LL97 RECs and offsets:
what actually counts.

The statute lets DOB authorize a deduction from the annual building emissions an owner must report where the owner demonstrates the purchase of greenhouse gas offsets or renewable energy credits, or the use of clean distributed energy resources (NYC Admin Code §28-320.3.6 (as amended by LL77/2023)). It matters because the emissions penalty is up to $268 for every metric ton of CO2e reported above the limit (NYC Admin Code §28-320.6; 1 RCNY §103-14(h)). The penalty math is covered separately; this page is about what a credit must be before DOB lets you subtract it.

Both deductions are written for Article 320 covered buildings — a single building over 25,000 gross square feet, or multiple buildings on one tax lot or under one board of managers totaling over 50,000 — though DOB's AHRF sheet also sets an offset cap for Article 321 buildings (DOB Deductions & Alternatives User Guide v3 (4/15/2026); DOB LL97 page; DOB AHRF Offset Program sheet (June 2026)). For how LL97 fits with the other NYC energy laws, start at the laws hub.

Under the statute as amended by Local Law 77 of 2023, a REC qualifies only if four tests are met: NYISO considers the source a capacity resource “located in, or whose output directly sinks into, the zone J load zone” for the reporting calendar year; the RECs are solely owned and retired by, or on behalf of, the building owner; the RECs are from the same year as the reporting year; and the building hosting the generating system does not also take a clean-DER deduction under §28-320.3.6.3 for the same energy (NYC Admin Code §28-320.3.6.1(i)–(iv) (as amended by LL77/2023)). A building claiming the deduction must also give DOB the geographic location of the resource that generated the RECs (NYC Admin Code §28-320.3.6.1 (as amended by LL77/2023)).

DOB's plain-language version: Zone J is the NYISO load zone corresponding to the five boroughs (DOB Article 320 Info Guide v1.4 (6/30/2025), §V Deductions). In practice that means NYSERDA Tier 4 RECs. DOB's REC FAQ states that Tier 4 RECs will be permissible for LL97 and that currently no other RECs are, while offshore-wind ORECs serving Zone J may qualify after further analysis (DOB RECs FAQ (Sept 2023), Q4). The Info Guide names Champlain Hudson Power Express as the only approved Tier 4 source, with RECs possibly available as early as 2026 (DOB Article 320 Info Guide v1.4 (6/30/2025), §V Deductions). New York RECs are issued and tracked in NYGATS, run by NYSERDA (DOB RECs FAQ (Sept 2023), Q2; DOB Article 320 Info Guide v1.4 §V).

One open question: whether Tier 4 RECs are actually on the market. DOB's filing-process document says RECs are anticipated to become available in 2026 and that further guidance will follow (DOB LL97 Compliance Report Submission Process (2/10/2025)). We have found no DOB notice confirming that Tier 4 RECs have been delivered or accepted in a filing, so treat availability as unconfirmed.

No. Local Law 77 of 2023 rewrote the REC deduction so that it applies to reported emissions resulting from the consumption of electricity — the 2019 text had no such limit (NYC Admin Code §28-320.3.6.1 (as amended by LL77/2023)). DOB's rule narrows it to emissions attributed to utility-supplied electricity consumed in the covered building (1 RCNY §103-14(e)(1)(i)), and DOB's FAQ says it plainly: an owner cannot use RECs to deduct the building's on-site fossil-fuel emissions (DOB RECs FAQ (Sept 2023), Q3). A building whose overage comes from heating fuel gets nothing from RECs.

What one REC is worth: utility electricity is counted at 0.000288962 tCO2e per kWh for 2024–2029 (NYC Admin Code §28-320.3.1.1), so one REC — one megawatt-hour — deducts roughly 0.289 tCO2e of electricity emissions. For 2030–2034 the coefficient falls to 0.000145 tCO2e per kWh (1 RCNY §103-14(d)(3)(ii)(a)), roughly halving what each REC removes.

Two more bars apply. An owner who files a decarbonization plan for good-faith penalty mitigation may not claim REC deductions for the 2024–2029 compliance period (1 RCNY §103-14(i)). And a solar host that registers its generation as LL97-eligible RECs forfeits both the host deduction and any off-taker deduction — the same energy cannot count twice (DOB Deductions & Alternatives User Guide v3 (4/15/2026); 1 RCNY §103-14(e)(1)(ii)). Beyond those, DOB's REC Policy says there is no other specific restriction in the rule on REC use during this compliance period (DOB REC Policy for LL97 (Sept 2023), §2) — unlike offsets, RECs carry no percentage cap in the rule, even though the 2023 amendment directs DOB to limit REC deductions by rule after weighing REC availability and environmental justice impacts (NYC Admin Code §28-320.6.1.1 (added by LL77/2023))(DOB's Info Guide labels the same section §28-320.3.6.1.1).

