Climate Leadership and Community Protection Act Implementation Risk Management

In the summer of 2019 Governor Cuomo and the New York State Legislature passed the Climate Leadership and Community Protection Act (Climate Act) and this summer the implementation process is in full swing.  This post addresses risk management concerns about the implementation process.

I am a retired electric utility meteorologist with nearly 40-years experience analyzing the effects of meteorology on electric operations. I believe that gives me a relatively unique background to consider the potential effects of energy policies related to doing “something” about climate change.  I have written a series of posts on the feasibility, implications and consequences of this aspect of the Climate Act.  The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

Background

The Climate Act establishes a Climate Action Council at §75-0103 that will develop a scoping plan to implement the requirements of the law.  The Citizens Budget Commission developed an overview of the CLCPA targets in Green in Perspective: 6 Facts to Help New Yorkers Understand the Climate Leadership and Community Protection Act.  The current emphasis is implementation of plans to meet the requirement to reduce GHG emissions from electricity production by 70% in 2030 and eliminate them altogether by 2040.  In my opinion, the proponents of the Climate Act believe that meeting the aspirational goal of a carbon-free electric system by 2040 is simply a matter of political will.  I am not nearly as optimistic because every time I look at any aspect of that transition I find unexpected complications, unintended consequences, and ever higher costs.

The basis of this article is work by the Risk Monger, a blog “meant to challenge simplistic solutions to hard problems on environmental-health risks”. The author of the blog, David Zaruk, is an EU risk and science communications specialist since 2000, active in EU policy events and science in society questions of the use of the Precautionary Principle. He is a professor at Odisee University College where he lectures on Communications, Marketing, EU Lobbying and PR. In my opinion, he clearly explains the complexities of risk management and I recommend his work highly.  I found his work apropos to the Climate Act implementation process.

Precautionary Principle

The Precautionary Principle is a strategy to cope with possible risks where scientific understanding is incomplete.  Unfortunately, many rely on this idea that to be safe we have to eliminate all risks as a precaution.  Zaruk explains that the problem is that policy-makers and politicians have confused this uncertainty management tool with risk management.  The conclusion of a recent series of posts on the failures of risk management of the COVID-19 response, while fascinating on its own, also provides a cautionary tale relative to New York’s energy policy and implementation of the Climate Act.

New York’s Climate Act is generally driven by the precautionary principle approach.  New York is trying to remove the risks of climate change impacts despite our lack of complete knowledge about climate variations.  For example, the Regulatory Impact Statement (RIS) for proposed revisions to the Part 242 CO2 Budget Trading Program states that “Overwhelming scientific evidence confirms that a warming climate poses a serious threat to the environmental resources and public health of New York State”.  After pointing out that anthropogenic GHG emissions have increased and that ambient levels of CO2 are “higher than at any point in the past 800,000 years”, the RIS goes on to say “The large and persuasive body of research demonstrates through unequivocal evidence that the Earth’s lower atmosphere, oceans, and land surfaces are warming; sea level is rising; and snow cover, mountain glaciers, and Greenland and Antarctic ice sheets are shrinking”.  In order to confront those risks the Climate Act focuses on greenhouse gas emission reductions but does not include a process to ensure that their cure is not worse than the alleged disease.

Risk Monger’s Risk Management Approach

Zaruk outlines seven steps of risk management:

        1. Scenario Building – all options must be mapped out;
        2. Risk Assessment – collect and refine data and evidence;
        3. Risk Analysis – weigh data against benefits and consequences;
        4. Apply Risk Reduction Measures – identify vulnerable groups and reduce exposures on them;
        5. Risk Communication (Empowerment) – inform public of risks and how to protect themselves;
        6. As Low as Reasonably Achievable (ALARA) – reduce exposures to a reasonable level vis-à-vis social well-being; and
        7. Refine ALARA: continuous exposure reductions – continually lower exposure levels so as to ensure benefits at higher safety levels

If these steps fail, apply the precautionary principle – As benefits and social goods will be lost, this is the last step and should only be temporary

These seven steps are the basis for twelve strategies he proposes as an alternative policy approach for rational discussion.  He believes that using these risk management strategies would have provided a better solution to the COVID-19 crisis and I believe that it would be appropriate to consider his alternative with respect to the Climate Act.

Zaruk argues that the docilian mindset, demanding a world with zero-risk, helped drive a solution that caused economic and social collapse in Western economies trying to reduce the effect of the virus outbreak.  Unfortunately, as he points out, there are influential forces lobbying for even more precaution.  His strategies for better risk management are entirely appropriate to consider with respect to the transition to an energy system that eliminates the use of fossil fuels because of the risks to affordability and reliability.  In the next section I address his strategies in this context.

Risk Management Strategies

The Risk-Monger’s first strategy is to place precaution properly in risk management.  The Climate Act is taking the precautionary step to ban the use of fossil fuels for electric generation by 2040.  Zaruk argues that stopping an activity can have significant consequences so it is more appropriate to implement this kind of stringent policy at the end of the process when “our capacity to prevent harm has failed or the value of the benefits could not be justified”.  The fact is that there are undeniable benefits to fossil fuels and alternative technologies are not well developed which could cause reliability problems and increase costs.  The Climate Act targets put the “cart before the horse” by not evaluating the potential consequences of the alternatives before setting the targets.

Two other strategies are related.  He argues that setting up government risk management units to provide independent oversight and foresight about emerging issues has tremendous value and proposes to have an independent risk assessment process outside of the political process that can present their findings to the public without interference.  Zaruk notes that “While Churchill’s saying: ‘Scientists should be kept on tap, but not on top’ stands as a truism of modern democracies and accountability, it does not mean that political leaders can be allowed to try to hide facts or deny evidence by pressuring their advisers”.  Unfortunately, this is directly opposite of the actions of the Cuomo Administration.  In the summer of 2019 a group of retired Department of Public Service employees submitted a letter that stated “Until the current administration, Governors have generally respected the plain language of the Public Service Law (PSL), which … safeguards the mission of the DPS to serve not political interests but the public interest.”  Based on my private discussions with staff at different agencies, the Governor’s minions micro-manage every decision based on political ramifications. This mindset permeates the state effectively eliminating any criticisms by industry in general and the utility industry in particular.

Zaruk recommends a strategy to promote scenario building in the governance process:

“Contrary to common practice in policymaking today, it is not a sign of weakness to have a Plan B or consider alternative eventualities. Examining a multitude of scenarios allows a risk manager to prepare for any situation, avoid black swans and limit unforeseen consequences. In most cases it is common sense: you better reduce your exposure to risks if you can imagine a wide range of scenarios and likelihoods and suitably prepare for them. “

The Climate Act mandates a scoping plan to implement an energy transition to meet the aspirational goals to reduce GHG emissions.  To me a scoping plan implies that there is no question about feasibility and the plan is simply a matter of picking the components to assemble the plan.  I have my doubts about the feasibility of the Climate Act targets.  There is no question in my mind that in order to prepare for any situation, avoid black swans and limit unforeseen consequences that outreach to many disciplines is necessary.  For example, as a meteorologist, I have spent some time trying to determine renewable resource availability for long duration periods of low renewable resources (most notably a period of calm winds in the winter when solar is at a minimum).  One scenario that I think is necessary is to look short-term at solar resource availability using an existing representative data set.  There has been no indication that state planners are considering the use of that resource.  My expectation is that the scoping plan will develop a narrow set of options that will allegedly meet the targets of the Climate Act but will sacrifice current reliability standards that reflect many different scenarios.

There are two recommended strategies directly at odds with the Climate Act implementation process: ensure expertise lies at the foundation of risk management and bring in different sources of expertise.  Zaruk points out that the European Union had an independent chief scientific advisor but that when there were results that were not politically correct, activist lobbying led to the abolishment of the position.  The position offered the opportunity to double-check policies to make sure that it represents science in the public interest and not just science that represents the most vocal proponents.  He explains that “Risk management needs to be based on the best evidence, not the strongest political ideology but as precaution serves as an easy, expedient, blameless solution, the battle to undo its dominance will be challenging”.  Such a function would be useful in New York but in the current Administration is clearly a non-starter.

He goes on to explain the need for different sources of expertise by noting that “limiting your advice pool is how mistakes are made”.    He states:

“I can’t count how many times in 2020 I have heard people talk about “the” science as if you simply needed to put a question into a machine and the answer would come out. Science is complex, often contested and defines itself by a method of challenging its theories and paradigms. Only consensus-loving neophytes (and a Swedish teenager) would talk about “the” science as if it meant something certain. Part of the risk management process is to plan out scenarios based on the best available scientific voices at that time.”

The Climate Action Council mandated to develop the scoping plan to implement the Climate Act ignores the importance of expertise.  The Council has 22 voting members: 12 political appointees who head various agencies and the rest non-agency experts: two appointed by the governor, three each appointed by majority leaders of the Assembly and Senate and one each appointed by the minority leaders of the Assembly and Senate.  The ten at large members shall “include at all times individuals with expertise in issues relating to climate change mitigation and/or adaptation, such as environmental justice, labor, public health and regulated industries”. In my opinion, it is lunacy that the Council that is supposed to determine how the future energy system of the state is supposed to operate does not specify energy system expertise as a criterion.  The bottom line is that none of these 22 people have relevant expertise for choosing options for a reliable energy system.

The only hope for New York’s future energy system is the requirement that the “The council shall convene advisory panels requiring special expertise and, at a minimum, shall establish advisory panels on transportation, energy intensive and trade-exposed industries, land-use and local government, energy efficiency and housing, power generation, and agriculture and forestry”. The advisory panels are charged “to provide recommendations to the council on specific topics, in its preparation of the scoping plan, and interim updates to the scoping plan, and in fulfilling the council’s ongoing duties”.  My concern is that it is not clear how any of these panels can provide recommendations that are inconsistent with the agendas of the Council that is weighed so heavily for those who believe that the meeting the goals is simply a matter of political will.  The plan for the Climate Act is directly at odds with these risk management expertise strategies.

Zaruk states that the key to risk management is that we should not be aiming for safe, but rather safer.  He defines this step: “As Low as Reasonably Achievable (ALARA)” and includes a strategy to use ALARA as a return to risk realism.  He explains:

“This zero-risk mindset, this demand for total safety, is built on a false objective. We should not be aiming for safe, but rather safer. But what level of safer is safe enough? Like any situation with uncertainty, it depends on the circumstances, needs and realities. If you are dying of thirst in a desert, what level of water purity will you accept? This is always a question of what is reasonably achievable. The principle goal for risk managers is to reduce exposure to hazards (risks) to as low as reasonably achievable”.

He explains what goes in ALARA:

“Some say it is simply a cost-benefit analysis (and then they would add that you cannot put a price on a human life). Every risk is different (to everyone) and the variables affecting our reasoning range from resources, available equivalent alternatives, time to undesired consequences, public perception of the risk, traditional practices, accountability, trust relations and the public willingness to change certain lifestyle habits.”

My primary concern with the Climate Act is the risk to electric system reliability that will occur when the system has to rely on intermittent and diffuse renewable energy.  There is a related principle particularly applicable to the Climate Act.  The Pareto principle states that, for many events, roughly 80% of the effects come from 20% of the causes. The primary worry here, in the absence of using an ALARA strategy, is that 80% of the risks to the electric system will occur as the amount of fossil fuel use goes below 20% of the total.  As noted before, I expect the primary problem will be the need for dispatchable electric power when renewable resources are low (think a calm period in the winter when solar resources are weak).  The great advantage of fossil-fired power plants is dispatchability and the risks of losing this firm capacity must be evaluated.

He concludes this strategy as follows:

 “There is no one rule guiding risk management as ALARA. Each situation looks at what is reasonable and what is achievable. Dreamers and idealists want a world that is simply unachievable; pragmatists could probably achieve more. Continuous improvement is a key element to ALARA. It is not just to lower the risk to what is reasonably achievable, but to then push that exposure reduction even lower … continuously in an iterative, reasonable process.”

Zaruk also recommends some long-term strategies that are not directly applicable to Climate Act implementation but would serve New York’s policy process well.  They all relate to public education and I think the primary target should be politicians and policy making bureaucrats.  He suggests that we all need to accept that risk management is not about assuring 100% safe and that means we have to abandon the precautionary logic.  In order to manage the expertise necessary for risk assessment we need to develop a viable means for public consultation.  With that in place then we can create a community trust/communication mechanism.  All this can promote a risk resilient population.

Conclusion

I spend a lot of time writing about the oncoming train wreck of New York’s Climate Act.  I wrote this hoping someone, somewhere with some influence might pick up on the need to step back and assess the risks of trying to meet the aspirational goals.  Zaruk has much more influence but is frustrated by the fact that the precautionary principle is driving so much current policy.  His conclusion, after writing 15 articles on the response to COVID-19, is what I expect to be the likely outcome of the Climate Act on its present trajectory:

“I do not have the millions of euros of foundation-fed interests, the guru-led tribal passion or activist-driven fear-making machinery of the privileged zealots. What that crap-cash has bought them over the past two decades (relying on a misplaced precautionary policy tool) is expedience, irresponsibility and catastrophic risk management failure. And now as these relentless fundamentalists line up again at the public trough, we are facing economic collapse, famine and their insistence on even more precaution.”

