The Grand Tier, a luxury apartment building in New York City, is a desirable place to live. It has views of Central Park, a private patio, and a marble-clad lobby that is home to a rare French tapestry. But despite all of these adornments, it is staring down the barrel at tens of thousands of dollars in fines from the city’s Local Law 97. The 377,564-square-foot multifamily property is one of more than 50,000 NYC buildings that are subject to the law’s penalties and must reduce their carbon emissions by 2024 when the law takes effect. The Grand Tier is also one of the more than 70 percent of New York City properties that use natural gas, which is a large contributor to carbon emissions.
The Grand Tier’s owners are racing to decarbonize the building, much like many NYC property owners, and they’ve turned to a new technology to help: a building carbon capture system. The owners have specifically turned to CarbonQuest to install the system, which the company claims is the first such installation in North America. The building’s carbon capture system, which has been fully operational since 2021, takes up about 600 square feet in the parking garage, occupying three parking spaces. The goal is for the system to reduce carbon emissions by 25 percent so the Grand Tier can reduce exposure to Local Law 97 fines. The building is also hoping for a 5-year return on investment.
Without the carbon capture system, the Grand Tier was looking at estimated Local Law 97 penalties of $97,630 annually between 2024-2029 and $368,812 annually between 2030-2034. The property is one of the more than 80 percent of multifamily buildings in New York City subject to the law, with commercial, hotels, and manufacturing facilities accounting for the rest. Local Law 97, passed by NYC in 2019, dictates that most buildings over 25,000 square feet must comply with new energy efficiency and greenhouse gas emissions limits by 2024. Stricter limits are expected to come into effect in 2030 and 2035. The law’s goal is to reduce the Big Apple’s greenhouse gas emissions, of which a large share comes from buildings, by 40 percent by 2030 and 80 percent by 2050.
Local Law 97 has caused no shortage of consternation among New York City property owners, and the specifics of the law are still being ironed out. The law is among several cropping up in cities and states nationwide, including in Boston, Chicago, and Washington, D.C. Reducing carbon emissions from large properties may seem simple to the casual observer, but that’s far from the case. Decarbonizing real estate assets is a difficult and, at times, expensive process, requiring investments in improved energy efficiency and, sometimes, electrification of building systems like heating and cooling that use natural gas.
Carbon capture and storage is not a new technology, as it has been used by power plants for decades, but its use in commercial buildings is. CarbonQuest thinks carbon capture at the building level can be added to the menu of decarbonization options. The company is working with other building owners in NYC to install carbon capture systems. “When we speak with clients, the most important thing for them is to reduce carbon emissions quickly and cost-effectively,” said Brian Asparro, COO at CarbonQuest.
The use of carbon capture systems in commercial buildings is still in its infancy, and while it is an exciting new green technology for real estate, it’s not without its challenges and controversies.
Capture, store, and transport
The carbon capture process at the building level works similarly to how it’s used in large power plant operations, just at a much smaller scale. First, emissions are captured and diverted from gas-fired systems into the carbon capture system. These emissions consist of carbon, nitrogen, water vapor, and oxygen. The system condenses out and removes the water vapor. The oxygen and nitrogen are then separated from the carbon and sent up the building’s flue while the carbon is liquefied. The compressed, cooled-down carbon liquid is then stored in a tank system where it can be sold and transferred.
In CarbonQuest’s case, they manage the entire process, including storing, transferring, and selling the liquid CO2. There are several ways the captured carbon can be reused, and CarbonQuest sells the CO2 to concrete manufacturers. The liquid carbon dioxide is injected into cement, which makes it stronger and permanently sequesters the carbon. The whole process is part of the so-called local circular carbon economy. The captured carbon could also be used in other ways, including for utility companies that use the carbon for wastewater treatment instead of carbonic acid. Carbon is less toxic than carbonic acid, cleaner, and less expensive.
CarbonQuest strives to keep a small carbon footprint in its operations, especially in the storage and transport process. That’s why the company sells the captured liquid carbon to nearby Brooklyn-based Glenwood Mason Supply, which uses it to make its concrete blocks more sustainable. When the liquid carbon is injected into concrete during the mixing process, calcium ions in the cement interact with the carbon dioxide to form Calcium Carbonate. The carbon remains permanently sequestered in the concrete even if the blocks are crushed in the future.
CarbonQuest told me they’re currently working with 5 other New York City buildings to install the carbon capture technology, and they’re looking to work with facilities in all asset classes, including commercial, hotels, and industrial. The biggest selling point of the technology to them is that it reduces building carbon emissions as quickly as possible. The company said buildings can use the carbon capture system in tandem with other decarbonization measures, such as building electrification and improved energy efficiency.
