The Carbon Taxes Are Coming! The Carbon Taxes Are Coming!
Carbon taxes are coming, and they’re coming fast!
Last week, the NYC City Council released an updated draft of Introduction 1253, a new bill that is likely to be passed into local law. If passed, this legislation will be the nation’s first legislative cap on carbon emissions. It is a part of NYC’s commitment to reduce greenhouse gases (GHGs) by 80% by 2050 (the 80x50 program).
If you’re a property manager of a building that is more than 25,000 square feet in size, this bill could have a drastic impact on your operations. Intro 1253 applies to private sector buildings larger than 25,000 square feet in size and all city buildings irrespective of size. Intro 1253 also establishes GHG emissions targets and expands Local Law 87 energy audits and retro-commissioning requirements for large buildings. If a building emits more than an established GHG allowance, it will be subject to a penalty.
Under the new law, a GHG allowance will be calculated based on the building’s square footage and occupancy classification. If a building emits more GHGs than its allotted budget, it will be charged a penalty for each metric ton of CO2e exceeding the allowance.
For example, let’s say a building exceeds its 2024 GHG budget by 500 metric tons CO2e. The penalty is calculated by multiplying $268/metric ton CO2e by the extent which the building 2024 GHG emissions exceed the GHG budget, which if we did the math would be $268 x 500 = $134,000 penalty for CY 2024 emissions. The penalties have been shown to be significant in certain cases, especially for large consumers of energy such as hospitals, data centers, as well as large residential and commercial buildings.
If passed, Intro 1253 will go into effect January 1, 2024. The first period of compliance is 2024-2029. In the next period of compliance from 2030-2034, the standards are stricter. Requirements beyond 2035 will be determined in the future.
Gotham 360 is keeping an eye on Intro 1253 as it evolves. Please feel free to reach out if you have any questions. Watch this space.