Investment of RGGI Proceeds Report for 2018

This is the third installment of my annual updates on the Regional Greenhouse Gas Initiative (RGGI) annual Investments of Proceeds update.  This post compares the claims about the success of the investments against reality.

I have been involved in the RGGI program process since its inception.  I blog about the details of the RGGI program because very few seem to want to provide any criticisms of the program. The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

Background

RGGI is a market-based program to reduce greenhouse gas emissions. It is a cooperative effort among the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont to cap and reduce CO2 emissions from the power sector.  According to a RGGI website: “The RGGI states issue CO2 allowances which are distributed almost entirely through regional auctions, resulting in proceeds for reinvestment in strategic energy and consumer programs. Programs funded with RGGI investments have spanned a wide range of consumers, providing benefits and improvements to private homes, local businesses, multi-family housing, industrial facilities, community buildings, retail customers, and more.”  Note that New Jersey has re-joined RGGI and Virginia will be joining in 2021.

The latest update was released on July 29, 2020.   The Investment of RGGI Proceeds in 2018 report tracks the investment of the RGGI proceeds and the benefits of these investments throughout the region. According to the report, the lifetime benefits of RGGI investments made in 2018 include:

        • $2 billion in lifetime energy bill savings
        • 4.6 million short tons of CO2 emissions avoided

RGGI notes that “The largest share of the investments was directed to energy efficiency, with 38% of the 2018 total. Greenhouse gas abatement programs, which include carbon-reducing beneficial electrification projects, received 20% of 2018 investments. 19% of investments were directed to clean and renewable energy programs, with direct bill assistance receiving 16%.”

Although proponents claim that this program has been an unqualified success I disagree.  I believe that the report mis-characterizes some of the numbers relative to the value of the program as an emission reduction approach.  This is because they present “lifetime” benefits of the investments.  Everyone is talking about emissions reductions from some annual value, usually 1990.  In order to determine effectiveness to meet those goals the only benefits that count are annual reductions due to RGGI.  While it may be appropriate to document the lifetime dollar savings for energy efficiency, I am convinced that using lifetime values for any other parameter is bogus.

Emissions Reductions

The first mis-leading statement claims that “As a whole, the RGGI states have reduced power sector CO2 pollution over 50% since 2005, while the region’s gross domestic product has continued to grow”. The first year of the RGGI program was 2009, when the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont emitted 108,487,823 tons of CO2.  Their comparison starting date was 2005 when the emissions from those nine states equaled 147,032,069 tons.  The insinuation in the 50% claim is that the RGGI program had something to do with the reduction but the reduction between 2005 and the start of the program was 26% so clearly something else has been going on.  This report was for 2018 and those states emitted 75,177,614 tons of CO2 so my estimate of the reduction since 2005 is 49%. Data are listed in the State-Level CO2 Emissions for Nine RGGI States 2005 to 2019 table. I used the EPA Clean Air Markets Division Data and Maps query tool to download the emissions from all programs by state for the period 2005 to 2018 so slight differences could be due to the data  used.

The important question is why did the emissions go down.  I believe that the real measure of RGGI emissions reductions success is the reduction due to the investments made with the auction proceeds so I compared the annual reductions made by RGGI investments.  The biggest flaw in this report is that it does not provide the annual RGGI investment CO2 reduction values accumulated since the beginning of the program.  In order to make a comparison to the CO2 reduction goals we have to sum the values in the previous reports to provide that information.  The table Accumulated Annual Regional Greenhouse Gas Initiative Benefits Through 2018 lists the annual avoided CO2 emissions generated by the RGGI investments from four previous reports as well as the lifetime values.  The accumulated total of the annual reductions from RGGI investments is 3,091,992 tons while the difference between total annual 2005 and 2018 emissions is 71,854,455 tons.  The RGGI investments are only directly responsible for 4% of the total observed annual reductions over the 2005 to 2018 timeframe!  I believe that the average of the three years before the program started is a better baseline and using that metric there was a 52,116,796 annual ton reduction (41%) to 2018 and RGGI investments accounted for only 6%.

Cost Efficiency

One way to determine if the GHG emission reduction costs are an effective tool is to compare the cost per ton reduced against a damage metric.  The social cost of carbon (SCC) is the metric used by Federal agencies for this purpose.  It is the present-day value of projected future net damages from emitting a ton of CO2 today.  I recently posted an overview summary of the SCC as used in New York. but for the purposes of this post you need to know that the values range widely depending on assumptions.  For example, if you use a discount rate of 3% and consider global benefits like the Obama-era Environmental Protection Agency (EPA) did then the 2020 SCC value is $50.  On the other hand, the current Administration interim SCC value is $7 for a 3% discount rate and $2 for a 5% discount rate that represents only benefits to the United States.  The Institute for Policy Integrity report “Expert Consensus on the Economics of Climate Change” projected a higher 2020 SCC value of ~$140 based on a survey of experts.  A 2015 paper in Nature Climate Change “Temperature impacts on economic growth warrant stringent mitigation policy” suggest that the SCC value should be $220.

The Accumulated Annual Regional Greenhouse Gas Initiative Benefits Through 2018 table lists the data needed to calculate the RGGI CO2 reduction cost per ton.  From the start of the program in 2009 through 2018 RGGI has invested $2,775,635,415 and reduced annual CO2 emissions by 3,091,992 tons.  The cost per ton reduced result, $898 per ton reduced, is four times greater than the highest SCC value and two orders of magnitude greater than the current EPA SCC value for United States benefits.

The RGGI report also provides mis-leading cost per ton reduced information.  Chart 5, RGGI Investments as a Subset of Total Proceeds states that RGGI Investments totaled $2,578,305,737 through 2018 and Table 6: All-Time Benefits of RGGI Investments states that 39,359,169 tons of CO2 were avoided.  Using those two numbers to calculate the cost per ton avoided gives a value of $65.51, which compares much better to the SCC values presented before.  Unfortunately, that approach is wrong.  All the political target reductions are based on emissions from a given year.  Therefore, the cost per ton reduced must only consider annual avoided tons.

Conclusion

The fact is that, for policy purposes, the annual reductions from RGGI have to be considered because that is the “apples to apples” comparison.  It is very disappointing that the RGGI investment reports no longer report the accumulated annual reductions.  I have to believe the reason why is because the values appropriate for determining the effectiveness of this program as a control program reflect so poorly on the program.

There is another change in the reported values between the 2018 report and previous reports that is troubling.  Until this report the first table listed the annual and life-time benefits of that year’s investments for eight categories.  The 2018 report only lists the benefits for two categories: energy bill savings and total CO2 avoided.  I guess showing that the investments in 2017 only managed to train 83 workers was not deemed important enough to include for 2018.

Reductions of CO2 directly attributable to investments made from the auction proceeds only total 4% of the observed CO2 reductions from 2005 to 2018 and only 6% from a representative background before the program started until 2018.  Those poor results combined with $2.6 billion investments costs result in a nearly $900 cost per ton of CO2 reduced.  That value far exceeds the social cost of carbon value contrived to prove the value of CO2 reductions.

Court Decision: Interim Social Cost of Greenhouse Gas Metric

This article was also posted at Watts Up With That

Recently a federal district judge found that the Bureau of Land Management (BLM, sorry it was their acronym first) arbitrarily relied on an aggressively scaled-back social cost of greenhouse gases metric to justify a rollback of methane standards for oil and gas equipment.  This post summarizes the decision, the reaction of the trade press, and a discussion on the background of the issue.

Background

The General Accounting Office (GAO) published a report to Congressional requesters, Social Cost of Carbon: Identifying a Federal Entity to Address the National Academies’ Recommendations Could Strengthen Regulatory Analysis, that provides good background information on the current controversy regarding the valuation of greenhouse gas emission climate impacts used by Federal agencies.  The Social Cost of Carbon (SCC) is the metric most commonly used and represents the long-term net economic damages associated with an incremental increase in carbon dioxide or other greenhouse gas emissions in a given year.  In 2009, the Office of Management and Budget and the Council of Economic Advisers convened the Interagency Working Group on Social Cost of Carbon (IWG) to develop government-wide estimates of the social cost of carbon for federal agencies to use in conducting regulatory cost-benefit impact analyses for rulemaking.  The IWG issued updates to the Technical Support Document that included revised estimates of the social cost of carbon in 2013, minor technical corrections in 2015, and enhanced discussion of uncertainties around the estimates in 2016.

In 2016, the BLM promulgated a rule to reduce waste of natural gas from venting, flaring, and leaks during oil and natural gas production activities on onshore Federal and Indian leases.  The benefits out-weighed the costs primarily because the social cost of methane, same idea as the social cost of carbon, IWG values showed benefits.  On March 28, 2017, President Trump issued Executive Order 13783, “Promoting Energy Independence and Economic Growth,” directing the BLM to review the 2016 rule and, if appropriate, to publish proposed and final rules suspending, revising, or rescinding it.  An interim SCC value was prepared as part of the Executive Order  The BLM reviewed the 2016 rule and determined that it would have imposed costs exceeding its benefits based on the interim SCC values and on September 28, 2018 rescinded the rule after determining that it would have imposed costs exceeding its benefits.

The GAO report was prepared to explain the differences between the IWG values and the interim values.  It found “Although both the prior and current estimates were calculated using the same economic models, two key assumptions used to calculate the current estimates were changed: using (1) domestic rather than global climate change damages (see table) and (2) different discount rates (3 and 7 percent rather than 2.5, 3, and 5 percent). As a result, the current federal estimates, based on domestic climate damages, are about 7 times lower than the prior federal estimates that were based on global damages (when both prior and current estimates are expressed in 2018 US dollars and calculated using a 3 percent discount rate).” 

The litigation in question only focused on the adequacy of the Rescission, and not the 2016 Rule itself. In this regard, Judge Yvonne Gonzalez Rogers of the U.S. District Court for the Northern District of CA found “that the rulemaking process resulting in the Rescission was wholly inadequate”.  I am only going to focus on one aspect of the decision – the cost benefit calculation.  The Court analyzed whether BLM acted in an arbitrary and capricious manner in using a new model, the “interim domestic” social cost of methane, for its analysis in enacting the Rescission, instead of using the previous social cost of methane model that was developed and used for the 2016 rule.

Trade Press Reaction

The environmental trade press discussed the flaws Rogers used for her decision. Bloomberg Law said the judge “rebuked the Bureau of Land Management for eliminating Obama-era restrictions on releases of the potent greenhouse gas from oil and gas infrastructure on public and tribal lands” and that “Her opinion included a detailed assault on how the land agency used a metric called the social cost of methane, calling the approach ‘riddled with flaws’”.  The Hill quoted parts of the decision: “In its haste, BLM ignored its statutory mandate under the Mineral Leasing Act, repeatedly failed to justify numerous reversals in policy positions previously taken, and failed to consider scientific findings and institutions relied upon by both prior Republican and Democratic administrations” and “In its zeal, BLM simply engineered a process to ensure a preordained conclusion” In the decision’s conclusion she said:  “Where a court has found such widespread violations, the court must fulfill its duties in striking the defectively promulgated rule.”  Energy & Cleantech Counsel discussed the implications of the rejection of BLM’s redefinition of the social cost of methane on other rules.

The environmental activist trade press, not surprisingly, thought the decision was good.  One headline crows: Court Slaps Down Trump Administration’s Rollback Of Methane Rule and another article states “Since the first day they came into office, the Trump administration has sought and failed to undermine the Methane Waste Prevention Rule at every turn – in Congress, through the regulatory process, and in the courts. Today’s ruling shows their efforts are illegal, and provides for the reinstatement of common sense protections that are in the best interest of the American public,” said EDF senior attorney Rosalie Winn.”

Decision Rationale Discussion

In the Costs Exceeded Benefits section of the decision there is a sub-section giving the Court’s background description.  For this discussion, the following is the relevant text, absent footnotes and the legal references:

“In 2016, to estimate the benefits of reducing methane emissions, BLM drew upon the conclusions of an Interagency Working Group (“IWG”) founded under the Administration of George W. Bush. The IWG was specifically organized to develop a single, harmonized value for greenhouse gas emissions for federal agencies to use in their regulatory impact analyses for rulemaking under Executive Order 12866. The IWG’s approach, known as the social cost of greenhouse gases, estimates the present value of the damages caused from each additional ton of greenhouse gas emitted at a point in time, or conversely, the present value of the benefits from reducing a ton of greenhouse gas emissions. As the IWG stated in 2015, these damages must be considered globally “because emissions of most greenhouse gases contribute to damages around the world and the world’s economies are now highly interconnected.” This approach was developed over several years through robust scientific and peer-reviewed analyses and public processes, and represents the best available science on this issue. (Notably, federal agencies have relied on the IWG’s valuation of the impacts of greenhouse gas emissions in rulemaking since 2009, and courts have upheld this approach.”

