Climate Mobilization and a Sustainable New York City

by |April 22, 2019

To mitigate climate change, we need to use energy as efficiently as possible and shift from fossil fuels to renewable energy as quickly as possible. Recently, New York’s City Council took a significant step toward reducing the greenhouse gases emitted by the city’s built environment. The goal of the bill is to reduce greenhouse gas emissions from buildings 40% by 2030 and 80% by 2050. While in most parts of the United States transportation is the source of most greenhouse gases, in New York City buildings are our main source of emissions. Last week, by a vote of 45-2 the New York City Council enacted the Climate Mobilization Act, a new law that targets greenhouse gas emissions from large buildings. According to Cecelia Smith-Schoenwalder of U.S. News and World Report, the new law:

“…contains six climate measures that address several topics, including greenhouse gas emissions and the feasibility of replacing all oil and gas burning power plants with renewables and batteries. It would also establish a renewable energy loan program, change the city’s building code to promote construction of wind turbines and require some buildings to cover their roofs with plants or renewable energy like solar panels or small wind turbines…Roughly 70 percent of NYC’s greenhouse gas emissions are attributable to energy usage from its more than 1 million buildings. The legislation would set emission caps that get higher over time for most buildings over 25,000 square feet”.

The bill requires large buildings to install new energy efficient heating and air conditioning systems as well as better insulated windows. It also provides financing for buildings willing to invest in renewable energy. As you might expect, the real estate industry opposed the bill, interestingly not because they are against reducing greenhouse gases from buildings, but due to the focus on large buildings. In a recent piece in the Daily News, reporter Michael Gartland quotes John Banks, president of the Real Estate Board of New York who argued that:

“The bill that passed today… will fall short of achieving the 40 x 30 reduction by only including half of the city’s building stock. The approach taken today will have a negative impact on our ability to attract and retain a broad range of industries, including technology, media, finance, and life sciences.”

Mayor De Blasio has indicated that he will sign the bill, perhaps because some are calling the bill a New York version of a Green New Deal — certainly a talking point for the Mayor in his travels to Presidential primary and caucus states.

The law is a major step forward, but its feasibility will only emerge with time. Estimates of the costs of complying with the law vary and the costs of the building retrofits will be borne by the tenants of the largely commercial real estate targeted. If the local economy is doing well, these costs will be absorbed by business. If the economy is not doing well, it may drive some businesses to less expensive unregulated real estate. It could also impact commercial spaces that are smaller than 25,000 square feet, driving business away from the city’s central business districts in Manhattan, Brooklyn and Long Island City.

Like the proposed national Green New Deal, we should look at this law as an experiment well worth undertaking, but also in need of evaluation and mid-course correction if it is either not meeting its goals or causing unanticipated negative impacts. It is important that we focus on the actual impact of these initiatives rather than the symbolic value of sticking it to big buildings, like Trump Tower, that use a great deal of energy.

I believe that New York City is in another of its transition phases and unlike previous transitions, I hope we manage to be self-conscious about the changes now underway. The original New York City was a commercial trading outpost that sent the raw materials of the New World to the European old world. The Erie Canal opened New York’s harbor to the agricultural bounty of the American heartland. Then we moved from trading to manufacturing. From the late 19th century to the 1960s we were a manufacturing city, making clothing, beverages and even automobiles.

But then something happened that we didn’t notice. Containerized shipping caused our port to become outdated, and our manufacturing base evaporated. Subsidies for suburban sprawl development, crime and racism combined with the declining manufacturing to cause New York’s near bankruptcy in the 1970s. But then the city started to reinvent itself. The service economy and tourism grew at a ferocious rate and the new post-industrial New York began to emerge. Symbolic of that change is the High Line park, once a freight train from the docks to the factories, now a promenade of tourists and locals. The docks are gone, the train was abandoned and the factories closed; but the media companies, galleries, universities, medical facilities, tourists and restaurants arrived and are thriving.

Cities like New York are in a global competition for businesses, residents and visitors. We will win or lose that competition based on the city’s environmental and social sustainability. Environmental quality, mass transit, public space and the built environment will either attract or repulse people and business. The Climate Mobilization Act is a policy innovation to modernize the energy infrastructure of our large commercial spaces. What we learn from this experiment can then be applied to smaller commercial and residential buildings. The city’s energy efficiency and use of renewable energy will ultimately reduce the cost structure of doing business in New York City. The jobs resulting from modernizing our energy system will stimulate the local economy while building important organizational capacity for the operation of our buildings. The new required energy infrastructure will not only need to be installed it will need to be maintained. Someone will have to do that work.

As New York City evolves into a sustainable city, the experience we have in transforming our old energy system to a new one will be valuable, and the transformation itself will make this very old place newer than it looks. Policy experiments like congestion pricing and taking street space and giving it from cars over to bikes, pedestrians and nature, are all part of building an attractive, globally competitive city. Each step needs to be taken with care and rigorously evaluated. Advocates need to be open to the idea that their good ideas might not always turn out as expected. Technology continues to change our economic life. We know that 80% of the American economy is now in the service sector and we know that automation and low-priced communication and information continue to change the way we work and live. Continued technological change will constantly change the physical, cultural, social and economic fabric of life in our cities. We need to assess and understand that change to ensure our cities thrive and serve us.

The Green New Deal places environmental sustainability on the national agenda for the first time in too many years. New York’s city and state governments are doing far more than talking about climate change and environmental sustainability — they are doing something about it. Today we celebrate the 49th Earth Day, next year will mark a half-century of remembering the importance of our planet. Many good people have spent many years working to protect the planet. Today, that work is more important than ever.

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LAURA ADCOCKEric A. SauterRobert Fischman Recent comment authors
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Robert Fischman
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Thank you, Steve, for bringing attention to this important package of legislation being adopted by New York City. I agree on many points that you have raised here, but would argue that the real estate industry is not entirely against this. Over the past decade, I have heard from many owners of NYC real estate that have wanted to improve the energy efficiency of their buildings. They understand that these improvements will reduce their operating expenses and increase their property values. These property owners have heard that PACE – or Property Assessed Clean Energy financing was available elsewhere in New… Read more »

Eric A. Sauter
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Eric A. Sauter

My sense is that the law will be litigated and potentially concluded to be an unenforceable penalty due to the impossibility of most CRE owners to comply with both the law and the terms of their mortgage loans. Most mortgages against CRE require the borrower to comply with all applicable laws during the term of the loan. But most mortgages against CRE also prohibit Borrowers from taking out secondary financing during the loan term, including PACE loans (which are provided “super-lien” status under law, making them anathema to mortgage lenders). In other words, taking out a PACE loan on top… Read more »

LAURA ADCOCK
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LAURA ADCOCK

Is this a joke, I am actually laughing, wind turbines on top of buildings?! What will structural engineers say? Giant batteries! Giant batteries are really green! Right ! Where are they putting all this stuff? Ha Ha Ha. Why are certain buildings exempt, shouldn’t they all be treated equally!