New York City Local Law 97 – Don’t Do It

Roger Caiazza

I have the pleasure to announce the availability of a new report prepared for New York Co-op and Condo Boards and Trade Associations regarding New York City Local Law 97 mandated conversion to electric heat.  Local Law 97 mandates that “most buildings over 25,000 square feet are required to meet new energy efficiency and greenhouse gas emissions limits as of 2024, with stricter limits coming into effect in 2030.” Our report (“LL97 Impacts Report”) argues that in the absence of a credible and feasible plan demonstrating where the electricity will come from, backed up by a functioning Demonstration Project showing how the transformed grid will work and how much the electricity will cost, Co-op and Condo Boards cannot responsibly undergo the enormously costly process of conversion to electric heat. 

Background

Co-authors Francis Menton, Richard Ellenbogen, and I prepared this report without compensation and on a pro bono basis because we felt duty-bound to warn people of the significant impending threat to their health and safety.  We received no funding of any kind from the real estate industry, the energy industry, or anyone else for this report.

I believe that the three of us represent different but complementary backgrounds that provide a unique take on the implementation of this law.  Francis Menton retired from the law firm Willkie Farr & Gallagher LLP after 31 years as a partner and brings a legal background to our team.  He has written about climate and energy issues for publications including the City Journal, Gatestone Institute, Real Clear Energy, and others, and is the main author at ManhattanContrarian.com with many of his articles reposted here.  Richard Ellenbogenhas a Bachelor’s degree and a Master’s Degree in Electrical Engineering from Cornell University.  He worked at Bell Telephone Laboratories in their Power Systems Laboratory, before joining Allied Converters, a plastic food packaging manufacturer in New Rochelle, N.Y.  As president of Allied Converters, Ellenbogen has overseen the company’s transformation into a green manufacturer with 100% waste recycling/repurposing, a 65 KW CHP System, and a 50-kilowatt solar array. Very few if any people in New York bring as much practical experience related to reducing energy use and lowering GHG emission.  For nearly the past two decades, Allied Converters has generated approximately 80% of its electric energy onsite and has operated with a Carbon Footprint 40% lower than the utility system. I am a retired air pollution meteorologist who started working at the interface between the electric utility industry and New York regulatory agencies starting in 1981.  I still closely follow New York regulatory initiatives and provide personal comments on energy and environment topics for regulatory proceedings and policy proposals.  I author the Pragmatic Environmentalist of New York blog and occasionally post articles here.

Francis Menton’s daughter Jane lived in a Queens co-op and was on their Board when Local Law 97 (LL97) was passed.  She and the members of her Board had an analysis done of the costs to meet the LL97 mandates.  In short, it was unaffordable. Not only that, but Jane also knew, based on her understanding of energy constraints in NYC, that it was unworkable and would result in an energy catastrophe. She recruited her father to write a report explaining the limitations of the electric grid.  Menton contacted me, I contacted Ellenbogen and the three of us agreed that, based on our backgrounds and experiences, we had a moral obligation to document the problems we expect will occur.  Out report is intended to provide information for a grass roots organization, directed by Jane, that we hope will coordinate a response by co-ops and condo boards throughout New York City (NYC).

Local Law 97

The goal of LL97 is to reduce the emissions produced by the city’s largest buildings 40 percent by 2030 and net zero by 2050.  Similar to New York’s Climate Leadership and Community Protection Act (Climate Act) this is political theater without regard to practicality.  The law also established the Local Law 97 Advisory Board and Climate Working Groups which are supposed to advise the city on how best to meet the LL97 mandates.

In December 2022, the NYC Buildings Department released a report (“NYC LL97  Report”) from the LL97 Advisory Board.  The NYC LL97 Report “represents the culmination of hundreds of hours of work of the Advisory Board, Working Groups, and staff members who dedicated their time and expertise to help the City advance building energy efficiency and emissions reduction efforts”.  This is a political document.  LL97 mandated the appointment of sixteen people – eight appointed by the mayor and eight of appointed by the speaker of the City Council.  In theory the membership was supposed to represent “key stakeholder interests from the building sector” but I can guarantee that the primary qualification for membership was alignment with the political goals – just like the advisory panels for the Climate Act’s planning process. 

There were seven Climate Working Groups. These Working Groups “leveraged subject-matter experts in

a variety of fields to present proposals to the Board on specific issue areas.  I do not want to disparage the work of these folks but the basic working premise of all these efforts is that we must do this because it is the law.  There are plenty of organizations that are happy to provide experts that can develop implementation plans that purport to show that it will work.  Pursuant to LL97, the NYC LL97 Report included “recommendations regarding several issues related to implementation of the law, including improving performance requirements to achieve at least a 40% reduction in aggregate GHG emissions by 2030”. The report provides these recommendations.

The NYC LL97 Report includes chapters on calculating and reporting GHG emissions; recommendations for “tailored emission reduction approaches based on different building types; mechanisms for maximizing emission reductions; assistance to “assist properties, especially those in high need areas, with compliance, rather than to fine them for noncompliance” approaches to maximize “compliance with LL97 through clear communications to the public and robust, direct outreach to covered property owners and stakeholders”; achieving consistency across existing regulations; and recommendations for further analysis.  The bottom line is that to meet the mandated emission limits buildings will eventually have to electrify their heating, cooking, and hot water systems.