Firstly, a clarification note.  This paragraph refers to the social cost of greenhouse gases rather than the social cost of carbon.  Carbon dioxide is not the only greenhouse gas and this regulation specifically addressed methane.  The IWG ”Addendum Valuing Methane and Nitrous Oxide Emission Changes in Regulatory Benefit-Cost Analysis” argues that using directly calculated societal cost values for methane and other non-CO2 greenhouse gases rather than global warming potential values (i.e. converting them to CO2 equivalents) is more appropriate. 

The simplistic argument that the social cost of greenhouse gases must be considered globally because it is a global problem overlooks the fact that the rationale for the IWG work was to evaluate costs and benefits of regulations in the United States.  The Federal requirements for these analyses all call for assessments based on national, not global impact. See, for example, discussion by Gayer and Viscusi.

The paragraph notes “This approach was developed over several years through robust scientific and peer-reviewed analyses and public processes, and represents the best available science on this issue”.  While this sounds impressive and scientific the reality is different.  In 2016, when the IWG was preparing their analyses, they noted that “new estimates of the social cost of non-CO2 GHG emissions have been developed in the scientific literature, and a recent study by Marten et al. (2015) provided the first set of published estimates for the social cost of CH4 and N2O emissions that are consistent with the methodology and modeling assumptions underlying the IWG SC-CO2 estimates”.

During the earlier iteration of the IWG work the US Environmental Protection Agency (EPA) realized that a social cost of gases other than CO2 were needed and found that there was a “paucity of peer-reviewed estimates of the social cost of non-CO2 gases in the literature”.  In response the EPA National Center for Environmental Economics developed estimates of the social cost of methane and nitrous oxide consistent with the methodology and modeling assumptions underlying the IWG SCC estimates.  Their work was published in two papers: Marten, A.L., and S.C. Newbold. 2012. Estimating the social cost of non-CO2 GHG emissions: methane and nitrous oxide Energy Policy 51: 957-972 (paywalled) and Marten, A.L., Kopits, E.A., Griffiths, C.W., Newbold, S.C., and A. Wolverton. 2015. Incremental CH4 and N2O Mitigation Benefits Consistent with the U.S. Government’s SC-CO2 Estimates. Climate Policy. 15(2): 272-298 (published online, 2014). (Paywalled)

I suspect that I am not the only one suspicious when an agency prepares a study that forms the basis of the regulatory metric proposed by other agencies.  I question the independence of the results in that approach.  Ultimately, the work and findings of agency work go through political appointees before they are released and there is no question that process motivates particular outcomes.  In anticipation of such cynicism the Addendum states:

“The methodology and estimates described in this addendum have undergone multiple stages of peer review and their use in regulatory analysis has been subject to public comment. With regard to peer review, the study by Marten et al. (2015) was subjected to a standard double-blind peer review process prior to journal publication. In addition, the application of these estimates to federal regulatory analysis was designated as Influential Scientific Information (ISI), and its external peer review was added to the EPA Peer Review Agenda for Fiscal Year 2015 in November 2014. The public was invited to provide comment on the peer review plan, though EPA did not receive any comments. The external peer reviewers agreed with EPA’s interpretation of Marten et al.’s estimates; generally found the estimates to be consistent with the approach taken in the IWG SC-CO2 estimates; and concurred with the limitations of the GWP approach, finding directly modeled estimates to be more appropriate. All documents pertaining to the external peer review, including a white paper summarizing the methodology, the charge questions, and each reviewer’s full response is available on the EPA Science Inventory website.”

I had no idea that the EPA Science Inventory website existed so I looked up this reference. According to the peer review plan: a contractor picked three reviewers, the public, including scientific or professional societies was not asked to nominate peer reviewers, no public nominations were allowed through the Peer Review Agenda, the Agency did not provide significant and relevant public comments to the peer reviewers before they conducted their review, the review was not a public panel, and public comments were not allowed at the panel review.  The fact that no comments were received from the public suggests that this was not well publicized and I am annoyed that the papers are paywalled when my tax dollars paid for the work.  Having to pay for the privilege to review their work is not inclusive.

EPA asked the three external reviewers recommended by a contractor to provide comments: Karen Fisher-Vanden, Professor of Environmental and Resource Economics, Director, Institute for Sustainable Agricultural, Food, and Environmental Science (SAFES), and Co-Director, Program on Coupled Human and Earth Systems (PCHES) at Penn State College of Agricultural Sciences; John Reilly, Senior Lecturer, Sloan School of Management and Co-Director, MIT Joint Program on the Science and Policy of Global Change at the Massachusetts Institute of Technology; and Steven Rose, Energy and Environmental Analysis Research Group, Electric Power Research Institute.  All three are well-qualified to review the work but I have this nagging concern that the reviewers from academia would be reluctant to provide negative feedback lest it affect review of future funding.

The request for peer review focused on the mechanics of vetting the Addendum.  The Science Inventory includes a peer review report that describes the process.  EPA developed a white paper, Valuing Methane Emissions Changes in Regulatory Benefit-Cost Analysis, that described the problem, the two different approaches for estimating societal valuation of impacts, the limitations of the global warming potential approach (GWP), and then developed its estimate of the direct estimation social costs.  The reviewers were asked seven questions about the white paper and the primary Marten et al. reference.  The peer review report includes the responses from the three reviewers and concludes with a summary and response description: 

“EPA recently conducted a peer review of the application of the Marten et al. (2014) non-CO2 social cost estimates in regulatory impact analysis (RIA). Three reviewers considered seven charge questions that covered issues related to the EPA’s interpretation of the estimates, the consistency of the estimates with the social cost of carbo estimates used in RIAs, EPA’s characterization of the limits of the alternative GWP approach to approximate the social cost of non-CO2 GHGs, and the appropriateness of using the Marten et al. estimates in RIAs. The reviewers agreed with EPA’s interpretation of Marten et al.’s estimates; generally found the estimates to be consistent with the social cost of carbon estimates; and concurred with the limitations of the global warming potential approach, finding directly modeled estimates to be more appropriate.”

Judge Rogers claimed that the approach used was “developed over several years through robust scientific and peer-reviewed analyses and public processes”.  I do not accept that the social cost of methane developed by one group, published in two papers, and peer-reviewed by three people is robust science. 

If you are interested in the social cost of GHG emissions metric, the peer review report is a worthwhile read.  It explains the metric and problems well and the comments from the experts indicate that there are significant issues that need to be resolved. 

Conclusion

When judges make decisions based on the “science”, the results generally reflect more their biases than the science itself.   The opinion by Judge Rogers reversed the recission because it “failed to consider scientific findings and institutions relied upon by both prior Republican and Democratic administrations” and “In its zeal, BLM simply engineered a process to ensure a preordained conclusion.”  Based on a review of the specific scientific findings used to develop the social cost of methane the same conclusions could be said for the metric developed by the IWG.

The bigger problem in my opinion, is an inappropriate reliance on peer review in the regulatory process.  Peer review focuses on the veracity of a specific scientific problem.  Even if the validity of the analysis is not subject to the value judgements of the use of certain parameters and assumptions, peer review does not address the needs of the public affected by the regulation.

The social cost of greenhouse gas emissions is a particularly important metric for any emission reduction program related to global warming.  Although there have been some attempts to describe the parameter and how it is used, the thing that is missing is an explanation of the impacts of the input parameters for the layman.  Consider the choice whether the benefits should be considered globally or nationally.  While climate change is a global problem, I am sure the public generally does not understand that the money that they have to spend for emission reductions provide minimal direct benefits to themselves or their families because most of the benefits are elsewhere on the globe.  I am positive that they don’t understand that the calculations of the benefits extend out 300 years and that the majority of expected benefits occur in the later years.  Surely there is a limit to how much they would be willing to pay for such a low payback on their investments?

Climate Leadership and Community Protection Act White Paper Comment

In the summer of 2019 Governor Cuomo and the New York State Legislature passed the Climate Leadership and Community Protection Act (Climate Act) and this summer the implementation process is in full swing.  I have written a series of posts on the feasibility, implications and consequences of this aspect of the law based on evaluation of data.  This post documents comments  I submitted to the New York Department of Public Service (DPS) on the White Paper on Clean Energy Standard Procurements to Implement New York’s Climate Leadership and Community Protection Act (White Paper).

I am a retired electric utility meteorologist with nearly 40-years experience analyzing the effects of meteorology on electric operations. I believe that gives me a relatively unique background to consider the potential effects of energy policies related to doing “something” about climate change.  The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

I am following the implementation of the Climate Act because I believe it will affect the affordability and reliability of New York’s energy.  The White Paper outlines how the DPS proposes to provide subsidies to get sufficient renewable resources built to meet the Climate Act targets.  I submitted comments because the definition of “renewable energy systems” as amended in the public service law with the addition of section 66-p is inconsistent with the reliability of the future electric system.

Renewable Energy System Definition

The Climate Act states:

      • 66-p. Establishment of a renewable energy program.
        1. As used in this section:

(b) “renewable energy systems” means systems that generate electricity or thermal energy through use of the following technologies: solar thermal, photovoltaics, on land and offshore wind, hydroelectric, geothermal electric, geothermal ground source heat, tidal energy, wave energy, ocean thermal, and fuel cells which do not utilize a fossil fuel resource in the process of generating electricity.

Problem

At the second Climate Action Council meeting on June 24, 2020 Energy and Environmental Economics (E3) presented results from their report “Pathways to Deep Carbonization in New York State”.  I have analyzed options for the future Climate Act electric system and agree with their concern about multiple-day periods when wind and solar resources could provide negligible power to the grid.  The report notes that “This long-duration (interday) challenge can be solved through a combination of large-scale hydro resources, renewable natural gas (RNG) or synthetic fuels such as hydrogen, Carbon Capture Storage (CCS), and nuclear power”.  During the question and answer period following the presentation, Climate Action Council members argued that RNG was not acceptable because it was not included in the definition of renewable energy systems.  In my opinion, there are two problems with the definition in that light: firm capacity and air source heat pumps.

E3 explains in their report that “Firm capacity is the amount of energy available for power production which can be guaranteed to be available at a given time. As the share of variable resources like wind and solar grows substantially, firm capacity resources will be needed to ensure year-round reliability, especially during periods of low renewables output.”  The options that they included in their deep carbonization pathway included two that are unlikely sources of much additional capacity in New York, large-scale hydro and nuclear, because of development concerns while two others, synthetic fuels and carbon capture storage, are only at the demonstration technical readiness level according to the International Energy Agency.  That leaves RNG as the most likely source of firm capacity.  Based on my work I believe that the alternative approach of using energy storage for this application will be a major technological challenge and surely will be extraordinarily expensive so excluding RNG would make providing firm capacity more difficult.  Therefore, I recommend that this technology not be rejected due to the magnitude of the firm capacity problem.

The argument that RNG is not a “renewable energy system” is based entirely on the fact that it is not explicitly included in the definition.  Note, however, that “geothermal ground source heat” is included but air source heat pumps are not.  As a result, then does that also mean the air source heat pumps are not an acceptable technology to meet the requirements of the Climate Act?  In order to meet the GHG emission reduction targets electrification of heating will be necessary.  Because air source heat pumps are cheaper and easier to install than ground source heat pumps, they are the preferred alternative.  Because this resource is necessary for the Climate Act it should be considered a renewable energy system even though it is not explicitly included in the definition.

Conclusion

It will be interesting to see whether RNG is accepted as a renewable energy system.  I have no doubt that it was deliberately excluded from the Climate Act definition because some well-connected but naïve lobbyist successfully argued to exclude that technology.  I don’t know why this technology is unacceptable but the fact is that in order to provide sufficient electric power during the long-duration low renewable resource periods New York needs as many sources of firm capacity as possible.  I believe that E3 knows this and had to propose the technology in order to reduce the need for energy storage.  They have not provided cost estimates yet but they know the numbers will be staggering if the necessary firm capacity has to be provided by battery energy storage.  The naïve opponents of RNG must not understand this inconvenient truth.

One final note, while I believe that RNG is needed, I do not believe it will solve the problem.  There simply are not enough sources of RNG that can provide enough stored gas to make much of a difference for the critical long-duration low renewable resource period peak load when that load includes electrification of heating and vehicles.

Climate Leadership and Community Protection Act Value of Carbon

In the summer of 2019 Governor Cuomo and the New York State Legislature passed the Climate Leadership and Community Protection Act (Climate Act) and this summer the implementation process is in full swing.  I have written a series of posts on the feasibility, implications and consequences of this aspect of the law based on evaluation of data, but those posts are generally technically oriented.  A key component in this process is the Value of Carbon or Social Cost of Carbon which is supposed to place a price on emissions of greenhouse gases (GHG) relative to climate change impacts  Because the concept is complicated and important for the implementation and justification of the Climate Act and I have prepared this is a non-technical summary to explain to those outside the bubble of this process what this means.

