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The world got a little bit greener when the lights of the Empire State Building flickered to life this year: For the first time, the beloved skyscraper and 13 other office buildings owned by the same company were powered solely by wind.
The three-year contracts, which started Jan. 1, will provide an estimated 300 million kilowatt hours of electricity for ESRT’s more than 10 million-square-foot portfolio. That’s enough to light every home in New York state for a month.
The real estate trust has already established a reputation for sustainability: A decade-long “deep carbon” retrofit enabled the Empire State Building to cut its planet-warming emissions by about 40 percent. The skyscraper itself has run on renewable energy since 2011.
How New York’s most famous landmark cut its carbon emissions by 40 percentBy expanding its renewable energy commitments to its entire portfolio, ESRT will avoid the production of some 450 million pounds of carbon dioxide, the equivalent of removing all New York City taxis from the road for an entire year.
The energy needed to operate buildings is among the nation’s largest sources of greenhouse gas emissions. In New York, buildings generate more than two-thirds of the city’s carbon emissions.
“More and more building owners are understanding the critical role that our skyline plays in tackling climate change and how they can be an important part of the solution,” said Donna De Costanzo, a director for climate and clean energy at the Natural Resources Defense Council.
After the Empire State Building’s “nation-leading retrofit,” she said, the decision to meet its remaining energy needs with renewables is “a significant next step.”
Citing confidentiality clauses in its contracts, ESRT declined to give the dollar value of the renewable energy purchase. The company noted that buying clean energy is slightly more costly than simply buying power from local utilities.
But opting for renewable power was as much a business decision as an environmental one, said Anthony Malkin, the trust’s chief executive. Many of ESRT’s existing tenants had been asking about switching to greener energy sources. And a growing number of companies — including some that rent space in ESRT buildings — have adopted corporate sustainability initiatives that include commitments to reduce their carbon footprints.
“We want to differentiate ourselves so we get better tenants at higher rents so we can outperform our competition,” Malkin said. “It’s all market driven.”
This move is an important symbolic victory for renewables, said Cyndy Reynolds, commercial sales director for Green Mountain Energy.
“When you have someone like ESRT who you know is going to look at every facet, whether it’s cost or reliability, and they decide to move forward … it’s not just a PR play at that point,” Reynolds said. “It truly does check the boxes of all the business metrics they have.”
“It’s so important to have examples like ESRT to show the nation that renewable power options are affordable and, dare I say, competitive,” she said.
The realities of the U.S. electric grid mean that the electrons powering ESRT’s lights and elevators don’t necessarily come directly from renewable sources. Green Mountain Energy sells power from certified wind farms around the country. Purchases of renewables through Direct Energy go toward solar and wind facilities in Texas.
This is how it works for almost all purchasers of green energy: Unless you are drawing power directly from solar panels or wind turbines on your own property, buying renewable energy simply means that you are paying for that energy to be produced somewhere. With the new contracts, a kilowatt hour of clean energy will be added to the grid for every kilowatt hour of electricity that ESRT properties use — helping to shift the nation away from carbon-emitting fossil fuels.
“If we increase the demand for clean power, we will necessarily decrease the demand for polluting power,” Malkin said. “And if we decrease the demand for polluting power, that stuff will come off the grid.”
Wind is the most-used renewable energy source in the United States, according to the Energy Information Administration, generating about 9 percent of the nation’s electricity last year.
Data from the financial advisory company Lazard show that new wind power facilities are cheaper to build and operate than almost all kinds of fossil fuel infrastructure, even without government subsidies. If you factor in tax credits and other incentives, generating wind can cost as little as $9 per 1,000 kilowatt-hours, compared to at least $23 per kilowatt-hour at natural gas power plants.
The vast majority of electricity in New York state currently comes from natural gas-fired and nuclear power plants. But in 2019, the state passed legislation committing to meet 70 percent of its energy needs with renewable sources by the end of the decade. New York aims to eliminate greenhouse gas emissions from its electric grid by 2040.
Big businesses have an important role to play in promoting that transition, Malkin said. By committing to buy renewable energy, ESRT is signaling to investors that there’s money to be made in taking action on climate.
“We’re trying to move the market with capital, rather than through a policy mandate,” he said. “There’s nothing wrong with a policy mandate. But if you can motivate people through business decisions, that’s good too. It’s another lever.”