Can Renewable Energy Credits (RECs) Cut Your Local Law 97 Penalty?
Short answer: Renewable energy credits can reduce the emissions counted for a building's utility electricity under Local Law 97, but not for gas or oil, and not enough to meet a limit alone. A REC is worth buying only if it costs less than about $77 per MWh in 2024 to 2029, or $39 from 2030.
What a REC does for Local Law 97
A renewable energy credit represents one megawatt-hour of renewable electricity. Under DOB's policy it can reduce the emissions attributed to a building's utility electricity. It cannot reduce emissions from gas, oil or steam, and a building cannot reach its limit with RECs alone.
When a REC is worth buying
Each MWh of electricity emits 0.000289 tCO2e in 2024 to 2029 and 0.000145 tCO2e from 2030. At $268 per ton, a REC that offsets one MWh avoids about $77 of penalty in 2024 to 2029 and about $39 from 2030. A REC priced above that costs more than the penalty it removes.
DOB's own policy note reaches the same conclusion for later years: it expected Tier 4 RECs to become available around 2026 and said they may cost more than the penalty in 2030 to 2034. Treat that as DOB's view when it was written, and check current prices.
The rules that limit RECs
- RECs apply to utility electricity only.
- The resource must be in New York City or deliver into it.
- The filing steps mention offsets of up to 10% of the limit, and a receipt must be uploaded.
- An owner who files a good faith efforts decarbonization plan may not use RECs in 2024 to 2029, per DOB's policy.
Rules can change. Confirm with DOB or a registered design professional before relying on RECs in a plan.
What to compare them with
Cutting a ton through an efficiency project lowers energy bills as well as the penalty, which a REC does not. See the cheapest fixes first, then compare costs per ton.
Frequently asked questions
Can you buy renewable energy credits to meet Local Law 97 limits?
Partly. DOB's policy says RECs can reduce the emissions counted for electricity supplied by the utility, but an owner cannot meet the limit through RECs alone.
What RECs qualify?
DOB's policy requires renewable energy resources located in New York City, or whose output flows directly into it. It points to new Tier 4 RECs. Check DOB for which RECs qualify now.
Is there a cap on how much RECs can offset?
DOB's filing steps mention offsets of up to 10% of the building's limit, with a payment receipt uploaded. The law lets DOB cap the deduction by rule, so confirm the current cap before you buy.
Are RECs worth buying?
Only if the price is below the penalty they avoid. From 2024 to 2029 that is about $77 per MWh, and from 2030 about $39 per MWh, at $268 per ton.
Sources
More Local Law 97 guides
- What is the NYC Local Law 97 penalty?
- How much will my building owe in 2030?
- Local Law 97 penalties by building type
- How to reduce Local Law 97 emissions
- Local Law 97 deadlines and reporting dates
- The biggest Local Law 97 penalties in NYC
- Local Law 97 for co-ops and condos
- Local Law 97 for hotels
- Local Law 97 Article 321: the pathway for affordable and rent-regulated buildings
- How to file your Local Law 97 report
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