Podcast
72
min read

🎧 #129: Decarbonizing New York City through Local Law 97

December 1, 2022

“The tools that have always been successful at instigating change are benchmarking and performance standards. Let's use those tools and evolve them to better fit the needs of today's definition of a high-performance building, which includes the carbon aspect, grid interactivity, and occupant responsiveness."


Molly Dee-Ramasamy

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Episode 129 is a conversation with Chris Colasanti and Molly Dee-Ramasamy from JB&B Engineering’s Deep Carbon Reduction team based in New York City.

Summary

We talked about where the decarbonization movement stands today, especially as it relates to New York’s Local Law 97. Molly and Chris unpacked first how the law works, then some of the challenges their clients have with it, and finally they shared some example projects where decarbonization, and electrifying heating specifically, hasn’t quite penciled out and where the industry needs to go from here if they’re going to get done in the future. This is a fascinating one.

Before we jump in with the interview, I want to make sure everyone is budgeting for the next cohort of the Nexus Foundations course. We just wrapped up public cohort 5, which had almost 50 students from all over the world, and we’ve taught over 350 students at this point. If you or your team need to learn the Foundations - see what I did there - of smart buildings, this course is for you. Just got to nexuslabs.online/foundations to learn more.

And without further ado, please enjoy this episode of the Nexus Podcast with Chris and Molly of JB&B Engineering.


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The Smart Buildings Center Education Program (SBCEP) is a 501c3 non-profit organization that believes the smarter use of technology and practices in the built environment, particularly as they relate to building operations and management, will enable a cleaner, healthier and more productive future. The SBCEP seeks to establish thought leadership for smart technologies and practices within the built environment, and pursues its objective through the following pillars of activity: delivering training programs to educate the building workforce of the future; enabling industry leading demonstration projects; and connecting the industry through hosting and participating in smart buildings events.

Check out their body of work on The Essential Role of Smarter Buildings in the Clean Energy Transition.


  1. JB&B (3:06)
  2. WattTime (38:49)
  3. Benchmark 8760 (39:27)
  4. 4 Vital Roles: The Smart Building Champion (56:10)
  5. 4 Vital Roles: The Design Consultant (56:10)
  6. All There Is Podcast with Anderson Cooper (58:52)
  7. Radiolab Podcast (1:00:02)

You can find Chris and Molly on LinkedIn.

Enjoy!

Highlights

  • JBB's background (6:25)
  • Deep Carbon Reduction (7:55)
  • Local Law 97's impact on the industry (9:36)
  • Stories from the ground (18:15)
  • Flight to quality and repositioning of assets (26:23)
  • Evolution of these programs and Benchmark 8760 (35:29)
  • The biggest impediment of decarbonizing buildings in NYC (42:31)
  • Helping clients with other risks (51:59)
  • The shift in the design consulting role (56:45)
  • Carveouts (58:23)

📊 A message from our sponsor, Altura Associates 📊

​​Altura is a mid-sized, mission-driven firm delivering impact and performance across the built environment and they’re looking for the best in the industry to join their team. From designing and implementing corporate sustainability programs, to manipulating systems in the field to achieve performance, to building the tools that support project teams, Altura is committed to solving our world's macro-level problems through tangible projects today.

If you are interested in working alongside passionate colleagues to make a lasting impact, reach out at careers@alturaassociates.com.


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Music credit: Dream Big by Audiobinger—licensed under an Attribution-NonCommercial-ShareAlike License.

Full transcript

Note: transcript was created using an imperfect machine learning tool and lightly edited by a human (so you can get the gist). Please forgive errors!

Now I know many of you enjoy the virtual smart buildings exchange conference in August. The team behind that conference is the smart building center education program. Uh, 5 0 1 C3 non-profit organization that believes a smarter use of technology and practices in the built environment, particularly as they relate to billing, operations and management will enable a cleaner, healthier, and more productive future. The smart building center seeks to establish thought leadership for smart [00:01:00] technologies and practices within the built environment and pursues its objective through the following.

Pillars of activity first. They deliver a training programs to educate the building workforce, the future second, they enable industry leading demonstration projects, and finally they connect the industry through hosting and participating in events like the smart buildings exchange conference. So check out their body of work on the essential role of smarter buildings into clean energy transition at the link in the show notes. And when you get in touch, tell them nexus labs center.

This episode is a conversation with Chris call Santi and Molly D Ram. Assami from JB and B engineering's deep carbon reduction team based in New York city. We talked about where the de-carbonization movement stands today, especially as it relates to new York's local law, 97, Molly and Chris unpacked first, how the law works and then some of the challenges that our clients with have with it.

And finally, they shared some example projects where decarbonisation. And electrifying heating [00:02:00] specifically, hasn't quite penciled out and where the industry needs to go from here. If they're going to get done in the future, this is a fascinating one. But before we jump in with the interview, I just want to make sure everyone is budgeting for the next cohort of the nexus foundations course.

We just wrapped up public cohort five, which had almost 50 students from all over the world. And we've now taught over 350 students at this point. So if you or your team need to learn the foundations. See what I did there of smart buildings. This course is for you. Just go to nexus labs.online/foundations to learn more.

And without further ado, please enjoy this episode of the next podcast with Chris and Molly of JB and B engineering.

[00:02:39] James Dice: All right. Hello, Molly and Chris, welcome to the Nexus Podcast. Great to have you on. Uh, let's start with, uh, introductions. Chris, can you go first, uh, introduce yourself and give us a little bit of, uh, your background?

[00:02:52] Chris Colasanti: Sounds good. Thanks James. Appreciate you having us on today. We're really excited. Long time listener of the Nexus. Um, [00:03:00] and, uh, yeah, we're excited to talk today about decarbonization and building systems. Um, a little bit about me. I'm an associate partner at JB and b. We'll talk a little bit about the firm in a second, but I'm originally kind of from a suburban, rural area of Pennsylvania.

Um, not too much decarbonization happening there. And on a whim I moved to Nette On a whim, I moved to New York City. Outta college I went to Penn State and I ended up at JB and b. I've been there about 20. amazing how you go to a, a job, you know, and I told my parents I'm gonna be there for a year, and then 20 years later I'm still there.

It's amazing how the city can get you. Um, and you know, at jpb I've had a bunch of different jobs on the way. I started out as an h e C designer. I worked on projects like the Bank of America Tower. I worked on Hudson Yards. And then, you know, I became a project manager. I'm a partner of the firm now, and I'm still involved in projects.

But more recently, you know, heavily involved in our deep carbon reduction service, which we're excited to talk about today.

[00:03:55] James Dice: Cool. And, and Molly, how about you? Can you give us a little bit of [00:04:00] your background?

[00:04:00] Molly Dee-Ramasamy: Yeah, absolutely. And I echo Chris's sentiment. It's great to be here. Thanks for having us on. Um, so my background is, is a little bit different. I, um, I actually started out of college in product design, believe it or not. Um, I went and I did my degree in Philadelphia in mechanical engineering, but had a strong focus on products and sort of on end user experience and understanding how people think.

And I was looking to make a move to New York. And I didn't know exactly what I was gonna get into, but I said, I'll take a job kind of, as long as it's engineering related, I'm in. Right. Not necessarily discriminating between product design or other forms of engineering. And um, you know, I, I ended up at JBM B and at the time didn't necessarily know too much about me p but over the last 10 years have really kind of grown to love this particular industry.

And the New York side of it specifically is so interesting. And so at JB b I started out in fields and commissioning right. Completely [00:05:00] kind of moved away from that product design focus from school, started getting into construction and operations and the real sort of practical side of building a building and operating a building and loved that.

And then, you know, at, at one point kind of moved. Into energy and carbon services, which has always been a really personal sort of interest of mine. Um, but you know, I didn't necessarily pursue it in college or professionally necessarily cuz I didn't, you know, I didn't know what was gonna happen there.

But this opportunity arose at jbm B to do this full time and it aligned so perfectly with my personal priorities that I was like, yeah, let's, you know, , let's jump in both feet. And so now I'm kind of bringing all those different pieces, right, the end user, user psychology side from product design, the field and commissioning practical design aspects.

And now this focus on energy and carbon as well to this deep carbon reduction services that Chris and I are gonna talk about.

[00:05:53] James Dice: That's interesting. Yeah. When I went through, you know, as a mechanical engineer in college, a lot of it seems like a lot of the [00:06:00] direction that a lot of my classmates headed was towards product. And I kind of was like the weird person who was doing internships in hvac and like, I would come back after the, you know, the summer like, and no one had any idea what I was talking about.

So that was, I, I, I feel you there, but I, you know, you also get, like, you get bit by the bug a little bit and you know, it's hard to go back once you, once you see this world. Um, yeah. So let's hear a little bit about Jbb. Chris. Can you give people some context for kind of how you guys approach the world, uh, what cities, uh, the firm serves, what kind of services you guys provide, that kind

[00:06:37] Chris Colasanti: Absolutely. Yeah. So JB and B is jars, Bowman Bulls, and we're a full service MEP design engineering firm. Um, you know, that means we design mechanical, electrical, the plumbing, the fire protection services for building, so all the building infrastructure systems that make this make the building work. Uh, we have a, you know, our main office is in New York City, and then we have an office in Boston and Philly.

We're really a regional firm. Uh, we do reach some [00:07:00] projects across the country and globally. Um, in terms of like the types of projects, it's all across the board. So all sectors and typologies, higher ed, cultural, institutional, lots of commercial office, campus work. It's really the, the larger, more robust projects the better for us.

Um, we kind of run toward these complex challenging projects and that's honestly the best fit for our firm. Um, and over the. We've added a bunch of different services toward, along with the traditional mep, so the av, it, building intelligence, anything that goes hand in hand with the building systems to make it work.

And most recently right, is about deep carbon reduction. It's a new service we added a few years ago and, you know, New York City like Molly said, and, and James, you said it's really like the epicenter right now of what's happening. It's really a tip of spear moment for the city, largely because of local L 97 and all the regulations.

And, uh, we're pretty excited to be like right smack in the middle of it.

[00:07:53] James Dice: Super cool. Yeah. So this D dcr deep carbon reduction, right. I got that. Right. Right. [00:08:00] Uh, Molly, can you talk a little bit more about what that service provides?

[00:08:04] Molly Dee-Ramasamy: Yeah, absolutely. So it, it, the name is actually a little on the nose. Um, we really are about deep carbon reduction. And so, uh, you know, Chris mentioned running towards these really complex problems. Decarbonizing buildings, especially existing buildings, is one of those really complex problems. Um, obviously with existing buildings, there's existing conditions that you have to deal with on top of all of the risk and sort of uncertainty that's happening around decarbonization right now in the building's industry.

And so, you know, when local I 97 first kind of hit the street, there was a lot of trepidation and a lot of sort of disruption that occurred within the industry, you know, and, and we said, well, let's lean into it, right? These are big problems. They need solutions. People need guidance. Um, and that's what Jbm B has been known for, for, you know, most of its history is running towards those problems.

And so that's what deep carbon reduction is. And to get sort of technical about it, which maybe we'll get more [00:09:00] into it later on, you know, but we talk about decarbonizing buildings. We're, we're talking in some cases about rethinking the entire heating system, right? For a building. Uh, it could be a conversion in an existing building from say, a steam system to an air, air source, heat pump system.

Um, but there, there's a lot that goes into this stuff. And it's a different, just a different way of kind of thinking about energy and carbon in the built environment that we've, we've had up till this point.

[00:09:26] James Dice: Totally, totally. I love that. Running towards complex problems. Um, so let's, we, we've mentioned a couple different things about New York City already. Let's, let's like go to the source or the beginning of this, if. It might not be the actual beginning, but let's call it the beginning with, with local law 97.

Um, how has that sort of impacted, you know, besides the impetus for this DCR team and this offering that you have, how's that sort of like changed the game in New York City for, for you and for your clients?

[00:09:59] Chris Colasanti: Yeah, honestly, [00:10:00] James, it's a, it's been a complete game changer. Um, there's really no other way to say it. You know, there were really two laws that were passed in a very short time. Uh, the first one was the natural gas ban law, that's local L 1 54. For all the number of folks out there, that was in like mid 2021.

And what that did was it said that any building under seven stories couldn't have a new gas service for heating energy or for cooking starting in 2023. So right around the corner for, for larger buildings, seven stories and up, it was 2027, also kind of right around the corner. So that sort of set the frame that like going forward, everything was gonna be all electric.

So that was the first law. The second one is local L 97, which was actually past the beginning or middle of 2019. But the real teeth for this law kind of take effect in the mid 2020s and 2024. And I think it's worth just taking a second explaining, cuz we're gonna kind of, kind of come back to this a couple times, uh, throughout the podcast here.

So the way local L 97 works is, is it sets a cap on carbon emissions for buildings. So this is, uh, tons of CO2 [00:11:00] emitted per square foot per year, and the cap for each building is based on the type of building and its, um, and its size. So for. If you have a, a data center building, that data center building is gonna get an emissions cap that's a little higher than, let's say, a multifamily building, right?

Because data centers consume more energy, so therefore they should get a higher emissions cap than a multifamily building. So you get, each one of these buildings gets its assigned cap based on square footage in typology. Then throughout the year, you accrue carbon emissions, and the carbon emissions come from the energy that's consumed by the building.

So if you know you're burning natural gas on site, that natural gas gets converted to carbon that counts toward your carbon cap. If you're buying utility steam, there's a conversion factor that gets counted toward your carbon cap. And if you're consuming electricity from the grid, depending on how green the grid is, you get carbon associated with the electricity from the grid and that gets counted.

So all that gets put in the big sauce of your carbon emissions. And compared to your. If you're under your cap, great. You're in compliance. You move on If you're [00:12:00] over the cap, if you consume more emissions than you're allowed, then there's a financial penalty associated with every ton of co2. So it's about $268 per ton over the cap.

And so in our, in the first compliance period of the law in 2024, we see most buildings kind of flying through with, okay, about 80% of buildings in New York City do not have penalties. They're not over their cap in 2024. In the second compliance period when these caps ratchet down about 50%, we see a larger percentage of buildings not meeting their caps called the numbers kind of flip.

It's about 80% of buildings are impacted by that 2030 limit. In 2035, those limits get ratcheted down again. In 2040, they go down again, all the way down to essentially zero emissions by 2050. So when somebody says, do I comply with local 97? The very next question outta our mouth is, well, when do you wanna comply?

