It’s just two paragraphs, buried toward the end of the nearly 4,000 pages making up Governor Andrew Cuomo’s proposed state budget for 2022. Yet critics say this obscure budget measure could undermine one of the most ambitious local climate laws in the world: New York City’s Local Law 97, which requires the city’s big buildings to slash their greenhouse gas emissions 40% over the next decade and 80% by 2050.
Part R of the Transportation, Economic Development and Environmental Conservation bill — one of a dozen pieces of legislation making up Cuomo’s proposed Executive Budget for 2022 — would allow building owners to meet their emissions targets under Local Law 97 by buying credits for renewable energy produced elsewhere in the state.
New analysis of Part R suggests the proposal’s impact could be even larger than critics initially feared.
In a letter sent yesterday to Cuomo and leaders of the state legislature, four environmental, planning and trade groups estimate that Part R would allow so many renewable energy credits (RECs) that building owners could meet all of their emissions targets until at least 2030 without making any upgrades to their buildings.
“Part R could open the floodgates to at least five to six million RECs, and potentially many more,” says the letter, which was first obtained by New York Focus. “On a carbon basis, that quantity of RECs represents twice the greenhouse gas emissions over the Local Law 97 limits for 2024 to 2029.”
“With that outcome, Part R is fundamentally at odds with [New York State’s] energy efficiency targets and the intent of Local Law 97,” the letter continues. The letter was signed by the Urban Green Council, the New York chapter of the American Institute of Architects, the Regional Plan Association, and the National Resources Defense Council.
The analysis reinforces a chorus of criticism from New York climate and environmental justice groups, who have blasted the proposal as “willfully undermin[ing]” the city’s climate law and as a “giveaway to real estate.”
“When we first saw this language, we weren’t certain exactly how huge a blow to the law this proposal would be, and therefore how many jobs and pollution reduction it would prevent,” said Pete Sikora, climate and inequality campaigns director at the progressive advocacy group New York Communities for Change.
“But now that experts have analyzed it in detail, it’s very clear that our worst fears are being realized, and that this proposed language would destroy the country’s best climate and jobs law.”
‘Leverage to fight back’
Top lawmakers in the state Senate told New York Focus that they’re prepared to challenge the governor over the proposal in budget negotiations.
“That Local Law was years in the making, the result of painstaking work and thorough analysis by a lot of people, and to swoop in and try to override it through the state process would be a huge mistake,” Senate Deputy Leader Michael Gianaris, the number two Democrat in the chamber, said in an interview.
“The governor has a strong hand to play in the budget but we now have dual supermajorities in both houses,” Gianaris continued. “That will give us some extra leverage to fight back.”
Liz Krueger, Chair of the Senate Finance Committee and number three in the chamber, also slammed the measure.
“This would create a loophole in the law that you could drive a big, polluting, diesel truck through,” Krueger told New York Focus. “New York State should not be in the business of undercutting bold local climate leadership.”
Over twenty Assemblymembers—including Environmental Conservation Committee Chair Steve Englebright—have signed a letter being drafted by newly elected Queens Assemblymember Jessica González-Rojas urging Assembly leadership to oppose Part R, González-Rojas’ office told New York Focus.
One of the signatories, Brooklyn Assemblymember Robert Carroll, told New York Focus that using existing credits to meet emissions targets “defeats the purpose” of the ambitious climate law.
“It’s analogous to the Civil War, when wealthy people would pay for others to do their military service,” Carroll said.
“This just seems to fly in the face” of the state’s own landmark climate law, the Climate Leadership and Community Protection Act, Carroll added.
State officials and other backers of Part R including the Real Estate Board of New York (REBNY) stress that expanding the criteria for energy credits eligible under Local Law 97 is only a stopgap measure until more renewable energy comes online for New York City.
“The only path to achieving New York City’s emissions reduction goals is through the reliable supply of renewable energy,” REBNY President James Whelan told New York Focus. “Right now, city building owners simply do not have enough access to adequate renewable energy options. The Governor’s proposal recognizes this reality and provides the right approach to ensuring we reach our long-term goals.”
The governor’s office referred requests for comment to the New York State Energy Research and Development Authority (NYSERDA), which said that expanding eligibility to existing energy credits was a temporary way of spurring clean energy investment and preserving existing renewables while more are built.
