On May 3, 2023, the state of New York enacted the nation's first statewide ban on the installation of fossil-fuel equipment and building systems in certain new construction.

New York has long been a leader in enacting legislation to protect the environment and to reduce greenhouse gas emissions. On May 3, 2023, in connection with the adoption of its 2023-2024 budget, New York amended Section 11-104 of the state's Energy Law (NY ENERGY § 11-104) and Section 378 of the state's Executive Law (NY EXEC § 378) (collectively, "Amendment") to prohibit fossil-fuel equipment and building systems in certain new construction beginning in 2026.

The Amendment provides, among other things, that:

Fossil-fuel equipment uses fossil fuel for combustion, primarily natural gas and propane. Fossil-fuel building systems are those used for the supply, distribution, or delivery of fossil-fuels.

Real estate stakeholders are reeling from the continuing consequences of the pandemic, rising interest rates, demographic and workplace changes, and increasingly tight credit markets. Sweeping government actions to combat climate change can no longer be in doubt. States such as California and Washington have revised their building codes to restrict the use of natural gas. New York's latest legislative effort to reduce greenhouse gas emissions may pressure other states to follow suit further clouding the outlook for real estate. The industry should anticipate an increasingly unpredictable future in which long-term planning is more difficult than ever before.