Local Law 97: Act Now

Local Law 97: Act Now

By Justin Baker, Managing Director, Lilker Energy Solutions
The recent passage of New York City’s Climate Mobilization Act, Local Law 97 (LL97), sets increasingly stringent limits on buildings’ greenhouse gas (GHG) emissions, which make up nearly three-quarters of all emissions citywide. The urgency to reduce building emissions is part of the City’s long range 80 x 50 plan to cut total emissions 80% by 2050. This new law has teeth, with significant fines levied on building owners for noncompliance. LL97 is far-reaching, with very few exemptions. Annual compulsory GHG emissions reporting starts with the 2024 calendar year, and owners have only until July 1, 2021, to file a request for relief for special circumstances. There are two initial levels of compliance, for the periods 2024-2029 and 2030-2034. Stricter emissions limits for 2035 and beyond will be announced no later than 2023.

 

Penalties legislated in LL97 raise the stakes dramatically for noncompliant owners and necessitate immediate action toward developing a roadmap for compliance. Significantly reducing carbon consumption and resultant GHG emissions is a complicated matter in buildings with existing systems running on traditional fuel sources; it requires a solid, forward-looking strategy and time to implement needed improvements.

Below is information to help you prepare, plan and learn about available financing for modifications and capital improvements required for compliance with LL97.

Who does LL97 affect?
LL97 covers commercial buildings over 25,000 sq. ft. If you’re required to report building energy usage data under the NYC Benchmarking Law, LL84, you’re required to adhere to LL97. Exemptions are rare: city-owned buildings are exempt, while landmarked buildings are not. As a point of reference, current benchmarking data indicates that 20% of reported buildings are out of compliance based on 2024 emissions standards, and 75% would not comply with 2030 standards.
How are GHG emissions calculated?
GHG emission are directly tied to energy use. Total building emissions are calculated by considering the amount and type of energy utilized by the building, including kWh of electricity from the grid, kbtu of natural gas, kbtu of #2 or #4 fuel oil, or kbtu of district steam. Emission limits are mandated by building type, size and space use.
When do I need to report building emissions data to DOB?
Owners will be required to submit an emissions report for calendar year 2024 to the Department of Buildings by May 1, 2025. If you miss the May 1 reporting deadline, there will be a fine of $0.50 per sq. ft. per month until a valid report is submitted.The report, which must be certified by a registered design professional, will detail whether or not your building is in compliance. If your building is out of compliance, the report must indicate by what amount the limit was exceeded. Carbon emissions documentation is an annual requirement; a new report must be submitted by May 1st for every year thereafter.
What is the penalty for noncompliance?
Buildings over the allowable emissions limit will be subject to an annual fine, calculated at $268 multiplied by the number of annual metric tons per square foot of emissions in excess of the stipulated limits.While the age and efficiency of building systems are a factor in emissions levels, there are other considerations such as special occupancies like data centers or 24/7 tenant operations that drive up emissions levels.As an example, we looked at two buildings’ potential liability relative to LL97’s 2024 and 2030 emission limits by comparing their current benchmarking (expressed in kilograms of carbon dioxide equivalent units per square) against allowable limits and converting the excess to metric tons. Building A is a 200,000 sq. ft. Class A Building constructed in the 1990s. With a current benchmarking of 7.1 kgCO2e/ft2, Building A would incur no penalties for 2024-2029. Building Bis a 2.1 million sq. ft. LEED Platinum skyscraper constructed in the early 2000s, with significant 24/7 operations. Its latest benchmarking is 13.2 kgCO2e/ft2, substantially above the 2024 limit. Without any improvements, the building owner could incur a potential fine of approximately $2.67 million annually in 2024-2029.

 

From 2030 to 2034, neither building will be in compliance without significant improvements. Building A faces potential fines of approximately $138,000 per year; Building B could see fines of nearly $4.9 million.

 

How do I know if my building is currently compliant with the 2024 and 2030 GHG limits?
Retain an experienced energy professional to review your building’s most current Benchmarking Report to determine where you stand relative to LL97 emission limits for both 2024 and 2030. The professional will advise you as to potential penalties if your building is noncompliant.
What do I do if my building is not compliant with LL97?
Act now. Ask your energy professional to create a compliance plan that will: a) optimize the equipment you have in place; b) make sure you’re consuming the right type of energy; and c) identify capital improvements/energy credits that will be required prior to the 2024 and 2030 deadlines for compliance.Working with a construction project estimator, your energy professional can provide a menu of options and related costs.
How much will LL97 compliance cost?
There is no simple answer. Depending on where your building falls, you may have more or less work to do prior to 2024. The cost of reducing emissions can vary greatly depending on what energy saving actions are needed.
How can I pay for LL97 compliance?
With the enactment of LL97, the City passed corresponding bill LL96 that establishes an innovative, low cost financing program called Property Assessed Clean Energy (PACE). A major advantage of a PACE loan is that it is repaid through the building’s property assessment tax bill. This means the loan attaches to the building, not the building owner. In addition, there are few upfront costs, the interest rates are lower than standard loans, and the terms can extend up to 30 years.
How will LL97 affect my tenants?
The better question is, “How will my tenants impact compliance?” And the answer is, quite a bit. It will be important to make sure your tenants understand the requirements of the law. They should be committed to operating energy efficient spaces and helping to reduce the overall emissions of the building. Extensive hours of operation and/or intensive use of electronic equipment could negatively impact your building’s benchmark.
Are there ways to comply outside of reducing my building’s energy usage?
Yes. You will likely need to reduce your energy usage to comply with this law, however, there are some additional options that will help you to achieve compliance. These include purchasing credits for renewable energy generated in NYC, purchasing GHG offsets that allow you to deduct up to 10% of the annual emissions limit, and carbon trading between buildings.

The bottom line: 2024 will be here sooner than you think. Now is the time to work with your energy and design professionals to develop a game plan that will get your building in compliance as quickly and cost-effectively as possible. Changes can’t happen overnight. A good long-term strategy that aims to comply with LL97 limits established for 2030 and beyond requires thoughtful assessment, expert planning and financial commitment.

If you’d like more information about LL97 and how to begin the compliance process, please email me at jbaker@lilkeremo.com. Lilker Energy Solutions, energy audit, commissioning and retro-commissioning professionals can review your benchmarking report, ensure your current equipment is operating at peak efficiency, and develop a long-term strategy to achieve and maintain LL97 compliance. 

Justin Baker, P.E., CEM, LEED AP
Managing Director, Lilker Energy Solutions

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