Tall buildings glow above a busy street scene in New York City
Heating buildings accounts for some 40 percent of New York City's carbon emissions. Mike Segar/Reuters

Making existing buildings more energy-efficient can cost millions of dollars. But under Mayor Bill de Blasio’s new mandate, owners must either upgrade or pay a hefty fine.

New York City’s building owners are facing a tall order: Mayor Bill de Blasio announced earlier this month that the city will become the first to mandate that existing buildings—from municipal offices to private businesses, hospitals, and apartments—must drastically curb their carbon emissions. Those who don’t comply will face hefty penalties amounting to as much as $2 million a year for a 1 million-square-foot building.

The mandate, which will target 14,500 buildings above 25,000 square feet, will also set a “fossil fuel cap.” The cap will require buildings to be upgraded or retrofitted with things like more energy-efficient heaters and boilers, as well as solar panels and windows that reduce heat loss in the winter and heat gain in the summer.

All this will have to be in place by 2030, though the city has yet to give many concrete details, such as what, exactly, the cap will be. The mayor’s office hasn’t responded to an interview request from CityLab, and has generally been mum on specifics. A recent New York Times article noted that the plan could could entail limiting market-rate apartments—one of the largest greenhouse gas emitters—to just 50,000 B.T.Us (the measure of fossil fuel usage) per square foot per year. According to the Times, that would be roughly a 25 to 30 percent reduction from current usage.

It’s an aggressive step from de Blasio—for good reasons. Heating buildings is the single largest contributor to greenhouse gas emissions, accounting for 42 percent of CO2 produced in the Big Apple. (Worldwide, that number jumps to 70 percent.) In 2014, the city released its sustainability plan, “One City Built to Last,” which set a goal of lowering emissions from buildings by nearly 3.4 million tons by 2025. If all goes as planned, the new mandate could cut 7 percent of the city’s carbon emissions by 2035, which the mayor’s office says is equivalent to taking 900,000 cars off the road.

So far, de Blasio has garnered support from environmentalist groups like the Natural Resources Defense Council and Environmental Defense Fund, whose members joined him in a press conference announcing the mandate. “[The mandate is] practical because it’s combining a clear deadline with financing and engineering help in a way that makes it as easy as possible to meet the climate target we need to meet,” says Andy Darrell, the New York regional director of EDF who also serves on New York City’s Sustainability Advisory Board.

The de Blasio administration—which has long pledged to reduce 80 percent of the city’s carbon emissions by 2050—is departing from the more common approach of giving developers and building owners incentives like tax breaks and financial grants for pivoting to clean energy. “We gave people a very fair amount of time in the private sector to come forward and really agree to voluntary goals that will be sufficient,” the mayor told the press last week. “But time was up. … It was time to move to mandates.”

Minor improvements, such as switching to more efficient lighting systems or insulating windows, can be in the ballpark of $1,500 for the smallest of the buildings targeted. Major upgrades can easily be upwards of $1 million, according to Mark Chambers, the director of the Mayor’s Office of Sustainability, who also spoke at the press conference.

The pricier changes are likely to include replacing current boilers, which may often be oversized and provide inefficient, uneven heating, according to a 2015 report by NRDC and the consulting group Steven Winter Associates. For the buildings that also have to switch from dirty heating oil to natural gas, the cost for a boiler upgrade could be around a “few thousand dollars a floor,” according to Darrell.

In one case study from the nonprofit Building Energy Exchange, a 380,000-square-foot, 472-unit apartment complex in the Sunnyside neighborhood of Queens made a series of upgrades, including replacing the boiler with a dual-energy heating system, adding insulation to the roof, and improving window insulation. The total investment came out to almost $2.1 million. In another case, greening a 20-story co-op tower in Greenwich Village cost roughly $6 million. That included replacing lightbulbs and windows, building a green roof, and switching from the dirtiest heating oil to natural gas.

Darrell says many upgrades will have to be done anyway as the systems age. “I suspect that there won't be that that many instances where you're taking a boiler and ripping it out prematurely,” he tells CityLab, adding that the 2030 deadline should allow time and flexibility for owners to decide what to do. “That gives you 13 years to figure this out. What this [mandate] is saying is at the time you're doing your upgrades, upgrade to the point where you meet this cleaner standard.”

Though the upgrades should eventually pay for themselves—the Sunnyside apartment building upgrades, for example, reportedly save the owners $325,000 a year—the financial help will be key to the mandate’s success, says Darrell. Assistance will come in the form of low-interest loans through the city’s Property Assessed Clean Energy program.

The proposed mandate doesn’t have full support across the board, at least not yet. In a statement to CityLab, John Banks, president of the Real Estate Board of New York, says his organization supports the effort to curb climate change but added that “these proposals require careful analysis, discussion, and debate,” as the city’s goals "could inadvertently promote buildings that use less overall energy without regard to how the energy is used." The board says the metric used to determine energy efficiency—a measure called the Energy Use Intensity—fails to take into account the number of people who occupy a building and how they use the energy. “Tenants’ energy-use patterns are a primary driver in a building’s total energy consumption and often outside of the building owner’s control …“ the group wrote in a legislative memorandum in June. It’s worth mentioning a debated theory known as the rebound effect, which speculates that as energy become more efficient, and therefore cheaper, tenants will likely use more. Darell, for one, is skeptical that everyone will suddenly start cranking up their heat in the winter or the AC during the summer.

Another critical voice comes from organizations that represent low-income families who are increasingly getting priced out of NYC’s housing market. These advocates worry that through a longstanding rule known as Major Capital Improvement (MCI), landlords will eventually pass on those high initial costs of retrofitting the buildings to their tenants, many of whom live in either rent-regulated buildings or affordable housing.

De Blasio, in his press conference, acknowledged the the MCI was “broken” and indicated that the target timeline for those particular buildings would be set in 2020, the same year the state of New York is set to undergo rent regulation reform. But with details murky, Delsenia Glover at the advocacy group Tenants and Neighbors remains unconvinced.

“It appears that there’s an assumption that when the [rent regulation] laws come up for renewal in 2019 that we will be able to get that the MCI rule changed,” she says, adding that affordable housing advocates have been working on the very issue for some two decades now. They’re optimistic, Glover says, “but to create a situation where an upgrade would trigger an MCI without [the revision to the law in place]… is jeopardizing the tenancy of millions of regulated tenants throughout the city.”

Glover says it’s happened before. She points to an incident in which the owners of an apartment tower replaced its windows to make the building more energy efficient. That, she says, triggered a rent increase of $15 per room per month through the MCI rule on top of a separate rent hike approved by NYC’s Rent Guidelines Board. Darrell sympathizes with the housing affordability concerns, but says he’s optimistic they will be addressed.

Collectively, mayors trying to comply with the C40 plan have just four years to make significant progress toward limiting the rise of global temperatures to less than 2 degrees Celsius. And that calls for drastic measures. If other cities follow in the footsteps of New York, they could very well make a dent in the world’s emissions. But first, the mandate will have to win the approval of New Yorkers.

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