Do you wanna comply in the first compliance period where it's this hard? Or do you wanna comply in the second compliance period where it's twice this hard, et cetera, et cetera, all the way down to 2050 when essentially anyone who's consuming natural [00:13:00] gas in a building is not gonna comply because any gas equals carbon equals your over your limit of zero.

So this is like a big deal, right? This is something completely, you know, very different than the energy codes than we've had before This idea. There's a performance based metric that changes every five years that's affected by building operations and by energy use and by the weather and all these other things.

It's totally different. I mean, if you think about the way that, you know, buildings thought about energy before this, right? It was the energy code, for example, and every couple years there'd be like a, a little nuance change energy code. You'd have a little better u value of glass. You'd have a little different watts per square foot of your lighting.

It was all these things that happened behind the scenes that the only people that really cared about it were the designers that had to make it work. Nobody, you know, nobody in the industry, nobody running a building. You know, the person that's responsible for the bottom line of operations really didn't care about what happened with the energy code.

But with this, it's suddenly and [00:14:00] literally in everybody's face across the board.

[00:14:03] James Dice: And then. The, the operators of the building, they might look at their Energy Star score and it really didn't have any tie to carbon really. Right. They might say, oh, I'm a 75 and I'm very proud of that and I'm gonna continue burning carbon for a really long time and remain proud of my Energy Star score.

So it changed that a hundred percent as

[00:14:25] Chris Colasanti: Yeah, you know,

[00:14:26] Molly Dee-Ramasamy: Yeah. And. In fact, these things at times are, are in conflict , which is, which is part of why this is tough, right? So not only is there a moving target of, of limits and compliance like Chris was just mentioning, you know, but this idea of carbon is different than energy efficiency and EY energy use intensity, right?

Which is how much energy you're using per square foot. That's, that's what historically has been the focus of these types of services, right? And the focus of policy Energy star, energy star portfolio manager in New York City, local I 84, which is the requirement to report your data through Energy Star [00:15:00] portfolio Manager.

These things were all very, and still are in many ways, very heavily focused on energy efficiency rather than emissions reduction. And so that's a big shift.

[00:15:09] Chris Colasanti: Here you have like kind of nothing happening for a really long time, right? These tiny little energy codes and then all of a sudden, boom, boom, these two laws within two years of each other that affect everybody in the city. That's, that's has to do with the building industry. And so, you know, we, we, Molly and I kind of talk about this all the time because like, there's such a range of responses.

Like in 2019, in 2020 when these laws kind of hit, you know, right away it was everybody pushing back really hard. You know, it can't be, they can't do this to us. We can't afford it. It's gonna drive industry out of the city. It's impossible. How do they expect the grid? I mean, it was just, it was this like, we like to say that everybody goes through kind of the five stages of grief when it comes to building decarbonization, right?

They start out in the denial. Denial and the anger, right? And how can it be? And then little by little it's like, you know what, actually maybe this isn't so bad and you know what, we can make these changes. And oh, and when everybody realizes that [00:16:00] the whole city is affected, This isn't just one building that's getting singled out.

If this is an industry-wide shift in the way that we're looking at buildings, then suddenly it becomes a collective sort of issue. And we have some folks right, that see this not as a, something pushing down, but as an opportunity. As an opportunity to differentiate themselves in the marketplace, right?

Taking advantage of these more stringent rules and regulations, like here's an opportunity now for us to make our building a little bit better, track the best tenants. It's like a whole new market in a lot of ways.

[00:16:31] James Dice: And you guys have clients outside of or across different verticals, right? So are the responses from your clients different depending on what type of building we're talking about as well?

[00:16:42] Chris Colasanti: Yeah. Go

[00:16:43] Molly Dee-Ramasamy: Yeah, I would say so. Yeah. I mean, I think, so certainly when you start looking across, let's say, multi, I'll use three examples. Multi-family versus office versus healthcare, right? Just to kind of use three high level [00:17:00] examples, you know, the, the multi-family folks don't necessarily have the same sort of channels of information that large commercial real estate does in the city, and so they're at a different place in that five stages of grief than the people who are class A developers that, you know, were, were providing feedback to the city when this law was, was originally being written, right?

They're obviously much further along in their journey and their process. And then healthcare, you know, they're interesting too because they've, they've got a very different focus, right? They're not just serving building occupants in a typical sense. There's the issue of patient health and patient comfort, and so there are other criteria that they're beholden to that comes into the equation of how they can or cannot comply with.

With carbon caps. So yeah, I mean, I think across different verticals, absolutely. Folks have different responses and will also need to have different strategies. I mean, decarbonization and deep decarbonization really is an engineered solution in every building, um, which sometimes really blows people, mo people's mind.

They're like, Hey, can't we just, isn't there just a recipe? [00:18:00] Can't we just, you know, do the same thing at scale? Uh, and the answer is usually no. , you know, the, the high level conceptual solutions Sure. But how to actually apply them in an individual building can be really challenging. Um, so yeah, that's a good question.

[00:18:15] James Dice: Okay. So that's a really good segue because I feel like it'd be good to hear some stories from you guys, um, you know, from your projects, from your clients. Um, Molly, do you wanna start off with an example, uh, of a story to tell?

[00:18:29] Molly Dee-Ramasamy: Yeah, I, I like that idea cuz it's, it's good to really talk about the kind, getting into the nitty gritty details. Um, and that's where, you know, things tend to, to get stuck. Um, so I'll give an example. You know, 2 million square foot existing building Chris and I have been working on for some time now. Um, and sort of early on in the process, we got in there, we did this full decarbonization study and came up with this pretty comprehensive plan right?

Over a 20, 30 year time horizon. Cuz that's what these kind [00:19:00] of decarbonization projects take, right? They take time, they're usually chunked up into different components because Rome wasn't built in a day, right? Sort Of chunked up into these smaller projects, uh, that are meant to be easier to implement. Uh, some of them are dependent on others, so they have to happen in a phased manner. But long story short, I mean, we put together a really solid plan, a plan that was gonna get this building to where it wanted to be in terms of carbon and energy efficiency goals.

Um, and, you know, unfortunately the cost to do it was just gonna be really, really, And there wasn't any way around it, right? Because right now we're sort of early in, in the adoption of some of the technologies that are key to decarbonization air sort. Heat pumps is a good example, right? Right. Now they come at a, at a premium.

And so when you take that into consideration with existing conditions, with the number of projects that was gonna need to occur over time, you know, the cost was just a lot more than I think anybody on the client side was anticipating it. And you can't know, [00:20:00] right? Because this is the first time people are really exploring this in a, in a real way.

And so we, we just weren't able to get the project moving forward, right? Um, it was just too much of, of a cost sort of surprise, I think, for the client at the end of the day. And we see this time and time again, you know, de. It's hard, it's tough. It, it is super expensive. It, you know, will always be more expensive, most likely than, than, you know, the natural gas or fossil fuel based option.

But we are early in this process in the industry and so that does factor in as well. Um, you know, and I, I think what we try to do is look at the long term outcomes and the long term value of undertaking these types of projects. But at the end of the day, you know, the way that we're used to thinking about energy projects is on roi.

And that ROI is typically between five and seven years. Sometimes less than that is what people are, are looking for when it comes to an energy project. And deep decarb is just, just way different than that, right? I mean, the return on [00:21:00] investment is not what you would typically think of. Uh, and that's because a lot of the time you can't capture that real value that's associated with doing the project.

[00:21:08] James Dice: And for this building that's 2 million square feet, I, I didn't catch what type of building it is, but what's, can you maybe go into a little bit more detail on what is the owner then gonna do about it, given the context we talked about earlier with local law 97.

[00:21:23] Molly Dee-Ramasamy: Yeah, good question. So it is a commercial building, quite large. Um, and this particular client, they've got goals. They've got, you know, internal and externally published ESG goals. And so they've made a commitment that they are very serious about and have continued to engage us to look at other solutions, ways to make things into even smaller incremental projects, ways of visualizing the data and thinking about that return on investment.

And what should factor into it? You know, it, it's certainly the initial study has been a springboard for more. Ways of, of evaluating what this really means [00:22:00] to them. And so the plan is to move forward, where possible, to make the changes where reasonable, um, but then also to keep our eye on what's happening in the policy landscape.

How technology is evolving, right? How financing is changing, and to start to factor those things over in over time.

[00:22:17] James Dice: Got it, got it. So are they looking at this and going like, um, these fines are gonna be significant for us and we know that we're gonna have to figure it out later? Or are they sitting here like, these fines are just something that it's less than the cost to do it and so therefore we're going to eat these fines?

Or how, how are they looking? Okay.

[00:22:37] Chris Colasanti: I was, yeah, I was just gonna say, you know, pretty much always, I hate using the word always, but almost always the fines are not significant enough to pay for the capital investment to get you out of the fines. So it's, it's almost, you know, I'm sure there's examples, but that's not the case. But yeah, the, the, it's just the ROI on these things just isn't there.

Even with the [00:23:00] fines, it's not there, like when you're talking about a complex commercial building with a fully tenanted building with systems that have been placed for 30 or 40 years, to be able to transition those buildings away from the systems they have now toward an electrified future, which I'll, I'll talk about in a second here, is just, it's really stinking hard and, um, and there's, you know, unless you're willing to cough up 50 million or a hundred million, which in today's environment, I just, I don't know how anybody does that.

Uh, you know, right now, I mean, building, building owners and, and, and developers have a lot to worry about, right? When it comes to the office market as, as you've talked about on your podcast a number of times. And so it's really, really hard to justify the expense. And so it's constantly about chunking it up, like Molly said, looking at different opportunities.

There's all sorts of incentives that are out there right now to, to execute on specific components of a plan. So we're trying our best. I think the ones with the longest visions and the, the, that have the longest hold for their portfolio are gonna do the best because it's just gonna take a long time.

There's another, another example I think that [00:24:00] kind of like dovetails right into this. It's another 2 million square foot building in the city built in, in the late, in the early sixties. So you can imagine, right, there's a commercial office building, it's 50 stories tall, massive building, and you know, this building, it, it its infrastructure 60 years old.

And they went through a pretty significant kind of update a few years ago. Um, and the building was in pretty, pretty decent shape actually relative to local 97 and everything else we're talking about. But this is like a flagship property of this developer, right? And they had very, very aspirational goals for this property.

You know, for the whole portfolio is like a beacon. And so we ended up getting engaged to do a study for them, just like the one that Molly just mentioned. And coming out of that was a whole plan. And the cornerstone of the plan was to implement air source heat pumps in this building with this big, big roof that they have.

Nice big flat roof was to put in air source heat pumps so that we could move some of the heating energy from its current utility steam, which is fairly carbon intensive in New York, over to air source heat pumps and take advantage of that renewable grid that's [00:25:00] coming and decarbonize. And to Molly's point, it was sort of a chunked up plan of, you know, a few heat pumps this year, a few heat pumps next year.

And when we got in front of the, the, you know, basically the, the CFO and all the right people, you know, literally the quote was, how can I sell this up the flag pole? It's fiscally irresponsible. And to me that. That just hit me right in the heart because this is absolutely the right solution for the building.

It's the next thing to do because they've already done all this other good stuff with the upgrades that they did. This is the next thing, and this is the thing that probably has the biggest impact to the overall carbon bottom line. But we just couldn't get there. And we sat back and said, what's going on here?

Like how, you know, we're we, you know, we know this is right, we know it has to happen. We gotta get the net zero by 2050. Look at the slope of the line for local L 97 on the caps, like how do we make this happen? And we kept coming back to, you know, sort of the financial implications just aren't supporting these metrics.

You know, [00:26:00] the energy costs don't support these investments. The carbon pricing, I hate to say it doesn't really do the right justice to get us there. So, you know, either you, I think maybe it was James, one of your podcasts where somebody said just, you know, ignore the ROI with some expletive expletive afterward.

I think that, you know, ROI just almost can't be part of the story anymore if, if, because it just doesn't work right now.

[00:26:23] James Dice: was gonna ask, one of the things that people say in this scenario is that there's gonna be a flight to quality or a repositioning of assets in that industry to say, we're gonna attract the tenants that have their own net zero carbon goals, and therefore this building is gonna now be worth more than it was before we did this project.

Are those sorts of analyses coming into play here? It doesn't sound like for these two examples, those are relevant right now. Do you see those

coming into play later on?

[00:26:50] Chris Colasanti: I, I do think they will. I think in this particular example, there wasn't any way to demonstrate the value for real to the stakeholder, which [00:27:00] is their tenants. The, there wasn't a transparent way to show that spending X million dollars on these e pumps was gonna result in a benefit for them. And so I think, you know, There's another, uh, project that we're working on, um, where this exact conversation kind of played out, James, that that of exactly what you're saying.

Um, this was a, uh, about value and this was a, um, it's a new building. It's a million square foot office building and very forward thinking developer. Um, and we're in the design process right now. Uh, so we're, you know, we're a little bit in the design process, so you gotta figure, it's gonna take a year, another year to design the building.

It's gonna be three or four years to build it. So we're talking about like a mid 2020s, late 2020s, you know, cfo and you gotta think of what the market's gonna be like then concerning how quickly things have moved already in the past two or three years. And so the developer clearly said to us like, alright, we know that natural gas ban law is in effect, we know local 97, every one of our peers is gonna have a building on the market in the mid 2020s that's gonna be all electric.

So you know what, that's in the rear view mirror. [00:28:00] Now what's next? Where do we go after this? Again, to this issue of the value? How do we create value for the marketplace? And so, you know, put on our thinking caps and, you know, the, the. Basically the next sort of, you know, way to go here is around grid interactivity, which I know you've talked about a lot.

And you know, the obvious answer is, is electrochemical batteries and to do grid interactivity with batteries. But in New York it's really stinking hard to do batteries cuz the fire department won't allow the lithium ion, they're very heavy, there's nowhere to really to put them. Um, and so we thought about it a little more and we came up with this idea of using thermal energy as a way to do grid interactivity to create a differentiator for our client.

Um, and if I could just take a second, I'll explain. Cause I think this is a pretty, pretty interesting sort of new concept. Um,

[00:28:49] James Dice: Yeah,

[00:28:49] Chris Colasanti: you know, the idea here is that, you know, in the, in the form of, of water, we can store energy and water by freezing it. So the idea here is that, you know, when you [00:29:00] think of, of what ice is, ice is essentially liquid water with the heat removed from it.

