When New York City passed its greenhouse gas emissions reduction law, also known as Local Law 97 (LL97), in 2019, the general response from vested parties was a mix of celebration and caution. The law’s intent from the outset (its formal title is the Climate Mobilization Act) is to gradually decarbonize nearly every large building in NYC that exceeds 25,000 of gross square feet, with the goal of achieving wholesale net-zero emissions by 2050. That equates to some 50,000 existing buildings in all, representing 60% of the city’s building area and more than two-thirds of the city’s emissions, according to calculations from the Urban Green Council.

“The law sets stringent emissions limits…starting in 2024, and imposes even tougher standards in 2030,” wrote Scott Gibson shortly after City Council passed LL97. He also noted that this ambitious emissions-slashing endeavor “won’t be cheap,” citing Urban Green Council’s initial cost projections of “between $16.6 billion and $24.3 billion.” (Urban Green played a large part in crafting the law.)

Local Law 97 is widely considered one of the most ambitious pieces of climate legislation for buildings in the world. (Many cities with similar legislation are targeting 2030 emissions reductions greater than 40%, as is outlined by LL97, but when adjusting for scale and scope, that superlative holds true.) Since its passage, various amendments and provisions have introduced new electrification credits and the like designed to incentivize heat pump adoption and other retrofits to aid owners to comply with LL97’s decarbonization goals over the next five years. But costs do remain a large concern among building owners, and the looming threat of penalties issued by the city for non-compliance has rubbed many building owners the wrong way.

The road to success

New York has a lot of old buildings and most of them cannot be retrofitted and electrified with the flip of a switch. But things may not be as bleak as the real estate industry would have us believe. For starters, NYC’s Department of Buildings (DOB) reported back in 2023 that compliance was outpacing initial expectations. A preliminary review by the DOB indicated only 11% of buildings were off pace for the initial 2024-29 compliance period, far more encouraging than the city’s prediction of 20%.

Further, the fearmongering over penalties may be much ado about nothing. According to Marshall Cox, CEO and founder of Kelvin, a Brooklyn-based company specializing in residential decarbonization, “No one really believes the city is going to issue fines. Local Law 97’s value is in making buildings aware of their potential liability, and it evaluates financially driven solutions.”

Cox details the typical sequence of events for building owners. “The first step is you have to calculate your building’s energy use intensity, and how many tons of carbon per square foot you’re emitting. When you do that, some [contractors] will say, Here’s your footprint and here’s how much you can get fined. When we do it, we say, Here’s your footprint and here’s how much you’ll save.”

In Cox’s estimation, the likely outcome for owners who don’t meet initial emissions reductions is that they’ll be told by the city that instead of paying a fine, simply spend that same amount on getting compliant, “and you’ll be good.”

This thinking is aligned with the law’s so-called good-faith exemption. Amended rules for LL97, issued in December 2023, stipulates that building owners “can show they are making a good faith effort to reduce carbon emissions in order to mitigate penalties and instead continue to invest that money into energy efficiency retrofits.” (Owners must report their buildings’ 2024 emissions to the DOB by May 1, 2025.) Essentially, the penalties will be repurposed as a prescriptive pathway towards decarbonization; an effort that amounts to the stick being rendered a carrot.

A no-cost solution

Kelvin’s core business is the Cozy, an insulated thermostatic radiator enclosure that regulates the temperature of individual radiators connected steam or hydronic heating systems and distributes that heat with greater efficiency. (Steam radiators heat about three-fourths of New York City buildings.) Cox says that his company has retrofitted nearly 10,000 apartments in NYC to date, spread across “a couple hundred buildings.” Thanks in large part to LL97, more than half that number was completed in just the last 12 months.

In 2025, the company is launching its “hybrid electrification” program that will expand its scope of services to include replacing dated, coolant-leaking air-conditioners with commodity heat pumps and thermal batteries. This measure will get most buildings to a 75% decarbonization rate, Cox estimates, en route to becoming fully electrified.

When people imagine the cost burdens associated with LL97, they speculate on the feasibility of gut-renovating a vintage apartment building fitted with a one-pipe steam system. “Everyone wants a clean environment, most co-ops do everything they can to do that,” Bob Friedrich, board president of Glen Oaks Village, a Queens co-op, told AMNY last May. “But you can’t create artificial dates and expect us to pay this kind of money. We don’t have this kind of money.”

“Everything costs a bunch of money, but we’re a solution that costs nothing. We’re trying to make it very easy for people to comply,” Cox says. The full extent of Kelvin’s work is what Cox calls “minimally invasive retrofitting.” “We never want to find out what’s on the other side of that wall,” he says, referring to the unsavory prospect of gutting a 100-plus-year-old building. “We don’t touch pipes, we don’t touch plumbing, we don’t touch any of that stuff. So, what are the things you can control? You can upgrade the envelope; that’s very expensive. You could try to electrify the heating; that’s outrageously expensive. Or you could take what exists and try to improve it.”

The zero upfront cost model is due to the company’s $100 million debt facility with ClearGen, a portfolio of funds managed by Blackstone Credit’s Sustainable Resources Group. This financial commitment has enabled Kelvin to sell its services to predominantly low- and middle-income buildings—a category that comprises about 80% of its customer base—with no upfront costs and building owners can still benefit from utility incentives and tax credits through the Inflation Reduction Act. “If you can finance these kinds of [building] transitions, it makes everything happen.”

Is affordable housing the key?

Fully electrifying about 50,000 buildings is a cumbersome task, to say the least. And depending on property type and financial constraints, decarbonization pathways will vary wildly. (Environmental groups have criticized Mayor Eric Adams’s administration for, among other things, allowing owners the option of purchasing renewable energy credits during the first compliance period.)

Now, once again, there is cause for both celebration and caution owing to New York City Council’s recent passage of the City of Yes for Housing and Opportunity plan (aka City of Yes), which the city’s planning department has called the “most ambitious update to NYC’s zoning code since 1961.” The City of Yes promises less restrictive zoning, greater density, and the creation of 80,000 new homes over the next 15 years. Of note, an LL97 provision allows owners to secure clean energy financing for new construction in the form of recently approved PACE financing.

Predictably, and understandably, the pushback against the plan’s “1,386 pages of zoning changes” has been swift, with many waging the inevitable outcome will be more upzoning and more luxury towers going up along Billionaires Row. “The City Planning Commission would like us to believe that a little more affordable housing in every neighborhood is the primary reason Mayor Adams and Big Real Estate want zoning reform,” writes architect John Massengale in Common Edge. “But in Manhattan, where land prices, apartment prices, and luxury tower profits are all high, [City of Yes] will mainly give us more apartments at the top of the market.” This sentiment is echoed, in a way, by Vishaan Chakrabarti in his now-famous op-ed for The Times, in which he writes, “New York needs to build more housing, and it can. New York could add dwellings for well over a million people—homes most New Yorkers could afford—without substantially changing the look and feel of the city.”

Despite its alleged faults, Local Law 97 was conceived with the sincere and worthwhile goal of cleaning up a lot of older, inefficient building stock. And by all accounts, it’s getting the job done. How and to what extent City of Yes will impact LL97’s continued success will of course depend on what gets built and for whom.

When asked what the biggest challenges are to reaching the law’s intended benchmarks, Cox points to things like navigating utility incentives (“a tough nut to crack”) and continuing pressure from real estate lobbyists who want to dilute the process with more loopholes. The biggest barrier, he says, is simply gaining access to the buildings in most need of retrofitting. “People live in these buildings low-income buildings. Historically, they have good reason to be distrustful” when any business knocks on their door. “Scheduling and optimizing this process has been the biggest lift.”

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