red alarm clock

Last month Con Edison stopped granting applications for natural-gas hookups in Westchester County, sending shock waves through the development community and roiling local elected leaders, affordable-housing advocates and other stakeholders. With only two months’ notice and an undefined moratorium period, many developers, financiers and government partners putting together projects are being forced to overhaul them or abandon them altogether.

Now National Grid is threatening a moratorium on new gas hookups in New York City and Long Island if it doesn’t get permits from the state by May 15 for a new undersea pipeline.

In Westchester, the problem is easy to understand. On the coldest days of the year, the demand on Con Ed’s gas system stretches its capacity. The company claims the current system won’t be able to meet future demand without access to more supply.

At its root, the problem stems from three things: significant growth in natural-gas demand created by the current development boom, increased demand from existing buildings converting to gas from dirtier energy sources such as heating oil, and more extreme heating needs as climate change brings more extremely cold winter days.

It appears as if the supply issue is at an impasse, with New York state having rejected many proposals for gas lines. Amid criticism from environmental advocates, a new pipeline has not been approved since 2013.

There’s enough finger-pointing to go around. The moratorium should be a wake-up call, however, not a free-for-all. It should force us to examine how we got here, what immediate actions we could take to alleviate the supply/demand problem and how we can avoid such crises in the future.

Short-term solutions we could implement today would reduce the demand for natural gas. For example, new developments could install dual-fuel burners, which allow buildings to switch from gas to oil on the coldest days. There are also proposals to increase supply by trucking gas in and storing it locally.

Those solutions are neither permanent nor sustainable, however.

Government, development agencies, energy suppliers and advocates should take the long view and focus on comprehensive solutions with the goal of improving the energy efficiency and sustainability of future development while addressing the efficiency needs of our existing built environment.

A growing body of research indicates that 25% or more of a building’s energy and water is wasted through correctable inefficiencies. Simple retrofits of multifamily buildings can reduce annual energy use by 15% to 30%. That includes upgrading lighting, installing high- efficiency HVAC equipment, updating hot-water distribution systems, creating a tighter building envelope through insulation and air-sealing, fixing water leaks and using energy-efficient appliances.

Barriers still exist for many owners, however, when it comes to constructing energy-efficient buildings and upgrading existing ones. State and local governments must provide guidelines and incentives to ensure changes are economically sound and don’t place an undue financial burden on building owners, particularly owners of small buildings.

In addition, state and local policy agendas need to align with building codes and regulations. Local governments need to consider changes to zoning laws and building codes to encourage or require developers to adopt common-sense efficiency measures. As the saying goes, the cheapest unit of energy is the one not used.

Owners also need access to private capital to help make efficiency projects financially feasible. Given the role lending institutions play in the financial and physical health of our buildings, the lenders ought to innovate and lead the industry toward greater efficiency. Some lenders, including my organization, are using a new method of underwriting the cost savings efficiency measures could create, and providing additional low-cost, long-term capital in the mortgage, giving owners a realistic financial pathway to include the measures in new construction and retrofits.

On the supply side, the moratorium highlights the urgent need for utility-scale renewables. Clean energy combined with demand-side energy management would dramatically relieve pressure on the supply of natural gas and help the state meet its ambitious clean- energy goals while supporting municipalities that invest in the sustainability of their building stock.

Regardless of whether those moratoriums are contrived “emergencies” aimed at pushing the state to approve new gas pipelines, they likely will have very real, disruptive effects on local revitalization and community development. New Rochelle, Yonkers and other Westchester cities are dealing with the fallout, and if National Grid imposes its own ban, Long Island and New York City also will have to scramble.

Had a comprehensive approach to reducing energy consumption been implemented a few years ago, the moratorium issue could have been avoided. It’s a lesson we can—and must—apply today.

Sadie McKeown is executive vice president and chief operating officer at the Community Preservation Corp.

This article was published in www.crainsnewyork.com and has been reposted by permission from the author.
Author:
McKeown is The Community Preservation Corporation’s Executive Vice President and Chief Operating Officer where she oversees the company’s lending activities, business operations and investor relations, as well the operation of its regional field offices located throughout New York. McKeown is also responsible for spearheading the company’s innovative “underwriting efficiency” practice that incorporates energy and water efficiency features into the financing of first mortgages for multifamily building owners. CPC has used this new underwriting method to leverage nearly $6.4 million in additional mortgage financing to fund more than 3,600 units of energy-efficient multifamily housing across New York State.

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