So if you can, you know, store energy in the form of ice tanks in the building, when you need extra heat to serve your building, you freeze that water with a big chiller. Um, I think the, the easiest example to explain it is, you know, the refrigerator in your house. So if you. If you go to the refrigerator, freezer in your house, in your kitchen and you put your hand behind the kit, the refrigerator, freezer, you're gonna feel some heat coming outta the back of that thing.

Um, you know, it's kind of cranking all the time, a little bit of heat. If you were to take a bucket of water and stick it in the freezer and put your hand back there, you would feel more heat because that freezer is taking the heat out of the water and dumping it behind the, the refrigerator freezer. And so if we can do that at scale, if we can do that in a large amount, then we have this source of energy in the form of liquid water that we can deploy as heat when we need it.

And so the value add here is that we can create a greater activity so we can deploy that heat when it's [00:30:00] advantageous from an electricity or a carbon standpoint. And also, We can maybe downsize our heating elements, right? These, you know, these air source heat pumps that are the, that are the solution right now for high rise office buildings, right?

We, we have to get heat from somewhere. It's either the ground or the air in an electrify future. So in, in an air source heat pump solution, these things are big. They take up a lot of space. They take up the entire roof. If you're lucky, if you can get 'em on the roof, sometimes they have to go in a mechanical room because they need to breathe.

They need to have access to air to be able to exchange energy with the environment. And so by implementing this ice heating concept, right, we found that you can actually reduce those heat pump sizes by like 50%. So that can give back value. In terms of the roof space or mechanical area, which could be, which could be leased, right?

Adds financial value. And then to this end, about the energy side, we thought, you know what? This is gonna be a home run on the energy side because we're gonna be able to make ice at night. Um, you know, and, and, and at times when electricity's cheapest, and we're gonna look at the time of use carbon methodology, and [00:31:00] we did this whole analysis, right?

Molly was like three months of work, went back to the client, presented it to him, and honestly it was extremely and terribly underwhelming . And we were so upset because this was an idea we were on for a year and a half. And this should be it. This is the answer. But at the end of the day, the ei this like crude metric, the way that we benchmark buildings was just.

Was a poor indicator of how this system would function. The energy cost at the end of the day was very similar because yeah, we were doing a little better job by, with the utility arbitrage night and day, but it wasn't quite enough of a swing to really, to generate the results. Cuz a lot of this work was being done in the winter when the electricity costs aren't that different between night and day.

And so we came to the table with all this stuff and it, and it just, it didn't drive it home and you know, it was like rats, here we are again, right, with the right solution, but there's no framework to value it properly and sell it. And the leasing person looked across at the table at us, you know, cuz it's not often that we have the brokers and the conversations with these engineering meetings, but they're there, they're like, interested, [00:32:00] right?

Cause this is, this is like new stuff for them too. The broker leaned across and he said, give me something I can. I can't sell this . And, and so, and so we were like, but you will, you know, you will, the, the tenants are going to ask for it in five years. There will be a market for this. Everyone's worried about the electric grid.

You're gonna be able to say that you have the most, you know, favorable building for the electric grid in all of New York City. And he's like, ah, nobody cares about the electric grid. Nobody cares about the electric grid. And I'm like, but they will care about it. No, nobody cares about the electric grid.

And so it's just, it's, it's sad. It's sad because we're, we're in some aspects like on that, that that curve, that like, uh, you know, that change curve. Like some we're just not there yet. Like it might, it might take a little bit of time yet for the market to price these things in the way that they really add value, that the ROI for the heat pump really doesn't matter.

It's about the carbon now and like, you know, the energy storage, right? It's about the, the grid and, you know, we're, we're ready. It's like we almost need like some of the, the fundamental systems to catch up a [00:33:00] little bit. I think.

[00:33:01] James Dice: Yep. Yeah. That's funny. It reminds me of our, our, our course, our foundation's course. We, we teach this jobs to be done framework. Like what, what, how do we use technology to improve outcomes for our stakeholders in buildings? And we have this. Category of jobs to be done that we call being a good citizen, like having the building be a good citizen, right?

In the, in the, you know, society of other buildings, which is a city, um, and a grid and a, you know, nation and a world, right? Um, and we pretty much tell everyone like, don't worry about that right now. Like, like, cuz no one cares at this point. Um, but I agree with you guys. I think it's, it has to be going there and at least the DOE and GSA and rmi, like all these organizations feel like it's headed there.

Right. Um, super interesting. So if I, if I repeat that last example back to you, it sounds like all of the extra costs to do with the ICE system, [00:34:00] um, was that those costs were being evaluated on a ROI standpoint and not necessarily the, the carbon value and the grid interaction value don't necessarily translate today over into a

dollar ROI value.

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[00:34:59] Molly Dee-Ramasamy: I think that's [00:35:00] a really good, sort of straightforward way of putting it, James, that, you know, grid interactivity. How do you translate that right now into dollars and cents that goes into a calculation. Of roi. It doesn't exist. Not yet.

Right. And so, you know, part of what we're doing is not just doing these studies for buildings, right? And trying to help them find that right engineered solution I think is a good segue to also talk about an initiative that we're very much involved in that we're leading called Benchmark 87 60, which asks the fundamental question, are we evaluating building performance in the right way?

Right? Are we actually capturing a good building versus a not so good Building on the right metrics. We've talked a lot about UI energy use intensity, and how it's crude, right? And there's a lot of support, not just within the Benchmark 87 60 initiative, but in the broader industry around this. Of using an hourly approach across a number of different [00:36:00] variables to evaluate building performance.

Yes, energy is one of those values, especially electricity given the time of use consideration, but also the intensity of the grid is something that should matter to the evaluation of whether or not a building is high performing or less high performing. Right? Occupancy, real time occupancy. How many people are in the building that are being served by those building systems?

That's relevant and that's important and so is weather, right? If I'm in New York and I'm dealing with the 30 degree temperatures outside today, you know, I should probably have a different calculation instead of considerations and somebody somewhere else in the US that's dealing with a different, you know, set of, of weather criteria.

And so Benchmark 87 60, uh, is this great cross-disciplinary initiative that we've been involved in for the last two years now that looks at the feasibility of evolving our benchmarking tools and our building performance standards. Local on 97, by the way, is an example of a building performance standard, um, to use these hourly data variables rather than that crude [00:37:00] sort of EY metric to evaluate building performance.

And I actually think that gets to be a good citizen that you're be a good citizen framework, James, because it is, it's saying, well, alright, let's take the tools that have been successful at instigating change, benchmarking, and performance standards. These have been the things that historically have worked in getting people to change their behavior around building buildings and operating buildings.

The proof is in the pudding. The data's there that supports it. These are tools that work. Let's use those tools. And just evolve them to better fit the needs of, of today's definition of a high performance building, which includes that carbon aspect, which includes that, that grid interactivity, that occupant responsiveness.

Um, yeah. And, and it's called, it's worth mentioning here, it's called Benchmark 87 60, cuz they're 8,760 hours in a year. Right. And so we think that hourly data is gonna be really key to properly evaluating, building performance and the value of these projects in the future.

[00:37:59] James Dice: [00:38:00] Yeah. And, and sort of, it sounds like this is like a local project that you guys are trying to get off the ground. Can you talk about like how, how, how can people that are listening to this kind of find out more about it and can they get involved and like, what are the next steps in sort of, uh, spreading this idea out throughout the.

[00:38:19] Molly Dee-Ramasamy: Thank you for asking. Um, so we are absolutely raising awareness, trying to. To be more broadly recognized and work with different groups to actually instigate some change. Um, who's involved, I think is worth mentioning as well. We have cross-disciplinary expertise. We've got a bunch of real estate folks that are involved.

Most of them focused here in New York City, but we're, you know, obviously are interested in including others from across the us. Uh, we've also got data providers. Um, so we have a partnership, for example, with what time, um, that provides our, our proof of concept platform. I'll kind of get into that later maybe.

But it's a, it's basically a, uh, a research project into how to use and how [00:39:00] to collect hourly data. They're providing data for us. What time is, we also have academics. So we've got some folks, some, some really smart folks from Stanford and Cornell Tech that are participating here. And a number of research type think tank folks.

So you mentioned rmi, they're involved, IMT are are involved as well. Um, sidewalk Labs slash Google. I mean, this is a group that is broad reaching and people can get involved by visiting our website. We have a website, um, it's called Benchmark 87 sixty.org. Um, and yeah, you can read about our mission. You can read about the message that we're sharing and how we wanna start to push this idea of better performance benchmarking, better building performance standards with hourly data out across the us right?

It's not just for New York, we started here, but we, we really want the idea to expand because we think it's gonna be critical for the success of all of these other decarbonization efforts that are happening in the industry that keep, you know, kind of hitting these barriers that, that Chris and I are, are talking about here.

[00:39:58] Chris Colasanti: I, I think in a lot of ways it's a, [00:40:00] it's a catch up thing. Like, you know, we have all these different solutions providers that are ahead of the game, like that are, that are doing all this good stuff with hourly data. We have great building technology in terms of occupancy counting. We have great meters that can measure energy efficiency and adjust set points, right?

But then the lowest common denominator are these benchmarking standards, which are just so crude that you can't, they're not taking advantage of all this other tech and all this stuff that's out there. And so everybody gets reduced down to this common denominator and then compared against that. And it just doesn't incentivize owners to do the right thing.

And so when we. When we like, you know, went to the, these 10 real estate developers in New York City, and these are folks that like, that you would know, they're all the biggest name people in New York and they have portfolios all over the country. They were all really excited because they see this as an opportunity too, for them in a lot of ways to differentiate themselves.

Like, Hey, listen, like now I can get recognized for my building, that even though it has the same a UI as this other one, it only uses energy in these hours instead of like, you know, at the peak time of the day. So it's about like, you know, these folks that are kind of [00:41:00] already doing a lot of the best stuff in the industry now should hopefully get recognized if we can evolve those standards to move toward hourly.

[00:41:05] James Dice: And then we can start to have, maybe I'm just repeating this back to you. You guys have already kind of said it, but then we can start to have the financials of utility incentives and regulations and hopefully utility rates, they can start to then adjust and start to reward those building owners for doing the right

thing.

Is that what you're

[00:41:24] Chris Colasanti: That's the idea. Yeah. You know, I just, just, uh, you know, there's a big steam system here in New York City. It's a utility steam system that provides steam, no, is it 10,000 buildings? Buildings, Molly, I think it's like 10,000 buildings in the city. And they haven't had a new rate case in 10 years. 10 years.

We haven't had a new rate case. And for one this year, and we're hoping, hopefully in the next couple weeks, we're hoping there's gonna be a lot more sophistication around the rate structure to address this kind of stuff. And if not in this rate case, surely the very next one. But like the thought of that, that like, you know, these foundational sort of common denominator issues haven't evolved in 10 years, is just mind blowing to me.

Like, we [00:42:00] gotta, and these are the things that move the needle. Like we can have a great product out there, we can have this amazing air source heat pump, but if, but if there are no market forces to force its movement, it's just not gonna happen. You'll, you'll get one person, right? Yeah. I'll go out on the limb, I'll do it.

You'll get one forward thinking person. But other than that it's just, it doesn't move at scale.

[00:42:16] James Dice: totally super interesting. I love how you guys are looking at it like holistically and you're like, oh, this is this. You know, this could change the way that each of us are sort of participating in this problem. Um, so what would you guys say are like the, is like the biggest impediment? I know it's a broad question.

Uh, biggest impediment of decarbonizing buildings in, in

New York City right now.

[00:42:43] Chris Colasanti: Uh, I'm gonna throw out one here, Molly, and then I'm sure you've got a, a list about 3000 miles long. But, uh, it's just, somebody asked me literally today, I was on a call with an architect today and we were talking about. putting together like a, a presentation for their firm. And, and she said to me, she said this this morning, she said, you [00:43:00] know, what is your number one issue when you, when you get on the phone with a client or a call or a meeting?

What is the first thing that, that is the, the resistance or the obstruction and immediately just came out. I was like, it's the grid. It's the grid. Even though local law 97 set the carbon coefficient of the grid recently to be a very renewable conversion factor. They just sent it, set it, uh, about a month ago.

They set it at essentially a 70% renewable grid in 2030, which is really ambitious and, and great, quite frankly. There still is trepidation. People are still saying it won't happen. It can't be, I don't believe it. I'm not gonna invest in this thing that relies on the grid because I don't trust the grid.

And then we, we obviously on this call know that, and I'm sure the listeners obviously probably don't feel that way, but, but it's the number one issue that we, and so, you know, when we go to a meeting with clients, Molly, what is it? A 75 slide deck of everything and anything we can think of about renewable renewables, the grid, the transition, the, the notable issues in New York City, the studies [00:44:00] that have been done, like all these things to try to like sort of combat with facts, this perception that.

The electric system is just gonna completely collapse. The second somebody puts one heat pump on it, which we know is not gonna happen for a long period of time. So I would have to say not the grid for me.

[00:44:15] James Dice: and real quick follow up on that. Cause I know there are a bunch more impediments that we should talk about, but I still, so I do a lot of writing and a lot of posting on LinkedIn to try to understand where people's feedback, like, get feedback from people, especially in my audience, which is, you know, all the people sort of thinking in nerdy ways about building technologies.

And so I've been posting a lot about electrification and I've had a lot of people post just that exact same fear, which is we, we, or fear or, um, belief, right, that the grid isn't gonna be ready to handle all that new load, especially when you throw in electric cars. So what, what do you say to them to sort of, with, without going into those 75 slides, , what, what do you say to them?

[00:44:59] Chris Colasanti: Well, I, I [00:45:00] completely val validate their concerns cuz they're all, they're all real and I think in a do nothing scenario, then they would be real. Right. You know, there, there would be an issue. Right. But, but no one is expecting there to be a transition to all electric overnight. It's gonna take a really long time.

And if, and it's, you know, and some would argue it's taking longer than we even want it to take. And the problems have been identified, uh, you know, where the issues are. And it's a question of, of getting the right funding and getting the right upgrades to be done. I just, I feel like we, you know, we've identified a problem, there is a path to solve the problem, and that path involves building more resilient infrastructure, which is a very good thing for everybody across the board.

