Decarbonize NY - Paying for Decarbonization: A Guide to the Financing, Incentives and Tax Benefits Available to New York City Building Owners
News, thoughts and tools to guide property owners and managers, lenders, developers and
sustainability professionals in their pursuit of a greener New York.
Local Law 97's 2030 limits will require most covered buildings to electrify heating or hot water, tighten the building envelope, or both, and the cost of that work is the question owners ask us most often. The answer is that a great deal of public and utility money remains available, but the programs changed substantially in 2026 and several that owners remember have closed. This article summarizes what is open now, who qualifies, and what to watch. Amounts are the programs' published figures as of October 29, 2026 and are subject to change and to the availability of funds.
What changed this year. Four developments reshaped the landscape. First, under the Public Service Commission's 2026–2030 orders, the utilities' heat-pump incentives for multifamily and commercial buildings moved out of the statewide "NYS Clean Heat" program into Con Edison's own sector programs, partial or hybrid electrification is no longer incentivized, and market-rate gas-equipment rebates were largely eliminated. Second, the federal budget act signed July 4, 2025 terminated the Section 179D deduction, the Section 45L credit and the Section 30C charging credit for projects beginning construction or placed in service after June 30, 2026, while leaving the investment tax credit for storage and geothermal largely intact. Third, Con Edison stopped accepting Level 2 EV make-ready applications in April. Fourth, on the positive side, the City enacted a new J-51 abatement equal to 100% over a multi-year period of certified rehabilitation cost, effective January 1, 2027, and the State's Standalone Clean Energy Initiative now offers regulated affordable buildings up to $37,000 per unit in grants for deep electrification.
Financing
| Program | Who qualifies | What it offers | Status |
|---|---|---|---|
| NYC C-PACE | Nearly any building other than 1–2 family homes, including co-ops, condos, nonprofits and ground lessees; mortgage-holder consent required | Long-term, fixed-rate financing of up to 100% of retrofit cost (35% of stabilized value for new construction and conversions), repaid on the tax bill over the useful life of the equipment; 15 qualified capital providers with minimums from $250,000 | Open; see our October 22 issue |
| NYCEEC loans | Multifamily (including co-ops and condos), commercial, institutional and nonprofit owners | Direct loans from $200,000 at roughly 7–8% for up to 90% of cost (100% for affordable housing); a streamlined $200,000–$800,000 product for co-ops and condos; predevelopment and incentive-bridge loans | Open |
| NY Green Bank | Affordable multifamily (priority), market-rate multifamily, commercial and community facilities; smaller borrowers in Disadvantaged Communities through participating CDFIs | Transactions of $5–50 million; electrification loans up to 100% of cost net of incentives, up to 15-year amortization; $250 million Community Decarbonization Fund lent through CDFIs at 1.5% | Open |
| HPD Preservation Loans with REDi | Rent-regulated rentals, Mitchell-Lama and HDFC co-ops that accept a 30-year regulatory agreement | 1% construction loans of up to $115,000–$260,000 per unit, plus electrification subsidy of up to $35,000 per unit ($1.25 million per building) | Open; first-come, first-served |
| Fannie Mae Green Rewards / Freddie Mac Green Up | Stabilized multifamily financed with an agency loan | Rate discount and higher proceeds by underwriting 50–75% of projected utility savings, for retrofits cutting energy and water use by at least 30% | Open |
State grants and incentives
| Program | Who qualifies | What it offers | Status |
|---|---|---|---|
| HCR Standalone Clean Energy Initiative | Multifamily with a State or federal regulatory agreement (HUD and Section 8 qualify; an HPD-only agreement does not) | Grants of up to $25,000 per unit for heat-pump heating and cooling, $7,000 per unit for electrical and envelope upgrades and $5,000 per unit for solar; $10 million per project | Open, rolling; pre-application meeting required |
| HCR Clean Energy Initiative | Projects financed with HCR tax credits, bonds or subsidy | 0% loans of up to $30,000 per unit (substantial rehab) or $21,500 per unit (moderate rehab) for electrification, built into the HCR financing | Open |
| NYSERDA FlexTech | Commercial, multifamily, institutional and nonprofit buildings | 50–75% of the cost of engineering studies, heat-pump feasibility work and LL97 compliance planning, up to $500,000 | Open |
