Beneficial Electrification Credit

The beneficial electrification credit (BE Credit) is an incentive under New York City’s Local Law 97. The credit rewards building owners who replace fossil fuel systems with highly efficient electric heating, cooling, and hot water equipment. It can help them achieve LL97 compliance and/or minimize penalties, by allowing them to claim lower emissions now and in future compliance years, depending on when the measure is installed. These credits are particularly valuable for buildings that complete electrification upgrades before 2027, helping to maximize emissions reductions and avoid LL97 penalties.

Interested in taking advantage of the BE Credit? You can find more information about the BE Credit in the Article 320 Information Guide and NYC Accelerator is here to guide you through the process, help you explore electrification options, and support you with LL97 compliance assistance to drastically reduce or avoid annual penalties.

The BE Credit is designed to incentivize building owners to replace fossil fuel systems with high-efficiency electric heating and water heating solutions. With approximately 40% of the city’s total greenhouse gas emissions stemming from heating and hot water, transitioning to electric systems is crucial for reducing overall emissions and achieving compliance with LL97, which sets carbon reduction targets for buildings in New York City. Owners who replace fossil fuel equipment early can receive a credit against emissions limits for the first or second compliance period.

Negative coefficient: Under LL97, an owner installing high-efficiency electricity-using equipment (like a heat pump) for heating, cooling, and hot water that displaces fossil fuel or steam-using equipment can multiply the energy use of the new equipment by a negative emissions coefficient to generate a deduction against total emissions. Any equipment installed prior to 2027 will receive double the credit.

To take advantage of the BE Credit, building owners should focus on projects that involve the replacement of fossil fuel-based systems with electric alternatives. Eligible projects include:

Heat Pump Water Heaters (HPWHs):

• Offer significant emissions reductions with minimal occupant disruption.
• Help fuel oil-dependent buildings avoid fines at a lower cost than other options.

Space Heating Electrification:

• Reduces emissions quickly and allows you to begin earning credits sooner. Full space heating electrification, while more expensive, can eliminate fines without relying on the BE Credit.

BE Credits can be banked for future use with certain limitations:

• Credits must be applied in full to a single compliance year and cannot be combined for use in the same year.
• Early projects completed before 2027 earn double credits, maximizing their future value, while those from 2027 to 2029 receive standard credits.
• Electricity usage from new heat pump systems further reduces total building emissions.

The table below outlines the number of years a building owner can apply greenhouse gas (GHG) savings credits based on when new heat pump systems are installed:

There is no separate application for the BE Credit. It will be recognized in your building’s LL97 filing through the DOB Now portal after you install eligible heat pump equipment before 2030. 
For more detailed information, please read the DOB rules package released in December 2023 and refer to the Article 320 Information Guide.