So I see this as like a, you know, yeah, it's a big, it's a big problem and it's gonna cost a lot of money, but in the end, we're gonna be left with something that's way better than what we have. so, I don't know, maybe that's not a, a easy answer, but,

[00:45:51] James Dice: but it sounds like a, if I'm an individual building owner, it's kind of like a tragedy, that commons thing a little bit, [00:46:00] where it's like I'm not trusting that other people are gonna do their part, so why should I do my part a little bit?

[00:46:07] Molly Dee-Ramasamy: Yeah, there's definitely some of that. I mean, it's, it's like a healthy level of fear around something that you have no control over. If I put myself in the shoes of a real estate person, right? I mean it's tough to bet a lot of your capital on whether or not somebody you have literally no control over will, in fact do their part.

And what I usually like to do to, to kinda get into this cuz I think the grid is just so fascinating. It's maybe my favorite area, topic area within this, you know, building decarbonization world. Um, you know, I've spent a lot of time researching and trying to understand how the grid works, right? Who's responsible for managing the grid?

How does the policy affect the operation of the grid? What is the New York ISO responsible for? What is their planning process? Right? And when you really get into the detailed, you know, sort of framework of how our grid is managed in New York specifically, right? It's a little bit different depending on where [00:47:00] you go.

I am often reassured and, and I feel that, um, there are a lot of checks and balances, right, that are in place specifically to avoid that, that doom scenario that everybody so acutely feels right. And I think it's just a matter of coming back to that, looking at the facts and looking at the information that's out there and saying, you know, it's a reasonable concern.

Absolutely. We have to be smart about how we electrify, but at the same time, we also have to realize and appreciate that there is a super robust infrastructure in place to help manage the transition. And those folks are thinking about it, right? They're thinking about it every day. They have podcasts about it.

They have annual reports, five year, 10 year, one year planning processes. I mean, you go down the rabbit hole with, with how the grid is hopefully gonna be managed over the course of the next 30 years. And it takes into. Electric vehicle adoption, it takes into account building electrification, load forecasts in the long term and the short term.

So yeah, I mean those are the things that make me feel better that I try to pass on to our clients and say like, [00:48:00] listen, let's look at all this stuff together. And the trend is this. Do we know the exact details of everything? Of course not. We can't tell the future. I wish we could. That would make things so much easier.

Um, but we can kind of see the writing on the wall, you know? That's how I would describe it.

[00:48:13] James Dice: Mm-hmm. . Totally. And it seems like what you're doing in that interaction with your clients is making them feel better about the risks that they have in making decisions. Right. So I.

[00:48:26] Molly Dee-Ramasamy: Yes.

[00:48:26] James Dice: And it kind of feels like that's what this whole game is. How do you help a building owner make the right decision and make them feel like they've reduced or minimized their risk as much as

possible?

Is that right?

[00:48:39] Chris Colasanti: Yeah.

absolutely. I think the, the second thing that gets right to that issue is, you know, the impediment and risk, right? And sort of addressing that risk is this issue of, of heat pumps being new tech to people. Um, you know, there's basically, right, again, in, in an urban environment where land and space are to premium, you've [00:49:00] got two options, right?

You have the ground source heat pumps, which are very limited in capacity cuz the footprint of your building is small relative to its size. And then the other one is the air source heat pumps. And both of them are very foreign into our environment here. Um, I, you know, they're a handful of geothermal or ground source heat pump projects in the city.

Right now they're operating all pretty small scale for multifamily applications. There are a couple commercial projects underway on the air source heat pump sized side. I know of I think two that exist. Um, neither of which have been turned on. And when I say two, I mean two of the large scale big air source heat pumps that we, we would put on a big building to serve heating and hot water and chilled water for the building.

And, and so as I mentioned to that one project earlier, like these heat pumps are the cornerstone sort of technology, like the foundational thing. All the other stuff is sort of ancillary to it. Like, not ancillary, but you know, we're gonna do heat recovery and we're gonna do decoupled ventilation, all those good things.

But the engine is that heat pump that's providing the, the energy, right? And so, you know, nobody [00:50:00] wants to be first. Um, and that, that gets to this risk issue. They don't, they don't wanna be first, they don't wanna have the heat pump up there, go to turn it on. It gets very cold out and it doesn't work, or it doesn't deliver the right amount of energy.

And so we spend a lot of time on an energy, like, and, and I think rightfully like talking about that, talking about how systems work, talking about how, how they operate at different temperatures, um, doing factory tours, site visits, uh, you know, we did. We had a bunch of clients fly to Italy to test one of the manufacturers in a, in a chamber all the way down to, you know, zero degrees Fahrenheit to make sure it actually functioned properly.

Just to like, give that sense, that reassurance that when it showed up in the building that it was actually gonna work. And we see this kind of over and over again. You know, it's like, okay, Chris, tell me where they're installed. And I'm like, well, there are a couple of 'em here and here. Well then I'm gonna wait a year until, until they're up and running.

So that's a, a risk is the technology. There's sort of a distrust, um, that and fear around it. And I understand that it's something new and nobody wants to lose their job over it, [00:51:00] but that we see that a lot.

[00:51:01] Molly Dee-Ramasamy: Buildings are also, you know, they're not

labs, they're places where people

actually, you know, have money invested and people are operating and living

and doing their thing, right. So I think it is really

understandable that, you know, nobody wants to be first in case something goes

awry. And so what Chris and I spend a lot of time doing with our team, you know, as we do a lot of energy modeling, but Chris and I are sort

of like the Grinch grins of energy modeling cuz we'll have our team, you know, come with. And then he and I will poke holes in it. ,

did you consider this? What about that? What happens if the wind chill

is X? What happens if it's the coldest day in the last 10 years? Right? And so that's part of the process of helping address

our clients fears and, and the risk associated with taking on some of these new ideas is

we need to think about the worst case scenario and where

things are likely to fail and then come up with answers proactively on how to address those

particular failure points. Um, and personally, I really love

that

[00:51:59] James Dice: Molly, if you [00:52:00] could roll into, maybe summarizing the rest of the risks. I think that would probably make, make sense here. You guys have a great list here and it would probably be fun to go into, you know, find detail on each of them, but maybe just

rising. How, how you help your clients with the, all these other risks

as well.

[00:52:19] Molly Dee-Ramasamy: Um, so, you know, in addition to what Chris mentioned, I think there's a lot of other kinds of risk

too, um, that we have to think about how to appropriately mitigate for our clients.

The big one for me, uh, is probably policy risk, um, and just sort of understanding what is obviously happening in the moment in terms of policy, but where things are headed as well, because we wanna plan for today, but we also wanna make things future proof for the next five years, 10 years, 15 years.

And so sort of understanding what might happen within the policy landscape is, I think an important area to, to address.

[00:52:53] James Dice: it feels like from a local law 97 standpoint, something has to change given that [00:53:00] there's these penalties and then so many buildings that can't hit it, but yet the penalties. Aren't really that significant from a financial standpoint. And so it's like, are they even gonna accomplish what they set out to accomplish?

It feels like to me that something has to change.

[00:53:15] Molly Dee-Ramasamy: Yeah, I mean I think certainly when it comes to local on 97 specifically, you know, the rule making is still very much underway. Chris mentioned they just released some proposed rules this last month in October, early October. And so we do, we expect things that, you know, they will change over time because this is the first real example of a, of a true building performance standard in an environment like New York City.

I mean, it has been done in other parts of the world, um, but we're learning as we go and, and I think that's just the truth of the matter. And as we learn more, things will adapt and adjust such that, you know, we hopefully achieve the desired end, um, which is to get to net zero by 2050.

[00:53:56] James Dice: totally. Uh, any other risks to cover [00:54:00] before we kind of move on?

[00:54:01] Molly Dee-Ramasamy: Yeah.

[00:54:02] James Dice: a good exercise, just looking at the obstacles, uh, and, and kind of hitting each of them individually.

[00:54:09] Molly Dee-Ramasamy: Definitely. Yeah. Yeah. I mean, we have a pretty comprehensive list. Um, so I mean, we talked about the cost pretty consistently, right? That's a, that's a big risk. Um, we talked about the tech and we talked about the electric grid. You know, I think another big one that's worth kind of mentioning is workforce development, right?

And the operations side of decarbonization. Speaking on that, from my time in field and in commissioning, right? Just because you put it on the drawings doesn't necessarily mean that it's gonna be built exactly the way you had intended. And obviously, operations teams have to respond to dynamic changes in the building once it's turned over.

And so that could mean different operations than were originally anticipated as well. And so there's a, there's sort of an underbelly point of failure there that hasn't been explored yet because we don't have a lot of large. Projects that have been implemented [00:55:00] yet to go through those learning processes through.

And like Chris mentioned, nobody wants to be the first. Um, and so, you know, there's a lot of checks and balances in place to try to mitigate that risk on its own. But, but that's another big one to me, right? Once the design community and the real estate community is fully on board with decarbonization, we still have to think about how to operate these buildings day to day and how to prepare our operations teams to do that in a way that they're comfortable with, but that also achieves the design intent.

And these systems are more complex, right? So it's not as easy as just saying like, you know, Hey, Mr. And Mrs. Operator just no big deal, brand new system. You'll figure it out. Like there needs to be a real process here to bring those folks along so that it can be successful,

[00:55:41] James Dice: Totally, especially when you're replacing like a gas fired boiler that has one one point and that's all, that's the entire control sequence is just meet that set point. Yeah. These, these systems, like you guys described with the thermal storage, are a lot more complicated than they used to be. [00:56:00] Um, so as we kind of wrap up here, I'd love to like, given all of this and given that you guys are in sitting in this design consulting role, right?

Um, I'm writing this, this series of newsletters right now to kind of close out the year on the sort of vital roles in smart buildings. So we're walking through. The role of the smart building champion, the role of the design consultant, the role of the msi, the role of the commissioning agent. And there might be more of, those are just the ones that I've sort of ridden so far.

we'll, we'll see what happens. When I get to number five, I don't like to have four. I feel like there should be either three or five. So that's just like a, a creator or writer OCD thing of mine. Um, but in that design consulting role, how are you guys thinking about the, the role of the design consultant shifting, um, as you know, these new ways to sort of design systems, obviously new ways [00:57:00] to think about the future, new ways to manage risk.

How are you guys thinking about your

role sort of changing.

[00:57:06] Chris Colasanti: You know, I think it's evolved a lot over the past few years. Um, you know, just even in the past, you know, last year getting in front of these CFOs of big corporations talking about decarbonization, right? That would've never happened before for an MEP engineer and energy consultant to be in that role.

Right? The sort of this nexus of the indoor air quality issues with covid and everything happening with sustainability, it's put, you know, mechanical engineering and sustainability, right? Sort of in the middle here, right? At a crossroads of all those different issues. It's really exciting for us. It's really interesting and exciting.

Uh, you know, we went from having a very sort of narrow and defined role of the MEP systems engineer to size equipment to fit in a certain place, to deliver a certain load, and then kind of moved on to suddenly now being part of the policy discussions, the energy discussions, the grid operations, maintenance, financing, [00:58:00] um, regulation.

I mean, I could go on and on. All the things that we just kind of talked about, about risk are all now part of the job, um, in order to be successful. And so it's just really evolved and it's really exciting and it's really changed. Um, and, uh, yeah, I mean we're, we're super happy to be in this position and be contributing in actually a meaningful way.

[00:58:19] James Dice: Yeah, I agree. It's super

exciting. Um, so let's, let's close this off with some, some carve outs. I'd love to hear a book or podcast or sort of other resource that we can link people to that has had a, a outsized impact on, on you guys lately. Let's

start with you, Molly.

[00:58:37] Molly Dee-Ramasamy: Sure. So my carve out is gonna be for a podcast, and it is not in any way, shape, or form related to sustainability, energy,

or carbon. Um, hopefully that's okay. Uh, but

if, if the, uh, the criteria has had an outsized

impact, um, Anderson Cooper's podcast, all there

is has had a big impact on me. I've been

listening to

it for the last [00:59:00] couple of weeks, and, um, for those of you who aren't familiar, haven't heard of it, it's actually about his journey through grief.

Um, and just kind of talking about something that everybody universally shares

in terms of experience at some point or another in their life. But it's so sort of awkward and uncomfortable to talk about, and it's Interesting. It's interesting about the human condition and how to relate to people

and connect with people. So highly recommend. Um, it's a, it's an emotional rollercoaster though. I'll warn everybody. It's a tear jerker, so. Yep. That one, that one's mine.

[00:59:31] James Dice: Sometimes I seek stuff like that out because I feel like, you know, being a business owner, being in buildings, the buildings world all the time, I can sometimes get to be very rationally kind of in my head minded. So that's a good resource for like when you need to feel stuff. I feel like I need to feel stuff sometimes, so I appreciate that

all, there is. How about you, Chris?

[00:59:52] Chris Colasanti: Well, first of all, I'm gonna put that one on my Do not listen to list, . Just check that off right now. Molly . Just kidding. I'm just kidding. [01:00:00] Um, I'm a frequent listener of Radiolab, uh, to W N Y C, New York City based, uh, show, radio show podcast. And they do a lot of science and neuroscience stuff. And this is also not, not an energy and carbon thing, but they had a rewind episode where they go back and they like replay ones from, you know, years ago with Mary Roach.

Uh, she's an author that does like these kind of fun, um, books on all sorts of like, kind of interesting science stuff. Uh, let you kind of Google her and you can show your own conclusions there. But anyway, There was an episode about the microbiome in our guts, and a couple like facts just jumped out at me, that we have, that the average human has four pounds of living things inside of them that aren't them, that aren't us.

Um, in bacteria and other organisms, four pounds, average human. And that four pounds represents, represents this is the real killer. 65% by quantity of all the cells in your body. So only 45% of us by [01:01:00] quantity is actually us. 65% of it is, is something else, which I thought was really interesting to think of that we're just like a walking collection of other things.

And, um, And it also talked about how the bacteria affect our behavior and that there were all these scientists, all these uh, studies showing how they, when they fed them certain things, it, it created different outcomes in, in the living things that they inhabited. And so that's the part that I was really fascinating because you know, when I'm in a bad mood now I have something to

[01:01:27] James Dice: Something to blame it on. Yeah,

[01:01:29] Chris Colasanti: somebody blame it Or not

[01:01:31] James Dice: Or would you make a mistake? Yeah, it was just, it was just my biome,

[01:01:34] Chris Colasanti: It was just my biome, not me. Yeah. ,

[01:01:37] James Dice: uh, well this is fun. Thank you both for, for taking the time to walk through your experiences. It seems like as a, and as an industry. We have, uh, some rolling up of our sleeves to do,

to try to try to answer some of these questions that you guys have raised.

