BPL: Driving Urban Sustainabillity with Building Carbon Caps

Objective

Develop the building blocks for a New York City policy to cap and reduce carbon emissions from large buildings in a way that minimizes cost, maximizes flexibility to building owners, and ignites market forces to achieve ambitious city-wide reductions in carbon emissions.

Background

Buildings are responsible for 70% of New York City's greenhouse gas emissions. Thus for NYC to achieve its goal of reducing carbon emissions 80% below 2005 levels by 2050, its buildings must dramatically reduce their carbon emissions. Unprecedented improvements in NYC building energy efficiency are anticipated through various initiatives such as the Greener Greater Buildings Plan, state and city energy conservation codes, the “Green Codes Task Force,” “2030 Districts”, the NYC Retrofit Accelerator, etc.  Still, “80 by 50” is an ambitious goal.  Given the real threat that current policies will not put NYC on track to meet it nor the interim targets, policy makers may resort to “measure-based mandates.” With New York City on the leading edge of initiatives that drive building energy efficiency, the City is an excellent test bed for alternative policy approaches.

The EPA’s “Clean Power Plan” uses a strategy that requires states to reduce carbon emissions from power plants. However, it allows states to flexibly craft their plans using various techniques to achieve the required emissions reductions. Similarly, building owners could be given myriad options to meet an emissions reduction goal, with a policy that allows maximum flexibility in specifying technological choices.

Suggested Approaches

1. Leverage data from Local Law 84 reporting: Annual energy reporting is currently done for large buildings in NYC using the EPA Portfolio Manager. Output includes a calculated value for carbon emissions based on “source energy.” Use this value as a baseline for performance, but analyze ways to ensure reporting accuracy (e.g. audits, certification) and minimize gaming.
    
2. Determine cap variations depending on building usage: Energy use intensity varies depending upon how the building is used, e.g., hospitals, office buildings, schools and residential buildings all use different amounts of energy per square foot.
    
3. Identify and specify alternative methods for eliminating carbon emissions: To enable flexibility for the owner to reach the carbon cap, explore and describe various approaches that enable building owners to achieve the cap. Alternatives can include (a) energy efficiency; (b) fuel switching, e.g. oil to gas; (c) distributed generation, e.g. CHP or solar; (d) purchase of renewable electricity through the grid; and (e) purchase of carbon offsets. Analyze the anticipated effects that different approaches will have both on building owner behavior and the markets.
    
4. Accommodate financing solutions, encourage energy efficiency, and allow for transferability: Examine possible government-based financing initiatives to enable energy efficiency measures to be executed. Consider the possibility of allowing owners to accrue escrow funds usable for energy efficiency initiatives; and/or methods to transfer debt payments on energy investments from one owner to the next.