I am a retired electric utility meteorologist with nearly 40-years experience analyzing the effects of meteorology on electric operations. I believe that gives me a relatively unique background to consider the potential effects of energy policies related to doing “something” about climate change.  The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

Background

The Climate Act establishes a Climate Action Council at §75-0103 that will develop a scoping plan to implement the requirements of the law.  The Citizens Budget Commission developed an overview of the CLCPA targets in Green in Perspective: 6 Facts to Help New Yorkers Understand the Climate Leadership and Community Protection Act.  The current emphasis is implementation of plans to meet the requirement to reduce GHG emissions from electricity production by 70% in 2030 and eliminate them altogether by 2040. 

This post addresses section § 75-0113 in the law.  In that section the Climate Act explicitly mandates how the value of carbon will be determined:

  1. No later than one year after the effective date of this article, the department, in consultation with the New York state energy research and development authority, shall establish a social cost of carbon for use by state agencies, expressed in terms of dollars per ton of carbon dioxide equivalent.
  2. The social cost of carbon shall serve as a monetary estimate of the value of not emitting a ton of greenhouse gas emissions. As determined by the department, the social cost of carbon may be based on marginal greenhouse gas abatement costs or on the global economic, environmental, and social impacts of emitting a marginal ton of greenhouse gas emissions into the atmosphere, utilizing a range of appropriate discount rates, including a rate of zero.
  3. In developing the social cost of carbon, the department shall consider prior or existing estimates of the social cost of carbon issued or adopted by the federal government, appropriate international bodies, or other appropriate and reputable scientific organizations.

Value of Carbon

The law states that “The social cost of carbon shall serve as a monetary estimate of the value of not emitting a ton of greenhouse gas emissions”. The Social Cost of Carbon (SCC) is the present-day value of projected future net damages from emitting a ton of CO2 today.  The idea is that New York will calculate the dollar-value of the Climate Act’s effect on climate change due to changes in greenhouse gas emissions. 

What that means to the public is when the costs of the control strategies proposed to meet the Climate Act targets are announced they will be compared to the benefits calculated using this metric, and, presumably will show that the benefits out-weigh the costs.  For example, a recent report contains this paragraph:

“NYSERDA estimates that the proposed Tier 1 procurements, as set out in Section II.c.1 below, – from 2021 to 2026 – would lead to a levelized impact on electricity bills of less than 0.5% (or $0.35 per month for the typical residential customer). Taking into account the value of the avoided carbon emissions, these procurements are estimated to yield a net benefit of around $7.7 billion over the lifetime of the projects.”

The net benefit of $7.7 billion is certainly impressive, however, it is important to understand how the value was calculated in order to determine whether the alleged benefits are valid.  In the following I will interpret specific statements in the Climate Act.

According to the Climate Act: “As determined by the department, the social cost of carbon may be based on marginal greenhouse gas abatement costs or on the global economic, environmental, and social impacts of emitting a marginal ton of greenhouse gas emissions into the atmosphere, utilizing a range of appropriate discount rates, including a rate of zero”.  The department referred to is the New York State Department of Environmental Conservation.

The first SCC basis possibility would be “based on marginal GHG abatement costs”. In this application, the marginal cost measures the cost to reduce a ton of greenhouse gas.  Presumably the goal is to develop a Marginal Abatement Cost Curve which is “a succinct and straightforward tool for presenting carbon emissions abatement options relative to a baseline (typically a business-as-usual pathway)”. This curve “permits an easy to read visualization of various mitigation options or measures organized by a single, understandable metric: economic cost of emissions abatement”.  For each control option, a block with width equal to the amount of potential reductions and height equal to marginal cost of the option is prepared.  An example, based on the widely cited 2007 McKinsey & Company study and reproduced for the King County Strategic Climate Action Plan, is shown below combining various measures from different sectors.  Note that if there are sufficient savings from the energy efficiency measure, consider residential lighting in this example, then those benefits out-weigh the costs and the marginal abatement cost is negative.

The second Climate Act carbon value alternative is “the global economic, environmental, and social impacts of emitting a marginal ton of greenhouse gas emissions into the atmosphere and that refers to the SCC.

In order to estimate the SCC impact of today’s emissions it is necessary to estimate total CO2 emissions, model the purported impacts of those emissions and then assess the global economic damage from those impacts.  The future projected global economic damage is then converted to present value. Finally, the future damage is allocated to present day emissions on a per ton basis to get the SCC value.  The SCC is already used in New York to, for example, determine the value of “zero emission credits” which is a subsidy to generating nuclear facilities.

There are value-judgement choices in each step of the SCC calculation process.  As shown below different choices in only two of the many parameters lead to an Obama-era SCC value of $50 in 2020 vs. the current SCC value of $7 in 2020.  Needless to say the difference of over seven times in this value has an impact on cost benefit calculations.

To this point New York has used the Obama Administration’s SCC values developed by the Interagency Working Group on the Social Cost of Carbon (IWG).  In 2017, President Trump signed Executive Order 13783 which, among other actions, disbanded the IWG and stated that the estimates generated by the Interagency Working Group were not representative of government policy.  Currently Federal projects use SCC estimates based on the same approach as the IWG that differ in two aspects: the only damages that were considered were those in the United States and different values were used to convert to present costs. 

Figure 1: Prior and Current Federal Estimates of the Social Cost of Carbon Dioxide in 2018 U.S. Dollars, 2020-2050 from the recent GAO report show that changing just those two variables results in very different damage estimates.  As shown in the table below, at the common 3% discount rate, the prior federal estimate and the one currently used in New York was $50 but the current federal estimate is only $7. 

Prior and Current Federal Estimates of the Social Cost of Carbon, per Metric Ton, at a 3 Percent Discount Rate in 2018 U.S. Dollars

 
Year of emissionsPrior estimates (based on global climate change damages)Current estimates (based on domestic climate change damages)
2020$50$7
2030$60$8
2040$72$9
2050$82$11

Source: GAO analysis of data from the Interagency Working Group on Social Cost of Greenhouse Gases, EPA, and the United States Gross Domestic Product Price Index from the U.S. Department of Commerce, Bureau of Economic Analysis. | GAO-20-254

Initially, the social cost of carbon sounds like authoritative science.  However, the differences boil down to the value judgements used to choose the parameters used to determine the benefits of the Climate Act.  The previously mentioned NYSERDA claim that one particular aspect of the plan would lead to a levelized impact on electricity bills of less than 0.5% (or $0.35 per month for the typical residential customer) sounds great. In their words, “taking into account the value of the avoided carbon emissions, these procurements are estimated to yield a net benefit of around $7.7 billion over the lifetime of the projects”.  However, the electric bill cost is real, everyone is going to pay that and the social cost of carbon “benefit” value depends on the judgement of those developing the numbers.

Consider whether New York should address global impacts, nation-wide impacts, or for the sake of argument, just the benefits that would accrue to New Yorkers if their emissions are reduced.  There is no doubt that because there are global impacts that looking at global impacts should be considered but what value is that to a New Yorker already on the edge of energy poverty.  If the cost of energy goes up significantly, and other jurisdictions that tried to implement less ambitious GHG emissions reductions programs has seen significant increases, then those New Yorkers least able to afford energy increases will be hit hard.  Therefore, I think it is entirely appropriate to provide New Yorkers with benefits based on all three geographical coverages.

Another little recognized aspect of the SCC calculation methodology is that the costs are calculated far into the future.  Proponents argue that because most of the warming caused by carbon dioxide emissions persists for many years, changes in carbon dioxide emissions today may affect economic outcomes for centuries to come.  The GAO report notes: “To create a social cost of carbon estimate for emissions occurring in a given year, models use discounting to convert the projected monetized climate damages into a present value. This process involves reducing the damages in each future year by a percentage known as the discount rate”.   As the graphs show, a higher discount rate reduces future values to a greater degree than applying a lower discount rate. If we use a higher discount rate, then we are weighting today’s costs as more important than impacts hundreds of years in the future.  The emotional alternative is worded as leaving the world a better place for our grand-children by using a low discount rate.  Note that the Climate Act specifies using a discount rate of zero that will surely show very high social costs of carbon.  But remember that the impacts of climate change will become more evident much further in the future than our direct descendants so choosing a low discount rate that considers future impacts and current costs as equally significant not only means that our grandchildren will have to pay high prices now but won’t even see the benefits.

There is another aspect to paying now for potential damages far in the future.  The money spent today is not available to spend on projects that could alleviate future damages.  For example, if sea-level rise is a concern, then spending money today emulating the Dutch experience keeping the ocean out of their land would make more sense.  Similar arguments for many of the damages included due to climate change can also be made but are routinely ignored by proponents of a high SCC value.

Context

Finally, I want to point out that the SCC, as proposed for use in the Climate Act, has two basic flaws.  In general, there is no consideration of benefits of GHG emissions and, particular to our situation, it does not consider NY’s actions relative to the world’s actions.  The effect of the two items is related.

In most environmental impact assessments, a primary consideration is the direct consequence of the action.  In this case, if New York reduces its GHG emissions how will global warming be affected.  Prior to the passage of the Climate Act I calculated the potential change.  If the Climate Act were to stop emitting 218.1 million metric tons (1990 emissions) the projected global temperature rise would be reduced approximately 0.0032°C by the year 2050 and 0.0067°C by the year 2100.  In order to give you an idea of how small this temperature change consider changes with elevation and latitude.  Generally, temperature decreases three (3) degrees Fahrenheit for every 1,000-foot increase in elevation above sea level.  The projected temperature difference is the same as going down 27 inches.  The general rule is that temperature changes three (3) degrees Fahrenheit for every 300-mile change in latitude at an elevation of sea level.  The projected temperature change is the same as going south two thirds of a mile. 

Another aspect of environmental impact assessment is a discussion of trade-offs.  However, the social cost of carbon does not consider any of the benefits of carbon dioxide.  The “CO2 fertilization effect” — the fact that rising emissions are making plants grow better, is not considered.  The satellite data show that “there has been roughly a 14 per cent increase in the amount of green vegetation on the planet since 1982, that this has happened in all ecosystems, but especially in arid tropical areas, and that it is in large part due to man-made carbon dioxide emissions”.  More importantly, Alex Epstein in the Moral Case for Fossil Fuels makes a compelling case for using fossil fuels use because: “the cheap, plentiful, reliable energy we get from fossil fuels and other forms of cheap, plentiful, reliable energy combined with human ingenuity, gives us the ability to transform the world around us into a place that is far safer from any health hazards (man-made or natural), far safer from any climate change (man-made or natural), and far richer in resources now and in the future.”

The International Energy Agency claimed that world population without access to electricity fell below 1 billion in 2017.  In order to reduce that number further, improve access to more electricity, and reap the benefits of abundant, reliable of energy, developing countries are building fossil-fired power plants.  According to the China Electricity Council, about 29.9 gigawatts of new coal power capacity was added in 2019 and a further 46 GW of coal-fired power plants are under construction.  If you assume that the new coal plants are super-critical units with an efficiency of 44% and have a capacity factor of 80%, all the reductions provided by the Climate Act will be replaced by the added 2019 Chinese capacity in just over three years or less than an year and a quarter if the 2019 capacity and the units under construction are combined. If construction of all coal plants elsewhere were included, then the time to subsume New York reductions would be even less.

Conclusion

Up until this point the State of New York has thus far relied on a single value of the SCC.  While that may be necessary for use in calculating credits for emissions reductions, elsewhere, and particularly in the case of claimed benefits relative to the costs of the program, it is more appropriate to consider a range of values because of the massive uncertainties associated with this metric. 

The  comments on the SCC prepared by Dr. Richard Tol in a Minnesota Public Utilities Commission hearing on that state’s use of the SCC provide a technical discussion of potential problems with the SCC. Dr. Tol is Professor of the Economics of Climate Change at Vrije Universiteit Amsterdam and a Professor of Economics at the University of Sussex and has direct experience estimating the social cost of carbon.  He concludes: “In sum, the causal chain from carbon dioxide emission to social cost of carbon is long, complex and contingent on human decisions that are at least partly unrelated to climate policy. The social cost of carbon is, at least in part, also the social cost of underinvestment in infectious disease, the social cost of institutional failure in coastal countries, and so on.”

According to the National Academies, the present value of damages reflects society’s willingness to trade value in the future for value today.  The Climate Act mandates that the carbon value consider a zero discount rate that means that value in the future equals value today.  However, the fact that New York’s potential emission reductions will be subsumed by increases elsewhere means that the valuation arguments are theoretical and that in practice New York reductions are only symbolic.

The calculation and use of the SCC is complicated and subject to mis-interpretation.  Such is the case with NYSERDA’s claim noted earlier that “these procurements are estimated to yield a net benefit of around $7.7 billion over the lifetime of the projects”.  In response to my question about the calculation of lifetime benefits, Dr. Tol explained that the SCC should not be compared to lifetime savings or costs.  Therefore, the $7.7 billion net benefit claim is incorrect.

