Did you know that in New York City over two-thirds of greenhouse gas emissions (that’s 47.9 Million Tonnes CO2e according to the Urban Green Council) come from buildings? Because of this outsized impact, over the last two decades, New York City has introduced a variety of climate-oriented local laws that focus on building sector emissions. Particularly, most large buildings over 25,000 square feet fall under Local Law 97 (LL97), which came into effect in 2024 and will become stricter in 2030 and beyond.

[Want to learn more about LL97? Read our blog posts on energy law compliance basics and strategies for energy law compliance here.]

Failure to meet the emissions caps set in LL97 will result in severe financial penalties. But beyond the fines for this and other local laws, non-compliance may lead to more costs for your building: from loss of eligibility for city and state financial incentives to higher carbon emissions to quality of life impacts on your tenants/shareholders.

As your building moves towards compliance, you may be wondering: What happens if we don’t take action in a timely fashion? 

Here’s what you should know about complying with NYC energy laws:

How the Penalties Work

Penalties for non-compliance are formula based and structured, with clear guidelines available on the NYC Buildings website.

For instance, for LL97, NYC code states that for buildings subject to Article 320 (which defines the covered buildings; e.g. most large private buildings over 25,000 gross square feet):

  • A covered building owner must submit the annual building emissions report
    • Penalty for non-compliance = (Floor Area x $0.50) per month
  • A covered building must meet the annual emissions limit for that building
    • Penalty for non-compliance = ((Actual Emissions – Emissions Limit) x $268) per year

For buildings subject to Article 321 (which provides alternative pathways for specific types of buildings, includes affordable housing and houses of worship):

  • A covered building owner must submit the compliance report on time
    • Penalty for non-compliance = $10,000
  • A covered building must demonstrate compliance with one of the two compliance pathways
    • Penalty for non-compliance = $10,000

Building owners should review the rules and may submit requests to the Department of Buildings (DOB) for adjustments based on external and financial constraints, as well as take advantage of deductions and alternatives.

Why the Penalties Drive Action

For LL97, NYC Accelerator notes that an estimated 11% of buildings are expected to exceed their caps in this first phase (2024–2029), and that the stricter limits in the next period (2030–2034) would affect up to 63% of covered buildings if no efficiency upgrades were made.

In other words: The penalties are designed to be costly enough to drive buildings to make investments in efficiency upgrades.

[Learn more about strategies for upgrades here.]

How NYC Energy Laws Are Enforced

Enforcement for these types of laws typically happens through administrative compliance and financial penalties, rather than physical enforcement actions.

Although we have not yet seen how NYC will enforce LL97 in practice (since the first final extended deadline was December 31, 2025), we know NYC is expecting buildings that fall under the law to file—and if they have calculated penalties, to develop an emissions plan or alternative pathways to meet future compliance.

Concerned about compliance? Based on our experience, we believe that the city will look to negotiate and/or find a mediated resolution with buildings to ensure action. We recommend buildings work with an experienced consultant to guide them in this process to demonstrate action to the DOB.

The takeaway: Even if your building is facing penalties, we recommend working with an expert to develop a plan for taking action, so that you can mitigate your fines and long-term costs. Furthermore, working with an expert can help you to uncover rebates and incentives that may offset your long-term investments into upgrade work.

[Learn more about our rebate & incentives services.]

How Penalties Compound Over Time

Let’s take a look at an example of a building that exceeds its LL97 limits by 500 metric tons. Based on the penalty structure above, that building would face roughly $134,000 annually in penalties in the short term if no investments in efficiency upgrades are taken.

In addition, these emissions penalties would increase over time, because stricter limits will come into effect in 2030, 2035, and beyond. While we don’t  yet know what those newer penalty structures will look like, we do know that they will likely be more severe over time to force compliance.

Thinking Ahead to 2030

Michael Scorrano, PE, Managing Director and Founder, EN-POWER GROUP

Beyond immediate penalties, Michael Scorrano, PE, Managing Director and Founder of EN‑POWER GROUP, cautions that buildings must think ahead. He explains that while those buildings that are fined in the first phase may take action immediately, “Many people impacted by the second compliance phase starting in 2030 are sitting there saying, ‘We know we may have to do something in the future, but we’re not necessarily thinking about it in 2026. Maybe 2027/28 we’ll get serious and do something.’”

Scorrano warns that putting off work may be problematic, as it may take several years to get work completed in time for the 2030 phase. Therefore, it’s imperative that buildings start planning now in order to be ready for 2030 and beyond.

What Non-Compliance Means for Building Operations and Residents/Tenants

Compliance isn’t just a technical issue: It’s one that impacts both building operations and residents/tenants.

Impact on Building Operations

In addition to budgeting to pay the penalties on an annual and increasing basis, non-compliance may impact a building’s operations in other ways. Scorrano says, “People might think about this as just short-term pain, but there are obviously longer-term benefits and implications to investing in efficiency upgrades.”

He emphasizes that energy efficiencies today pay dividends tomorrow, as energy continues to become more expensive over time, “If you look at a lifecycle cost, the savings could be worth millions and millions of dollars over a 25-year period. Energy efficiency and decarbonization plans in the building could help to provide long-term energy savings.”

Impact on Residents/Tenants

For residents/tenants, non-compliance drives up their monthly costs, may impact the quality of their comfort/experience in the building (as compared to buildings that implement measures to meet their carbon caps), and may impact their ability to sell their units (when applicable) due to prospective buyers’ perceptions about the building’s efficiency, energy usage, and utility costs.

Translation: The impact of non-compliance goes well beyond fines.

Reporting, Disclosure, and Transparency

Collective data from LL97 and laws like it allow the government to better understand how building emissions are changing over time. Data published by the government, as well as organizations like the Urban Green Council, show the impact of compliance, as well as potential for impact.

Why the Timeline Matters

As discussed above, LL97 and other similar laws are designed to become more stringent over time, so it’s important for building owners to plan ahead and build a roadmap towards increasing efficiency.

Key milestones include:

  • 2024–2029: Initial compliance period
  • 2030–2034: Stricter limits come into effect (including lower electricity carbon coefficient and 40% targets for New York City Housing Authority)
  • 2035-2049: More stringent limits come into effect
  • 2050+: Citywide zero emissions requirements come into effect

While the timelines and limits may shift as new city administrations come into power, the milestones should still be used as a starting point for planning for building owners.

[Learn more on the NYC Buildings website.]

Recap: Plan Ahead to Maximize Benefits and Minimize Penalties

What happens if your building does not take action to comply with NYC energy laws? In addition to facing annual penalties in the short-term—and increased penalties at future compliance milestones—your building will not be able to take advantage of the financial incentives that may be available currently, nor will your building benefit from the real-world cost savings of energy efficiency.

Scorrano sums it up: “Time goes fast and it’s really important for buildings to at least start resource planning in order to (A) hire a consultant to help put together a good roadmap and (B) look at their capital reserve requirements. It really is the type of thing where you need to start now in order to really plan for 2030. Even if you don’t put a project in action this year, or even into next year, you certainly need to have something going on by 2028 in order to meet your 2030 requirement, if you have a big carbon penalty. The sooner you can get something done, the quicker you may get a benefit from the energy efficiency standpoint.”

If you need support complying with LL97 and other NYC energy laws, get in touch with us, and our team can work with you to build a plan. Reach out at 914-263-1199 or email info@enpg.com.

Or, contact our Director of Business Development, Mitchell Karasik, with your building address and contact name, and we’ll be in touch fast:

📧 mvkarasik@enpg.com

📞 914-263-1199

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