Can New York City Become the World’s Greenest City Without Becoming More Unaffordable?

Rules are being drafted to guide compliance with a 2019 New York City law that requires most of about 50,000 buildings, many over 25,000 square feet, to cut their greenhouse gas emissions by 40 percent by the end of this decade and to achieve net-zero emissions by 2050.

These cuts are important. New York City’s buildings are responsible for over 70 percent of the city’s greenhouse gas emissions, most generated on site.

Few other cities have taken such an aggressive step, and New York should be applauded for this effort. Other cities will be watching this transition closely.

The good news is that roughly 80 percent of those buildings already are expected to meet the first in a series of emissions goals when the measure, Local Law 97, takes effect next year. The city estimates that roughly 4,000 buildings could fall short. (Thousands of additional buildings with affordable housing units must meet different requirements.) Without renovations to reduce their emissions, those 4,000 buildings face the possibility of significant fines in 2025.

Meeting the next goal, in 2030, may be a more formidable challenge. At this point, according to city data, 75 percent of the buildings that must meet emissions cuts by the end of this decade would fail to do so without retrofits. Additional cuts loom after that. Buildings will have to further reduce their emissions to meet goals for 2035, 2040 and 2050. (You can look up a building’s compliance status at accelerator.nyc.)

These retrofits will cost money, and here’s where the trade-offs begin. Take the building where one of us (Paul) lives. For retrofits to both improve energy efficiency and reduce emissions, co-op shareholders spent around $35,000 per apartment to upgrade to a new boiler and modernize its air-conditioning system.

No one wants added costs like those to push New Yorkers out of their present apartments or perhaps even the city. For no matter how leaky old apartment buildings might be, the carbon footprint of the average New Yorker household is still only a third to a half of what the same family would be likely to emit were it to move to a house in the suburbs or beyond.

From a climate perspective, living closely and densely, without the two-car garage, is the best way to live. How then do we make life economically viable in a big city like New York while reducing building emissions and transforming the city into a model of energy efficiency? The city’s Buildings Department is now examining proposals from its advisory board to put the emissions law into effect. Among them are caps on credits buildings can receive for using renewable energy, what constitutes a good-faith effort by buildings that fail to comply and whether buildings should get a break on emissions for using energy during off-peak periods of demand.

To begin with, let’s agree that the law needs sticks like the prescribed fine of up to $268 for every metric ton of greenhouse gas emissions exceeding a building’s cap. Relying on noble volunteers alone won’t do. That approach already exists. Earlier laws attempted to shame buildings into improving their energy efficiency by requiring them to prominently display their efficiency rating, from A to F.  Some building owners have taken their cues, but almost half of the city’s buildings still get D’s and F’s, with the F’s given to buildings that failed to submit their energy information to the city.

Of course, not all sticks are equally stiff. Some are flexible. For example, allowing buildings to trade carbon reductions with one another would be a good way to cut costs while cutting carbon. Buildings that reduce their emissions below their caps could even make money by selling credits for those cuts to other buildings whose emissions reductions are more expensive. A study released by New York University in 2021 found carbon trading would lead to deeper cuts in greenhouse gas emissions and lower the cost of complying with the law.

Such a carbon trading program, which would most likely require approval by the mayor and City Council, must not be confused with what the city is proposing: using renewable energy credits to comply with the law. Buildings would obtain these credits by buying their electricity from sources that generate renewable energy, like solar or wind or hydropower. The credits would allow the buildings to deduct emissions from their overall emissions. But if buildings are allowed to buy too many credits, often at prices we calculate at well under $10 per ton, it would render the law toothless. The advisory board is recommending a cap of 30 percent of a building’s excess emissions. Instead the city should look to more creative solutions to provide more carrots for complying with the law.

The Inflation Reduction Act can help, a lot. It behooves New York City and the state to get their administrative acts together quickly to be ready to help homeowners take advantage of the many federal refunds for everything from heat pumps to induction stoves and for the insulation and electric wiring to make both work. Federal subsidies are important, but they, too, have real limits. In general, they are more designed to help those in single-family homes in the suburbs than urban apartment dwellers. Renters, for example, are almost entirely left out of the equation. They have little say other than to plead with their landlords to remove the gas stoves, which may be responsible for one-eighth of childhood asthma cases.

Fortunately for New York, there is another major carrot it could deploy. The city has a famously convoluted property tax system in sore need of reform. It wouldn’t be the first time a seemingly intractable problem gets solved by linking it to another problem in need of a solution. The city should reduce the tax burden of any large building that takes on an emissions reduction project.

Paul’s building in the Financial District has a monthly maintenance bill that is more than 50 percent taxes. While the building got support from the New York State Energy Research and Development Authority for a boiler upgrade, the residents took the hit on the redo of the ancient central air-conditioning. It’s hard to imagine the co-op board approving another massive maintenance hike to meet emissions limits down the road without some corresponding incentives, like a cut in property taxes.

But wouldn’t the city’s tax base wither if the bulk of its buildings sought this kind of relief? After all, property taxes account for around a third of New York City’s $100 billion annual budget. The fact is, greener buildings are more valuable, in turn leading to higher property tax revenues. So as taxpayers invest money to make buildings greener, the city becomes richer, and everyone eventually is made whole, and then some. Greener buildings provide ample benefits to society overall, for example by making for healthier residents. Healthier residents mean fewer sick New Yorkers and thus lower costs for the city’s Health Department and its public hospitals. Equally important, people want to live in greener places.

The economy will benefit directly in another crucial way: by subsidizing the expansion of New York City-based trade schools that train local carpenters, electricians and future contractors in the ins and outs of net-zero building techniques. Technical schools really could be pathways to creating the work force we need for a greener future. By one count, meeting emissions goals through retrofits alone could create over 140,000 jobs in the New York metro region by 2030.

All of this is going to be hard, of course. The thing we fear most is that the electorate will get the impression that it will be too hard and render Local Law 97 devoid of the necessary tools to make it work or the city will water down the law by allowing too many renewable energy credits for compliance. We must not let this happen.  

The rewards the city reaps will not only be reputational. If New York cracks this decarbonization nut (as it started to do under Mayor Michael Bloomberg with transport and especially bike lanes), the city’s hard-to-bear summers, when the asphalt, steel and brick absorb the sun’s rays and turn the city into a heat island will mellow. The noise from air-conditioners and boilers will ebb.

It will be a much nicer place to live.

Paul Greenberg teaches in New York University’s animal studies program and is the writer in residence at the Safina Center. Gernot Wagner is a climate economist at Columbia Business School.

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