| NY-Sun | Commercial and multifamily solar; enhanced incentive for regulated affordable housing | $1.60–$2.00 per watt for solar on affordable multifamily; prevailing-wage and canopy adders of $0.20 per watt; standard Con Edison blocks subject to availability | Open; check block availability |
| NYSERDA Retail Storage Incentive | Demand-metered commercial and master-metered multifamily customers | $100–$125 per kWh in New York City ($350 per kWh for critical facilities in Disadvantaged Communities) for batteries up to 5 MW | Open; first-come, first-served |
| Charge Ready NY 2.0 | Multifamily, workplaces and hotels | $3,000 per Level 2 port ($4,000 in Disadvantaged Communities) plus site bonuses of $4,000–$10,000 | Open while funds last |
| New Efficient Homes NY Heat Pump Incentive | New all-electric residential construction under 50,000 sq. ft. | Initially $6,000 per unit for air-source and $15,000 per unit for ground-source heat pumps, plus $1,000 in Disadvantaged Communities, capped at 35% of equipment cost | Open through 2029; declining blocks |
| NYSERDA’s Buildings of Excellence, Round 7 | Low-carbon multifamily projects at the construction-documents stage, including office-to-residential conversions | Up to $1.5 million per project | Proposals due Jan. 20, 2027 |
Utility incentives
| Program | Who qualifies | What it offers | Status |
|---|---|---|---|
| Con Edison Multifamily Electrification and Efficiency Program | Market-rate buildings of 5+ units | $5,000 per unit for full-load heat-pump heating and $1,000 per unit for heat-pump hot water (or $200 per MMBtu custom), up to 50% of cost or $1 million; efficiency measures at up to 70% of cost | Open; 2027 rates due Dec. 15, 2026 |
| Con Edison Affordable Multifamily Energy Efficiency Program | Buildings of 5+ units with a regulatory agreement or at least 25% of units at or below 80% of AMI | Electrification incentives of roughly $16,000–$18,000 per unit and efficiency incentives of up to $2,600 per unit, at up to 85% of cost | Open |
| Con Edison Commercial & Industrial Program | Commercial accounts with peak demand above 100 kW | $0.35 per kWh and $5 per therm (100,000 BTUs) saved (envelope work $0.85 per kWh and $25 per therm); electrification at $120–$200 per MMBtu; up to 50% of cost | Open; 2026 bonuses have expired |
| Con Edison Small Business Program | Businesses, nonprofits and houses of worship under 300 kW | Up to 70% of efficiency costs and 50% of electrification costs; heat pumps at $5,000–$12,500 per project | Open |
| National Grid Multifamily Gas Weatherization | Gas-heated buildings of 5+ units in Brooklyn, Queens and Staten Island | Up to 70% of envelope work: insulation at $5–$10 per sq. ft., windows at $5.50–$8 per sq. ft., air sealing at $4 per therm; $150,000 per project | Open; 2026 applications by Dec. 31 |
Tax benefits
| Program | Who qualifies | What it offers | Status |
|---|---|---|---|
| J-51 (Local Law 160 of 2026) | Rentals at least half affordable, Mitchell-Lama and government-assisted buildings (which must waive MCI increases for the work); co-ops and condos with average assessed value of $60,000 per unit or less | Property-tax abatement of 100% of certified rehabilitation cost, up to 8⅓% per year for up to 20 years | Effective Jan. 1, 2027 for work completed after June 29, 2026; HPD rules pending |
| NYC Solar and Storage Abatement | All classes including co-ops and condos; not ICAP, 421-a or PILOT properties | 30% of installed cost of solar and batteries, up to $250,000, over four years | Open through 2034; file by Mar. 15 for upcoming year |
| NYC Green Roof Abatement | All property classes | $10 per sq. ft. ($15 in priority districts), up to $200,000 | Extended to Mar. 15, 2030 |
| Federal Investment Tax Credit (§ 48E / § 48) | Taxable owners; nonprofits and nonprofit HDFCs through elective pay | 30% of the cost of solar, storage and ground-source heat pumps (6% without prevailing wage for systems over 1 MW), with adders of 10–20 points for domestic content, energy communities and low-income housing | Solar must begin construction by July 4, 2026 or be in service by end of 2027; storage and geothermal continue through 2033 |
| LL97 Beneficial Electrification Credit | All covered buildings | Double emissions credit for heat pumps operational before 2027; half credit for 2027–2029 | Equipment must be running by Dec. 31, 2026 for the double credit |
Stacking. The State and City electrification grants (SCEI, CEI, HPD REDi) and Con Edison's affordable multifamily electrification incentive each exclude one another for the same measures, so an affordable building generally chooses one. NY-Sun, Charge Ready NY, FlexTech, C-PACE and the tax benefits can usually be layered on top. The solar abatement is unavailable to properties receiving ICAP, 421-a or PILOT benefits, which is a trade-off to consider for commercial owners.
