Seattle – Not Just for Starbucks These Days – Mayor Proposes Greenhouse Gas Reduction Legislation

Seattle Mayor Bruce Harrell recently proposed legislation that would require the city’s large commercial and multifamily buildings to reduce greenhouse gas emissions (“GhG”) over the next several decades and achieve net-zero emissions by 2050.

Per the City’s press release, the standards were nearly 2 years in the making, are expected to reduce annual commercial building greenhouse gas emissions by 27% compared with 2008 levels,

According to the EPA and multiple studies, the built environment (i.e., buildings) are a large contributor to GhG emissions nationwide, and in Seattle, contributes more than 33% of the city’s total GhG emissions.

Seattle is one of a growing list of cities (including Boston who announced this policy 2 weeks ago) — and more recently, some states (e.g., Washington) — that require many new buildings to be all-electric. While these policies will likely reduce consumption of fossil fuels in many cases, they do not address existing buildings that use gas, oil and fossil fuels to provide heat, hot water and chiller water.

During 2023, more and more states and municipalities are developing building performance standards that aim to reduce buildings’ carbon footprint by requiring them to meet certain standards. These more recent standards focus on greenhouse gas emissions rather than just energy usage.

Seattle’s proposed new standard is, per Construction Dive, the product of nearly 2 years of meetings, open houses, webinars, advisory group and specialized task force sessions. Not surprisingly, not all constituents were happy with pushback during the development of these standards coming from environmental groups that want more and faster emission reductions and from real estate and business groups that believe that standards are far too reaching.

All told, according to the Seattle Office of Sustainability and Environment, the new standards will cover approximately 4,100 buildings in Seattle, including about 1,885 multifamily buildings and 1,650 nonresidential buildings that are mostly downtown and in dense neighborhoods. Like many of the other cities adopting these type of GhG emissions based standards (see, e.g., New York City with Local Law 97), the proposal offers several pathways for buildings to comply with the standards; owners who do not comply would be fined.

It is believe by the City Administration that the new standard will help Seattle secure federal funding and incentives. Seattle City Council is expected to review and likely implement the legislation in their fall session.

Parting Shot – Seattle is part of a growing list of cities and States that are looking to reduce energy consumption in its building stock by way of focusing on fossil fuel consumption and GhG emissions by requiring monitoring, measuring and reporting by larger buildings, and, if standards set by the applicable governing body have been exceeded, the owner of the building (and thereafter, likely the tenants under their leases) will be subject to a fine until they correct their exceedance.  Carrots have been offered in the past as incentives, these types of ordinances are much more of the stick approach.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on your Sustainability and ESG planning and initiatives. For more information, please contact Brad A. Molotsky, David Amerikaner, Sheila Rafferty-Wiggins, Alice Shanahan, Jeff Hamera, Nanette Heide, Joel Ephross, Jolie-Anne Ansley, Robert Montejo, Seth Cooley, or the attorney in the firm with whom you are regularly in contact.

ESG: – New York City Council Passes a Natural Gas Ban for New Buildings

Last week, New York City’s city council approved a ban on natural gas as a fuel source in newly constructed buildings.

Per reporting from NPR, nearly 40% of carbon emissions in the country — and more than 50% of New York City’s emissions — come from buildings.

The new natural gas ban in newly constructed buildings, by a vote of 40-7, applies to buildings that are up to 7-stories in height by the end of 2023; buildings that are taller than 7-stories have until 2027 to comply.

The bill contains several exceptions, including hospitals, laundromats and crematoriums.

As noted by NPR, the legislation also requires that the Mayor’s Office of Long-Term Planning and Sustainability conduct 2 long term studies. The first will examine the use of heat pump technology and the second is a study on the impact of the new bill on the city’s electrical grid.

Not surprising there has been massive pushback from the natural gas industry against these type of natural gas bans. This pushback, however, has not stopped cities around the country from proceeding with various types of natural gas ban efforts. By way of example, at least 42 cities in California have acted to limit natural gas in new buildings, and Salt Lake City, Utah and Denver, Colorado have also made plans to move toward required electrification in buildings.

Moreover, in Ithaca, New York, the city committed to ending the use of natural gas in all buildings — not just new ones.

Passing this type of natural gas ban for new buildings in New York City, the largest city in the country, marks a significant move for other cities trying to move similar legislation to attempt to cut down carbon emissions in the fight against climate change, joining cities like San Jose and San Francisco that have made similar commitments to reduce emissions.

The efforts to ban natural gas in new buildings in New York City is also being considered on a state wide basis in the New York Senate and House. Senator Brian Kavanagh (D) and Assembly Member Emily Gallagher (D) are working on legislation that would require any buildings constructed in New York after 2023 to be entirely powered by electricity. If their legislation passes, New York would become the first state to ban natural gas in new buildings on a state-wide level.