In conclusion, New Yorkers should be aware of the back story of the social cost of carbon benefits claimed to date for Climate Act projects when compared to the costs.  The costs to implement the Climate Act will be real changes to ratepayer bills.  The benefits claimed are based on numerous value judgements, ignoring world-wide emission increases that will subsume New York’s reductions, and, if lifetime benefits are claimed, are much higher than appropriate.  For all intents and purposes, today’s costs for the Climate Act will provide negligible benefits to those paying the bills.

NY Climate Act Implementation – Electric Generation De-Carbonization Pathways

On July 18, 2019, Governor Cuomo signed into law the Climate Leadership and Community Protection Act (Climate Act). It is among the most ambitious climate laws in the world and requires New York to reduce economy-wide greenhouse gas emissions 40 percent by 2030 and eliminate the use of fossil fuel for electricity production by 2040. New York’s politicians were sure that implementing these goals was simply a matter of political will so they offered no plan how it would be done.  On June 24, 2020 Energy plus Environmental Economics (E3) presented results of their emissions reductions pathway analyses to the New York Climate Action Council which gives the first inkling of what the law may suggest will be done.  This post analyzes the electric generation analysis approach.

I am following the implementation of the CLCPA closely because its implementation affects my future as a New Yorker.  Given the cost impacts for other jurisdictions that have implemented renewable energy resources to meet targets at much less stringent levels I am convinced that the costs in New York will be enormous and my analyses have supported that concern.  The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

I did a post on the Pathways to Deep Decarbonization in New York State Presentation  that can be viewed on the video of the webinar.  The Pathways to Deep Decarbonization in New York State – Final Report  itself and two appendices: Appendix A: Methods and Data  and Appendix B: Literature Review of Economy-Wide Deep Decarbonization and Highly Renewable Energy Systems  were included in the meeting materials.  This post addresses electric generation in the final report and Appendix A.

E3 Modeling

The E3 analysis uses models to simulate which combinations of resources can be used to meet the Climate Act goals, how the transmission grid can provide those resources and the renewable capacity needed to maintain reliability.  I will address these three models below.

E3 used their PATHWAYS model to “create strategically designed scenarios for how the State can reach its 2030 and 2050 GHG goals. The model is built using ‘bottom-up’ data for all emissions produced and energy consumed within the State.   It identifies GHG reduction measures from transportation, buildings, industry, electricity, and other sectors, and captures interactions among measures to create a detailed picture of emissions reductions and costs through 2050”.  E3 notes “that as a ‘stock rollover’ model, PATHWAYS considers realistic timing of investments to replace appliances, vehicles, buildings, and other infrastructure. It pays special attention to the dynamics between electricity generation and new loads from transportation and buildings, as well as the role of low-carbon fuels such as advanced biofuels, hydrogen, and synthetic fuels”.

I believe there is a major problem with their “stock rollover” model.  As far as I can tell, it does not consider the readiness of the technology proposed.  The International Energy Agency (IEA) recently published “Special Report on Clean Energy Innovation” that notes:

“Without a major acceleration in clean energy innovation, net-zero emissions targets will not be achievable. The world has seen a proliferating number of pledges by numerous governments and companies to reach net-zero carbon dioxide (CO2) emissions in the coming decades as part of global efforts to meet long-term sustainability goals, such as the Paris Agreement on climate change. But there is a stark disconnect between these high-profile pledges and the current state of clean energy technology. While the technologies in use today can deliver a large amount of the emissions reductions called for by these goals, they are insufficient on their own to bring the world to net zero while ensuring energy systems remain secure – even with much stronger policies supporting them.”

I have shown that E3 ignored these limitations in its assessment of the technology needed to provide electricity when they claimed “Deep decarbonization in New York is feasible using existing technologies”.  That statement mis-characterizes the actual situation.  As IEA points out feasibility depends upon making all parts of the technological application process, what they call the value chain, commercially viable.  The fact is that for the E3 technologies proposed to address the winter peak problem, one or more aspects of commercial viability, availability limitations, or public perception make the E3 recommendations risky bets for future reliability and affordability.

In order to consider effects of the transmission grid on the de-carbonization effort, E3 used their RESOLVE model:

Our modeling approach also incorporates detailed electricity sector representation using E3’s RESOLVE model. RESOLVE is used to develop least-cost electricity generation portfolios that achieve New York’s policy goals, including 100% zero-emission electricity, while maintaining reliability.

For this study, RESOLVE was configured with six zones: two zones representing the upstate and downstate portions of the New York electricity system and four zones representing the external markets that interact with New York.

It is beyond the scope of my analysis to quantitatively determine whether this resolution is sufficient to represent the New York grid relative to the generation portfolios.  Qualitatively, however, the fact that New York City, which has specific transmission load constraints and a requirement for a minimum level of in-city generation, is lumped with Long Island suggests that this is a significant deficiency.

In my comments on the resource adequacy hearing and elsewhere I have argued that actual short-term meteorological data must be used to correctly characterize the renewable resource availability for New York in general and in areas downwind of the Great Lakes in particular. This is because the lakes create meso-scale features, most notably lake-effect snow and clouds, that can affect solar resources many miles from the lake shore. It is important that the solar and wind resources be evaluated based on geographically representative short-term data so that site-specific temporal effects can be included. E3 calculates the “effective load-carrying capability” which they define as the amount of “perfect capacity” that could be replaced or avoided with wind, solar, or storage while providing equivalent system reliability.

The values in this analysis were developed using E3’s reliability model, RECAP. The model assesses generation resource adequacy for a power system based on loss-of-load probability analysis but is inherently flawed for this application because it does not consider the observed renewable resource availability which can only be quantified by a detailed look at historical meteorological data such as I have proposed.

Electricity Demands

E3 correctly notes that it will be challenging to meet increased electricity demand due to electrification of vehicles and buildings while at the same time reducing, and eventually eliminating, GHG emissions while maintaining system reliability.  E3 predicts that electricity demand may increase by 65% to 80% depending on the “scale and timing of electrification”.  The electricity requirements depend upon how much of a role bio-fuels and synthetic fuels can play in replacing fossil fuels.  This analysis suffers from the lack of consideration of technical readiness for those technologies.  The IEA report lists very few bio-fuel and synthetic fuel technologies that have reached sizeable deployment and have all designs and underlying components at high technological readiness levels.

Peak Demands

The report explains that the transformation will “change the timing and magnitude of consumers’ electricity demands and create a “winter peaking” system in New York, owing to new demands from electric space heating”.  They go on to claim “Flexibility in electric vehicle charging patterns and building loads can significantly reduce peak demands and the need for new electric generating capacity. Flexible loads can serve a similar role to battery storage, shifting demand to times of high renewables output.”

“Figure 17 illustrates this evolution of the system peak—and the impacts of electric load flexibility over time”.  Because I think winter load is the greater future concern, I will discuss winter instead of summer information.  Figure 17 Annual summer and winter peak electricity demands shows how the peak electricity demand is expected to change.  I was unable to find the corresponding data for the annual summer and winter peak electricity demands portion shown in the figure but I estimate from the figure that the winter statewide peak load will be 24 GW in 2020 and in 2050 the peak load will be 35 GW with flex loads and 43 GW without flex loads.

The bottom portion of Figure 17 Average hourly loads by month is confusing at first glance.  It shows the average hourly load as it varies by each month.  E3 used their models to generate load shapes and develop their claim that there is 8 GW of peak load shaving available in 2050.  There is insufficient information to critique that claim but I am struck by the appearance of the 2020 and 2050 hourly load shapes.  In 2020 heating is a small component of load but in 2050 it will be much larger.  Consequently, I expect that the components of the load shape will change so I would expect some kind of change in the shape.  Instead it appears that the load is just larger and there is no change in the shape.  Importantly it is not clear why the load can be shaved.  Where do you shift the heating component that makes up the sharp increase early in the morning?  If you heat your home at 3:00 AM it will be cold by 7:00 AM during the peak.  Moreover, note that there does not appear to be as much flex load available at the peak later in the day that is roughly the same magnitude.  Consequently, I am not convinced of their arguments that 8 GW of load can be shaved off the winter peak.

Resource Portfolios

E3 claims that New York State has “access to diverse in-state renewable energy resources and zero-emissions technology options, as well as access to adjoining states, provinces, and regional transmission systems which offer additional options for zero-emissions energy supply”.  The E3 analysis used their RECAP model to determine “the new resources required to reliably meet electricity demand in buildings, transportation, and industry with 100% zero-emissions electricity for the upstate and downstate regions of New York”.

Although E3 claims that their analysis models the reliability contributions of intermittent and limited-duration resources, the fact that they did not use a comprehensive and more representative meteorological data set as input makes that claim weak in my opinion.  The worst-case reliability problem in the no-fossil-fuel future is very likely to be the worst-case wind and solar resource availability period not the peak load.  Unfortunately, it is possible that the winter conditions that create future peak loads may also exacerbate renewable resource availability so the two conditions may overlap.  I don’t think anyone has adequately addressed this issue yet.

E3 claims: Our analysis finds that New York can reliably meet growing electricity loads with 100% zero-emissions electricity by relying on a diverse mix of resources, including:

          • Onshore and offshore wind
          • Large-scale and distributed solar
          • In-state hydro and existing and new hydro imports from Quebec
          • Existing nuclear capacity
          • Existing and new combined cycles (CC) and combustion turbines (CT) utilizing zero-emissions biogas
          • New natural gas-fired combined cycles with carbon capture and sequestration (CC-CCS)

Eventually I will try to quantify the resources of each of these resources so that I can compare their projections with others.  The lack of data in this regard makes that task daunting.  I do want to make one observation.  Figure 18, Projected Installed Capacity (top) and Annual Electricity Generation (bottom), shows huge increases in bioenergy installed capacity in both scenarios.  However, note that the annual generation for those categories is small.  I cannot imagine a business case for developing that kind of capacity for such limited output so I believe it is likely that bioenergy will have to be heavily subsidized to make it available as they propose.

Transmission

E3 explains:

New investments in transmission will be needed to enable the delivery of 100% zero-emission electricity, including:

          • Local transmission upgrades to integrate new renewable resources
          • Additional transmission to deliver renewable resources from other regions, especially Quebec, into New York
          • Bulk transmission capacity from upstate New York to downstate load centers

Although New York has started the process of adding bulk transmission capacity it is not clear how much more will be needed.  I have yet to see anyone explain if any of the off-shore wind will be considered in-city generation for reliability purposes.  The DPS White Paper on CES procurements to implement the Climate Act includes a proposal for a Tier 4 procurement to encourage will directly extend financial support for renewable energy delivered into the New York City control zone but that discussion did not address in-city generation requirements.

 Firm Capacity

E3 explains that “Firm capacity is the amount of energy available for power production which can be guaranteed to be available at a given time. As the share of variable resources like wind and solar grows substantially, firm capacity resources will be needed to ensure year-round reliability, especially during periods of low renewables output.”

Firm capacity allows the system to have adequate resources available during prolonged periods of low renewable energy output. I agree with the E3 description that “The State’s need for firm resources would be most pronounced during winter periods of high demand for electrified heating and transportation and lower wind and solar output”.  E3 says that the hourly loads in their analysis are based on six years of historical weather 2007-2012.  I asked E3 what monitoring locations were used but never heard back.  I believe these data are from the National Weather Service climatological sites.  If that is the case they are not representative of the whole of New York and that NYS Mesonet data available from every county in the State should be used instead.

Conclusion

The first proposal to meet the Climate Act targets that was presented to the Climate Action Council can only be considered an overview.  The E3 analysis does not impress me.  While their models give the veneer of respectability to the projections, the reality is that the inherent over-simplifications of their models under-estimates the difficulties of the transition in New York and gives a false sense of security to their assurances that implementation will succeed.

Despite the limitations, the analysis does make important points.  I agree with their conclusion that the transition will “change the timing and magnitude of consumers’ electricity demands and create a “winter peaking” system in New York, owing to new demands from electric space heating”.  They point out that a multi-day period of low renewable energy availability will be a particular problem in the winter and state that: “Firm capacity is the amount of energy available for power production which can be guaranteed to be available at a given time. As the share of variable resources like wind and solar grows substantially, firm capacity resources will be needed to ensure year-round reliability, especially during periods of low renewables output.”

After their presentation to the Climate Action Council, members asked E3 about the use of renewable natural gas as one of the firm capacity resources.  Apparently, some believe that renewable natural gas is not a renewable energy resource according to the Climate Act.  Be that as it may, I suspect that E3 has found that without sufficient firm capacity resources the only alternative to maintain reliability will be extraordinary amounts of energy storage.  Energy storage is very expensive and E3 might have included renewable natural gas energy to limit energy storage use to keep the costs down.

Although E3 claims to bring “clear, unbiased analysis to the critical issues facing the energy industry today” I don’t think that is possible to be unbiased and work for the New York Climate Action Council.  New York’s Climate Act is predicated upon the belief that decarbonization is only a matter of political will.  Unfortunately, that belief is inconsistent with the firm capacity challenge for the winter peak.  It will be interesting to see how the Council deals with inconvenient issues that challenge the notion that this transition is not pushing the envelope of electric system reliability.