Closed or ended. The Climate Friendly Homes Fund, NYSERDA's Low Carbon Pathways and Multifamily Performance programs, HPD's Green Housing Preservation Program, HUD's Green and Resilient Retrofit Program and Con Edison's PowerReady Level 2 program are no longer accepting applications, and the federal 179D, 45L and 30C benefits are unavailable for new work. Owners who budgeted around any of these should revisit the numbers.
Timing. Several deadlines fall within weeks: Con Edison's 2026 incentive rates expire with the 2027 program manuals due December 15; National Grid's 2026 weatherization applications are due December 31; and the Local Law 97 double electrification credit requires heat pumps to be operational by December 31. Please contact a member of our team if you would like help assembling a capital stack for your building.
On the Horizon
Upcoming Deadline – Coordinate the No. 4 Oil Phaseout With LL97 Planning – NYC Administrative Code §24-168 prohibits boilers serving private buildings from burning No. 4 fuel oil on or after July 1, 2027. Owners subject to LL97’s annual emissions limits should evaluate the required conversion alongside their preparations for the tighter 2030 caps and keep in mind that converting away from No. 4 oil does not automatically satisfy LL97.
Compliance Reminder – LL84 Penalties Continue After the Annual Deadline – Owners who have not completed their 2026 Local Law 84 benchmarking submission, covering 2025 consumption, should file promptly. DOB may assess $500 penalties quarterly, up to $2,000 per reporting year; the next assessment is February 1, 2027. Owners should confirm that the City has received a fully compliant submission and resolve any outstanding reporting errors. Completing the overdue filing can prevent further quarterly penalties, although previously incurred penalties may remain payable.
Items to Watch – Steam Decarbonization Collaborative Begins November 12 – In an October 20 notice, the New York State Department of Public Service announced the first meeting of a collaborative examining decarbonization of Con Edison’s steam system. Scheduled for November 12, 2026, the collaborative is intended to evaluate emissions calculations, potential technologies and implementation timelines. Steam purchased contributes to a building’s LL97 reported emissions. Owners evaluating whether to retain steam service or electrify building systems should follow the collaborative’s work while continuing to model compliance using DOB’s prescribed emissions coefficients. Interested stakeholders can request meeting access through the contact identified in the notice.
Compliance Planning – Recheck the Emissions Limit for Your 2027 LL97 Report – The temporary option to use the original Building Code occupancy-group limits applies only to calendar years 2024 and 2025. Under DOB’s LL97 rules, 2026 emissions, reported in 2027, must be assessed using ENERGY STAR Portfolio Manager property types. Owners who relied on the temporary option should have their Registered Design Professional recalculate the applicable limit instead of assuming that prior compliance will carry forward.
Contact
Please do not hesitate to reach out to us if you have any questions regarding these developments. Contact Michael J. Clain, Partner, Benjamin M. Ellis, Special Counsel, or William C. Ladd, Associate. Special acknowledgment to fellow author, Kathrine H.K. Pedersen, Law Clerk.
Disclaimers
In some jurisdictions, this material may be deemed as attorney advertising. Past results do not guarantee future outcomes. Possession of this material does not constitute an attorney/client relationship. This information is provided for your convenience and does not constitute legal advice. It is prepared for the general information of our clients and other interested persons and it may include links to websites other than the Windels Marx website. This information should not be acted upon in any particular situation without first consulting with an attorney and obtaining legal advice based on your specific facts and circumstances.
