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Energy Efficiency Grades: Will They Impact Environmental Accountability for NYC Building Owners?

NYC, Other, Real Estate Developments, Real Estate Legality

Look out for energy efficiency letter grades on NYC building entrances this fall as a 2019 environmental law goes into effect. To comply, buildings must display their grades by October 31.

The law, which passed in 2018 and was amended in 2019, requires buildings of over 25,000 square feet to submit their energy consumption data to the US Environmental Protection Agency (EPA). The EPA will then assign the building a score, which translates to a letter grade from A to D. The grades will be displayed much like letter grades for restaurants. For now, failure to comply will only result in a fine and a grade of F. However, in 2024, buildings will be required to meet a certain level of energy efficiency. [1]

Critics of the plan argue that the mandatory grade posting will prove to be an expensive measure that will not significantly mitigate greenhouse emissions. It is important to note, however, that buildings account for over 70 percent of New York City’s greenhouse gas emissions. [1] NYC lawmakers who supported the measure see transparency as the first step in understanding how buildings use energy, in order to ascertain where and how buildings can reduce their carbon footprint. They hope that building owners will learn more about energy efficiency through this program, so that they will be able to effectively make changes to their buildings as emissions standards become more stringent. Supporters also anticipate that renters and buyers of both residential and commercial spaces will factor a building’s efficiency into their decision making process. Consumer behavior can therefore become an additional motive for building owners to improve their efficiency. [2]

The pandemic may also have an impact on buildings’ environmental footprints. The density of a building affects its efficiency; namely, when a building holds more people, it spreads out its energy use over more people. For example, a building must run its HVAC system whether there are 5 people or 500 people in the building. With more people, the building’s basic costs of operation are spread out. This poses a problem with the pandemic, as more people are prioritizing social distance in their offices and residences. A demand for more spacious buildings will likely make emissions reduction more difficult.

Building emissions limits, which go into effect in 2024, are detailed in Local Law 97 of 2019. The building energy efficiency grades can be found in Local Law 95 of 2019.

[1] Ricciulli, V. (November 2019) NYC Buildings Will Soon Display Letter Grades Tracking Energy Efficiency from Curbed Accessed August 3 2020

[2] Morris, B. (July 2020) Grace Period for Submitting Benchmarking Data Is Set to Expire from Habitat

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