Carbon trading isn’t a new idea, but as a city-level policy tool to reduce emissions in buildings, it’s a revolutionary concept. With cities seeking to reduce building emissions, practical and innovative policies are needed to unlock cost-effective carbon savings. And as NYC moves to implement Local Law 97’s building emissions caps, the city is considering trading as a solution. This report will help inform NYC’s carbon trading study and spur global dialogue about this novel policy approach.
In Trading: A New Climate Solution for Buildings, we identify multiple policy options for a carbon trading program among buildings through the lens of environmental justice. These options provide flexibility for consideration by global cities.
The report explores 11 key program design questions and puts forth 59 policy options for any city-level trading program to consider. And finally, we tie it all together with examples of how these options could be combined to illustrate potential trading programs.
Over the course of nine months, we convened members of our Global Climate Efficiency Trading Initiative, key NYC stakeholders and trading experts. During this process, we found that with the right design, a carbon trading program for NYC’s buildings could:
- Drive new retrofit investments to buildings in environmental justice areas;
- Provide flexibility for building owners to comply with Local Law 97 at lower cost;
- Incentivize earlier carbon savings from buildings by rewarding owners who act sooner.
This report is the first step in a broader policy development process. Urban Green will share these results with the city as it explores trading options, and discuss the benefits of trading for the implementation of Local Law 97. We’ll also be collaborating with Green Building Councils in Hong Kong, London, Singapore and Toronto to discuss how this policy tool can transform the building sector for a low-carbon future well beyond New York City.
“Climate action has never been more urgent. How we heat and cool buildings is a significant part of our greenhouse gas emissions. New actions, like building carbon trading, help to lower emissions, create thousands of decent jobs and, done right, address equity. Solutions like this show how cities are leading the way on climate and learning from each other to tackle the climate crisis,” says David Miller, former Mayor of Toronto and Director of International Diplomacy for C40.
“Envisioning a carbon trading program for New York City that supports emissions and pollution reductions in our frontline climate communities is both innovative and important work in our urgent fight against a changing climate,” says Mark Chambers, Director of NYC Mayor’s Office of Sustainability. “We thank Urban Green for their continued partnership and look forward to continuing the work in creating a program that serves all New Yorkers.”
Trading: A New Climate Solution for Buildings was made possible through generous support from the Energy Foundation and New York Community Trust.
In November 2021, NYU released the carbon trading study required by Local Law 97. The study is the first comprehensive modeling assessment of the law's costs and benefits and the feasibility of a potential carbon trading program for buildings.