With mandates like New York City’s Local Law 97 taking effect in 2024 and more investors requiring that projects be more environmentally conscious, real estate developers are scrambling to increase their sustainability efforts and reduce emissions.

While climate financing can help fund green initiatives, only $630B a year has been invested so far to tackle this issue globally, and just a fraction of this money has gone to developing countries.

This sparse investment in climate control resulted in calls at a recent International Energy Agency conference to double efforts to increase energy-efficiency from 2.2% to 4% a year. The goal is to help lead the world to a more secure and affordable pathway to net-zero emissions by 2030.

Capalino, a New York City-based strategic consulting firm, works as an adviser on a variety of energy-efficient projects. The company serves as an intermediary to help companies understand their financing options. Many of them don't have strategies to secure climate financing in place.

“From evaluating funding opportunities to securing the financial package and monitoring compliance, we’re there to provide intermediary services for funding solutions,” Capalino Managing Director Susan Hinkson-Carling said.

Hinkson-Carling added that Capalino helps companies explore these climate financing opportunities in its earliest stages.

“As many of the mandates and benefits are in their nascent stages, it is not often easy to navigate the myriad of programs and how to access these incentives,” she said. “Funding energy-efficient projects requires creative thinking and a holistic approach.”

Capalino Director of Capital Markets Paul Leibowitz said one challenge is in determining the appropriate strategy for existing assets as compared to new developments, which are designed to comply with higher clean energy standards.

He added that Capalino is available to help owners from institutions to co-ops weigh their options and develop strategies by recommending potential sources of funding to secure their capital needs.

Steps that Capalino takes to help clients get funding include reviewing state and federal energy resources available from the Inflation Reduction Act and determining a project’s eligibility and compliance requirements.

“The Capalino team is able to determine sustainability projects impacted by Local Law 97 and their financial needs to make recommendations for a set of state and federal energy incentives for owners to pursue,” Leibowitz said.

Hinkson-Carling said Capalino helps secure financing by taking a deep dive into the overall direction of the project, as well as looking at opportunities to include clean energy solutions in the plan.

Capalino can create a road map to help the client receive funding from both the public and private sectors. While private capital sources may require a company to demonstrate a track record of using sustainable technology and proof of performance, there are also other ways to obtain public financing, Hinkson-Carling said.

“We've been able to use traditional funding sources, like the New York State Energy Research and Development Authority’s grants and loans,” she said. “Also, we look for less traditional sources of climate financing, like discretionary funding from city agencies and elected officials and tax abatements from economic development organizations. To find creative financing, we must look at each project on its own and understand how to leverage all parts of the development to put together a compelling package.”

Leibowitz said there isn’t a one-size-fits-all approach to financing large-scale renewable energy projects — each has its own set of challenges.

“While many owners are under pressure to address climate challenges, it's a complex field that requires strategic expertise in reviewing all methodologies and funding, especially with implementing a plan in NYC’s complicated regulatory environment,” he said. “As a result, it is sometimes necessary to have a competitive bidding process tailored around the goals of a project.”

He added that the goals of the competitive bidding process are to remove any internal or external biases and provide an opportunity for the marketplace to address those individual project needs.

Capalino is able to connect with public and private entities to help break through these difficult barriers to secure more financing for energy-efficient projects.

“Whether it’s a performance contract or a design-build approach, running a bidding process to evaluate strategic partnerships in a competitive and thoughtful way will grow in importance,” Hinkson-Carling said. “We’re here to mobilize our team and engage with different companies and agencies to formulate a compelling energy savings plan that will benefit all parties involved.”

This article was produced in collaboration between Studio B and Capalino. Bisnow news staff was not involved in the production of this content.

Studio B is Bisnow’s in-house content and design studio. To learn more about how Studio B can help your team, reach out to studio@bisnow.com.