Landlords can buy their way out of NYC’s climate law starting this week

As a candidate, Mayor Zohran Mamdani pledged to close loopholes that allowed landlords to limit compliance with the city’s landmark law capping building emissions.

But later this week, landlords will have the opportunity to buy their way out of the climate law through an energy credits program initiated by his predecessor, Mayor Eric Adams.

Advocates say the ability to purchase renewable energy credits disincentivize property owners from reducing emissions. They say the credits cost less than the necessary climate-friendly upgrades or the penalties for noncompliance with the climate law, known as Local Law 97.

“Mayor Mamdani should remember his campaign promises, and step up to protect New Yorkers from corner-cutting billionaires who will abuse this loophole to line their own pockets and gut the efficacy of Local Law 97,” said Graham Gale, New York City organizer with Food & Water Watch.

Local Law 97 is intended to force landlords to reduce emissions from buildings, which account for about two-thirds of the city’s carbon pollution. But many landlords and co-op owners have long said they cannot afford to retrofit their buildings to reduce pollution, and that the penalties for noncompliance are onerous.

Mayor Eric Adams pitched the credits in 2023 as a way to fund clean energy projects while protecting building owners from crippling costs.

Advocates, however, said the credits severely weakened the law. There is no cap on how many credits a building owner can buy.

The New York State Energy Research and Development Authority will put the first round of credits up for sale on Wednesday. The credits are projected to generate nearly $1.8 million that will go toward the Champlain Hudson Power Express transmission line bringing hydropower from Quebec to New York City.

“Renewable energy credits are an important compliance tool under Local Law 97 and help finance the clean energy infrastructure New York needs,” said Basha Gerhards, executive vice president of public policy at the Real Estate Board of New York. “Any added constraints on these credits before adequate renewable energy is available will lead to more fines for building owners and ultimately for higher energy costs for New Yorkers.”

The minimum purchase is 1,000 credits at a cost of $35.52 each.

Pete Sikora, campaigns director for New York Communities for Change, said that price means it’s cheaper for a building owner to buy out of compliance rather than pay penalties or invest in upgrading their properties to reduce emissions.

“The state obviously should be spending money to help further clean energy, but it shouldn’t be doing that at the expense of actual pollution reductions getting actually done in New York City buildings,” Sikora said.

The credit can only be purchased to offset emissions from sources away from the building itself, like the generation of electricity. The credits, for example, cannot be used to make up for carbon emissions from a fossil-fuel boiler in a building.

Department of Buildings spokesperson Andrew Rudansky defended the use of credits.

“The City is committed to helping property owners reinvest in their own buildings and avoid penalties by getting on a manageable compliance pathway to reduce carbon emissions through energy efficiency retrofits,” he said. “Local Law 97 allows covered building owners to purchase renewable energy credits as one of those compliance pathways, which supports a cleaner grid for our city and helps to cut down on overall pollution.”