Uh, thank you for, for leading us in that.

Appreciate it

[01:02:00]

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Molly Dee-Ramasamy

Welcome to Nexus, a newsletter and podcast for smart people applying smart building technology—hosted by James Dice. If you’re new to Nexus, you might want to start here.

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Episode 129 is a conversation with Chris Colasanti and Molly Dee-Ramasamy from JB&B Engineering’s Deep Carbon Reduction team based in New York City.

Summary

We talked about where the decarbonization movement stands today, especially as it relates to New York’s Local Law 97. Molly and Chris unpacked first how the law works, then some of the challenges their clients have with it, and finally they shared some example projects where decarbonization, and electrifying heating specifically, hasn’t quite penciled out and where the industry needs to go from here if they’re going to get done in the future. This is a fascinating one.

Before we jump in with the interview, I want to make sure everyone is budgeting for the next cohort of the Nexus Foundations course. We just wrapped up public cohort 5, which had almost 50 students from all over the world, and we’ve taught over 350 students at this point. If you or your team need to learn the Foundations - see what I did there - of smart buildings, this course is for you. Just got to nexuslabs.online/foundations to learn more.

And without further ado, please enjoy this episode of the Nexus Podcast with Chris and Molly of JB&B Engineering.


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The Smart Buildings Center Education Program (SBCEP) is a 501c3 non-profit organization that believes the smarter use of technology and practices in the built environment, particularly as they relate to building operations and management, will enable a cleaner, healthier and more productive future. The SBCEP seeks to establish thought leadership for smart technologies and practices within the built environment, and pursues its objective through the following pillars of activity: delivering training programs to educate the building workforce of the future; enabling industry leading demonstration projects; and connecting the industry through hosting and participating in smart buildings events.

Check out their body of work on The Essential Role of Smarter Buildings in the Clean Energy Transition.


  1. JB&B (3:06)
  2. WattTime (38:49)
  3. Benchmark 8760 (39:27)
  4. 4 Vital Roles: The Smart Building Champion (56:10)
  5. 4 Vital Roles: The Design Consultant (56:10)
  6. All There Is Podcast with Anderson Cooper (58:52)
  7. Radiolab Podcast (1:00:02)

You can find Chris and Molly on LinkedIn.

Enjoy!

Highlights

  • JBB's background (6:25)
  • Deep Carbon Reduction (7:55)
  • Local Law 97's impact on the industry (9:36)
  • Stories from the ground (18:15)
  • Flight to quality and repositioning of assets (26:23)
  • Evolution of these programs and Benchmark 8760 (35:29)
  • The biggest impediment of decarbonizing buildings in NYC (42:31)
  • Helping clients with other risks (51:59)
  • The shift in the design consulting role (56:45)
  • Carveouts (58:23)

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​​Altura is a mid-sized, mission-driven firm delivering impact and performance across the built environment and they’re looking for the best in the industry to join their team. From designing and implementing corporate sustainability programs, to manipulating systems in the field to achieve performance, to building the tools that support project teams, Altura is committed to solving our world's macro-level problems through tangible projects today.

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Full transcript

Note: transcript was created using an imperfect machine learning tool and lightly edited by a human (so you can get the gist). Please forgive errors!

Now I know many of you enjoy the virtual smart buildings exchange conference in August. The team behind that conference is the smart building center education program. Uh, 5 0 1 C3 non-profit organization that believes a smarter use of technology and practices in the built environment, particularly as they relate to billing, operations and management will enable a cleaner, healthier, and more productive future. The smart building center seeks to establish thought leadership for smart [00:01:00] technologies and practices within the built environment and pursues its objective through the following.

Pillars of activity first. They deliver a training programs to educate the building workforce, the future second, they enable industry leading demonstration projects, and finally they connect the industry through hosting and participating in events like the smart buildings exchange conference. So check out their body of work on the essential role of smarter buildings into clean energy transition at the link in the show notes. And when you get in touch, tell them nexus labs center.

This episode is a conversation with Chris call Santi and Molly D Ram. Assami from JB and B engineering's deep carbon reduction team based in New York city. We talked about where the de-carbonization movement stands today, especially as it relates to new York's local law, 97, Molly and Chris unpacked first, how the law works and then some of the challenges that our clients with have with it.

And finally, they shared some example projects where decarbonisation. And electrifying heating [00:02:00] specifically, hasn't quite penciled out and where the industry needs to go from here. If they're going to get done in the future, this is a fascinating one. But before we jump in with the interview, I just want to make sure everyone is budgeting for the next cohort of the nexus foundations course.

We just wrapped up public cohort five, which had almost 50 students from all over the world. And we've now taught over 350 students at this point. So if you or your team need to learn the foundations. See what I did there of smart buildings. This course is for you. Just go to nexus labs.online/foundations to learn more.

And without further ado, please enjoy this episode of the next podcast with Chris and Molly of JB and B engineering.

[00:02:39] James Dice: All right. Hello, Molly and Chris, welcome to the Nexus Podcast. Great to have you on. Uh, let's start with, uh, introductions. Chris, can you go first, uh, introduce yourself and give us a little bit of, uh, your background?

[00:02:52] Chris Colasanti: Sounds good. Thanks James. Appreciate you having us on today. We're really excited. Long time listener of the Nexus. Um, [00:03:00] and, uh, yeah, we're excited to talk today about decarbonization and building systems. Um, a little bit about me. I'm an associate partner at JB and b. We'll talk a little bit about the firm in a second, but I'm originally kind of from a suburban, rural area of Pennsylvania.

Um, not too much decarbonization happening there. And on a whim I moved to Nette On a whim, I moved to New York City. Outta college I went to Penn State and I ended up at JB and b. I've been there about 20. amazing how you go to a, a job, you know, and I told my parents I'm gonna be there for a year, and then 20 years later I'm still there.

It's amazing how the city can get you. Um, and you know, at jpb I've had a bunch of different jobs on the way. I started out as an h e C designer. I worked on projects like the Bank of America Tower. I worked on Hudson Yards. And then, you know, I became a project manager. I'm a partner of the firm now, and I'm still involved in projects.

But more recently, you know, heavily involved in our deep carbon reduction service, which we're excited to talk about today.

[00:03:55] James Dice: Cool. And, and Molly, how about you? Can you give us a little bit of [00:04:00] your background?

[00:04:00] Molly Dee-Ramasamy: Yeah, absolutely. And I echo Chris's sentiment. It's great to be here. Thanks for having us on. Um, so my background is, is a little bit different. I, um, I actually started out of college in product design, believe it or not. Um, I went and I did my degree in Philadelphia in mechanical engineering, but had a strong focus on products and sort of on end user experience and understanding how people think.

And I was looking to make a move to New York. And I didn't know exactly what I was gonna get into, but I said, I'll take a job kind of, as long as it's engineering related, I'm in. Right. Not necessarily discriminating between product design or other forms of engineering. And um, you know, I, I ended up at JBM B and at the time didn't necessarily know too much about me p but over the last 10 years have really kind of grown to love this particular industry.

And the New York side of it specifically is so interesting. And so at JB b I started out in fields and commissioning right. Completely [00:05:00] kind of moved away from that product design focus from school, started getting into construction and operations and the real sort of practical side of building a building and operating a building and loved that.

And then, you know, at, at one point kind of moved. Into energy and carbon services, which has always been a really personal sort of interest of mine. Um, but you know, I didn't necessarily pursue it in college or professionally necessarily cuz I didn't, you know, I didn't know what was gonna happen there.

But this opportunity arose at jbm B to do this full time and it aligned so perfectly with my personal priorities that I was like, yeah, let's, you know, , let's jump in both feet. And so now I'm kind of bringing all those different pieces, right, the end user, user psychology side from product design, the field and commissioning practical design aspects.

And now this focus on energy and carbon as well to this deep carbon reduction services that Chris and I are gonna talk about.

[00:05:53] James Dice: That's interesting. Yeah. When I went through, you know, as a mechanical engineer in college, a lot of it seems like a lot of the [00:06:00] direction that a lot of my classmates headed was towards product. And I kind of was like the weird person who was doing internships in hvac and like, I would come back after the, you know, the summer like, and no one had any idea what I was talking about.

So that was, I, I, I feel you there, but I, you know, you also get, like, you get bit by the bug a little bit and you know, it's hard to go back once you, once you see this world. Um, yeah. So let's hear a little bit about Jbb. Chris. Can you give people some context for kind of how you guys approach the world, uh, what cities, uh, the firm serves, what kind of services you guys provide, that kind

[00:06:37] Chris Colasanti: Absolutely. Yeah. So JB and B is jars, Bowman Bulls, and we're a full service MEP design engineering firm. Um, you know, that means we design mechanical, electrical, the plumbing, the fire protection services for building, so all the building infrastructure systems that make this make the building work. Uh, we have a, you know, our main office is in New York City, and then we have an office in Boston and Philly.

We're really a regional firm. Uh, we do reach some [00:07:00] projects across the country and globally. Um, in terms of like the types of projects, it's all across the board. So all sectors and typologies, higher ed, cultural, institutional, lots of commercial office, campus work. It's really the, the larger, more robust projects the better for us.

Um, we kind of run toward these complex challenging projects and that's honestly the best fit for our firm. Um, and over the. We've added a bunch of different services toward, along with the traditional mep, so the av, it, building intelligence, anything that goes hand in hand with the building systems to make it work.

And most recently right, is about deep carbon reduction. It's a new service we added a few years ago and, you know, New York City like Molly said, and, and James, you said it's really like the epicenter right now of what's happening. It's really a tip of spear moment for the city, largely because of local L 97 and all the regulations.

And, uh, we're pretty excited to be like right smack in the middle of it.

[00:07:53] James Dice: Super cool. Yeah. So this D dcr deep carbon reduction, right. I got that. Right. Right. [00:08:00] Uh, Molly, can you talk a little bit more about what that service provides?

[00:08:04] Molly Dee-Ramasamy: Yeah, absolutely. So it, it, the name is actually a little on the nose. Um, we really are about deep carbon reduction. And so, uh, you know, Chris mentioned running towards these really complex problems. Decarbonizing buildings, especially existing buildings, is one of those really complex problems. Um, obviously with existing buildings, there's existing conditions that you have to deal with on top of all of the risk and sort of uncertainty that's happening around decarbonization right now in the building's industry.

And so, you know, when local I 97 first kind of hit the street, there was a lot of trepidation and a lot of sort of disruption that occurred within the industry, you know, and, and we said, well, let's lean into it, right? These are big problems. They need solutions. People need guidance. Um, and that's what Jbm B has been known for, for, you know, most of its history is running towards those problems.

And so that's what deep carbon reduction is. And to get sort of technical about it, which maybe we'll get more [00:09:00] into it later on, you know, but we talk about decarbonizing buildings. We're, we're talking in some cases about rethinking the entire heating system, right? For a building. Uh, it could be a conversion in an existing building from say, a steam system to an air, air source, heat pump system.

Um, but there, there's a lot that goes into this stuff. And it's a different, just a different way of kind of thinking about energy and carbon in the built environment that we've, we've had up till this point.

[00:09:26] James Dice: Totally, totally. I love that. Running towards complex problems. Um, so let's, we, we've mentioned a couple different things about New York City already. Let's, let's like go to the source or the beginning of this, if. It might not be the actual beginning, but let's call it the beginning with, with local law 97.

Um, how has that sort of impacted, you know, besides the impetus for this DCR team and this offering that you have, how's that sort of like changed the game in New York City for, for you and for your clients?

[00:09:59] Chris Colasanti: Yeah, honestly, [00:10:00] James, it's a, it's been a complete game changer. Um, there's really no other way to say it. You know, there were really two laws that were passed in a very short time. Uh, the first one was the natural gas ban law, that's local L 1 54. For all the number of folks out there, that was in like mid 2021.

And what that did was it said that any building under seven stories couldn't have a new gas service for heating energy or for cooking starting in 2023. So right around the corner for, for larger buildings, seven stories and up, it was 2027, also kind of right around the corner. So that sort of set the frame that like going forward, everything was gonna be all electric.

So that was the first law. The second one is local L 97, which was actually past the beginning or middle of 2019. But the real teeth for this law kind of take effect in the mid 2020s and 2024. And I think it's worth just taking a second explaining, cuz we're gonna kind of, kind of come back to this a couple times, uh, throughout the podcast here.

So the way local L 97 works is, is it sets a cap on carbon emissions for buildings. So this is, uh, tons of CO2 [00:11:00] emitted per square foot per year, and the cap for each building is based on the type of building and its, um, and its size. So for. If you have a, a data center building, that data center building is gonna get an emissions cap that's a little higher than, let's say, a multifamily building, right?

Because data centers consume more energy, so therefore they should get a higher emissions cap than a multifamily building. So you get, each one of these buildings gets its assigned cap based on square footage in typology. Then throughout the year, you accrue carbon emissions, and the carbon emissions come from the energy that's consumed by the building.

So if you know you're burning natural gas on site, that natural gas gets converted to carbon that counts toward your carbon cap. If you're buying utility steam, there's a conversion factor that gets counted toward your carbon cap. And if you're consuming electricity from the grid, depending on how green the grid is, you get carbon associated with the electricity from the grid and that gets counted.

So all that gets put in the big sauce of your carbon emissions. And compared to your. If you're under your cap, great. You're in compliance. You move on If you're [00:12:00] over the cap, if you consume more emissions than you're allowed, then there's a financial penalty associated with every ton of co2. So it's about $268 per ton over the cap.

And so in our, in the first compliance period of the law in 2024, we see most buildings kind of flying through with, okay, about 80% of buildings in New York City do not have penalties. They're not over their cap in 2024. In the second compliance period when these caps ratchet down about 50%, we see a larger percentage of buildings not meeting their caps called the numbers kind of flip.

It's about 80% of buildings are impacted by that 2030 limit. In 2035, those limits get ratcheted down again. In 2040, they go down again, all the way down to essentially zero emissions by 2050. So when somebody says, do I comply with local 97? The very next question outta our mouth is, well, when do you wanna comply?

Do you wanna comply in the first compliance period where it's this hard? Or do you wanna comply in the second compliance period where it's twice this hard, et cetera, et cetera, all the way down to 2050 when essentially anyone who's consuming natural [00:13:00] gas in a building is not gonna comply because any gas equals carbon equals your over your limit of zero.

