tells Habitat. “First, the promise of benchmarking needed something else before it could be fully realized – and that was simplification. Most people are not energy experts, and data is hard for people to understand. And second, we’re now able to make energy efficiency more desirable. In New York City, as soon as there’s competition, you see results. I think that’s what we’re going to see from letter grades. New Yorkers are competitive, they’re strivers. People will know if it’s an A, B, or C building – and doesn’t every New Yorker want to live in an A building, just like they want to eat in an A restaurant?” 

When the letter grades go up on building walls, they’ll include a numerical grade that reflects the building’s Energy Star rating. The Environmental Protection Agency computes these numbers by using a nationwide database to compare the energy uses of buildings that have comparable size, usage, occupancy, hours of operation, location, and other factors. An A grade will be awarded to buildings with an Energy Star score of 90 or above, meaning they’re as energy-efficient as at least 90 percent of comparable buildings nationwide. The grade of B will be awarded to buildings that score 50 to 89; a C for 20 to 49; a D for 0 to 19; and an F for buildings that are required to submit benchmarking information but fail to do so. There will also be an N grade for buildings that are exempted from Local Law 84 or are not covered by the Energy Star program. 

Unger says the numerical grades will add nuance to the letter grades. For instance, a building with an Energy Star rating of 88 will receive a B grade, but the board and brokers can claim, accurately, that the building is only slightly less efficient than an A-rated building. 

Proponents of letter grades for New York buildings frequently point to the success a similar system has enjoyed in Europe. But Unger is quick to add an important distinction. The European Union grading system, which went into effect in 2002, is based on a building’s construction. “How it was built translates into a letter grade,” Unger says, “but actual energy use might be all over the place. An A building could be using a D amount of energy.” 

Nonetheless, high letter grades have had a positive effect on the value of European buildings. In Denmark, the value of high-graded buildings has risen by more than 10 percent. 

“If the letter grades made that difference in Europe,” Unger says, “imagine what will happen with grades based on actual energy use in New York City.”