Navigating Building Decarbonization in New York

Strategies for Commercial and Industrial Leaders

Commercial, multifamily, and industrial buildings – both new and existing – face barriers to decarbonization amid competing demands and growing pressure from legislation and consumers. But there are opportunities to build value today, namely energy efficiency and strategic electrification, while making progress toward a decarbonized future.

New York’s emissions reduction targets are guided by the Climate Act , with building energy efficiency and electrification serving as a cornerstone for the State’s climate goals.

Decarbonization of new buildings was codified in 2023. Starting in 2026, the installation of fossil fuel equipment is prohibited in new buildings up to seven stories before applying to all new construction in 2029 (barring exceptions for certain commercial and emergency uses). New York City’s Local Law 154 and other municipal legislation set even earlier timelines for all-electric new construction.

Other policies, including Local Law 97 and New York’s forthcoming Cap-and-Invest program , aim to accelerate decarbonization in existing buildings and industry. Thus, now is the opportune time for property owners to begin planning their decarbonization strategy – both to futureproof against regulation and the increasing risks climate change poses to their assets.

Taking a Phased and Tailored Approach

Retrofitting existing buildings and converting to all-electric equipment requires considerable planning and investment. However, it is not an all-or-nothing proposition, and the reality is that many buildings will take a phased approach.

While full electrification is the end goal of decarbonization for most building types, reducing energy use with efficiency improvements and partial electrification can be a cost-effective bridge solution to begin transitioning away from fossil fuels. It’s important to factor in the design and remaining useful life of building systems when determining the most appropriate approach to partial or full electrification.

The International Tailoring Co. Building in Manhattan, for instance, repurposed its existing hydronic loop system to integrate nine central air-to-water heat pumps and two new condensing boilers. The retrofit project also utilizes waste heat in the summer for hot water and a building management system to optimize efficiency.

Industrial and commercial buildings with various uses have made considerable strides in lowering their energy consumption and emissions with energy efficiency improvements. Hollingsworth and Vose (H&V), an advanced material manufacturer, worked with an on-site energy manager to identify energy conservation opportunities and inform an energy management strategy based on the facility’s equipment and systems. The selected energy conservation measures resulted in electricity savings of 10% and fuel savings of 6.5%.

Mount Sinai Hospital also worked with an on-site energy manager to develop an energy management plan and implement energy efficiency upgrades across its six-building campus. In just two years, the NYC hospital cut energy use by 10% from its 2017-18 baseline, far exceeding the total reduction goal of 4.4%.

Developing a Decarbonization Strategy

Not having a plan for building decarbonization will soon become a business liability. Taking stock of building systems and energy performance is a fundamental first step to compare options and prioritize investments. Multifamily, industrial, and commercial facilities can access technical assistance to help inform their decarbonization strategy.

The best path for energy efficiency, electrifying building systems, and incorporating renewables will depend in part on the facility type and design, useful life of assets, and lease structure. Factoring in clean energy tax credits from the Inflation Reduction Act, plus New York State incentives, is important to determine the return on investment and financing needs associated with any decarbonization strategy.

All-Electric Is Feasible Today

Efficient, all-electric technologies are already available for multifamily buildings and most commercial applications. Notably, the number of heat pumps sold in the U.S. surpassed gas furnace sales for a second consecutive year. Cold-climate heat pumps are used in most buildings in Norway and Sweden, underpinning their efficacy across New York State.

Though work is still underway to connect more renewables to the grid, replacing a fossil fuel heating system with heat pumps today would reduce a building’s emissions by 41% in the first year following installation.

For example, Hudson Square Properties is implementing floor-by-floor installation of water source heat pumps to decarbonize heating and cooling at its 978,277 square foot property. The property is leveraging tenant turnover between now and 2032 to upgrade building systems to new technologies that lower emissions and energy use on the path to full decarbonization.

Village Grove, a 40-unit multifamily building in Tompkins County, utilized Passive House design and efficient, all-electric building systems to decarbonize its operations.

Innovation and technological advances will continue to make decarbonization an easier and cost-effective proposition. Through the Clean Heat for All Challenge, appliance manufacturers are designing and testing efficient window heat pump units – a potential decarbonization solution that could bypass more costly multifamily building retrofits.

Thermal energy networks, also known as community heat pumps, are another approach to decarbonizing heating and cooling on a larger scale that is being evaluated by municipalities, colleges, and larger properties across New York. Such systems use a network of pipes to connect multiple buildings and distribute thermal energy through geothermal processes, surface water, or recirculating waste heat.

Building for a Decarbonized Future

While new technologies will be required to decarbonize certain industrial uses that require high temperature heat, there’s ample opportunity now for curbing emissions and energy use across all building types.

Through a combined approach of reducing energy loads, recovering wasted heat, and integrating renewables, moving towards partial or full electrification is technologically feasible today. This phased strategy is also fundamental to its cost-effectiveness, as greater operating efficiencies minimize the system sizing requirements and total investment to retrofit buildings for a decarbonized future.