Another Example of New York State Environmental Hypocrisy

On July 15, 2020, the Council on Environmental Quality (CEQ) announced its final rule titled “Update to the Regulations Implementing the Procedural Provisions of the National Environmental Policy Act.”  On July 16, 2020, New York Department of Environmental Conservation Commissioner Basil Seggos responded with a press release vilifying the changes to the process.  This post explains why the Commissioner’s concerns are flatly contradicted by the State’s own actions.

I am a retired electric utility meteorologist with nearly 40-years experience analyzing the effects of meteorology on electric operations and reviewing environmental policies on energy operations. The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

Statement from NYS DEC Commissioner Basil Seggos on NEPA Rollbacks

First, here is the statement released by Seggos:

It’s no surprise that the President wants to eviscerate the nation’s environmental review law. This has been the most reckless anti-environment, anti-health, and anti-science administration in history. The administration thinks this would be good for the economy but they have it backward. Thorough environmental review actually strengthens local economies and jobs by ensuring the resiliency and durability of our infrastructure. Environmental review also provides important protections for low-income communities and communities of color that have borne the brunt of pollution-the same communities most impacted by the coronavirus and most at risk from climate change.

CEQ NEPA Regulation Revisions

What changed in the rules to draw the ire of Commissioner Seggos?  According to the press release, “The modernized regulations will promote more efficient, effective, and timely environmental reviews by all Federal agencies”.  The fact sheet states:

For the first time in over 40 years, CEQ has comprehensively updated its National Environmental Policy Act (NEPA) regulations to modernize the Federal environmental review process, which will benefit the environment, economy, and every American. The regulations, which apply to all Federal agencies, have been complex and unnecessarily difficult to understand and navigate. The result has been excessive paperwork, litigation, and delays. Environmental impact statements (EISs) for Federal highway projects have averaged over seven years to complete and some reviews have taken a decade or more.

CEQ’s final rule will modernize the NEPA regulations by simplifying and clarifying the requirements, and incorporating key elements of President Trump’s One Federal Decision policy. The final rule codifies Supreme Court and other case law, updates the regulations to reflect current technologies and agency practices, eliminates obsolete provisions, and improves the format and readability of the regulations. The rule also exempts certain loan guarantee programs from the NEPA process, which will reduce unnecessary burdens on small businesses and family farms. Additionally, the rule will expand public participation and the involvement of tribal governments in the NEPA process. The modernized NEPA regulations will accelerate the environmental review and permitting processes for development of modern, resilient infrastructure, management of our Federal lands and waters, and restoration of our environment.

Accelerated Renewable Energy Growth and Community Benefit Act

In early April 2020, NYS passed the Accelerated Renewable Energy Growth and Community Benefit Act (AREGCBA) as part of the 2020-21 state budget.  This legislation is intended to ensure that renewable generation is sited in a timely and cost-effective manner.  According to the State’s press release, “New York State public authorities and agencies announced the passage of legislation as part the FY 2020-2021 state budget to dramatically speed up the siting and construction of clean energy projects to combat climate change and help jumpstart the state’s economic recovery from the COVID-19 health crisis”.

In a post describing the AREGCBA, I commented on the legislative finds and statement of purpose of the law.  Of particular note, In section 4: “A public policy purpose would be served and the interests of the people of the state would be advanced by:  expediting the regulatory review for the siting of major renewable energy facilities and transmission infrastructure necessary to meet the CLCPA targets, in recognition of the importance of these facilities and their ability to lower carbon emissions”.  New York has a permitting process in place for electric generating units, Article 10. that requires “environmental and public health impact analyses, studies regarding environmental justice and public safety, and consideration of local laws” but those requirements take time to evaluate and it appears the purpose of this legislation is to over-ride the time needed for those analyses.

Conclusion

Clearly, the only distinction between these two separate actions is what kind of project should get treated differently in the future.  The Trump administration wants to “accelerate the environmental review and permitting processes for development of modern, resilient infrastructure, management of our Federal lands and waters, and restoration of our environment”.  The Cuomo administration wants to expedite “the regulatory review for the siting of major renewable energy facilities and transmission infrastructure necessary to meet the CLCPA targets”.  That choice is a value judgement.

 

In the summer of 2019 Governor Cuomo and the New York State Legislature passed the Climate Leadership and Community Protection Act (CLCPA) which was described as the most ambitious and comprehensive climate and clean energy legislation in the country when Cuomo signed the legislation.  The comprehensive plan to implement the transition to an electric system that does not use any fossil fuels by 2040 has yet to be developed.  The massive build-out of solar and wind resources as well as the energy storage needed has not been quantified.  Nonetheless, state agencies are preparing environmental impact analyses and the AREGCBA is going to accelerate the siting of renewable energy facilities.

If Commissioner Seggos is truly worried about the environment, health impacts and science as well as protections for low-income communities and communities of color, then he needs to address issues related to the CLCPA build-out.  The cumulative life-cycle impacts of New York’s energy transition should be addressed for starters.  One recent estimate by Brattle presented at a June 15 NYISO committee meeting indicated that over ten times the existing wind energy capacity of New York might be necessary by 2040.  The cumulative environmental impacts of that many wind turbines on birds and bats needs to be addressed.  Seggos’ Department of Environmental Conservation (DEC) has been touting a link between peaker power plants and human health but, so far, has ignored potential health impacts of wind turbines.

The DEC has thus far also ignored the sustainability science of renewable energy and energy storage.  However, as shown in a recent study, “compared with hydrocarbons, green machines entail, on average, a 10-fold increase in the quantities of materials extracted and processed to produce the same amount of energy”.  What are the environmental impacts of the extraction and processing of those materials?  More importantly, with regards to “low-income communities and communities of color”, where are those materials going to come from.  A recent UN report warns that the raw materials used in electric car batteries, are highly concentrated in a small number of countries.  For example, two-thirds of all cobalt production happens in the Democratic Republic of the Congo (DRC). According the UN Children’s Fund, about 20 per cent of cobalt supplied from the DRC comes from artisanal mines, where human rights abuses have been reported, and up to 40,000 children work in extremely dangerous conditions in the mines for meager income.

I believe that a comprehensive cumulative environmental impact analysis of the life-cycle of the renewable energy resources required by the CLCPA is necessary.  If Commissioner Seggos were calling for such an analysis, then I would respect his statement on the revised NRPA regulation.  However, such is not the case and New York’s current regulatory process clearly shows the hypocrisy of the Cuomo Administration.

NY Climate Leadership and Community Protection Act “Benefits”

I was prompted to prepare this post while reading the White Paper on Clean Energy Standard Procurements to Implement New York’s Climate Leadership and Community Protection Act (white paper) prepared by the New York Department of Public Service (DPS) and the New York State Energy Research and Development Authority (NYSERDA) because that document claims a “net benefit of around $7.7 billion” over the lifetime of projects they believe are required to meet the goal that 70% of electric energy will be produced by renewable energy by 2030 (70 by 30).  Although I have written about the approach used by the State before I believe it is necessary to re-iterate my concerns in the current context.

I am a retired electric utility meteorologist with nearly 40-years experience analyzing the effects of meteorology on electric operations. I believe that gives me a relatively unique background to consider the potential quantitative effects of energy policies based on doing something about climate change.  The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

Background

In the summer of 2019 the Governor Cuomo and the New York State Legislature passed the Climate Leadership and Community Protection Act (Climate Act) which was described as the most ambitious and comprehensive climate and clean energy legislation in the country when Cuomo signed the legislation.

The legislation includes not only the 70 by 30 requirement but also a mandate to eliminate all fossil fuel use in the electricity sector by 2040. I have written a series of posts on the feasibility, implications and consequences of this aspect of the law based on evaluation of data.

Unfortunately, the politicians that passed the Climate Act never bothered to figure out how it could be done.  Among problems to resolve are development of a plan for renewable resources and an implementation plan to pay for those resources.  The DPS has a mandate to establish a program whereby jurisdictional load serving entities (today’s jargon for what used to be called the electric utilities) secure renewable energy resources to serve the 70 by 30 target.  The white paper explains how they propose to do this.  It includes the following:

        • Description of the key provisions in the Climate Act relating to the 70 by 30, including the role of jurisdictional LSEs and the definition of renewable energy systems;
        • Projection of the quantity of renewable energy that must be deployed to achieve 70 by 30;
        • Establishes average annual procurement targets for different tiers in the existing procurement process;
        • Proposal for a new tier for the procurement process; and
        • Cost and benefit analysis.

The following quote from the cost and benefit analysis sparked my interest:

“NYSERDA estimates that the proposed Tier 1 procurements, as set out in Section II.c.1 below, – from 2021 to 2026 – would lead to a levelized impact on electricity bills of less than 0.5% (or $0.35 per month for the typical residential customer). Taking into account the value of the avoided carbon emissions, these procurements are estimated to yield a net benefit of around $7.7 billion over the lifetime of the projects.”

This post will show the fallacies in this benefit claim.

Social Cost of Carbon

It is New York State policy to calculate benefits of greenhouse gas emission reductions using the Social Cost of Carbon (SCC).  The SCC is the present-day value of projected future net damages from emitting a ton of CO2 today.  In order to estimate the impact of today’s emissions it is necessary to estimate total CO2 emissions, model the purported impacts of those emissions and then assess the global economic damage from those impacts.  The projected global economic damage is then discounted to the present value. Finally, the future damage is allocated to present day emissions on a per ton basis to get the SCC value.

I have previously argued that there are several technical reasons that the single value the State of New York has thus far relied on should not be used exclusively.  It is more appropriate to consider a range of values because of the massive uncertainties associated with this metric.  The  comments on the SCC prepared by Dr. Richard Tol in a Minnesota Public Utilities Commission hearing on that state’s use of the SCC better explain potential problems with the SCC.

Dr. Tol is Professor of the Economics of Climate Change at Vrije Universiteit Amsterdam and a Professor of Economics at the University of Sussex and has direct experience estimating the social cost of carbon.  In his testimony, Tol explains that there are differences between SCC and traditional damages cost methodologies: “The causal chain for the social cost of carbon is rather long, complex and contingent. In this way it is different from the traditional damages cost methodology for a pollutant like mercury or lead.”  He uses a couple of examples to explain that the many interactions between purported changes to the environment from a changed in the greenhouse effect due to a ton of CO2 depend upon assumptions every step of the way which makes it “rather difficult to the climate effects of CO2 emissions.”  He concludes: “In sum, the causal chain from carbon dioxide emission to social cost of carbon is long, complex and contingent on human decisions that are at least partly unrelated to climate policy. The social cost of carbon is, at least in part, also the social cost of underinvestment in infectious disease, the social cost of institutional failure in coastal countries, and so on.”

My biggest concern is that tweaking any one of many inputs to the SCC calculation radically change the results. New York uses the SCC values developed by the Obama administration. In 2017, President Trump signed Executive Order 13783 which modified two aspects of the calculation:  only considering damages occurring within the United States and employing discount rates of 3 percent and 7 percent for the use of this parameter in regulatory policy. The Obama values used global damage numbers and discount rates of 2.5 percent, 3 percent, and 5 percent. The difference between those two assumptions results in a SCC for domestic economic impacts at a 7 percent discount rate would be $2.20 in the year 2050, while the SCC for global economic impacts at a 2.5 percent discount rate would be $100.62. These changes reflect economic and policy judgements without advising the public what is happening.  When the costs hit the consumers, someone is going to have a lot of explaining to do.

Lifetime Benefits

Despite these issues, New York State uses the SCC without conditions to claim benefits from their proposed investments.  The white paper states “Taking into account the value of the avoided carbon emissions, these procurements are estimated to yield a net benefit of around $7.7 billion over the lifetime of the projects.”  NYSERDA regularly calculates benefits based on the lifetime of their projects.  This is a different approach than that used in air pollution control regulation cost reduction calculations.  In the Environmental Protection Agency’s Reasonably Available Control Technology rule when you calculate the cost effectiveness of a control program, the cost of the control system is divided by the annual emissions reduction to get the dollars per ton reduced.  There is no consideration of lifetimes.

If you are interested in the cost of the Climate Act, you need to know the annual reductions possible from technologies implemented to reduce emissions.  The Climate Act specifies reductions from 1990 annual emissions so the apples to apples comparison is the annual reduction.  On the other hand, in a NYSERDA energy efficiency program, the avoided energy saved by the efficiency program equates to money saved.  It seems reasonable to count the total savings to the ratepayer.

When it comes to the SCC, I believed that it was inappropriate to consider lifetime savings but could not find anything specific in the literature to validate my belief.  I contacted Dr. Tol and asked the following question:

There is a current proceeding where NYSERDA is claiming that their investments are cost-effective but they use life-time benefits.  I concede that the ratepayer cost-benefit calculation should consider the life-time avoided costs of energy and can see how that reasoning might also apply to the social cost of carbon.  However, in the following definition, SCC is the present-day value of projected future net damages from emitting a ton of CO2 today, I can interpret that to mean that you shouldn’t include the lifetime of the reduction.  Am I reading too much into that?

