Carbon Taxation & The Healthcare Sector

As we discussed in last week’s blog post, Intro 1253 will have operational and financial impacts on buildings throughout the five boroughs, in all sectors. As originally conceived, Intro 1253 targets buildings larger than 25,000 square feet and requires them to meet certain emissions caps beginning in 2022. The bill is set to be passed on Earth Day.

Gotham 360 supports the spirit of the bill, because it is a revolutionary step towards carbon neutrality. However, we believe there is still more work to be done to ensure that the bill is achievable. We have made a concentrated effort to advise city council on making the requirements more feasible for our clients. The bill has been through multiple iterations, and Gotham has been an active part of the comments periods.

One of the sectors we have advocated for most is hospitals, which have unique energy needs and are thus disproportionately affected by the bill. Hospitals are open 24/7/365; operate advanced medical equipment like MRI machines and CT scanners; and must ensure sanitary conditions by moving air through rooms much more frequently than other buildings. The current limitations are not only unattainable but would present a safety risk.

In the original draft of the bill, hospitals were given the same building emissions limits as office buildings and retail stores with vastly lower energy needs. The bill does not account for many Federal and State laws and regulations that require research buildings and hospitals to use more energy than similarly sized buildings. For example, rules adopted by the Centers for Medicare & Medicaid Services require hospitals to maintain 20 air changes to guarantee sterile conditions. This is far higher than the three air changes per hour required of most commercial buildings.

Hospitals are committed to doing their part to combat climate change. Many have voluntarily joined the Mayor’s Carbon Challenge to reduce their greenhouse gas emissions by 30% by 2020 and 40% by 2030. However, in its current form, Intro 1253 sets unrealistic standards that would burden hospitals with tens of millions of dollars in penalties, potentially putting their viability at risk.

Hospitals are already struggling. The average operating margin for New York State hospitals is 1.8% — three times lower than the national average. Intro 1253 could push the most fragile hospitals over the edge. We are working to make the bill more feasible for hospitals, to ensure they are doing their part to help the environment while still being able to care for NYC’s residents.

At Gotham 360, we work to make the world a more sustainable place. At the same time, we strive to lay the foundations for feasible, attainable goals. Intro 1253 could be a great thing for NYC and a great model for other cities, but must not disproportionally affect industries that do not need any more financial pressure.