16 May 2022
Unprecedented urban development has put increasing pressure on cities to develop sustainable growth strategies. Already, cities account for 75% of global carbon emissions and with urban populations set to double by 2050, the intensity of urban environmental impacts will grow exponentially without effective sustainability strategies.
While much of the climate policy discourse focuses on efforts at the national level, the role of local governments in driving the sustainability agenda should not be underestimated. Cities across the world are implementing innovative sustainability policies. New York City and London, two international hubs for real estate investment and development, have implemented transformative programs promoting climate change mitigation and resiliency.
New York City
New York City is a distinct example of the importance of urban-level policy making. Uncertainty and fluctuations in American environmental policy over the past 5 years left the development of climate policies in the hands of state and local governments. Following the US withdrawal from the Paris Agreement in 2017, New York City released the world’s first CITY-LEVEL ACTION PLAN in line with the Agreement’s goals. Further, in 2018, it was the first city to submit a VOLUNTARY LOCAL REVIEW for the UN sustainable development goals. Finally, in 2019, the City released what has been called one of the most ambitious legislative packages released globally: The Climate Mobilization Act.
Among the new regulations implemented by the Climate Mobilization Act is LOCAL LAW 97. With major implications for the real estate investment sector, LOCAL LAW 97 requires any existing building over 25,000 sq. ft to reduce carbon emissions by 40% by 2030 and by 80% by 2050. This applies to more than 50,000 of New York’s largest buildings, representing more than 60% of the City’s total building footprint. With the first deadline for annual GHG emissions reports due in 2025, asset owners have just over 3 years to implement compliant emissions reductions plans.
Opportunities are high in New York as the compliance deadline comes closer. Local Law 97 alone is projected to lead to a new $20 billion retrofit market according to a 2019 URBAN GREEN COUNCIL report. In addition, the CLIMATE MOBILIZATION ACT established financing tools for asset owners to invest in clean energy and building retrofits – providing key incentives for owners to invest in their assets’ climate resilience and energy performance.
London
Across the Atlantic, London has been developing an ambitious sustainable development plan of its own. With a target of reaching net-zero emissions by 2030, the 2021 LONDON PLAN has wide-reaching effects for the real estate sector who needs to contribute to emissions reduction efforts. New major developments are REQUIRED to implement a minimum of 35% reductions in GHG emissions while smaller residential and non-residential developments are also required to reduce emissions by between 10 and 15% .
The London Plan couples mandatory energy efficiency measures with borough-level offset funds to help meet net-zero targets, offering asset owners several pathways to reach these targets. Each borough is required to establish and administer a carbon offset fund in which developments that fail to achieve the zero-carbon target on-site can contribute to.
In addition to GHG emissions, the London Plan emphasises the importance of mitigating heat risk driven by the Urban Heat Island effect (UHI), a phenomenon unique to cities. Concentrated urban areas of pavement and buildings without significant vegetation or bodies of water to absorb and retain heat can cause temperatures to rise to dangerous levels in hot climates and seasons. LONDON alone can reach temperatures 10 degrees higher than surrounding areas. As a uniquely urban phenomenon, UHI is best mitigated at a city level where local policies can be tailored to the realities of the community, climate and area.
Disparities between national and city realities, such as physical climate, require differentiation in policies between levels of government. Urban policies are especially critical for environmental and social regulations, with more opportunities to progress policy developments ahead of national legislatures. The case study of New York City highlights the ability of local leaders to break with federal inaction and implement transformative legislation in the largest municipality in the nation. London offers an example of how, even in a country with substantial climate legislation, city-level policies tailored to local realities can vastly improve the scope of regulatory action.
With such dynamic changes happening at national and municipal levels, it can be difficult for organisations to track the most important and relevant developments for their operations. Longevity Partners is uniquely equipped to support organisations with these challenges, offering comprehensive legislation reviews for all levels of governance.
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