But critics say that it would dramatically undercut the NYC law’s climate, economic and environmental justice objectives.
‘Completely undermining a primary objective of the law’
In order to understand Part R’s implications, it’s worth revisiting the fundamentals of Local Law 97.
Currently, energy use in buildings — including heating, cooling, and electricity for appliances — produces some two-thirds of New York City’s total greenhouse gas emissions, according to a 2017 inventory. Apartment and commercial buildings of more than 25,000 square feet, which are covered under Local Law 97, produce about half of that, or 35 percent of the city’s total emissions.
The law aims to reduce those emissions in two ways: first, by forcing building owners to cut their energy consumption through retrofits and efficiency upgrades, and second, by switching the sources of that energy to renewables.
That’s where energy credits come in, allowing owners to meet their emissions targets indirectly by investing in new renewables for New York City. Local Law 97 specifies that to be eligible, the renewable energy bought by those credits must be delivered directly into the city grid.
But under the new budget measure, owners could meet their targets by buying credits, known as “Tier 2 credits,” that would go toward maintaining existing facilities anywhere in the state.
The measure specifies that Tier 2 credits would only be eligible if sufficient credits for new renewable energy powering the city grid aren’t available, and its backers characterize it as merely bridging the gap until more local renewables come on line.
According to the findings presented in yesterday’s letter, however, the greater availability and lower cost of Tier 2 credits “would encourage building owners to comply with Local Law 97 by purchasing RECs instead of implementing energy efficiency measures, completely undermining a primary objective of the law.”
Susanne DesRoches, Deputy Director of Infrastructure and Energy in Mayor Bill De Blasio’s office, explained why the mayor strongly opposed the proposal. It wouldn’t spur renewable energy development for the city or even upstate, she said; because Tier 2 is “mainly a maintenance payment to existing renewables … it does not decrease global greenhouse gases either.”
Meanwhile, she said, it would stall the city’s effort to phase out dirty energy. “The reason why the power being injected into New York City is important is that that will displace in-city polluting generation,” DesRoches said.
“We need the renewable energy to come to New York City tomorrow,” Sonal Jessel, director of policy at WE ACT for Environmental Justice, told New York Focus. “And we want to make sure we’re putting in systems through Local Law 97 that really enable that instead of putting in buffers.”
About half of the city’s current energy supply is produced within the five boroughs, overwhelmingly by burning fossil fuels, Desroches said. That pollution doesn’t just contribute to global warming—it also degrades local health, especially in working-class communities of color. The same is true, Desroches and Jessel both said, for the large majority of the city’s buildings that currently burn fossil fuels for heat and hot water.
This ties back to what advocates say is supposed to be Local Law 97’s main vehicle for decarbonizing buildings: efficiency upgrades, such as replacing lights and windows, installing better insulation, and switching heating and cooling to electric systems.
Retrofits are also expected to create tens of thousands of jobs in New York City. Jessel points to “good-paying jobs” for construction workers, electricians, painters, and HVAC technicians. Adam Roberts, policy director at the architects’ institute, emphasized that Local Law 97 is also a “huge job creator” for white-collar professions including architecture, design, and engineering.
“By undercutting Local Law 97, we’re potentially saying to a lot of these companies… there’s much less work in New York than you had planned, and doing that at a time when there’s already not enough work,” Roberts told New York Focus.
Altogether, the Urban Green Council estimated in 2019 that Local Law 97 could create 141,000 jobs in the city by 2030. That could come as a major boost to the design, construction, and clean energy sectors, which have all taken a hit during the Covid-19 pandemic.
Some state lawmakers and city officials, including de Blasio, have further argued that it should not be up to the governor to “weaken” city laws.
“It is a bit dangerous when the state attempts to supersede local laws within hidden language sections of our budget,” said Senate Finance Committee chair Krueger in a hearing last Thursday.
The fate of Part R will be decided in the coming months as the Senate and Assembly draft their own versions of the budget and then return to Governor Cuomo for negotiations. Senate Deputy Leader Gianaris said the fight could test the emboldened legislature’s new supermajority powers.
“This will be a test this year, for sure,” he said. “This is uncharted territory for everybody.”
Akash Mehta contributed reporting.