Carbon Emissions and Local Law 97 – A large real estate expense for tenants?

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Armano Real Estate December Newsletter

Carbon Emissions and Local Law 97 – A large real estate expense for tenants? 

Carbon emissions and Local Law 97 are the new hot topics in New York City real estate. Landlords are making the first attempts at passing through possible carbon emission penalty payments resulting from Local Law 97 onto tenants. Armano Real Estate is successfully navigating carbon emission lease clauses and helping tenants mitigate building expense pass-through risks.  

Please see the below resources and feel free to contact us regarding your current real estate situation. We can explore strategies to mitigate rising occupancy costs. And we can provide a no-fee lease review and analysis and a preliminary space program to help meet your back to work plans and corporate real estate vision.

Local Law 97
In 2019, the City Council passed Local Law 97 with ambitious goals to tackle climate change by putting carbon caps on the city’s biggest source of greenhouse gas emissions: buildings. The goal of Local Law 97 is to cut buildings’ emissions 40% by 2030 and 80% by 2050 across the five boroughs.

However, for the past three years there’s been little guidance on how owners and managers could achieve the aggressive targets. The Department of Buildings finally released a series of that regulating how property owners are able to comply with the law on October 6th. A public hearing was held on November 14th

Most building owners must comply with the law starting in 2024, and the emissions limits ratchet down in 2030 and 2050. If not, owners could face fines of $268 for every ton of emissions above the limit.

The proposed rules put forth ways to determine each building’s energy use and yearly allowance for the amount of greenhouse gasses it can emit. The DOB also published a preliminary list of buildings that are subject to the law. Local Law 97 applies to all buildings larger than 25,000 square feet, including some grocery stores, distribution centers, offices and several kinds of apartment buildings.

We expect the DOB will finalize the rules by the end of the year and will craft more rules governing how the law works moving forward. 

One way building owners can comply with the law without actually making any changes is to buy renewable energy credits generated from solar and wind projects to offset their buildings’ carbon emissions related to utility-supplied electricity consumption. Most electricity that powers New York City is generated from fossil fuels. 

Owners will eventually be able to purchase credits related to two massive energy transmission projects underway to help bring clean electricity to the city, but the law kicks in before those projects are slated to come online. 

Please see the following links on carbon emissions and returning to the office.

NYS Carbon Emissions
Sustainability – Buildings (
Returning to the Office
Returning-to-the-Office.pdf (

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