NYC Embodied Carbon

Master Keys

• PLG's long-term, non-recourse C-PACE funds can now be used to acquire buildings for adaptive reuse, thanks to a concept called Embodied Carbon
• The building process emits around 40% of all greenhouse gases, creating a strong incentive to reuse existing buildings rather than tearing them down
• The unavoidable emissions from buildings are called embodied carbon, and NYC will now consider it when determining if a project qualifies for C-PACE

Even though New York has had a C-PACE program since 2009, it's finally primed to become one of the largest C-PACE states in the country.

What changed?

New York has finally followed the lead of Colorado and allowed the use of embodied carbon when determining whether a project is eligible for C-PACE funds. This means that the adaptive reuse of buildings is now far more highly incentivized than it was before, opening the door to creative projects in every borough to be funded with capital from PLG.

Why Does Embodied Carbon Matter?

Embodied carbon typically refers to greenhouse gas emissions that are an unavoidable part of the building process, like manufacturing, transportation, installation, maintenance, and disposal of construction or demolition materials.  

C-PACE’s early days in New York favored new construction unless the retrofit was fully electric. That has changed. By allowing C-PACE to be used for projects that demonstrate environmental benefit through the reduction of embodied carbon, New York is incentivizing the adaptive reuse of buildings.

The change makes sense. New York state has 5.3 million buildings – over a million of which are likely C-PACE eligible – with around 90% built prior to the year 2000. Tearing them down as they reach the end of their useful lives instead of repairing and reusing them would be an unbelievable waste of resources – to say nothing of the loss of the character that makes neighborhoods and towns feel unique.

This isn’t a minor policy tweak to make climate goals seem more achievable: According to a 2021 report from RMI, buildings account for nearly 40% of greenhouse gas emissions and of that, 25% is embodied carbon. Incentivizing the creative reuse of existing buildings keeps a meaningful amount of carbon from entering the atmosphere.

How Can PLG Help?

The most exciting change is that PLG’s long-term, fixed-rate, non-recourse capital can now be used to finance acquisitions as well as improvements, up to 35% LTV.

For example, developers looking to take an aging office building and turn it into mixed use or residential property can now use New York’s new embodied carbon provision to access PLG’s institutional C-PACE capital.

Outside of acquisitions, PLG’s funds can be used for a wide range of enhancements that can decrease operating costs and improve property values, like building envelope improvements, high-efficiency HVAC systems, and smart building upgrades.