Triple Bottom Line – By passing this type of natural gas ban in new buildings, focusing on buildings as one of the largest emitters of green house gases,  New York has provided other cities with a leader to attempt to follow if they are so inclined.  As noted, California has been attempting this type of ban on a city by city basis and has passed 42 such bans throughout the state.  If New York state follows the NYC lead it will become the first state to enact such a ban and would mark a bit of a watershed moment in the fight against greenhouse gas emissions showing that buildings can indeed be constructed in this manner if reduced emissions are one of the  key goals attempting to be achieved by the builder/owner or the legislature.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on Sustainability and ESG planning and initiatives within their own space. We would be happy to discussion your proposed project with you. For more information, or if you have any questions about this post, please contact Brad A. Molotsky, Nanette Heide, Seth Cooley, David Amerikaner, Jolie-Anne Ansley, Hari Kumar or the attorney in the firm with whom you are regularly in contact.

New York City’s Local Law 97: Energy Conservation Requirements That Open Opportunities

On April 20, Duane Morris LLP hosted a webinar on New York City’s Local Law 97, featuring:

  • Brad A. Molotsky, Partner, Duane Morris LLP, speaking about the legal and policy landscape;
  • Robert Politzer, President and Founder, GREENSTREETNYC, speaking about turning liability into opportunity with Local Law 97 compliance;
  • Crystal Smith, New York Market Director, Greenworks Lending at Nuveen, speaking about C-PACE financing;
  • Dan Egan, Senior Vice President of Energy and Sustainability, Vornado Realty Trust, speaking about the large New York property owner’s perspective; and
  • David Amerikaner, Special Counsel, Duane Morris LLP, moderating.

Local Law 97 was adopted in 2019 as part of New York City’s Climate Mobilization Act (CMA), a package of legislation designed to reduce greenhouse gas emissions from the City’s buildings by 40% by 2030 and by 80% by 2050, using 2005 as the baseline. The CMA includes bills aimed at encouraging the use of solar panels and green roofs, amending building energy efficiency grades, and authorizing the use of Commercial Property-Assessed Clean Energy (C-PACE) Financing to fund energy efficiency upgrades and building retrofits as well green energy installations.

But the centerpiece of the CMA is Local Law 97, which applies, generally, to buildings over 25,000 square feet in the City, with some exceptions, and establishes carbon emission intensity caps that begin to take effect in 2024 and become more stringent over time. The law will require covered buildings to understand their carbon footprints and to reduce their emissions through several mechanisms, including by implementing efficiency improvements and generating green energy, among others. It is estimated that over 50,000 buildings in New York will fall within the ambit of the CMA (over 60% of the buildings within the City), which results in over 3.15 billion square feet of coverage.

The April 20 webinar produced a lively discussion. Below are some of the takeaways from the discussion:

  • Timing. The CMA was passed in 2018 but in order to give building owners time to game plan, evaluate and then execute on carbon reduction plans, will become operative in 2024 with required reporting starting in May, 2025.
  • Failure to comply will be expensive. A covered building must pay $268 for every metric ton that that its carbon emissions exceed the cap established for its building type, beginning with the first compliance period in 2025. There are also fines for filing false emissions reports and failure to file a report.
  • But compliance can reduce operating expenses and modernize a building at minimal cost. A building energy audit is likely to reveal “low-hanging fruit,” such as efficiency upgrades that can be financed at low cost and can reduce energy operating expenses for the property. In addition, clean energy generation can be incorporated into a building with little or no upfront cost and affordable financing, and on-site generation will improve a building’s bottom line over time.
  • C-PACE financing is helpful to making improvements pencil out. C-PACE financing, authorized in New York and soon to be launched in NYC, allows building energy efficiency upgrades to be financed at low rates and paid back through an additional assessment on the property tax bill over a 20 to 25 year period. Note that the CMA also allows renewable energy credits and other offsets to count towards a building compliance targets.
  • New York’s efforts to decarbonize its electric grid will help. The state’s goal is to create all its electricity from carbon-free sources by 2040. As the renewable energy needed to meet this goal continues to be more readily available, NYC buildings will be powered by electrons that were generated using less and less carbon, easing the path to compliance with Local Law 97 over time.
  • The right thing to do for the planet is increasingly converging with the right thing to do for the bottom line. Vornado Realty Trust, for example, set a goal years ago to decarbonize its buildings by 2030. Vornado is just one of many examples of companies that have continued to embrace sustainability, energy efficiency and carbon reduction as smart business, that just happens to help the rest of society in reducing their tenants’ carbon emissions and helping to fight climate change.

A recording of the conversation is available here.

Duane Morris has an active ESG and Sustainability Team to help organizations and individuals plan, respond to, and execute on Sustainability and ESG planning and initiatives within their own space. We would be happy to discussion your proposed project with you. Contact your Duane Morris attorney for more information. We will continue to track New York’s carbon reduction mandates and are available to advise you and your colleagues on compliance with Local Law 97 and other regulations as they are rolled out.

If you have any questions about this post, please contact David Amerikaner, Brad A. Molotsky, Christiane Schuman Campbell, Darrick Mix, Dominica Anderson, Nanette Heide or the attorney in the firm with whom you are regularly in contact.

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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