E-commerce is being transformed by choosing robots and other warehouse automation systems, which reduce the time and costs associated with fulfilling orders. Automation also allows for more compact storage, as robots take up less space than human workers and forklifts. Technology has enabled the construction of micro fulfillment centers or MFCs – compact, automated distribution centers that can be easily deployed in urban areas to better serve customers. This strategy is not possible with conventional distribution centers, as they require a lot of space.
New York's April 2019 Climate Mobilization Act includes Local Law 97 , which is an emissions reduction law for buildings. Starting in 2024, the law will apply emission limits to New York City buildings larger than 25,000 square feet. There is a fine of US$268 per metric ton of CO2 equivalent above the limit, calculated annually. If you are planning a micro-fulfillment center in New York, you may be wondering if the 2019 LL97 will apply?
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Below we will discuss the main cases in which New York's emissions reduction law could affect microfulfillment centers. However, many of them will be exempt thanks to their small size. An MFC is classified as Storage Group S, which is subject to the following limits:
- Period 2024 – 2029: 0.00426 tCO2e/sf
- Period 2030 – 2034: 0.00110 tCOe/sf
Local Law 97 has a goal of reducing building emissions by 40% by 2030 and 80% by 2050. However, specific limits are calculated individually for each building, based on its square footage and occupancy classification.
Urban fulfillment centers smaller than 25,000 SF are exempt
Consider that LL97 only covers buildings larger than 25,000 sf, and a micro-fulfillment center can be deployed in less than 10,000 sf. This means that many MFCs will be exempt from the emissions reduction law thanks to their compact design. However, the following are some cases where LL97 would apply:
- Like any other building, an MFC is subject to LL97 if its area exceeds 25,000 sf.
- Some MFCs are designed to be installed in existing stores, and LL97 applies if the total area is greater than 25,000 sf.
- LL97 also applies to groups of buildings on the same tax lot and with a total area above 50,000 m². This is another case where an MFC of less than 25,000 sf may be affected.
For example, a microfulfillment center with an area of 26,000 sf would be subject to a limit of 111 tCO2e for 2024-2029 and 29 tCO2e for 2030-2034, based on the per square meter limits presented above. However, a smaller MFC with an area of 24,000 m2 would be exempt.
Microfulfillment centers offer many competitive advantages , and in the case of New York you too can avoid LL97 with this emerging technology. For example, you can use an MFC with an area of 20,000 m2 (exempt) instead of a conventional distribution center covering 80,000 m2 (subject to LL97).
Issuance limits for a store and MFC in the same tax batch
Groups of buildings on the same tax lot are subject to 2019 LL97 if the total area exceeds 50,000 sf. To demonstrate how this can affect an MFC, we will assume that a 50,000 m² store (Group M) and a 10,000 m² microservice center (Group S) are in the same tax lot.
- Grupo Mercantil M's emission limits are 0.01181 tCO2e/sf in 2024-2029 and 0.00403 tCO2e/sf in 2030-2034. This means that the store is subject to a limit of 591 tCO2e/year for the first period and 202 tCO2e/year for the second period.
- Normally the MFC would not be affected, but in this case there are two buildings with a combined area over 50,000 sf on the same tax lot. Based on the 10,000 m2 area and Storage Group S classification, the emissions limit is 43 tCO2e in 2024-2029 and 11 tCO2 in 2030-2034.
Adding the emission limits for the two occupancy classifications, we obtain 634 tCO2e for 2024-2029 and 213 tCO2e for 2030-2034. In this case, the MFC is affected by LL97 because it is combined with a store and the total area exceeds 50,000 m2.
Regardless of occupancy classification, energy efficiency measures can help your building meet LL97. A professional MEP engineering firm can provide an energy-efficient design for a new construction or renovation, or an energy audit for an existing building.