So this is like a big deal, right? This is something completely, you know, very different than the energy codes than we've had before This idea. There's a performance based metric that changes every five years that's affected by building operations and by energy use and by the weather and all these other things.

It's totally different. I mean, if you think about the way that, you know, buildings thought about energy before this, right? It was the energy code, for example, and every couple years there'd be like a, a little nuance change energy code. You'd have a little better u value of glass. You'd have a little different watts per square foot of your lighting.

It was all these things that happened behind the scenes that the only people that really cared about it were the designers that had to make it work. Nobody, you know, nobody in the industry, nobody running a building. You know, the person that's responsible for the bottom line of operations really didn't care about what happened with the energy code.

But with this, it's suddenly and [00:14:00] literally in everybody's face across the board.

[00:14:03] James Dice: And then. The, the operators of the building, they might look at their Energy Star score and it really didn't have any tie to carbon really. Right. They might say, oh, I'm a 75 and I'm very proud of that and I'm gonna continue burning carbon for a really long time and remain proud of my Energy Star score.

So it changed that a hundred percent as

[00:14:25] Chris Colasanti: Yeah, you know,

[00:14:26] Molly Dee-Ramasamy: Yeah. And. In fact, these things at times are, are in conflict , which is, which is part of why this is tough, right? So not only is there a moving target of, of limits and compliance like Chris was just mentioning, you know, but this idea of carbon is different than energy efficiency and EY energy use intensity, right?

Which is how much energy you're using per square foot. That's, that's what historically has been the focus of these types of services, right? And the focus of policy Energy star, energy star portfolio manager in New York City, local I 84, which is the requirement to report your data through Energy Star [00:15:00] portfolio Manager.

These things were all very, and still are in many ways, very heavily focused on energy efficiency rather than emissions reduction. And so that's a big shift.

[00:15:09] Chris Colasanti: Here you have like kind of nothing happening for a really long time, right? These tiny little energy codes and then all of a sudden, boom, boom, these two laws within two years of each other that affect everybody in the city. That's, that's has to do with the building industry. And so, you know, we, we, Molly and I kind of talk about this all the time because like, there's such a range of responses.

Like in 2019, in 2020 when these laws kind of hit, you know, right away it was everybody pushing back really hard. You know, it can't be, they can't do this to us. We can't afford it. It's gonna drive industry out of the city. It's impossible. How do they expect the grid? I mean, it was just, it was this like, we like to say that everybody goes through kind of the five stages of grief when it comes to building decarbonization, right?

They start out in the denial. Denial and the anger, right? And how can it be? And then little by little it's like, you know what, actually maybe this isn't so bad and you know what, we can make these changes. And oh, and when everybody realizes that [00:16:00] the whole city is affected, This isn't just one building that's getting singled out.

If this is an industry-wide shift in the way that we're looking at buildings, then suddenly it becomes a collective sort of issue. And we have some folks right, that see this not as a, something pushing down, but as an opportunity. As an opportunity to differentiate themselves in the marketplace, right?

Taking advantage of these more stringent rules and regulations, like here's an opportunity now for us to make our building a little bit better, track the best tenants. It's like a whole new market in a lot of ways.

[00:16:31] James Dice: And you guys have clients outside of or across different verticals, right? So are the responses from your clients different depending on what type of building we're talking about as well?

[00:16:42] Chris Colasanti: Yeah. Go

[00:16:43] Molly Dee-Ramasamy: Yeah, I would say so. Yeah. I mean, I think, so certainly when you start looking across, let's say, multi, I'll use three examples. Multi-family versus office versus healthcare, right? Just to kind of use three high level [00:17:00] examples, you know, the, the multi-family folks don't necessarily have the same sort of channels of information that large commercial real estate does in the city, and so they're at a different place in that five stages of grief than the people who are class A developers that, you know, were, were providing feedback to the city when this law was, was originally being written, right?

They're obviously much further along in their journey and their process. And then healthcare, you know, they're interesting too because they've, they've got a very different focus, right? They're not just serving building occupants in a typical sense. There's the issue of patient health and patient comfort, and so there are other criteria that they're beholden to that comes into the equation of how they can or cannot comply with.

With carbon caps. So yeah, I mean, I think across different verticals, absolutely. Folks have different responses and will also need to have different strategies. I mean, decarbonization and deep decarbonization really is an engineered solution in every building, um, which sometimes really blows people, mo people's mind.

They're like, Hey, can't we just, isn't there just a recipe? [00:18:00] Can't we just, you know, do the same thing at scale? Uh, and the answer is usually no. , you know, the, the high level conceptual solutions Sure. But how to actually apply them in an individual building can be really challenging. Um, so yeah, that's a good question.

[00:18:15] James Dice: Okay. So that's a really good segue because I feel like it'd be good to hear some stories from you guys, um, you know, from your projects, from your clients. Um, Molly, do you wanna start off with an example, uh, of a story to tell?

[00:18:29] Molly Dee-Ramasamy: Yeah, I, I like that idea cuz it's, it's good to really talk about the kind, getting into the nitty gritty details. Um, and that's where, you know, things tend to, to get stuck. Um, so I'll give an example. You know, 2 million square foot existing building Chris and I have been working on for some time now. Um, and sort of early on in the process, we got in there, we did this full decarbonization study and came up with this pretty comprehensive plan right?

Over a 20, 30 year time horizon. Cuz that's what these kind [00:19:00] of decarbonization projects take, right? They take time, they're usually chunked up into different components because Rome wasn't built in a day, right? Sort Of chunked up into these smaller projects, uh, that are meant to be easier to implement. Uh, some of them are dependent on others, so they have to happen in a phased manner. But long story short, I mean, we put together a really solid plan, a plan that was gonna get this building to where it wanted to be in terms of carbon and energy efficiency goals.

Um, and, you know, unfortunately the cost to do it was just gonna be really, really, And there wasn't any way around it, right? Because right now we're sort of early in, in the adoption of some of the technologies that are key to decarbonization air sort. Heat pumps is a good example, right? Right. Now they come at a, at a premium.

And so when you take that into consideration with existing conditions, with the number of projects that was gonna need to occur over time, you know, the cost was just a lot more than I think anybody on the client side was anticipating it. And you can't know, [00:20:00] right? Because this is the first time people are really exploring this in a, in a real way.

And so we, we just weren't able to get the project moving forward, right? Um, it was just too much of, of a cost sort of surprise, I think, for the client at the end of the day. And we see this time and time again, you know, de. It's hard, it's tough. It, it is super expensive. It, you know, will always be more expensive, most likely than, than, you know, the natural gas or fossil fuel based option.

But we are early in this process in the industry and so that does factor in as well. Um, you know, and I, I think what we try to do is look at the long term outcomes and the long term value of undertaking these types of projects. But at the end of the day, you know, the way that we're used to thinking about energy projects is on roi.

And that ROI is typically between five and seven years. Sometimes less than that is what people are, are looking for when it comes to an energy project. And deep decarb is just, just way different than that, right? I mean, the return on [00:21:00] investment is not what you would typically think of. Uh, and that's because a lot of the time you can't capture that real value that's associated with doing the project.

[00:21:08] James Dice: And for this building that's 2 million square feet, I, I didn't catch what type of building it is, but what's, can you maybe go into a little bit more detail on what is the owner then gonna do about it, given the context we talked about earlier with local law 97.

[00:21:23] Molly Dee-Ramasamy: Yeah, good question. So it is a commercial building, quite large. Um, and this particular client, they've got goals. They've got, you know, internal and externally published ESG goals. And so they've made a commitment that they are very serious about and have continued to engage us to look at other solutions, ways to make things into even smaller incremental projects, ways of visualizing the data and thinking about that return on investment.

And what should factor into it? You know, it, it's certainly the initial study has been a springboard for more. Ways of, of evaluating what this really means [00:22:00] to them. And so the plan is to move forward, where possible, to make the changes where reasonable, um, but then also to keep our eye on what's happening in the policy landscape.

How technology is evolving, right? How financing is changing, and to start to factor those things over in over time.

[00:22:17] James Dice: Got it, got it. So are they looking at this and going like, um, these fines are gonna be significant for us and we know that we're gonna have to figure it out later? Or are they sitting here like, these fines are just something that it's less than the cost to do it and so therefore we're going to eat these fines?

Or how, how are they looking? Okay.

[00:22:37] Chris Colasanti: I was, yeah, I was just gonna say, you know, pretty much always, I hate using the word always, but almost always the fines are not significant enough to pay for the capital investment to get you out of the fines. So it's, it's almost, you know, I'm sure there's examples, but that's not the case. But yeah, the, the, it's just the ROI on these things just isn't there.

Even with the [00:23:00] fines, it's not there, like when you're talking about a complex commercial building with a fully tenanted building with systems that have been placed for 30 or 40 years, to be able to transition those buildings away from the systems they have now toward an electrified future, which I'll, I'll talk about in a second here, is just, it's really stinking hard and, um, and there's, you know, unless you're willing to cough up 50 million or a hundred million, which in today's environment, I just, I don't know how anybody does that.

Uh, you know, right now, I mean, building, building owners and, and, and developers have a lot to worry about, right? When it comes to the office market as, as you've talked about on your podcast a number of times. And so it's really, really hard to justify the expense. And so it's constantly about chunking it up, like Molly said, looking at different opportunities.

There's all sorts of incentives that are out there right now to, to execute on specific components of a plan. So we're trying our best. I think the ones with the longest visions and the, the, that have the longest hold for their portfolio are gonna do the best because it's just gonna take a long time.

There's another, another example I think that [00:24:00] kind of like dovetails right into this. It's another 2 million square foot building in the city built in, in the late, in the early sixties. So you can imagine, right, there's a commercial office building, it's 50 stories tall, massive building, and you know, this building, it, it its infrastructure 60 years old.

And they went through a pretty significant kind of update a few years ago. Um, and the building was in pretty, pretty decent shape actually relative to local 97 and everything else we're talking about. But this is like a flagship property of this developer, right? And they had very, very aspirational goals for this property.

You know, for the whole portfolio is like a beacon. And so we ended up getting engaged to do a study for them, just like the one that Molly just mentioned. And coming out of that was a whole plan. And the cornerstone of the plan was to implement air source heat pumps in this building with this big, big roof that they have.

Nice big flat roof was to put in air source heat pumps so that we could move some of the heating energy from its current utility steam, which is fairly carbon intensive in New York, over to air source heat pumps and take advantage of that renewable grid that's [00:25:00] coming and decarbonize. And to Molly's point, it was sort of a chunked up plan of, you know, a few heat pumps this year, a few heat pumps next year.

And when we got in front of the, the, you know, basically the, the CFO and all the right people, you know, literally the quote was, how can I sell this up the flag pole? It's fiscally irresponsible. And to me that. That just hit me right in the heart because this is absolutely the right solution for the building.

It's the next thing to do because they've already done all this other good stuff with the upgrades that they did. This is the next thing, and this is the thing that probably has the biggest impact to the overall carbon bottom line. But we just couldn't get there. And we sat back and said, what's going on here?

Like how, you know, we're we, you know, we know this is right, we know it has to happen. We gotta get the net zero by 2050. Look at the slope of the line for local L 97 on the caps, like how do we make this happen? And we kept coming back to, you know, sort of the financial implications just aren't supporting these metrics.

You know, [00:26:00] the energy costs don't support these investments. The carbon pricing, I hate to say it doesn't really do the right justice to get us there. So, you know, either you, I think maybe it was James, one of your podcasts where somebody said just, you know, ignore the ROI with some expletive expletive afterward.

I think that, you know, ROI just almost can't be part of the story anymore if, if, because it just doesn't work right now.

[00:26:23] James Dice: was gonna ask, one of the things that people say in this scenario is that there's gonna be a flight to quality or a repositioning of assets in that industry to say, we're gonna attract the tenants that have their own net zero carbon goals, and therefore this building is gonna now be worth more than it was before we did this project.

Are those sorts of analyses coming into play here? It doesn't sound like for these two examples, those are relevant right now. Do you see those

coming into play later on?

[00:26:50] Chris Colasanti: I, I do think they will. I think in this particular example, there wasn't any way to demonstrate the value for real to the stakeholder, which [00:27:00] is their tenants. The, there wasn't a transparent way to show that spending X million dollars on these e pumps was gonna result in a benefit for them. And so I think, you know, There's another, uh, project that we're working on, um, where this exact conversation kind of played out, James, that that of exactly what you're saying.

Um, this was a, uh, about value and this was a, um, it's a new building. It's a million square foot office building and very forward thinking developer. Um, and we're in the design process right now. Uh, so we're, you know, we're a little bit in the design process, so you gotta figure, it's gonna take a year, another year to design the building.

It's gonna be three or four years to build it. So we're talking about like a mid 2020s, late 2020s, you know, cfo and you gotta think of what the market's gonna be like then concerning how quickly things have moved already in the past two or three years. And so the developer clearly said to us like, alright, we know that natural gas ban law is in effect, we know local 97, every one of our peers is gonna have a building on the market in the mid 2020s that's gonna be all electric.

So you know what, that's in the rear view mirror. [00:28:00] Now what's next? Where do we go after this? Again, to this issue of the value? How do we create value for the marketplace? And so, you know, put on our thinking caps and, you know, the, the. Basically the next sort of, you know, way to go here is around grid interactivity, which I know you've talked about a lot.

And you know, the obvious answer is, is electrochemical batteries and to do grid interactivity with batteries. But in New York it's really stinking hard to do batteries cuz the fire department won't allow the lithium ion, they're very heavy, there's nowhere to really to put them. Um, and so we thought about it a little more and we came up with this idea of using thermal energy as a way to do grid interactivity to create a differentiator for our client.

Um, and if I could just take a second, I'll explain. Cause I think this is a pretty, pretty interesting sort of new concept. Um,

[00:28:49] James Dice: Yeah,

[00:28:49] Chris Colasanti: you know, the idea here is that, you know, in the, in the form of, of water, we can store energy and water by freezing it. So the idea here is that, you know, when you [00:29:00] think of, of what ice is, ice is essentially liquid water with the heat removed from it.

So if you can, you know, store energy in the form of ice tanks in the building, when you need extra heat to serve your building, you freeze that water with a big chiller. Um, I think the, the easiest example to explain it is, you know, the refrigerator in your house. So if you. If you go to the refrigerator, freezer in your house, in your kitchen and you put your hand behind the kit, the refrigerator, freezer, you're gonna feel some heat coming outta the back of that thing.

