New York City building owners got a new tool this week to sidestep the city's toughest climate law: starting Wednesday, they can purchase an unlimited number of renewable energy credits, each priced at $35.52, to offset the carbon emissions that count against their properties under Local Law 97. The credits, backed by hydropower newly flowing into Queens from Quebec, are cheaper than either retrofitting a building or paying the law's steep noncompliance penalties, according to critics who say the option guts the law's original intent.
Local Law 97 was designed to force landlords to reduce building emissions, since buildings account for about two-thirds of New York City's carbon pollution, as reported by Gothamist. The law allows covered building owners to purchase renewable energy credits as one compliance pathway, and building owners can now buy an unlimited number of them — with a minimum purchase of 1,000 credits per transaction. The New York State Energy Research and Development Authority put the first round of credits up for sale this week, and NYSERDA also sells the credits directly to building owners without requiring long-term contracts, with each one representing one megawatt-hour of clean power delivered into New York City's Zone J.
The credits are tied to real new supply. The Champlain Hudson Power Express, a 339-mile transmission line, reached commercial operation on June 1, delivering up to 1,250 megawatts of Canadian hydropower directly to Astoria, Queens — enough to supply roughly 20% of the city's electricity needs, per NYSERDA. That matters because more than 90% of the city's downstate electricity previously came from fossil fuel power plants, a reliance that deepened after the 2021 retirement of the Indian Point nuclear plant. Renewable energy credits are projected to generate nearly $1.8 million in proceeds, which will help fund the transmission project itself.
A Program Born Under Adams, Defended Under Mamdani
The energy credits program was initiated under former Mayor Eric Adams, who pitched the credits in 2023 as a way to fund clean energy projects while protecting building owners from crippling costs. Mayor Zohran Mamdani has pledged to close loopholes allowing landlords to limit compliance with the city's building-emissions law, setting up a tension between the current administration's stated goals and a program it inherited.
Andrew Rudansky defended the use of renewable energy credits, and the Department of Buildings says it remains committed to helping property owners reinvest in their buildings and avoid penalties through energy-efficiency retrofits rather than relying solely on credits. Basha Gerhards said renewable energy credits are an important Local Law 97 compliance tool, reflecting real estate industry concerns about the cost of physical upgrades.
Advocates Warn of a Pollution Loophole
Climate advocates argue the credits severely weakened Local Law 97. Graham Gale said Mayor Mamdani should protect New Yorkers from landlords abusing the renewable-energy-credit loophole, while Pete Sikora said buying credits is cheaper than paying penalties or upgrading properties to reduce emissions. Sikora added that clean-energy spending should not come at the expense of actual pollution reductions in New York City buildings.
Landlords and co-op owners counter that they cannot afford to retrofit their buildings to reduce pollution and describe Local Law 97's penalties as onerous. Under the law, covered building owners face fines of $268 per metric ton of carbon dioxide equivalent over their assigned annual emissions cap, according to the NYC Department of Buildings, plus a separate monthly fine of $0.50 per square foot for late annual filings. Those numbers apply to nearly 50,000 properties citywide — individual buildings over 25,000 gross square feet, or multi-building lots exceeding 50,000 gross square feet.
Why RECs Can't Fix Everything
There's a catch that limits how far the credits can go. Renewable energy credits can offset emissions from sources away from the building itself, such as electricity generation, but they cannot offset carbon emissions from a fossil-fuel boiler inside a building, since city rules restrict credit use to electricity-related emissions only. That means a landlord can buy enough credits to zero out the emissions blamed on grid electricity, but a building still burning gas for heat or hot water remains on the hook for those direct emissions regardless of how many credits it purchases.
The stakes for getting this wrong are rising fast. While fewer than 10% of covered properties exceeded their carbon caps during the current 2024–2029 compliance period, roughly 57% are projected to exceed limits when stricter rules take effect in 2030, according to the Urban Green Council. The Real Estate Board of New York has projected that total citywide fines could top $900 million annually once those tighter caps kick in, making the $35.52 credits look, to some owners, like an insurance policy against the coming crunch.
Residential buildings with between 1% and 35% rent-regulated units must begin complying with Local Law 97 carbon limits starting in January, with their first official emissions filings due in May 2027 under Article 320 pathways. Covered owners must certify their annual emissions reports through the city's BEAM portal by May 1 each year, though an automatic grace period extends penalty-free filing through June 30. Hoodline has previously reported on early compliance numbers and on how the law's timelines are already reshaping costs for co-op boards and commercial owners alike.
Ultimately, the credits decarbonize the electrical grid but do not eliminate localized pollution from the buildings themselves — a distinction that will matter more as rent-regulated properties enter the compliance system and the 2030 emissions caps draw closer. Renewable energy credits help cut overall pollution and support a cleaner grid for the city, but whether that's enough to satisfy a mayor who has promised to close compliance loopholes remains an open question heading into the next phase of the law.
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