July 2021 - Quarterly Market Letter
On behalf of the team at 5, I am pleased to forward our market letter for the second quarter of...
New York City’s sustainability goals are among the nation’s most aggressive and ambitious. The Climate Mobilization Act (CMA) was passed by the New York City Council in April 2019, pledging that the city will reduce its greenhouse gas emissions by 80% and achieve carbon neutrality by 2050. Approximately 71% of greenhouse gas emissions in the city are from commercial and residential buildings. Accordingly, pieces of legislation that comprise the CMA are focused around reducing the carbon footprint of the city’s largest buildings and making them more energy efficient. This new legislation intends to counter climate change and is comprised of several local laws. Local Law 97 (LL97) is the centerpiece of the CMA which seeks to limit carbon emissions from both new and existing buildings.
This landmark legislation affects over 57,000 buildings across New York City with a near-term goal of reducing building-based greenhouse gas emissions by 40% by 2030. As part of Mayor de Blasio’s Green New Deal, the passage of LL97 is seen as an unprecedented commitment to combat climate change in New York City. LL97 specifically applies to any building that is more than 25,000 square feet and sets carbon emissions limits beginning in 2024. For buildings that are not in compliance with the city's requirements, resulting financial penalties begin to be assessed in 2025. The scope of LL97 is unique as it applies to both existing structures and new construction projects. There are several other local laws, in addition to the CMA and LL97, that affect building owners.
Local Law 84 (LL84) requires building owners to submit energy benchmarking data annually by May 1 for buildings that are more than 50,000 square feet. This data, which captures a variety of electricity, natural gas, steam, water, and fuel oil usage parameters, must be entered and tracked through a public database to identify and inform both building owners and tenants of opportunities to become more energy efficient.
Local Law 95 (LL95), formerly Local Law 33 (LL33), requires building owners to post their Energy Efficiency Rating Label in a conspicuous location near each public entrance. Buildings are assigned a letter grade based on the annual energy benchmark that is submitted to the Department of Buildings through LL84. Letter grades (A through F) are based on a building’s occupancy type and measured against the energy performance scores of similar buildings. According to the Mayor’s Office of Sustainability, some of the objectives behind LL95 include:
• Incentivize capital improvements to lower operating costs, improve tenant comfort, and save energy.
• Strengthen opportunities for building owners to increase marketability, improve brand reputation, and demonstrate commitment to tenants.
• Empower tenants, co-op and condo owners, and other stakeholders to choose buildings that align with their personal environmental values.
5 currently serves over 5% of the electric load in New York City and represents many clients that are subject to the CMA and other energy-related local laws. 5’s team is very familiar with the city’s compliance requirements and several of our team members have been appointed to working groups that report to the mayor’s office on the implementation of this legislation.
Contact Us to learn how we can help your buildings in New York City satisfy the requirements of the CMA and avoid fines for non-compliance as part of a comprehensive energy strategy.