Um, you know, it's kind of cranking all the time, a little bit of heat. If you were to take a bucket of water and stick it in the freezer and put your hand back there, you would feel more heat because that freezer is taking the heat out of the water and dumping it behind the, the refrigerator freezer. And so if we can do that at scale, if we can do that in a large amount, then we have this source of energy in the form of liquid water that we can deploy as heat when we need it.

And so the value add here is that we can create a greater activity so we can deploy that heat when it's [00:30:00] advantageous from an electricity or a carbon standpoint. And also, We can maybe downsize our heating elements, right? These, you know, these air source heat pumps that are the, that are the solution right now for high rise office buildings, right?

We, we have to get heat from somewhere. It's either the ground or the air in an electrify future. So in, in an air source heat pump solution, these things are big. They take up a lot of space. They take up the entire roof. If you're lucky, if you can get 'em on the roof, sometimes they have to go in a mechanical room because they need to breathe.

They need to have access to air to be able to exchange energy with the environment. And so by implementing this ice heating concept, right, we found that you can actually reduce those heat pump sizes by like 50%. So that can give back value. In terms of the roof space or mechanical area, which could be, which could be leased, right?

Adds financial value. And then to this end, about the energy side, we thought, you know what? This is gonna be a home run on the energy side because we're gonna be able to make ice at night. Um, you know, and, and, and at times when electricity's cheapest, and we're gonna look at the time of use carbon methodology, and [00:31:00] we did this whole analysis, right?

Molly was like three months of work, went back to the client, presented it to him, and honestly it was extremely and terribly underwhelming . And we were so upset because this was an idea we were on for a year and a half. And this should be it. This is the answer. But at the end of the day, the ei this like crude metric, the way that we benchmark buildings was just.

Was a poor indicator of how this system would function. The energy cost at the end of the day was very similar because yeah, we were doing a little better job by, with the utility arbitrage night and day, but it wasn't quite enough of a swing to really, to generate the results. Cuz a lot of this work was being done in the winter when the electricity costs aren't that different between night and day.

And so we came to the table with all this stuff and it, and it just, it didn't drive it home and you know, it was like rats, here we are again, right, with the right solution, but there's no framework to value it properly and sell it. And the leasing person looked across at the table at us, you know, cuz it's not often that we have the brokers and the conversations with these engineering meetings, but they're there, they're like, interested, [00:32:00] right?

Cause this is, this is like new stuff for them too. The broker leaned across and he said, give me something I can. I can't sell this . And, and so, and so we were like, but you will, you know, you will, the, the tenants are going to ask for it in five years. There will be a market for this. Everyone's worried about the electric grid.

You're gonna be able to say that you have the most, you know, favorable building for the electric grid in all of New York City. And he's like, ah, nobody cares about the electric grid. Nobody cares about the electric grid. And I'm like, but they will care about it. No, nobody cares about the electric grid.

And so it's just, it's, it's sad. It's sad because we're, we're in some aspects like on that, that that curve, that like, uh, you know, that change curve. Like some we're just not there yet. Like it might, it might take a little bit of time yet for the market to price these things in the way that they really add value, that the ROI for the heat pump really doesn't matter.

It's about the carbon now and like, you know, the energy storage, right? It's about the, the grid and, you know, we're, we're ready. It's like we almost need like some of the, the fundamental systems to catch up a [00:33:00] little bit. I think.

[00:33:01] James Dice: Yep. Yeah. That's funny. It reminds me of our, our, our course, our foundation's course. We, we teach this jobs to be done framework. Like what, what, how do we use technology to improve outcomes for our stakeholders in buildings? And we have this. Category of jobs to be done that we call being a good citizen, like having the building be a good citizen, right?

In the, in the, you know, society of other buildings, which is a city, um, and a grid and a, you know, nation and a world, right? Um, and we pretty much tell everyone like, don't worry about that right now. Like, like, cuz no one cares at this point. Um, but I agree with you guys. I think it's, it has to be going there and at least the DOE and GSA and rmi, like all these organizations feel like it's headed there.

Right. Um, super interesting. So if I, if I repeat that last example back to you, it sounds like all of the extra costs to do with the ICE system, [00:34:00] um, was that those costs were being evaluated on a ROI standpoint and not necessarily the, the carbon value and the grid interaction value don't necessarily translate today over into a

dollar ROI value.

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[00:34:59] Molly Dee-Ramasamy: I think that's [00:35:00] a really good, sort of straightforward way of putting it, James, that, you know, grid interactivity. How do you translate that right now into dollars and cents that goes into a calculation. Of roi. It doesn't exist. Not yet.

Right. And so, you know, part of what we're doing is not just doing these studies for buildings, right? And trying to help them find that right engineered solution I think is a good segue to also talk about an initiative that we're very much involved in that we're leading called Benchmark 87 60, which asks the fundamental question, are we evaluating building performance in the right way?

Right? Are we actually capturing a good building versus a not so good Building on the right metrics. We've talked a lot about UI energy use intensity, and how it's crude, right? And there's a lot of support, not just within the Benchmark 87 60 initiative, but in the broader industry around this. Of using an hourly approach across a number of different [00:36:00] variables to evaluate building performance.

Yes, energy is one of those values, especially electricity given the time of use consideration, but also the intensity of the grid is something that should matter to the evaluation of whether or not a building is high performing or less high performing. Right? Occupancy, real time occupancy. How many people are in the building that are being served by those building systems?

That's relevant and that's important and so is weather, right? If I'm in New York and I'm dealing with the 30 degree temperatures outside today, you know, I should probably have a different calculation instead of considerations and somebody somewhere else in the US that's dealing with a different, you know, set of, of weather criteria.

And so Benchmark 87 60, uh, is this great cross-disciplinary initiative that we've been involved in for the last two years now that looks at the feasibility of evolving our benchmarking tools and our building performance standards. Local on 97, by the way, is an example of a building performance standard, um, to use these hourly data variables rather than that crude [00:37:00] sort of EY metric to evaluate building performance.

And I actually think that gets to be a good citizen that you're be a good citizen framework, James, because it is, it's saying, well, alright, let's take the tools that have been successful at instigating change, benchmarking, and performance standards. These have been the things that historically have worked in getting people to change their behavior around building buildings and operating buildings.

The proof is in the pudding. The data's there that supports it. These are tools that work. Let's use those tools. And just evolve them to better fit the needs of, of today's definition of a high performance building, which includes that carbon aspect, which includes that, that grid interactivity, that occupant responsiveness.

Um, yeah. And, and it's called, it's worth mentioning here, it's called Benchmark 87 60, cuz they're 8,760 hours in a year. Right. And so we think that hourly data is gonna be really key to properly evaluating, building performance and the value of these projects in the future.

[00:37:59] James Dice: [00:38:00] Yeah. And, and sort of, it sounds like this is like a local project that you guys are trying to get off the ground. Can you talk about like how, how, how can people that are listening to this kind of find out more about it and can they get involved and like, what are the next steps in sort of, uh, spreading this idea out throughout the.

[00:38:19] Molly Dee-Ramasamy: Thank you for asking. Um, so we are absolutely raising awareness, trying to. To be more broadly recognized and work with different groups to actually instigate some change. Um, who's involved, I think is worth mentioning as well. We have cross-disciplinary expertise. We've got a bunch of real estate folks that are involved.

Most of them focused here in New York City, but we're, you know, obviously are interested in including others from across the us. Uh, we've also got data providers. Um, so we have a partnership, for example, with what time, um, that provides our, our proof of concept platform. I'll kind of get into that later maybe.

But it's a, it's basically a, uh, a research project into how to use and how [00:39:00] to collect hourly data. They're providing data for us. What time is, we also have academics. So we've got some folks, some, some really smart folks from Stanford and Cornell Tech that are participating here. And a number of research type think tank folks.

So you mentioned rmi, they're involved, IMT are are involved as well. Um, sidewalk Labs slash Google. I mean, this is a group that is broad reaching and people can get involved by visiting our website. We have a website, um, it's called Benchmark 87 sixty.org. Um, and yeah, you can read about our mission. You can read about the message that we're sharing and how we wanna start to push this idea of better performance benchmarking, better building performance standards with hourly data out across the us right?

It's not just for New York, we started here, but we, we really want the idea to expand because we think it's gonna be critical for the success of all of these other decarbonization efforts that are happening in the industry that keep, you know, kind of hitting these barriers that, that Chris and I are, are talking about here.

[00:39:58] Chris Colasanti: I, I think in a lot of ways it's a, [00:40:00] it's a catch up thing. Like, you know, we have all these different solutions providers that are ahead of the game, like that are, that are doing all this good stuff with hourly data. We have great building technology in terms of occupancy counting. We have great meters that can measure energy efficiency and adjust set points, right?

But then the lowest common denominator are these benchmarking standards, which are just so crude that you can't, they're not taking advantage of all this other tech and all this stuff that's out there. And so everybody gets reduced down to this common denominator and then compared against that. And it just doesn't incentivize owners to do the right thing.

And so when we. When we like, you know, went to the, these 10 real estate developers in New York City, and these are folks that like, that you would know, they're all the biggest name people in New York and they have portfolios all over the country. They were all really excited because they see this as an opportunity too, for them in a lot of ways to differentiate themselves.

Like, Hey, listen, like now I can get recognized for my building, that even though it has the same a UI as this other one, it only uses energy in these hours instead of like, you know, at the peak time of the day. So it's about like, you know, these folks that are kind of [00:41:00] already doing a lot of the best stuff in the industry now should hopefully get recognized if we can evolve those standards to move toward hourly.

[00:41:05] James Dice: And then we can start to have, maybe I'm just repeating this back to you. You guys have already kind of said it, but then we can start to have the financials of utility incentives and regulations and hopefully utility rates, they can start to then adjust and start to reward those building owners for doing the right

thing.

Is that what you're

[00:41:24] Chris Colasanti: That's the idea. Yeah. You know, I just, just, uh, you know, there's a big steam system here in New York City. It's a utility steam system that provides steam, no, is it 10,000 buildings? Buildings, Molly, I think it's like 10,000 buildings in the city. And they haven't had a new rate case in 10 years. 10 years.

We haven't had a new rate case. And for one this year, and we're hoping, hopefully in the next couple weeks, we're hoping there's gonna be a lot more sophistication around the rate structure to address this kind of stuff. And if not in this rate case, surely the very next one. But like the thought of that, that like, you know, these foundational sort of common denominator issues haven't evolved in 10 years, is just mind blowing to me.

Like, we [00:42:00] gotta, and these are the things that move the needle. Like we can have a great product out there, we can have this amazing air source heat pump, but if, but if there are no market forces to force its movement, it's just not gonna happen. You'll, you'll get one person, right? Yeah. I'll go out on the limb, I'll do it.

You'll get one forward thinking person. But other than that it's just, it doesn't move at scale.

[00:42:16] James Dice: totally super interesting. I love how you guys are looking at it like holistically and you're like, oh, this is this. You know, this could change the way that each of us are sort of participating in this problem. Um, so what would you guys say are like the, is like the biggest impediment? I know it's a broad question.

Uh, biggest impediment of decarbonizing buildings in, in

New York City right now.

[00:42:43] Chris Colasanti: Uh, I'm gonna throw out one here, Molly, and then I'm sure you've got a, a list about 3000 miles long. But, uh, it's just, somebody asked me literally today, I was on a call with an architect today and we were talking about. putting together like a, a presentation for their firm. And, and she said to me, she said this this morning, she said, you [00:43:00] know, what is your number one issue when you, when you get on the phone with a client or a call or a meeting?

What is the first thing that, that is the, the resistance or the obstruction and immediately just came out. I was like, it's the grid. It's the grid. Even though local law 97 set the carbon coefficient of the grid recently to be a very renewable conversion factor. They just sent it, set it, uh, about a month ago.

They set it at essentially a 70% renewable grid in 2030, which is really ambitious and, and great, quite frankly. There still is trepidation. People are still saying it won't happen. It can't be, I don't believe it. I'm not gonna invest in this thing that relies on the grid because I don't trust the grid.

And then we, we obviously on this call know that, and I'm sure the listeners obviously probably don't feel that way, but, but it's the number one issue that we, and so, you know, when we go to a meeting with clients, Molly, what is it? A 75 slide deck of everything and anything we can think of about renewable renewables, the grid, the transition, the, the notable issues in New York City, the studies [00:44:00] that have been done, like all these things to try to like sort of combat with facts, this perception that.

The electric system is just gonna completely collapse. The second somebody puts one heat pump on it, which we know is not gonna happen for a long period of time. So I would have to say not the grid for me.

[00:44:15] James Dice: and real quick follow up on that. Cause I know there are a bunch more impediments that we should talk about, but I still, so I do a lot of writing and a lot of posting on LinkedIn to try to understand where people's feedback, like, get feedback from people, especially in my audience, which is, you know, all the people sort of thinking in nerdy ways about building technologies.

And so I've been posting a lot about electrification and I've had a lot of people post just that exact same fear, which is we, we, or fear or, um, belief, right, that the grid isn't gonna be ready to handle all that new load, especially when you throw in electric cars. So what, what do you say to them to sort of, with, without going into those 75 slides, , what, what do you say to them?

[00:44:59] Chris Colasanti: Well, I, I [00:45:00] completely val validate their concerns cuz they're all, they're all real and I think in a do nothing scenario, then they would be real. Right. You know, there, there would be an issue. Right. But, but no one is expecting there to be a transition to all electric overnight. It's gonna take a really long time.

And if, and it's, you know, and some would argue it's taking longer than we even want it to take. And the problems have been identified, uh, you know, where the issues are. And it's a question of, of getting the right funding and getting the right upgrades to be done. I just, I feel like we, you know, we've identified a problem, there is a path to solve the problem, and that path involves building more resilient infrastructure, which is a very good thing for everybody across the board.

So I see this as like a, you know, yeah, it's a big, it's a big problem and it's gonna cost a lot of money, but in the end, we're gonna be left with something that's way better than what we have. so, I don't know, maybe that's not a, a easy answer, but,

[00:45:51] James Dice: but it sounds like a, if I'm an individual building owner, it's kind of like a tragedy, that commons thing a little bit, [00:46:00] where it's like I'm not trusting that other people are gonna do their part, so why should I do my part a little bit?