The NYC LL97 Report is incomplete.  Like the Climate Act Scoping Plan, it does not address feasibility.  This is a particularly critical point because at the same time as this law is mandating increased use of electricity, the Climate Act mandates 70% renewable electrical generation by 2030 and 100% zero emissions generation by 2040.   Our report (“LL97 Impacts Report”) argues that credible and feasible plan must be prepared that demonstrates where the electricity will come from.  In order to guarantee health and safety a functioning Demonstration Project showing how the transformed grid will work and how much the electricity will cost is needed before Co-op and Condo Boards can responsibly undergo the enormously costly process of conversion to electric heat.

Report to Co-op and Condo Boards and Trade Associations regarding New York City Local Law 97

The LL97 Impacts Report points out that LL97 mandates that most large residential buildings in the City must convert to electric heat by 2030, and all of them by 2035.  Such conversions, should they occur, will add substantially to the demand on the City’s electrical grid.  Simultaneously, New York State has enacted the Climate Act, an even more comprehensive climate statute, that mandates that power plants that run on natural gas — the generators of most of the City’s reliable electricity — must be closed during the 2020s and 30s, and all of them closed by 2040.  The State has also mandated that a portion of new vehicle sales be zero-emissions vehicles starting in 2026, ramping up to 100% of all such sales by 2035, further dramatically increasing the demand on the City’s grid.  These several mandates are in irreconcilable conflict.  They cannot all be met simultaneously; and, in combination, they will inevitably undermine the reliability of the City’s electric grid.

The LL97 Impacts Report points out that neither the State nor the City of New York has presented any credible plan demonstrating that in the early to mid-2030s there will be sufficient reliable electricity generation to meet the demands anticipated from both current uses, and from the large additions that have been mandated.  Indeed, the State has admitted that, in lieu of a definitive plan, it relies instead on a speculative hope for new technologies not yet invented or deployed at scale to bridge the large gap in electricity supply that will inevitably arise from the conflicting mandates.  The State can point to no Demonstration Project showing how its hope for a de-carbonized electrical grid can succeed, nor to any detailed projection of the anticipated costs.

Even the New York Independent System Operator (NYISO) – the entity responsible for maintaining the reliability of the grid it oversees – has recently issued warnings as to the looming dangers ahead from insufficient and unreliable electricity supply.  In its recent 10-year Power Trends study, NYISO sees the danger of unreliability of the grid as arising no later than the phasing out by December 31, 2030 of the New York Power Authority’s small natural gas plants located in New York City. The NYISO report states:

 “If demand on the grid grows at a rate greater than the buildout of new generation and transmission, reliability deficiencies could arise…”. 

In addition, the Public Service Commission recently released its Clean Energy Standard Biennial Review Report that admits that the Climate Act 70% renewable electrical generation by 2030 goal will not be met until 2033 at the earliest.  The report cites global interest rates, inflation, and supply chain pressures as factors affecting the progress needed to meet the 2030 mandate.  Those factors also impact LL97 implementation.

The LL97 Impacts Report provides detailed descriptions of the issues raised in the NYISO and PSC reports.  It explains that the ongoing pursuit of New York’s irreconcilable energy mandates creates especially severe potential consequences for the City’s large co-ops and condominiums. The boards of most of these buildings currently face a mandatory 2030 deadline for conversion to electric heat.  Complying with this mandate can only be done at very large cost, indeed a cost so large that it would stretch the finances of nearly all buildings to the breaking point.  Boards also have under New York law a fiduciary duty to their shareholders and members, which encompasses protecting the health and safety of all residents, and not squandering their constituents’ money.

The LL97 Impacts Report notes that in the absence of a credible and feasible plan demonstrating where the electricity will come from, backed up by a functioning Demonstration Project showing how the transformed grid will work and how much the electricity will cost, Boards cannot responsibly undergo the enormously costly process of conversion to electric heat.  Because of their fiduciary duties, Board members can face severe personal liability if, for example, they put their residents in the position of losing heat when the electrical grid fails on the coldest days of winter; or if they commit their building to borrowing large sums that must be repaid to install a heating system that then does not work when needed.

Conclusion

The NYC LL97 Report falls far short of what is needed to provide Co-op and Condo Boards and the residents of those buildings with any assurance that the LL97 mandates can be met at the same time the Climate Act is transforming the electric energy system with massive deployments of wind, solar, and energy storage as well as not yet commercially available resources.  This means extraordinary risks for keeping the heat on in the winter in NYC.

The fines that are slated to be imposed on buildings failing to convert by 2030, although substantial, are small compared to the combined exposures of conversion costs plus potential liabilities.  Moreover, when it becomes apparent that the grid cannot handle the mandated demands, the laws imposing impossible and irreconcilable mandates must inevitably be modified.  The LL97 Impacts Report concludes that no responsible Board can go down the road of converting a large building to electric heat until NYC proves that the mandates are demonstrably feasible without threatening the safety and welfare of affected residents.

Roger Caiazza blogs on New York energy and environmental issues at Pragmatic Environmentalist of New York.  This represents his opinion and not the opinion of any of his previous employers or any other company with which he has been associated.