‘A failed technology’
Not everyone has high praise for carbon capture technology, though. The track record for carbon capture and storage at power plants is spotty at best, according to some reports. For example, a study by the Institute for Energy Economics and Financial Analysis (IEEFA) reviewed 13 carbon capture projects worldwide. They found that the tech and regulatory framework supporting the projects is inadequate.
Seven of the 13 large-scale projects underperformed, 1 was questionable, and only 2 projects in Norway’s gas processing sector could be called a success. Carbon capture projects in the power industry had the worst results, with two failures and one shelved project. One of the failures was a $3.1 billion mega-project in Western Australia run by Chevron and several other companies called Gorgon, the world’s largest carbon capture project. The massive project, launched in 2016 to great fanfare, failed to meet its target of removal of carbon dioxide from the atmosphere by more than 50 percent in its first 5 years of operation. “Gorgon had access to the best petroleum engineers in the world, and they still couldn’t get carbon capture to work,” said Bruce Robertson, Energy Finance Analyst for the IEEFA and one of the report’s authors.
While some reports suggest carbon capture is ineffective, others claim much higher success rates. For example, NRG Energy’s Petra Nova coal-fired power plant in Texas claims to capture 90 percent of carbon emissions. And NET Power’s La Porte, Texas, plant claims 100 percent carbon capture, a natural-gas plant designed to produce low-cost electricity and generate near-zero atmospheric emissions.
How carbon capture works at natural gas and power plants is a bit different from how it would work in commercial real estate. Transporting the captured carbon is typically done via pipelines, and the carbon is usually stored in underground geologic formations. Carbon dioxide combined with water can also be used for enhanced oil recovery, improving oil drilling rates. Robertson told me enhanced oil recovery is mainly the goal for large-scale carbon capture projects, which makes the technology have negligible greenhouse gas reduction impacts. It’s hard to argue that enhancing oil production is much of a climate change solution. Nearly 75 percent of all carbon captured annually by these projects is reinjected into oil fields to drill more oil out of the ground, according to IEEFA.
Carbon capture, storage, and utilization is a 50-year-old technology that Robertson claims has simply been rebranded as a climate solution. “Governments see carbon capture as a climate solution because of what the International Energy Agency says,” he told me. “But the IEA is funded largely by oil and gas firms, so there’s a conflict of interest. They’re promoting a failed technology. All it does is produce more oil and gas.”
The U.S. is one country that’s subsidizing carbon capture technology in a big way. The recently passed Inflation Reduction Act significantly increases the tax credit for carbon reduction investment, which will expand opportunities for the technology and make it more cost-effective for the steel, cement, refinery, chemical, and natural gas-powered generation industries. In the U.S., there are 10 commercial, operational carbon capture projects, but 102 projects were in the advanced or early stages of development as of 2021. All these facilities combined could capture about 149.3 million tons of CO2 annually. For context, consider that the U.S. emitted more than 5 billion tons of carbon dioxide in 2019 alone.
Another green building tool
Carbon capture and storage is a complicated technology, and many other things can go wrong. Carbon dioxide isn’t toxic, but it’s heavier than air, so any escape during transport poses an asphyxiation hazard to employees and communities. The geologic storage of captured carbon also presents risks. Sequestering the carbon underground has risks of massive leakages and even the potential to cause seismic activity.
But most of the challenges associated with carbon capture and storage that have been studied are related to large-scale implementation at power plants. The technology hasn’t been widely studied for use in commercial buildings. On a small, building-sized scale, it’s brand new and could be a powerful way to speed up our path toward lower greenhouse gas emissions.
Environmental activists don’t particularly like carbon capture because they claim it extends our use of fossil fuels and rebrands it as a climate solution. While this may be true for coal-fired power plants, the tech could be helpful in commercial real estate. Property owners are under intense pressure to decarbonize buildings quickly, so any type of tech that helps is welcome. Carbon capture systems don’t have to be the be-all-end-all, either. They can be used in tandem with various other measures to lower a building’s carbon emissions.
One may wonder why use carbon capture and keep relying on natural gas in commercial buildings, but it’s important to note that we’re still in the early stages of building electrification. Heat pumps in commercial buildings that replace gas-fired systems may gain more popularity soon, especially because of incentives from the Inflation Reduction Act. And the economics of wide-scale electrification at larger commercial properties is getting better, but it’s still tricky for now, not to mention the increased strain of so much more electricity use on the nation’s grid.
Carbon capture systems could act as a bridge technology that moves the needle further on real estate decarbonization while the country and world transition to a lower-carbon economy with more renewable energy. The carbon capture system in the Grand Tier in Manhattan could help that facility avoid a large chunk of penalties from Local Law 97. If it works, more carbon capture systems will be installed not just in NYC properties but all across the U.S. Carbon capture may not be a perfect piece of green building technology, but with so many building owners facing increased scrutiny to reduce carbon emissions in such a short amount of time, it could be a worthwhile investment if only to avoid financial penalties.