Are We Entering a New Era of Green Buildings?

You may have heard that New York City (NYC), the most populous city in the United States, has passed a groundbreaking law limiting building GHG emissions in an effort to meet its ambitious greenhouse gas (GHG) reduction target—80 percent by 2050. The new regulation is having a major impact on building owners and facilities managers as they must meet building emissions restrictions for the first time.

The passing of the new law has left many wondering whether more jurisdictions will adopt GHG emissions limits for buildings. With pressure from many stakeholders to act now, waiting to see how effective legislation is in actually lowering GHG emissions may not be an option. The answers to the questions of can and will this legislation be replicated across the country are uncertain.

Here, we summarize some of the details of the law passed by the NYC council regulating building emissions and discuss what changes building owners and facilities managers may need to make to comply with such a rule.

Where It Began

The link between sustainability and green buildings has long been recognized by the local government in NYC. In 2009, the Greener, Greater Buildings Plan (GGBP) was launched in an effort to minimize the energy wasted from large buildings over 50,000 square feet (sf). As part of GGBP, a law was passed that required these large buildings to benchmark energy performance and to submit data annually. This important baseline data collection and other laws laid the foundation for the GHG regulations passed this year.

Which Buildings Are Covered by the Rule?

According to the nonprofit Urban Green Council (UGC), the GHG regulation will apply to 50,000 buildings in NYC (that cover a total of 3.15 billion sf), of which 59 percent is residential, and the rest is commercial. The UGC estimates that if all buildings subject to the regulation come into compliance, the result will be about a 26 percent decrease in carbon emissions from the current output of covered buildings.

Following are the facilities covered by the NYC rule:

• Buildings greater than 25,000 gross square feet (gsf);
• Two or more buildings on the same tax lot that, in combination, exceed 50,000 gsf; and
• Two or more buildings that are condos owned by the same board of managers that exceed 50,000 gsf.

There are seven exemptions from this rule—notably including power plants, rent-regulated accommodations, and places of public worship.

Rollout of the Rule

In an effort to allow NYC’s regulated community time to comply, emissions limits will be deployed in two phases. The first round of emissions restrictions will begin in 2024 and be effective through 2029. However, according to analysis by the UGC, based on current energy usage, 80 percent of buildings currently meet these emissions standards. This means that only the most significant emitters must make modifications to meet these initial limits. However, in the second phase, from 2030 to 2034, stricter emissions limits will apply. The UGC estimates that only 25 percent of buildings currently meet the stricter phase two standards, meaning that 75 percent of covered buildings will have to make operational changes, undergo retrofits, or seek an alternative path to compliance.

How Will Facilities Managers Determine if Their Building Complies?

Facilities managers in NYC will be responsible for calculating their buildings’ GHG emissions—determining if they are in compliance with the new rule—and annual reporting.

Emissions limits. The new emissions limits are not one size fits all. A unique limit will be calculated for each building based on its size and a factor (“emissions intensity limit” in units of tons of carbon dioxide equivalent per square foot (tCO₂e*/sf)) related to the building type. As somewhat of a proxy for building type, the method uses occupancy groups as defined in the NYC building code. The smaller the intensity factor, the lower the emissions limits for a building of that size.

Measuring building emissions. Technically, building emissions are not measured directly; they are calculated. A building’s real (metered) energy usage is multiplied by a factor (the “greenhouse gas coefficient of energy consumption”) that represents tCO₂e emissions for different types of energy. There are five different factors, one for each of the following types of energy usage: (1) electricity, (2) combustion of natural gas, (3) combustion of #2 fuel oil, (4) combustion of #4 fuel oil, and (5) steam.

Noncompliance. Each building must submit a yearly report beginning in May 2025 to demonstrate that it does not exceed the emissions limit. The penalty for not reporting can be large—up to 50 cents per month for each square foot. The civil penalties for noncompliance are up to $268 per excess tCO₂e, which can add up quickly, depending on how much a building’s emissions exceeds the limits. The penalty for providing false information on the report is $500,000. With so much cash on the line, it’s important to comply with this regulation.

What Will Facilities Managers Need to Do to Reduce GHG Emissions?

Buildings that exceed the emissions limit must take action to come into compliance. If only a small emissions reduction is required, then improving operational efficiency without significant expenditure may be adequate. These actions may include adjusting temperature settings on the air-conditioning (AC)/heating unit and hot water heater, repairing leaks, insulating pipes, and weatherizing. If a larger emissions reduction is required, building retrofitting to upgrade appliances; lighting; heating, ventilation, and air conditioning (HVAC) systems; windows; and insulation may be necessary. This may require a large capital investment and involve months of work by energy modelers, engineers, and construction workers.

If a building does not meet its emissions limit, the City may lower its calculated GHG emissions by applying deductions in exchange for participating in another “green” program (i.e., an alternate compliance route). A deduction may be applied if the building owner:

• Purchases renewable energy credits (RECs),
• Purchases GHG offsets, or
• Uses distributed energy resources located at the facility.

NYC’s Office of Energy and Emissions Performance will assist building owners without adequate financial resources or technical expertise in complying with the law. The Office of Long Term Planning and Sustainability will also perform a feasibility study to determine if GHG emissions trading is possible in the future—this may ease the regulatory burden for some buildings that are not meeting the GHG emissions limits.

What Could This Mean Outside NYC?

It’s difficult to predict if ambitious GHG emissions reduction rules will be a new normal for buildings. Washington, D.C., has already established a Building Energy Performance Standard that requires buildings to meet standards at least as strict as the median Energy Star® score for each building type—a rule that will affect an estimated 50 percent of buildings in the district.

Although the future is uncertain, you can start thinking about what changes might need to be made in your facility to meet a mandatory decrease in energy consumption. Benchmarking your energy usage is a critical first step to gathering data to guide decisions and planning. Understanding what building performance data are, how to collect them, and how to benchmark now can keep a business ahead of future rules and regulations. You can utilize the EPA’s ENERGY STAR® Portfolio Manager®, an online tool that tracks energy and water consumption and estimates GHG emissions for any type of building.

*CO₂e is the metric used to compare the emissions of GHGs with different global warming potentials, as defined by the Intergovernmental Panel on Climate Change.