Answers to 5 Pressing Questions on Local Law 97

Beginning in 2024 — about seven months from now — co-op and condo boards in larger buildings will have to reduce their carbon emissions under specified caps to comply with Local Law 97. Failure to do so will result in fines. The caps get more stringent in coming years, with the ultimate goal of reducing carbon emissions to zero by 2050. Crain's offered answers to five pressing questions about how boards can comply with this ambitious climate law:

1. Everyone talks about electrification — switching from fossil fuels to building systems powered by electricity from renewable sources. But can the city's electric grid handle a massive shift to electrification?

In the near term, it will not strain the city’s grid for buildings to switch to electric power rather than burning fossil fuels, according to a 2021 report from the Urban Green Council, a nonprofit that studies building decarbonization. The grid will need to evolve to meet future demand, but there is time, according to John Mandyck, CEO of the Urban Green Council. “There is plenty of room to electrify before we have to systematically worry about the grid,” Mandyck says. “That shouldn't be a cause for delay for people to take electrification steps today."

2. Will the city help pay for the transition?

The short answer is that the Adams administration has made vague promises to "increase the supply of green financing available." One source of financing the city currently offers is the Property Assessed Clean Energy program, or PACE, which can fund up to 100% of a building’s retrofits through a long-term loan paid back in premiums added to property tax bills. The city says it also continues to pursue grants, rebates and other funding available through the federal Inflation Reduction Act and the Infrastructure Investment and Jobs Act. Utility companies and the New York State Energy Research and Development Authority also have programs available.

3. How will Renewable Energy Credits factor in?

Local Law 97 allows building owners to offset certain emissions by purchasing Renewable Energy Credits from projects that are delivering renewable energy to the city’s grid. Under an initial round of rules published in December (and soon to be expanded and clarified), the Department of Buildings restricts the use of renewable energy credits to emissions generated from electricity use. The stipulation means that the credits can’t be used to offset fossil fuel emissions for heating and domestic hot water. It’s worth noting that credits aren’t expected to be plentiful in the city until the latter half of the decade.

4. How will the city enforce the law?

Building owners will be required to submit emissions reports to the city. Beginning in 2025, if a building exceeded its annual 2024 emissions limit it could face fines of $268 for every metric ton of carbon dioxide over the limit. Building owners may also be on the hook for other penalties and violations, but those have yet to be finalized by the DOB. Expect the city to share more details on enforcement in the coming months.

5. Will co-op and condo boards be able to apply for relief from the city?

Rohit Aggarwala, the city’s chief climate officer and commissioner of the Department of Environmental Protection, said during a City Council hearing last year: “We have no intention of giving anyone a free pass or letting anyone off the hook, but we also see no benefit to the environment in punishing someone who is actually doing everything possible.”

Building owners who make a “good faith effort” to comply with the law may receive reduced penalties or have their carbon caps lowered. The city has yet to clarify how it defines a good faith effort. Andrew Rudansky, a spokesperson for the DOB, said the agency will detail what that entails in rulemaking expected in the months ahead. Building owners should be warned: This will not be a “get out of jail free” card. The general idea is to give property owners who may be faced with extraordinary circumstances an opportunity to plead their case for relief.