[00:46:07] Molly Dee-Ramasamy: Yeah, there's definitely some of that. I mean, it's, it's like a healthy level of fear around something that you have no control over. If I put myself in the shoes of a real estate person, right? I mean it's tough to bet a lot of your capital on whether or not somebody you have literally no control over will, in fact do their part.

And what I usually like to do to, to kinda get into this cuz I think the grid is just so fascinating. It's maybe my favorite area, topic area within this, you know, building decarbonization world. Um, you know, I've spent a lot of time researching and trying to understand how the grid works, right? Who's responsible for managing the grid?

How does the policy affect the operation of the grid? What is the New York ISO responsible for? What is their planning process? Right? And when you really get into the detailed, you know, sort of framework of how our grid is managed in New York specifically, right? It's a little bit different depending on where [00:47:00] you go.

I am often reassured and, and I feel that, um, there are a lot of checks and balances, right, that are in place specifically to avoid that, that doom scenario that everybody so acutely feels right. And I think it's just a matter of coming back to that, looking at the facts and looking at the information that's out there and saying, you know, it's a reasonable concern.

Absolutely. We have to be smart about how we electrify, but at the same time, we also have to realize and appreciate that there is a super robust infrastructure in place to help manage the transition. And those folks are thinking about it, right? They're thinking about it every day. They have podcasts about it.

They have annual reports, five year, 10 year, one year planning processes. I mean, you go down the rabbit hole with, with how the grid is hopefully gonna be managed over the course of the next 30 years. And it takes into. Electric vehicle adoption, it takes into account building electrification, load forecasts in the long term and the short term.

So yeah, I mean those are the things that make me feel better that I try to pass on to our clients and say like, [00:48:00] listen, let's look at all this stuff together. And the trend is this. Do we know the exact details of everything? Of course not. We can't tell the future. I wish we could. That would make things so much easier.

Um, but we can kind of see the writing on the wall, you know? That's how I would describe it.

[00:48:13] James Dice: Mm-hmm. . Totally. And it seems like what you're doing in that interaction with your clients is making them feel better about the risks that they have in making decisions. Right. So I.

[00:48:26] Molly Dee-Ramasamy: Yes.

[00:48:26] James Dice: And it kind of feels like that's what this whole game is. How do you help a building owner make the right decision and make them feel like they've reduced or minimized their risk as much as

possible?

Is that right?

[00:48:39] Chris Colasanti: Yeah.

absolutely. I think the, the second thing that gets right to that issue is, you know, the impediment and risk, right? And sort of addressing that risk is this issue of, of heat pumps being new tech to people. Um, you know, there's basically, right, again, in, in an urban environment where land and space are to premium, you've [00:49:00] got two options, right?

You have the ground source heat pumps, which are very limited in capacity cuz the footprint of your building is small relative to its size. And then the other one is the air source heat pumps. And both of them are very foreign into our environment here. Um, I, you know, they're a handful of geothermal or ground source heat pump projects in the city.

Right now they're operating all pretty small scale for multifamily applications. There are a couple commercial projects underway on the air source heat pump sized side. I know of I think two that exist. Um, neither of which have been turned on. And when I say two, I mean two of the large scale big air source heat pumps that we, we would put on a big building to serve heating and hot water and chilled water for the building.

And, and so as I mentioned to that one project earlier, like these heat pumps are the cornerstone sort of technology, like the foundational thing. All the other stuff is sort of ancillary to it. Like, not ancillary, but you know, we're gonna do heat recovery and we're gonna do decoupled ventilation, all those good things.

But the engine is that heat pump that's providing the, the energy, right? And so, you know, nobody [00:50:00] wants to be first. Um, and that, that gets to this risk issue. They don't, they don't wanna be first, they don't wanna have the heat pump up there, go to turn it on. It gets very cold out and it doesn't work, or it doesn't deliver the right amount of energy.

And so we spend a lot of time on an energy, like, and, and I think rightfully like talking about that, talking about how systems work, talking about how, how they operate at different temperatures, um, doing factory tours, site visits, uh, you know, we did. We had a bunch of clients fly to Italy to test one of the manufacturers in a, in a chamber all the way down to, you know, zero degrees Fahrenheit to make sure it actually functioned properly.

Just to like, give that sense, that reassurance that when it showed up in the building that it was actually gonna work. And we see this kind of over and over again. You know, it's like, okay, Chris, tell me where they're installed. And I'm like, well, there are a couple of 'em here and here. Well then I'm gonna wait a year until, until they're up and running.

So that's a, a risk is the technology. There's sort of a distrust, um, that and fear around it. And I understand that it's something new and nobody wants to lose their job over it, [00:51:00] but that we see that a lot.

[00:51:01] Molly Dee-Ramasamy: Buildings are also, you know, they're not

labs, they're places where people

actually, you know, have money invested and people are operating and living

and doing their thing, right. So I think it is really

understandable that, you know, nobody wants to be first in case something goes

awry. And so what Chris and I spend a lot of time doing with our team, you know, as we do a lot of energy modeling, but Chris and I are sort

of like the Grinch grins of energy modeling cuz we'll have our team, you know, come with. And then he and I will poke holes in it. ,

did you consider this? What about that? What happens if the wind chill

is X? What happens if it's the coldest day in the last 10 years? Right? And so that's part of the process of helping address

our clients fears and, and the risk associated with taking on some of these new ideas is

we need to think about the worst case scenario and where

things are likely to fail and then come up with answers proactively on how to address those

particular failure points. Um, and personally, I really love

that

[00:51:59] James Dice: Molly, if you [00:52:00] could roll into, maybe summarizing the rest of the risks. I think that would probably make, make sense here. You guys have a great list here and it would probably be fun to go into, you know, find detail on each of them, but maybe just

rising. How, how you help your clients with the, all these other risks

as well.

[00:52:19] Molly Dee-Ramasamy: Um, so, you know, in addition to what Chris mentioned, I think there's a lot of other kinds of risk

too, um, that we have to think about how to appropriately mitigate for our clients.

The big one for me, uh, is probably policy risk, um, and just sort of understanding what is obviously happening in the moment in terms of policy, but where things are headed as well, because we wanna plan for today, but we also wanna make things future proof for the next five years, 10 years, 15 years.

And so sort of understanding what might happen within the policy landscape is, I think an important area to, to address.

[00:52:53] James Dice: it feels like from a local law 97 standpoint, something has to change given that [00:53:00] there's these penalties and then so many buildings that can't hit it, but yet the penalties. Aren't really that significant from a financial standpoint. And so it's like, are they even gonna accomplish what they set out to accomplish?

It feels like to me that something has to change.

[00:53:15] Molly Dee-Ramasamy: Yeah, I mean I think certainly when it comes to local on 97 specifically, you know, the rule making is still very much underway. Chris mentioned they just released some proposed rules this last month in October, early October. And so we do, we expect things that, you know, they will change over time because this is the first real example of a, of a true building performance standard in an environment like New York City.

I mean, it has been done in other parts of the world, um, but we're learning as we go and, and I think that's just the truth of the matter. And as we learn more, things will adapt and adjust such that, you know, we hopefully achieve the desired end, um, which is to get to net zero by 2050.

[00:53:56] James Dice: totally. Uh, any other risks to cover [00:54:00] before we kind of move on?

[00:54:01] Molly Dee-Ramasamy: Yeah.

[00:54:02] James Dice: a good exercise, just looking at the obstacles, uh, and, and kind of hitting each of them individually.

[00:54:09] Molly Dee-Ramasamy: Definitely. Yeah. Yeah. I mean, we have a pretty comprehensive list. Um, so I mean, we talked about the cost pretty consistently, right? That's a, that's a big risk. Um, we talked about the tech and we talked about the electric grid. You know, I think another big one that's worth kind of mentioning is workforce development, right?

And the operations side of decarbonization. Speaking on that, from my time in field and in commissioning, right? Just because you put it on the drawings doesn't necessarily mean that it's gonna be built exactly the way you had intended. And obviously, operations teams have to respond to dynamic changes in the building once it's turned over.

And so that could mean different operations than were originally anticipated as well. And so there's a, there's sort of an underbelly point of failure there that hasn't been explored yet because we don't have a lot of large. Projects that have been implemented [00:55:00] yet to go through those learning processes through.

And like Chris mentioned, nobody wants to be the first. Um, and so, you know, there's a lot of checks and balances in place to try to mitigate that risk on its own. But, but that's another big one to me, right? Once the design community and the real estate community is fully on board with decarbonization, we still have to think about how to operate these buildings day to day and how to prepare our operations teams to do that in a way that they're comfortable with, but that also achieves the design intent.

And these systems are more complex, right? So it's not as easy as just saying like, you know, Hey, Mr. And Mrs. Operator just no big deal, brand new system. You'll figure it out. Like there needs to be a real process here to bring those folks along so that it can be successful,

[00:55:41] James Dice: Totally, especially when you're replacing like a gas fired boiler that has one one point and that's all, that's the entire control sequence is just meet that set point. Yeah. These, these systems, like you guys described with the thermal storage, are a lot more complicated than they used to be. [00:56:00] Um, so as we kind of wrap up here, I'd love to like, given all of this and given that you guys are in sitting in this design consulting role, right?

Um, I'm writing this, this series of newsletters right now to kind of close out the year on the sort of vital roles in smart buildings. So we're walking through. The role of the smart building champion, the role of the design consultant, the role of the msi, the role of the commissioning agent. And there might be more of, those are just the ones that I've sort of ridden so far.

we'll, we'll see what happens. When I get to number five, I don't like to have four. I feel like there should be either three or five. So that's just like a, a creator or writer OCD thing of mine. Um, but in that design consulting role, how are you guys thinking about the, the role of the design consultant shifting, um, as you know, these new ways to sort of design systems, obviously new ways [00:57:00] to think about the future, new ways to manage risk.

How are you guys thinking about your

role sort of changing.

[00:57:06] Chris Colasanti: You know, I think it's evolved a lot over the past few years. Um, you know, just even in the past, you know, last year getting in front of these CFOs of big corporations talking about decarbonization, right? That would've never happened before for an MEP engineer and energy consultant to be in that role.

Right? The sort of this nexus of the indoor air quality issues with covid and everything happening with sustainability, it's put, you know, mechanical engineering and sustainability, right? Sort of in the middle here, right? At a crossroads of all those different issues. It's really exciting for us. It's really interesting and exciting.

Uh, you know, we went from having a very sort of narrow and defined role of the MEP systems engineer to size equipment to fit in a certain place, to deliver a certain load, and then kind of moved on to suddenly now being part of the policy discussions, the energy discussions, the grid operations, maintenance, financing, [00:58:00] um, regulation.

I mean, I could go on and on. All the things that we just kind of talked about, about risk are all now part of the job, um, in order to be successful. And so it's just really evolved and it's really exciting and it's really changed. Um, and, uh, yeah, I mean we're, we're super happy to be in this position and be contributing in actually a meaningful way.

[00:58:19] James Dice: Yeah, I agree. It's super

exciting. Um, so let's, let's close this off with some, some carve outs. I'd love to hear a book or podcast or sort of other resource that we can link people to that has had a, a outsized impact on, on you guys lately. Let's

start with you, Molly.

[00:58:37] Molly Dee-Ramasamy: Sure. So my carve out is gonna be for a podcast, and it is not in any way, shape, or form related to sustainability, energy,

or carbon. Um, hopefully that's okay. Uh, but

if, if the, uh, the criteria has had an outsized

impact, um, Anderson Cooper's podcast, all there

is has had a big impact on me. I've been

listening to

it for the last [00:59:00] couple of weeks, and, um, for those of you who aren't familiar, haven't heard of it, it's actually about his journey through grief.

Um, and just kind of talking about something that everybody universally shares

in terms of experience at some point or another in their life. But it's so sort of awkward and uncomfortable to talk about, and it's Interesting. It's interesting about the human condition and how to relate to people

and connect with people. So highly recommend. Um, it's a, it's an emotional rollercoaster though. I'll warn everybody. It's a tear jerker, so. Yep. That one, that one's mine.

[00:59:31] James Dice: Sometimes I seek stuff like that out because I feel like, you know, being a business owner, being in buildings, the buildings world all the time, I can sometimes get to be very rationally kind of in my head minded. So that's a good resource for like when you need to feel stuff. I feel like I need to feel stuff sometimes, so I appreciate that

all, there is. How about you, Chris?

[00:59:52] Chris Colasanti: Well, first of all, I'm gonna put that one on my Do not listen to list, . Just check that off right now. Molly . Just kidding. I'm just kidding. [01:00:00] Um, I'm a frequent listener of Radiolab, uh, to W N Y C, New York City based, uh, show, radio show podcast. And they do a lot of science and neuroscience stuff. And this is also not, not an energy and carbon thing, but they had a rewind episode where they go back and they like replay ones from, you know, years ago with Mary Roach.

Uh, she's an author that does like these kind of fun, um, books on all sorts of like, kind of interesting science stuff. Uh, let you kind of Google her and you can show your own conclusions there. But anyway, There was an episode about the microbiome in our guts, and a couple like facts just jumped out at me, that we have, that the average human has four pounds of living things inside of them that aren't them, that aren't us.

Um, in bacteria and other organisms, four pounds, average human. And that four pounds represents, represents this is the real killer. 65% by quantity of all the cells in your body. So only 45% of us by [01:01:00] quantity is actually us. 65% of it is, is something else, which I thought was really interesting to think of that we're just like a walking collection of other things.

And, um, And it also talked about how the bacteria affect our behavior and that there were all these scientists, all these uh, studies showing how they, when they fed them certain things, it, it created different outcomes in, in the living things that they inhabited. And so that's the part that I was really fascinating because you know, when I'm in a bad mood now I have something to

[01:01:27] James Dice: Something to blame it on. Yeah,

[01:01:29] Chris Colasanti: somebody blame it Or not

[01:01:31] James Dice: Or would you make a mistake? Yeah, it was just, it was just my biome,

[01:01:34] Chris Colasanti: It was just my biome, not me. Yeah. ,

[01:01:37] James Dice: uh, well this is fun. Thank you both for, for taking the time to walk through your experiences. It seems like as a, and as an industry. We have, uh, some rolling up of our sleeves to do,

to try to try to answer some of these questions that you guys have raised.

Uh, thank you for, for leading us in that.

Appreciate it

[01:02:00]

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