The US real estate industry is bracing for a new policy which is expected to raise taxes on carbon emissions. Building owners are awaiting the roll out of more stringent guidelines and standards which may require a costly uplift of climate friendly facilities on their properties. New York City will likely be hit the hardest by the new rule; $268 for every ton of carbon dioxide emitted beyond a defined threshold. This change is expected to take place as early as next year. New York City’s carbon emission footprint is dominated by its buildings that require fossil fuels to power them for AC and heat. The combination of increased taxes and decreased rental income from low tenancy rates signals a challenging time ahead for landlords. According to the Wall Street Journal’s latest analysis, the tax bill could increase more than $50 million during the first 5 year period of these policies being implemented, starting as early as 2024. Non-compliance would have significantly more drastic consequences; with fines estimated up to $214 million. Other parts of the country have had a head start. Cities in California and Boston have been required to conform since 2021. Laws in Massachusetts and Nevada will not go into effect till 2026. Landlords with diversified portfolios across the US will need to evaluate their portfolio exposure and how it will be impacted/reported to City officials between 2024 and 2030. 

https://www.wsj.com/real-estate/commercial/buildings-are-empty-now-they-have-to-go-green-7739f6c5