For calendar years 2024 through 2029, the statute authorizes an offset deduction of up to 10 percent of the annual building emissions limit (NYC Admin Code §28-320.3.6.2 (as amended by LL77/2023)). DOB's rule repeats the cap for AHRF offsets and carries the deduction into each compliance period (1 RCNY §103-14(e)(3), (e)(3)(vii)), and DOB's LL97 page states the maximum offset deduction is 10% of the calculated emissions limit (DOB LL97 Greenhouse Gas Emissions Reduction page). The base is the limit, not the emissions: a building with a 1,000 tCO2e limit can deduct at most 100 tons, whatever it emitted.

To qualify, offsets must be generated within the reporting year, purchased under an offset standard referenced by DOB's rules, publicly registered under that standard, and retired or designated to DOB for retirement — with additionality, meaning the project is not already required by regulation (NYC Admin Code §28-320.3.6.2 (as amended by LL77/2023)). In practice the rule and DOB's web page recognize one source: offsets generated by the NYC Affordable Housing Reinvestment Fund (1 RCNY §103-14(e)(3)(i); DOB LL97 Greenhouse Gas Emissions Reduction page).

DOB's program sheet settles three edge cases: multi-building reports compute the cap on the aggregated limit; Article 321 buildings compute it on the building's 2030 emissions limit; and Article 320 owners applying for a §28-320.7 adjustment must purchase the maximum allowable offsets each year (DOB AHRF Offset Program sheet (June 2026)). Those adjustments themselves require a good-faith effort to buy offsets (§28-320.7(1.2)) — or offsets or RECs for the financial-hardship adjustment (§28-320.7(2.3)) — that failed because a sufficient quantity was not available at a reasonable cost (NYC Admin Code §28-320.7(1.2), (2.3)).

An AHRF offset costs $268 per metric ton of CO2e (DOB AHRF Offset Program sheet (June 2026)), and DOB says the price was determined using the same approach as the penalty, so it equals the penalty price (DOB Article 320 Info Guide v1.4 (6/30/2025), §V(C)). An offset therefore buys no discount; it redirects the same dollars into affordable housing — more than $1.46 million was raised from AHRF offset sales in the first LL97 reporting year, earmarked for decarbonization projects in affordable housing (DOB press release 4/22/2026).

Because the application must precede the report, put the purchase on the same calendar as the May 1 filing.

For offsets, the requirement is concrete: an applicant who purchased offsets up to the 10% maximum uploads to BEAM a copy of that year's payment receipt and enters the amount of offsets purchased (DOB LL97 Compliance Report Submission Process (2/10/2025)). The report is due May 1 each year, beginning May 1, 2025, and an owner is not liable for the failure-to-file penalty if a report demonstrating compliance is filed within 60 days of the due date — June 30 (NYC Admin Code §28-320.3.7; §28-320.6.2; 1 RCNY §103-14(b), (g)). The rest of the mechanics are in how to file an LL97 report.

For RECs, the rule does not yet say what a claim must include. The statute requires the geographic location of the generating resource (NYC Admin Code §28-320.3.6.1 (as amended by LL77/2023)); the rule's REC provision has no documentation clause; and DOB's process document says further REC guidance will become available (DOB LL97 Compliance Report Submission Process (2/10/2025)). Until DOB publishes REC instructions, plan to document ownership, retirement, vintage and location — the statutory tests.

Whatever you claim, owners must keep all documentation used to prepare the emissions report for a minimum of six years and provide it to DOB on request (1 RCNY §103-14(b)(1)).

For offsets, yes under the current rule. The statute wrote the offset deduction for calendar years 2024 through 2029 (NYC Admin Code §28-320.3.6.2 (as amended by LL77/2023)), and Local Law 77 of 2023 lets DOB extend date-limited deductions to future compliance periods by rule (NYC Admin Code §28-320.3.6 (as amended by LL77/2023 §35)). DOB's rule provides offset deductions “for each compliance period” (1 RCNY §103-14(e)(3)); the notice adopting the January 19, 2025 amendment says the change was made to “clarify that deductions for offsets are available in each compliance period” (DOB Notice of Adoption and Statement of Basis and Purpose, 1 RCNY §103-14 amendment eff. 1/19/2025); and the AHRF sheet computes the Article 321 cap on a building's 2030 limit (DOB AHRF Offset Program sheet (June 2026)). The 10% cap carries over. The deduction rests on the rule rather than the statute's own text, which still reads 2024–2029, so a 2030 plan built on offsets should be revisited if DOB amends the rule again.

For RECs, the economics change. The utility-electricity coefficient drops to 0.000145 tCO2e per kWh for 2030–2034 (1 RCNY §103-14(d)(3)(ii)(a)), so each REC deducts about half as much. DOB's own policy analysis puts the highest economically viable REC price at $268/tCO2e, expects Tier 4 RECs to be attractive in 2026–2029, and concludes that for 2030–2034 the cost of RECs is likely to exceed the cost of maximum penalties (DOB REC Policy for LL97 (Sept 2023), §3A). Buildings counting on credits to bridge the 2030 limits should model the halved coefficient, not today's.