{"id":980,"date":"2011-04-05T16:33:10","date_gmt":"2011-04-05T16:33:10","guid":{"rendered":"http:\/\/blogs.edf.org\/energyexchange\/?p=980"},"modified":"2011-04-07T20:37:56","modified_gmt":"2011-04-07T20:37:56","slug":"edf-commends-new-york-city%e2%80%99s-split-incentive-%e2%80%9ctrifecta%e2%80%9d","status":"publish","type":"post","link":"https:\/\/blogs.edf.org\/energyexchange\/2011\/04\/05\/edf-commends-new-york-city%e2%80%99s-split-incentive-%e2%80%9ctrifecta%e2%80%9d\/","title":{"rendered":"New York City\u2019s Split Incentive \u201cTrifecta\u201d"},"content":{"rendered":"

By: Elizabeth Stein, EDF Attorney<\/p>\n

Today<\/a>, New York City is pioneering a new solution to the long-studied problem of the \u201csplit incentive\u201d that prevents commercial landlords and office tenants from saving money and cutting pollution with energy efficiency.\u00a0\u00a0 This is not just an academic exercise \u2013 the solution will be rolled out in the heart of Manhattan, at the Gold LEED-certified 7 World Trade Center site, and modeled in the government\u2019s own leases across the city.\u00a0 This can be a game-changer for energy efficiency nationally.<\/p>\n

Energy efficiency is the fastest, most cost-effective way to reduce greenhouse gas (GHG) emissions in the United States. Americans waste an extraordinary amount of energy in inefficient buildings \u2013 and that means we\u2019re wasting money too. In New York City, buildings account for a staggering 80% of the city\u2019s carbon emissions and $15 billion in energy costs<\/a>.\u00a0 Applying today\u2019s technology, many buildings could cut energy use by between 20 and 40% through investments that have the potential to pay for themselves.\u00a0 Investments in energy efficiency will reduce greenhouse gas emissions, lower energy costs, and create jobs when we need them most.<\/p>\n

Today\u2019s commercial leases, however, stand in the way of unleashing that savings stream \u2013\u00a0 hence the split incentive conundrum.\u00a0 Why would a landlord upgrade a building\u2019s energy systems if the cost savings accrue only to the tenant? \u00a0Something as simple as the way a lease is drafted can block access to the cheapest and fastest way to solve air and climate pollution.<\/p>\n

To solve this problem, \u00a0Mayor Bloomberg\u2019s administration teamed up with EDF, NRDC, NYSERDA, real estate consultants HR&A and Cycle-7, and senior real estate attorney, Marc Rauch, among others, to reinvent the commercial lease in a way that lines up the incentives so that landlords and tenants will want<\/em> to upgrade their buildings and cut waste.\u00a0 The new lease language is simple, straightforward, and can be used by any commercial building, anywhere.<\/p>\n

The basic idea is to realign the business deal on energy costs, so that both landlords and tenants are motivated to stop wasting energy.\u00a0 Under the new lease announced today, part of the cost savings from energy efficiencies are made available to pay for upgrades to cleaner technology.\u00a0 Tenants save money and buildings end up with newer lighting and heating and air conditioning systems that cost less to operate.\u00a0 The new lease also solves a tough measurement and verification challenge by applying an easy-to-understand discount to the upfront cost-savings projections obtained by a landlord\u2019s engineer, in order to protect against variances between cost savings projections and realities over time.<\/p>\n

By changing the business deal between landlord and tenant, the lease structure announced today<\/a> creates a way to save money, cut pollution, and modernize building systems.\u00a0 It\u2019s the ultimate win-win for New York City\u2019s commercial landlords, tenants \u2013 and for any of us who breathe the air in a city with lots of power plants.\u00a0 I think of this as a split incentive \u201ctrifecta:\u201d it\u2019s being adopted by the private sector in a true market transaction at the World Trade Center site, the City itself is committing to use the approach in leases where it is a tenant, and the Real Estate Board of New York (REBNY), New York City\u2019s leading real estate trade association, is speaking favorably about the solution.<\/p>\n

This is a great example of what can happen when government, advocates, and the private sector roll up their sleeves together to solve a problem.\u00a0 This forward-thinking business deal serves as a model for every commercial building in the country.\u00a0 Help us spread the word, and let\u2019s see if we can use this to open up the marketplace for energy efficiency globally.<\/p>\n

For more information, please see the City’s Energy Aligned Lease fact sheet<\/a> and model language<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"

By: Elizabeth Stein, EDF Attorney Today, New York City is pioneering a new solution to the long-studied problem of the \u201csplit incentive\u201d that prevents commercial landlords and office tenants from saving money and cutting pollution with energy efficiency.\u00a0\u00a0 This is not just an academic exercise \u2013 the solution will be rolled out in the heart …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[254,9],"tags":[],"coauthors":[],"class_list":["post-980","post","type-post","status-publish","format-standard","hentry","category-energy-efficiency","category-new-york"],"acf":[],"yoast_head":"\nNew York City\u2019s Split Incentive \u201cTrifecta\u201d - Energy Exchange<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/blogs.edf.org\/energyexchange\/2011\/04\/05\/edf-commends-new-york-city\u2019s-split-incentive-\u201ctrifecta\u201d\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"New York City\u2019s Split Incentive \u201cTrifecta\u201d - 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