Beneficial Electrification Credit

What you need to know about the Beneficial Electrification Credit

What is the BE Credit and how can it support LL97 compliance? 

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 42% 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 that replace fossil fuel equipment early can receive a credit against emissions limits for the first or second compliance period. 

• Negative coefficient: LL97 establishes multipliers that affect the value of emissions credits based on the energy consumption of qualifying heat pump systems. Any equipment installed prior to 2027 will receive double the credit. 
• Electricity-use allowance: The energy consumed by newly installed heat pumps can be subtracted from your building's total electricity usage, effectively negating emissions linked to the heat pump for compliance calculations. 

What projects are eligible for the BE 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. 

The BE Credit is especially beneficial for domestic hot water heating, which accounts for 32% of total energy consumption in multifamily buildings and represents a significant opportunity for decarbonization. 

How does credit banking work for Local Law 97 compliance? 
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. 
• Installations between 2021 and 2026 receive double credits, 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: 

How do I apply for the beneficial electrification credit? 

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.