Cuomo’s renewable energy boon to New York City building owners 

ALBANY – Owners of large New York City buildings have found a potential workaround for a new city law requiring them to cut emissions, thanks to Gov. Andrew Cuomo.

Cuomo’s budget proposal includes a provision backed by the Real Estate Board of New York which would override a portion of the city’s landmark building emissions law hailed by environmental advocates. The governor wants to let building owners buy renewable energy from existing wind and solar plants in upstate New York as an alternative to penalties or investments in more costly efficiency improvements.

“In order to ensure that New York City has reliable, sustainable access to renewable energy for today and the near-future, it’s essential that there be additional, new investment in green power production – and this smart State measure will create a meaningful pathway for that investment,” said John Gilbert, executive vice president and chief operating officer at Rudin Management Company.

The city law had been years in the making and emerged only after extensive negotiations among interested parties. But the ultimate aim was to make buildings more energy-efficient through physical upgrades such as new facades, insulation, windows and HVAC systems. Supporters saw it as a means of cutting building emissions – which are responsible for about 70 percent of the city’s greenhouse gas output – while also creating new green jobs in the clean energy sector.

Those who have been pushing for building emissions mandates have had to stomach a series of compromises before and after the law was passed – most recently at the behest of City Council Speaker Corey Johnson, who pushed a carveout for natural gas-powered fuel cells. Allowing building owners to buy renewable energy credits, or RECs, generated by vintage solar, wind and hydropower plants is seen as another weakening of the bill’s original intent.

“It’s puzzling given the governor’s recent raft of climate proposals,” said NYC Environmental Justice Alliance executive director Eddie Bautista. “We find it deeply troubling because the expected emission and job generation projections that the law envisions can get whittled away and significantly – with an untailored” renewable energy credit program.

A Department of Public Service official said on background that the proposal aligns the city’s law with recent changes to the Clean Energy Standard, providing a temporary compliance option for building owners to buy existing renewable energy until offshore wind or renewables are available for delivery into the city.

Cuomo’s proposal came as a surprise to Mayor Bill de Blasio’s office. A spokesperson said City Hall did not request the change and is still reviewing it.

Real estate interests argue there is no realistic way for some building owners to meet the reductions because of their previous efficiency investments, and that they’d otherwise simply pay the penalty if no renewable offsets are available. The emissions law does allow waivers if building owners can demonstrate they could not reasonably comply.

“Without access to renewable energy, New York will never reach its climate change and emissions reduction goals,” Rudin’s Gilbert said. “We must get the most out of the sources we have now while we push to get more online in the coming years.”

But those who lobbied for the bill argue the REC loophole allows building owners to avoid the hard and costly work of making their buildings more efficient.

“[The law] compels owners of large, polluting buildings to slash their climate pollution through upgrading their buildings to high energy efficiency. That will create tens of thousands of jobs in design, renovation and construction,” said Pete Sikora of New York Communities for Change. “Governor Cuomo should not try to jam a regulatory loophole into the state budget on behalf of landlords who may want to skate out of complying with the city’s law.”

The New York State Energy Research and Development Authority is already required to contract for a majority of these RECs, called Tier 2, over the next five years through competitive solicitations – with costs passed on to utility customers. The authority is allowed to resell them to other parties under the state’s clean energy program, which REBNY supported, although those details are being finalized.

So allowing real estate owners to meet their emissions reduction requirements with the RECs will not drive new investments in renewable energy in the state.

The governor’s proposal stipulates that building owners can only use the Tier 2 option if no renewable energy credits from sources delivered directly into the city (Tier 4 RECs) or offshore wind RECs are available. Transmission projects to bring renewables to the city, a push touted by Cuomo in one of his State of the State addresses, may not be completed for years. Offshore wind projects also aren’t expected to come online until well into the next decade.

The enforceable penalty provisions of the New York City emissions law, Local Law 97, don’t go into effect until 2024.

Building owners are currently able to buy renewable energy located in the city or delivered to the area, including Canadian hydropower, to meet their obligations, which aligns with the Tier 4 proposal. That was a hard-fought provision of the law at the time and came as a surprise to many as it was inserted late in the process.

Still, come clean energy advocates see the proposal as a positive step.

“This change would allow existing upstate wind and solar facilities to sell to NYC building owners, which the clean energy industry supports,” said Anne Reynolds, executive director of the Alliance for Clean Energy New York. “It makes sense to have NYC’s law align with the State’s goals to support and grow renewable energy Statewide. Once offshore wind is built, building owners can buy from those new clean generators as well.”