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Decarbonization isn’t new. Professionals in the built environment have been focused for many years on greater energy efficiency, reduced consumption, and more usage of renewables. Even though policies aimed at reducing carbon emissions are changing course, and some renewable energy projects are being scrapped, there are still many places where local laws require building owners to drastically reduce their energy footprints—but easier said than done.

The ongoing challenges in decarbonizing skyscrapers, warehouses, apartments, and myriad other types of buildings were a key topic during ULI’s 3^rd Real Estate Developer & Utility Convening on September 22—part of Climate Week NYC, the largest climate conference outside of the United Nations’ COP.

Hosted by the new law firm HSF Kramer—a merger of Herbert Smith Freehills and Kramer Levin—the event featured panel discussions and workshop exercises focused on how owners can most efficiently procure green power from utility companies.

Addressing the disconnect

Renewables are the fastest-growing energy source for buildings globally, with usage rising by 4.1 percent annually between 2009 and 2019. The real estate world and utility companies need to be key allies in order to meet green energy and carbon reduction goals. But as many in the industry have found, that’s not often the case.

“Working with utility companies and getting owner and tenant collaboration on getting whole building energy data is really tricky and has been tricky for decades,” said Kara Kokernak, senior director of the Lewis Center team.

Many of the country’s largest property owners have set goals around achieving carbon neutrality or net zero within the next several years. However, there are significant challenges in trying to meet those pledges.

Lauren Moss is senior vice president and chief sustainability officer at Vornado Realty Trust, which has a portfolio totaling about 34 million square feet (3.2 million sq m) of commercial and retail space, mostly in New York City. She said one of the biggest challenges has been the state’s Zone J grid getting dirtier after nuclear power was shut down. Renewables have not made up the gap, especially during peak seasons.

“We have had to increase REC [renewable energy certificate] purchasing to provide zero emissions electricity to our tenants,” Moss said. “We have been going in the wrong direction with emissions, although we believe it will change over the next 10 years as more renewables come online.” In particular, Moss said she hopes to see the city’s steam system “responsibly decarbonized,” adding that her firm is committed to steam decarbonization and sees steam as a resilient product. “I think there’s going to be a case coming up for steam,” she said. “The costs of electricity and resiliency are challenges in NYC.”

Challenging landscape

For the Americas DWS Group, which owns 400 assets across the U.S., the biggest barrier is internal data collection, said Hyon Rah, head of sustainability at the firm. With properties in several different markets across the country, it has been difficult for the firm to have a centralized data system.

Rah said the firm is now undertaking a survey on its assets to better understand which utility goes with each asset and of those, which ones offer renewable options. “Two of our marquee funds are under EU Article 8 funds, and a lot of European investors are asking for decarbonization commitments,” Rah said. “We hope that by the end of the year, we can get at least the database done and at least a significant number of assets signed up.”

New York City is at the forefront of decarbonization and has some of the most stringent policies in the country. Leaders there are focusing on how to bring clean energy into the city in an affordable and equitable way, while also trying to meet the state’s renewable energy targets.

“New York City receives about 14 percent of electricity from renewables and zero energy, and we have a long way to go to get to the 100 percent target the state wants,” said Julia Casagrande, deputy director for clean energy in the Mayor’s Office of Climate and Environmental Justice.

While many large renewable projects have been canceled or put to the side in New York, energy storage systems are ramping up, and two notable offshore wind projects—Empire Wind and Sunrise Wind—are still in the pipeline.

Success stories

While there was a lot of discussion about challenges, there were also good examples of solutions. Vornado’s Moss shared that her firm’s film studio project along Manhattan’s West Side Highway will have a solar roof and will be designed to operate with renewable energy.

Vornado is working with both the New York State Energy Research & Development Authority (NYSERDA) and Con Edison on the project, as both organizations offer incentives for solar projects. “What made the solar project pencil was the support from NYSERDA,” Moss said. “It’s the 60 cents per kilowatt that makes the payback work.”

Con Edison is planning to decarbonize the city’s steam system by 2050, in line with the state’s Climate Leadership & Community Protection Act (CLCPA) as well as Local Law 97. According to a study published last year, steam decarbonization is more economical than upgrading the electrical systems in many Manhattan buildings. In addition, a decarbonized steam system can help to offset the load on the city’s grid by reducing the number of buildings that need electrical upgrades and by mitigating peak power usage.

In Midtown, Con Edison recently completed the design of a thermal energy network (TEN) at the famed Rockefeller Center office complex after two years of working on the pilot project. The TEN, owned by Con Edison, builds on an existing thermal network and will operate for six months out of the year, supplying heat to three commercial buildings, with two buildings owned by Tishman Speyer and the other owned by Rockefeller Group. It will repurpose waste heat in the winter that comes from facilities within Rockefeller Center that require air conditioning even in the coldest winter weather.

The project is one of the first pilot projects to come after the state passed the Utility Thermal Energy Network and Jobs Act (UTENJA) in 2022 to allow utilities to own, operate, and maintain thermal energy networks in their service territories. “Over the past two years we’ve developed great relationships with Tishman Speyer and Rockefeller Group and have overcome a lot of challenges,” said Brittni Provencher, engineering manager of Utility Thermal Energy Networks at Con Edison.