His response explains that the use of life-time savings or costs is inappropriate:

Dear Roger,

Apples with apples.

The Social Cost of Carbon of 2020 is indeed the net present benefit of reducing carbon dioxide emissions by one tonne in 2020.

It should be compared to the costs of reducing emissions in 2020.

The SCC should not be compared to life-time savings or life-time costs (unless the project life is one year).

stay healthy

Richard

Dr. Richard S.J. Tol MAE
Professor
Department of Economics, Room 281, Jubilee Building
University of Sussex, Falmer, Brighton BN1 9SL, UK

Conclusion

I am convinced that the majority of New York State ratepayers are unaware of the ramifications of the Climate Act and even if they know about it, it is unlikely that they know how the state calculates its claims that the costs will be out-weighed by the benefits.  In this instance, the quotation: “there are three kinds of falsehoods, lies, damned lies and statistics” could be modified to “there are three kinds of falsehoods, lies, damned lies and climate benefit estimates”.

This post explains that the SCC is a weak tool for climate policy.  I am most concerned that the SCC values are not robust because small changes in any of the large number of assumptions give contradictory results.  When used in policy making, like the Climate Act, the values chosen are politically expedient rather scientifically based.  The costs of the Climate Act will be enormous and I believe it is incumbent upon its advocates to explain their analyses and use of the SCC.

However, this post also shows that even if you accept the SCC as a valid approach and use the values chosen by New York, then the cost benefits claimed by NYSERDA, in general, and the white paper, in particular, are flawed because they rely on life-time benefits.  Today’s SCC is the net present benefit of reducing carbon dioxide emissions by one ton this year.  The SCC should not be compared to life-time savings or life-time costs.  As a result, the claim that the “procurements are estimated to yield a net benefit of around $7.7 billion over the lifetime of the projects” is wrong.

 

NY Climate Act Implementation – IEA Special Report on Clean Energy Innovation

Update July 6, 2020: I looked at the ETP Clean Energy Technology Guide in more detail and found their ratings for anerobic digesters.  I have modified the relevant section.

On July 18, 2019, Governor Cuomo signed into law the Climate Leadership and Community Protection Act (Climate Act). It is among the most ambitious climate laws in the world and requires New York to reduce economy-wide greenhouse gas emissions 40 percent by 2030 and eliminate the use of fossil fuel for electricity production by 2040. New York’s politicians were sure that implementing these goals was simply a matter of political will so they offered no plan how it would be done.  The International Energy Agency (IEA) recently published “Special Report on Clean Energy Innovation” that directly relates to this implementation effort that I believe should be required reading for New York’s Climate Action Council.

I am following the implementation of the CLCPA closely because its implementation affects my future as a New Yorker.  Given the cost impacts for other jurisdictions that have implemented renewable energy resources to meet targets at much less stringent levels I am convinced that the costs in New York will be enormous and my analyses have supported that concern.  The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

On June 24, 2020 Energy plus Environmental Economics (E3) presented results of their emissions reductions pathway analyses to the New York Climate Action Council which gives the first inkling of what the law’s supporters acknowledge will have to be done.  I took issue with the presentation’s claim that “Deep decarbonization in New York is feasible using existing technologies” previously and in this post will highlight key points made in their Special Report on Clean Energy Innovation (“EIA Report”) that are relevant to New York’s Climate Act Implementation.

Introduction

New York’s Climate Act requires that the Climate Action Council prepare a plan for “net zero emissions in all sectors of the economy” in the following:

§ 75-0107. Statewide greenhouse gas emissions limits.

1. No later than one year after the effective date of this article, 24 the department shall, pursuant to rules and regulations promulgated after at least one public hearing, establish a statewide greenhouse gas emissions limit as a percentage of 1990 emissions, as estimated pursuant to section 75-0105 of this article, as follows:

a. 2030: 60% of 1990 emissions.

b. 2050: 15% of 1990 emissions.

§ 75-0103. New York state climate action council.

11. The council shall on or before two years of the effective date of this article, prepare and approve a scoping plan outlining the recommendations for attaining the statewide greenhouse gas emissions limits in accordance with the schedule established in section 75-0107 of this article, and for the reduction of emissions beyond eighty-five percent, net zero emissions in all sectors of the economy, which shall inform the state energy planning board’s adoption of a state energy plan in accordance with section 6-104 of the energy law. The first state energy plan issued subsequent to completion of the scoping plan required by this section shall incorporate the recommendations of the council.

The E3 presentation echoes the belief of the supporters of the Climate Act that achieving the net zero goal is essentially just a matter of political will.  However, the IEA report suggests that optimism is mis-placed:

“Without a major acceleration in clean energy innovation, net-zero emissions targets will not be achievable. The world has seen a proliferating number of pledges by numerous governments and companies to reach net-zero carbon dioxide (CO2) emissions in the coming decades as part of global efforts to meet long-term sustainability goals, such as the Paris Agreement on climate change. But there is a stark disconnect between these high-profile pledges and the current state of clean energy technology. While the technologies in use today can deliver a large amount of the emissions reductions called for by these goals, they are insufficient on their own to bring the world to net zero while ensuring energy systems remain secure – even with much stronger policies supporting them.”

Analysis

In order to focus my analysis on a manageable component of the Climate Act implementation plan I am going to address one component of the electric sector de-carbonization pathway.  E3 and I agree that the biggest problem for a de-carbonized electric system is going to be the winter peak when solar resources are low and the potential for a large high-pressure system could mean that wind resources are near zero for several days.  E3 claims the New York winter statewide peak load will be 24 GW in 2020 and in 2050 the peak load will be 35 GW with flex loads and 43 GW without flex loads when the added demands of electrifying transport and heating are added to the system. E3 offered a combination of five options to meet the challenge: large-scale hydro resources, renewable natural gas, synthetic fuels such as hydrogen, Carbon Capture Storage (CCS), and nuclear power.  I will look at these technologies with respect to the IEA report and feasibility in New York to determine if the 2040 de-carbonized electric system goal is realistic.

There are two technologies listed that are mature and have long histories of development: large-scale hydro resources and nuclear power.  However, New York needs additional resources to meet this demand challenge and I believe it is unlikely that either technology can be counted on in New York.  Although nuclear should be considered the fact that the completed nuclear power plant at Shoreham was never operated, the closing of one operational unit at Indian Point in 2020, and the planned closing of the last operational unit at Indian Point in 2021 suggests that new nuclear in New York is extremely unlikely.  I am comfortable saying that there are no significant sources of undeveloped hydro available much less permittable in New York.  There is a potential for Canadian hydro-power that will likely be considered.

The remaining three technologies are still in the “clean energy innovation pipeline” described in the IEA report.  IEA explains:

“Innovation is not the same as invention. After a new idea makes its way from the drawing board to the laboratory and out into the world, there are four key stages in the clean energy innovation pipeline. But this pathway to maturity can be long, and success is not guaranteed:

Prototype: A concept is developed into a design, and then into a prototype for a new device (e.g. a furnace that produces steel with pure hydrogen instead of coal).

Demonstration: The first examples of a new technology are introduced at the size of a full-scale commercial unit (e.g. a system that captures CO2 emissions from cement plants).

Early adoption: At this stage, there is still a cost and performance gap with established technologies, which policy attention must address (e.g. electric and hydrogen-powered cars).

Mature: As deployment progresses, the product moves into the mainstream as a common choice for new purchases (e.g. hydropower turbines).”

The EIA report notes that de-carbonization comes from four main technology approaches. These are the electrification of end-use sectors such as heating and transport; the application of carbon capture, utilization and storage; the use of low-carbon hydrogen and hydrogen-derived fuels; and the use of bioenergy. EIA explains that each of these areas faces challenges in making all parts of the technological application process, what they call the value chain, commercially viable in the sectors where reducing emissions is hardest.  The IEA report uses the technology readiness level (TRL) scale (complete description in Box 3.2 on page 67) to assess where a technology is on its journey from initial idea to market use.  Their evaluation of the TRL for different de-carbonization technologies is summarized in three figures: Figure 3.2 TRL of technologies along the low-carbon electricity value chain, Figure 3.3 TRL of technologies along the CO2 value chain, and Figure 3.4 TRL of technologies along the low-carbon hydrogen value chain.

Figure 3.2 notes that hydropower and nuclear are mature technologies.  While it is straying from my intent to discuss only those technologies proposed for the winter peak, it is interesting that solar PV, solar thermal, wind, and hydrogen from water electrolysis are all listed as an early adoption TRL. 

E3 claims that Carbon Capture Storage (CCS) can be used to address the winter peak.  The EIA report notes that capture, transport and utilization or storage of CO2 emissions as a successful decarbonization strategy hinges on the commercial availability of technologies at each stage of the process as well as on the development and expansion of CO2 transport and storage networks at a sizeable scale (Figure 3.3). In this instance I assume that E3 is referring to CCS combined with natural gas combustion.  According to the EIA report natural gas electricity production coupled with chemical absorption has a demonstration TRL.  The feasibility issue in New York may ultimately be storage because there is no oil production to enhance.  Storage in saline formations has an early adoption TRL but New York refused to allow propane storage because of its impact on community character so I would imagine this could not be permitted either.

E3 claims that “synthetic fuels such as hydrogen” can be used to address the winter peak. I am going to only consider hydrogen synthetic fuel production and that is covered in Figure 3.4.  The EIA report notes:

“The value chain for low-carbon hydrogen is not completely developed at commercial scale today. It comprises many technologies that are necessary to produce, transport, store and consume low-carbon hydrogen, each of them at a different stage of maturity and facing specific technical challenges (Figure 3.4)”. 

The pathway report only mentions the use of hydrogen but not how it would be used for the winter peak.  I assume that E3 proposes to use hydrogen production from electrolysis and that has an early adoption TRL.  In order to have it available for use during the winter peaks it will need to be shipped and stored.  The hydrogen infrastructure for pipelines and tanks are both rated as mature technologies.  If the hydrogen is supposed to be used for heating hydrogen boilers and fuel cells have an early adoption TRL but hydrogen-driven fuel cells only have a large prototype TRL.  If the hydrogen is supposed to be used to generate electricity then high-temperature fuel cells have an early adoption TRL and hydrogen-fired gas turbines have a large prototype TRL.

Updated July 6, 2020: E3 also proposes to use renewable natural gas from anerobic digesters to address the winter peak problem.  I could not find a category in these three figures that I think fits this technology in the EIA report.  The poster version of the technology guide rates biogas from a non-algae feedstock as “Commercial Operation In Relevant Environment – Solution is commercially available, needs evolutionary improvement to stay competitive”. There are questions about the collection and storage infrastructure needed to transport and store it for the winter peak demand as well as how much gas is available relative to the need for the winter peak.  

Conclusion

I believe that this report underscores my belief that the statement “Deep decarbonization in New York is feasible using existing technologies” mis-characterizes the actual situation.  As EIA points out feasibility depends upon making all parts of the technological application process, what they call the value chain, commercially viable.  The fact is that for the technologies proposed to address the winter peak problem, one or more aspects of commercial viability, availability limitations, or public perception make the E3 recommendations risky bets for future reliability and affordability.

I suggest that it would be better for the State to take a measured approach rather than the all-in approach currently envisioned.  The fact is that we don’t know what will work best for New York so it would be better to have a plan that could be adjusted as necessary.  The IEA proposes five innovation principles that I think would be appropriate for New York to incorporate in their Climate Act implementation process. 

For governments aiming to achieve net-zero emissions goals while maintaining energy security, these principles primarily address national policy challenges in the context of global needs, but are relevant to all policy makers and strategists concerned with energy technologies and transitions:

Prioritise, track and adjust. Review the processes for selecting technology portfolios for public support to ensure that they are rigorous, collective, flexible and aligned with local advantages.

Raise public R&D and market-led private innovation. Use a range of tools – from public research and development to market incentives – to expand funding according to the different technologies.

Address all links in the value chain. Look at the bigger picture to ensure that all components of key value chains are advancing evenly towards the next market application and exploiting spillovers.

Build enabling infrastructure. Mobilise private finance to help bridge the “valley of death” by sharing the investment risks of network enhancements and commercial-scale demonstrators.

Work globally for regional success. Co-operate to share best practices, experiences and resources to tackle urgent and global technology challenges, including via existing multilateral platforms.

NY Climate Act Implementation – De-Carbonization Pathways Overview

On July 18, 2019, Governor Cuomo signed into law the Climate Leadership and Community Protection Act (Climate Act). It is among the most ambitious climate laws in the world and requires New York to reduce economy-wide greenhouse gas emissions 40 percent by 2030 and eliminate the use of fossil fuel for electricity production by 2040. New York’s politicians were sure that implementing these goals was simply a matter of political will so they offered no plan how it would be done.  On June 24, 2020 Energy plus Environmental Economics (E3) presented results of their emissions reductions pathway analyses to the New York Climate Action Council which gives the first inkling of what the law may suggest will be done.  This post is an overview summary of that report concentrating on the presentation summary of the draft findings.

