Summary

New York City’s Affordable Housing Reinvestment Fund (AHRF) Offsets Program is a highly innovative mechanism that enables building owners subject to Local Law 97 (LL97) to purchase offsets for up to 10% of their annual emissions limits. The offset purchases then fund emissions reductions projects at affordable housing buildings in New York City. The AHRF Offsets Program keeps emissions reductions hyper local, while providing clean air, clean heat, and clean cooling to low-income buildings.

Overview

New York City’s LL97 is one of the most ambitious plans for reducing greenhouse gas (GHG) emissions in the nation. The law establishes emissions limits for most buildings over 25,000 square feet, which are currently responsible for nearly 70% of New York City’s GHG emissions. In the lead up to LL97 implementation, New York City launched the AHRF Offsets Program, an innovative program that generates offsets to support decarbonization projects in affordable housing buildings. The AHRF Offsets Program is a collaboration between New York City’s Department of Buildings (DOB), NYC Housing Preservation and Development (HPD), the Mayor’s Office of Climate and Environmental Justice (MOCEJ), and the New York City Energy Efficiency Corporation (NYCEEC) as the program administrator. The contributions from AHRF offset sales fund projects through HPD’s Resilient & Equitable Decarbonization Initiative (REDi), a joint initiative of HPD and the New York State Energy Research and Development Authority (NYSERDA), which provides funding and technical assistance to build capacity and scale up decarbonization projects in affordable housing within the HPD development pipeline.

Accelerating Local Benefits

Retrofitting a large building can be a complex and resource-intensive endeavor involving long-term asset management, ongoing building assessments, and alignment with financial planning cycles. These challenges are even greater for affordable housing buildings, where often aging infrastructure typically demands more extensive upgrades and funding can be limited. The AHRF Offsets Program creates an opportunity for both LL97 building owners and affordable housing building owners to overcome these challenges. AHRF offsets are priced at $268 per metric ton of carbon dioxide equivalent (tCO₂e), reflecting the cost of reducing emissions in a New York City building, and mirroring the methodology used to calculate LL97 penalties. This gives owners the choice to invest in emissions reduction work at their own property or, for up to 10% of their emissions limits, fund comparable reductions at an affordable housing building. By supporting retrofits in under-resourced buildings, the AHRF Offsets Program delivers direct local benefits while also giving LL97 covered buildings the flexibility to plan and phase their own retrofits, ensuring the city’s energy and environmental goals are still met.

High Integrity Offsets

Offsets, when implemented effectively, can be a constructive tool in a larger effort to achieve deep emissions reductions. However, offset programs should be designed to ensure that the associated emissions reductions have integrity. AHRF offsets are designed to uphold a high standard of environmental integrity, ensuring that every ton of avoided emissions is additional, unique, quantifiable, verified, and permanent. The AHRF Offsets Program supports projects that would not otherwise occur under current regulations, specifically in buildings that are not required to comply with LL97 annual emissions limits. Each offset corresponds to one tCO₂e reduced, and is tracked through a public registry to prevent double-counting. HPD REDi projects achieve emissions reductions by replacing fossil fuel equipment with high-efficiency electric alternatives per HPD Design Guidelines. The methodology used to estimate savings is replicable and grounded in historical outcomes of similar projects, and savings are measured through annual benchmarking reports. As the affordable housing buildings are participating in HPD’s REDi program, NYSERDA acts as an independent third party that has validated the program’s methodology and approved qualified Technical Assistance Providers who verify project outcomes. The verification of impacts by NYSERDA provides additional confidence in the benefits of the offset purchases.

Aligning Climate Action with Affordable Housing Priorities

AHRF offset sales help ensure that HPD does not need to turn away qualifying low-income buildings seeking to decarbonize through the REDi program. Replacing fossil fuel equipment with high-efficiency electric systems provides health, safety, and environmental benefits for residents and the surrounding community. These projects also create job opportunities for local contractors, which in turn support workforce development and drive local economic growth. Giving LL97 building owners a way to support these neighboring building improvements keeps the benefits hyper local while scaling up the clean energy economy. Supporting energy efficiency work in New York City’s affordable housing stock is essential for preserving long-term housing stability and affordability, improving building resilience, and ensuring low-income communities are not left behind in the city’s infrastructure investments.

Looking Ahead

HPD has a large pipeline of REDi projects that are not required to comply with LL97 emissions limits and are good candidates for completing emissions reduction retrofits. As buildings work to achieve compliance with LL97 decreasing emissions limits, the City and NYCEEC are prepared for growing demand of offset purchases. The AHRF Offsets Program will continue to advance the goals of LL97 by driving GHG emissions reductions in New York City buildings and supporting the building owners who are leading the way in achieving the City’s energy and environmental goals.