I am following the implementation of the CLCPA closely because its implementation affects my future as a New Yorker.  Given the cost impacts for other jurisdictions that have implemented renewable energy resources to meet targets at much less stringent levels I am convinced that the costs in New York will be enormous and my analyses have supported that concern.  The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

Summary

The Pathways to Deep Decarbonization in New York State Presentation  can be viewed on the video of the webinar.  The Pathways to Deep Decarbonization in New York State – Final Report  itself and two appendices: Appendix A: Methods and Data  and Appendix B: Literature Review of Economy-Wide Deep Decarbonization and Highly Renewable Energy Systems  were included in the meeting materials.

I think the best way to summarize the report is to simply reproduce the conclusions in section 5 of the presentation and then discuss the points made:

This report presents E3’s initial strategic analysis to inform New York’s future decisions for meeting GHG goals under the CLCPA. Based on our detailed assessment of pathways to deep decarbonization in New York State, we find the following:

        • Deep decarbonization in New York is feasible using existing technologies. This reinforces the conclusion of many other studies. All needed technologies currently exist and can safely be assumed to realize incremental improvements resulting from significant deployment. A high level of innovation will make the transition easier, but the transition is already technically feasible.
        • There are different pathways to a carbon neutral future. A 30-year transition demands action now across all sectors of the State’s economy but affords some optionality. All scenarios that achieve carbon neutrality show significant progress across the “four pillars” of decarbonization: energy efficiency and conservation, decarbonizing the electricity supply, switching to low-carbon fuels, and negative emissions.
        • Continued research, development, and demonstration is key to advancing a full portfolio of options. Some studies and scenarios rely on technologies that have only been demonstrated in a limited number of applications and require further progress before commercial readiness.
        • Consumer decision-making drives the pace of decarbonization, particularly in buildings and on-road transportation. By 2030, key technologies like plug-in electric vehicles, electric heat pump heating and hot water systems, and other electric appliances in the home (e.g., stoves, clothes dryers) will need to become normalized, meeting or exceeding half of new sales with accelerating adoption through midcentury.
        • Flexibility along multiple dimensions is key to maintaining reliability and reducing cost of a 100% zero-emission electricity system. In the electricity sector, several forms of flexibility are necessary for balancing a 100% zero-emissions grid. Flexible end-use loads and battery storage can provide sufficient short-term (intraday) flexibility to balance high levels of variable renewable output. The more difficult challenge is during winter periods with high heating loads and very low renewable energy production, which can occur over several days. This long-duration (interday) challenge can be solved through a combination of large-scale hydro resources, renewable natural gas (RNG) or synthetic fuels such as hydrogen, Carbon Capture Storage (CCS), and nuclear power.
        • Managed electrification can help mitigate the risk of very high winter peaks. In addition to efficiency and end-use load flexibility, investments in a balanced mix of electric heating system configurations and investment in research and development to continue the improvement in cold climate heat pump performance can help to mitigate potential risk associated with unintended consequences of unmanaged electrification.

Background

The New York State Energy Research and Development Authority (NYSERDA) hired E3 to conduct the strategic analysis of New York’s decarbonization opportunities.  It is strategic in the sense that they worked backwards from the targets and put together measures that would be needed to reach them.

The report notes that:

The CLCPA requires additional reporting of emissions associated with “extraction and transmission of fossil fuels imported into the state,” as well as the adoption of a 20-year global warming potential, a metric that emphasizes the near-term climate impacts of short-lived climate pollutants such as methane. The calculation of a 1990 baseline that includes these new requirements is currently underway.

This report is based on the existing inventory of 1990 emission that uses the 100-year global warming potential commonly used elsewhere.  New York’s irrational[1] war on natural gas includes the 20-year global warming potential in order to maximize the effect of natural gas and methane reductions relative to the targets.

Feasibility

The report claims that “Deep decarbonization in New York is feasible using existing technologies”.  Their definition of feasibility apparently means somewhere, someplace, someone has successfully applied the technology.  Using their criteria I am surprised they did not include nuclear fusion as a technology.  After all fusion plasma has been maintained in a stable state for 70 seconds.  Using their rosy projections surely this technology will be available for use in 2050.

Reality is only two paragraphs away: “Continued research, development, and demonstration is key to advancing a full portfolio of options. Some studies and scenarios rely on technologies that have only been demonstrated in a limited number of applications and require further progress before commercial readiness”.  When the report claims “All needed technologies currently exist and can safely be assumed to realize incremental improvements resulting from significant deployment. A high level of innovation will make the transition easier, but the transition is already technically feasible”, there is a serious effort to stretch feasibility that most people would accept in this context.

I agree with the report’s conclusion that winter periods with high heating loads and very low renewable energy production is going to be a big challenge.  The report claims that this can be solved through “a combination of large-scale hydro resources, renewable natural gas (RNG) or synthetic fuels such as hydrogen, Carbon Capture Storage (CCS), and nuclear power”.  I do not agree that RNG and synthetic fuels such as hydrogen are necessarily feasible at the scale necessary to keep the lights on when New Yorkers need the power the most once heating and transportation are electrified.

One final feasibility comment.  The report notes that “investment in research and development to continue the improvement in cold climate heat pump performance can help to mitigate potential risk associated with unintended consequences of unmanaged electrification”.  This refers to the very real problem that air source heat pumps become much less efficient when temperatures go below 20 deg F.  Their study assumes “that a balanced portfolio of electric space heating systems – including cold climate air-source heat pumps with and without onsite combustion backup as well as ground-source heat pumps – would be deployed”.  Heat pumps are very efficient because they move heat/energy rather than produce it when they provide heating.  Ground-source heat pumps always have energy to move.  The problem that air-source heat pumps have is there isn’t enough energy to provide the heat needed when temperatures are cold.  Absent a repeal of the laws of thermodynamics, it is not clear what additional R&D is going to be able to do for air-source heat pump performance when there is no energy to convert.

De-Carbonization Pillars

The pathways proposed to achieve carbon neutrality show “significant progress across the “four pillars” of decarbonization: energy efficiency and conservation, decarbonizing the electricity supply, switching to low-carbon fuels, and negative emissions”.  I address each pillar below.

While I believe that energy efficiency and conservation are the most effective tools for emission reductions, I also believe that there are limits to what can be practically achieved.  New York is already among the most energy efficient states in the country so future progress will likely be difficult.

My primary concern is decarbonizing the electricity supply because all the analyses that show the availability of renewable resources have to date failed to consider small-scale solar variability.  During winter periods with high heating loads the report notes that very low renewable energy production over several days could be expected but their analysis did not use the NY Mesonet data available from every county to refine their projection.  Given the significant effect that the Great Lakes have on precipitation and cloudiness across much of Upstate New York that is a serious deficiency in their solar resources projections.

The report explains that “Advanced low-carbon liquid and gaseous fuels are key to decarbonizing sectors where electrification is challenging, such as freight transportation, aviation, marine, and high-temperature industrial applications”.  Their fuels analysis includes hydrogen produced from electricity produced by renewables.  The thought is that when all the renewables are built there will be many times when we don’t need the electricity so instead of curtailing production, they will use it to create hydrogen that can be stored for use when the wind doesn’t blow at night.  This may or may not be feasible in my mind and because no jurisdiction has employed this technology in a similar application I tend to think it may not be feasible.

There is another little tidbit related to bio-fuels that needs to be recognized.  The report notes that “the pathways modeled in our analysis can achieve deep decarbonization using available in-state biomass feedstocks that are assumed to be converted to advanced renewable natural gas and renewable petroleum products. We also assume that a small amount of wood consumption remains in 2050 to serve a variety of needs, including residential wood usage in the North Country”.  In this instance does North refer to anything north of New York City?  More importantly, their pathways “retain approximately 16 TBtu of wood consumption statewide in 2050; Compare to 2016 residential wood usage in the North Country of about 3 TBtu”.  I personally don’t think that increasing residential wood usage five times over current use is a “small” amount.

Negative emissions strategies including both natural and working lands and negative emissions technologies make up the fourth pillar.  The report defines “negative emissions” as “the removal of CO2 directly from the atmosphere or from the emission stream of renewable biogenic feedstock combustion (where the carbon emitted was first captured from the atmosphere in the photosynthesis process, resulting in a net decrease in atmospheric carbon)”.  The report states that “With nearly 20 million acres of forest, New York State’s natural and working lands sink is projected to sequester between 23 to 33 MMT CO2e”.  The obvious question that comes up is that given a five-fold increase in residential wood usage isn’t that going to cut down the sequestration potential?

Customer Choice

There are two aspects of this that most New Yorkers do not realize are coming soon to their lives: customer choice and customer energy use.  The report explains that “Consumer decision-making drives the pace of decarbonization, particularly in buildings and on-road transportation. By 2030, key technologies like plug-in electric vehicles, electric heat pump heating and hot water systems, and other electric appliances in the home (e.g., stoves, clothes dryers) will need to become normalized, meeting or exceeding half of new sales with accelerating adoption through midcentury.”  What that translates to is you will only have a fifty-fifty chance to buy fossil-fueled appliances or cars in ten years even if the performance that the report admits has to improve has not reached the level needed for your application.  That does not even begin to consider personal preferences for the capability and reliability of on-site fossil fuels.  I have yet to see an explanation of what will happen when there is an ice storm after everything is electrified.  I value the capability to have heat even when the power is down as a very nice benefit of natural gas.

In order to reduce the amount of energy and storage needed it is necessary to shave the peak load as much as possible.  The report notes that “Flexible end-use loads and battery storage can provide sufficient short-term (intraday) flexibility to balance high levels of variable renewable output”.  I believe that flexible end-use load translates to eventual remote control of customer power use.   The theory is that smart meters can provide enough detailed information that they can be used to charge customers higher rates when the load gets high providing a signal for customers to shift usage.  One of the unintended consequences of heating electrification and the expected change to the annual peak load moving to the winter is that shifting heating load is much less of an option.  In the early morning when temperatures are coldest and people warm up their houses what load can be shifted?  If it is a choice between a blackout or a brownout across the system or limiting power use by individual customers it is not a stretch to think that smart meters will limit usage.

Conclusion

Given the enormity of the challenge to meet the Climate Act targets and the composition of the Climate Action Council membership I suppose it was too much to expect unbiased, fact-based implementation pathways.  However, the exaggerated feasibility claims and internal inconsistencies of this document worry me.  The first key takeaway “deep decarbonization is feasible using existing technologies” is only true with a liberal definition of feasible and existing technologies.

The biggest problem is going to be the winter peak when it is likely that there will be insufficient renewable energy available for multiple days.  E3 offered a combination of five options to meet the challenge: large-scale hydro resources, renewable natural gas, synthetic fuels such as hydrogen, Carbon Capture Storage (CCS), and nuclear power.  Note that New York needs additional resources to meet this new challenge and while large-scale hydro resources and nuclear power are possible sources to think that they can be developed in New York is very unlikely.  Renewable natural gas from anerobic digesters is a proven technology but is it feasible to collect and store enough to meet the winter peak demand.  Synthetic fuel production hasn’t even proven itself as a technology that can be deployed at scale much less meet the collection and storage requirements.  CCS is another technology that has “only been demonstrated in a limited number of applications and requires further progress before commercial readiness” but even if the technology works the bigger issue is where are you going to put the collected CO2.  In order to safely store CO2, you need a particular geological formation and that may mean that this technology cannot be used where it is needed in New York.

The conclusion that “Deep decarbonization in New York is feasible using existing technologies” coupled with the conclusion “Continued research, development, and demonstration is key to advancing a full portfolio of options” is a glaring inconsistency.  Two pathways include a “small” amount of wood consumption in 2050 but it turns out that level is five times the existing level.  Furthermore, that consumption is at odds with the negative emissions needed from forest sequestration.

Based on this, I fear that the scoping plan will not be scrutinized in sufficient detail to maintain reliability and affordability.  The Climate Action Council will merely pay lip service to their responsibilities to the citizens of the State and the result will be disastrously high energy costs and impacts to reliability.

I believe that it is only a matter of time until the Iron Law of Climate, “while people are often willing to pay some price for achieving climate objectives, that willingness has its limits” catches up to the Climate Act. It is not only the enormous costs but it is also the changes in lifestyles that will precipitate public demand to repeal the law.  I believe that is in the best interest of the State to get this over as quickly as possible so I think the time has come to accelerate implementation of New York’s Climate Leadership and Community Protection Act.  In order to meet the requirement for an 85% emission reduction economy-wide by 2050 we should immediately stop all investments in fossil fuel infrastructure.  New Yorkers will have to purchase electric vehicles and stop purchasing gas and oil furnaces, gas stoves and gas hot water systems at some point to meet these goals.  According to the advocates the technology is feasible, available, affordable, and necessary.  Let’s test the willingness of the citizens of the State to meet these goals now and get this over sooner rather than later.

[1] I consider New York’s policies to ban hydraulic fracturing and not permit new natural gas infrastructure irrational because the lower prices that resulted from that technology have been responsible for the majority of the emission reductions observed in New York’s electric sector since 2010.