NYS REV Investment Cost Effectiveness

Earlier this month I did a series of posts on the Citizens Budget Commission Getting Greener Report and this post addresses one of their recommendations.  In particular, they recommended that New York State “Establish a prioritization system to pursue renewables that provide the greatest GHG reductions at lowest cost.”  The Clean Energy Dashboard has data to start just such a system.

In my post on the New York Clean Energy Dashboard I noted that it provides data describing Reforming the Energy Vision program activity by electric and gas utilities and the New York State Energy Research and Development Authority (NYSERDA)”.  The dashboard has data that can be used to determine the cost efficiency of CO2 reductions.   In my previous post I presented the total cost effectiveness of all the programs and in this post, I break down the cost effectiveness by program for a first attempt at setting priorities.

Methodology

In order to determine which programs provide the greatest GHG reductions at the lowest cost we can filter Clean Energy Dashboard data twice and calculate a cost per ton reduced for each program.  To get emission reductions, the Clean Energy Dashboard needs filters for C02e Emission Reductions, Gross Annual (Metric Tons) and acquired savings.  I accessed the data tables and downloaded the data in the View Progress by Program tab that includes CO2e Emission Reductions, Gross Annual (Metric Tons).

To get the money spent to get those emission reductions, the Clean Energy Dashboard needs filters for Budget (dollars) and acquired savings.  We are asking for the money spent when “both the measure is installed and currently operational, and the funds associated with the measure or project have been expended.”  I access the data tables and downloaded the data in the View Progress by Program tab that lists the Budget (Dollars) data.

The next step was to combine the two data sets so that I could match the programs listed in each data set.  There was not a complete one-to-one correspondence between the programs so I manually edited the file to match all the programs possible.

Results

Once I had a data file with one-to-one correspondence, I found that there were three categories.  One program was included with emission reductions but no budget dollars and 52 programs had budget dollars but no emission reductions.  There were 107 programs with data for CO2e Emission Reductions and Budget dollars so that I could calculate cost effectiveness.

There was one Central Hudson program that had CO2e Emission Reductions but no budget funds.  In their Community Lighting program Central Hudson partners with local not-for-profit organizations to distribute free LED lightbulbs to eligible residential  customers and has reduced 334.21 tons of CO2e.

The 52 programs with spent money but no emission reductions were primarily NYSERDA projects.  These programs had an acquired budget total of $113,401,265. There were five Con Ed programs, two National Grid (NiMo) programs and the remaining 45 programs were all from NYSERDA.  I think I will return to these programs later because the emphasis in this post is on the programs where we can estimate cost effectiveness.  For now the New York State Clean Energy Dashboard Programs with Budget Money but No CO2e Emission Reductions table lists the programs.

For the 107 programs with both emission reductions and budget data, I divided the funds spent by the CO2 reductions to determine the CO2 invesment efficiency ($/ton) for each program.  The Carbon Dioxide Equivalent Cost Effectiveness Reductions table lists the cost effectiveness data for each program along with the administrator, program name and description, CO2e reduction and acquired funds spent ranked by the cost per ton.  I summarized the results in the Summary of Carbon Dioxide Equivalent Cost Effectiveness Reductions table.  Note that there were a total of 3,056797 CO2e emission reduction tons and an acquired budget total of $937,958572 which works out to an overall cost per ton rate of $306.84 per ton CO2e reduced.

The Social Cost of Carbon (SCC) is supposed to represent the future cost impact to society of a ton of CO2 emitted today.  I believe New York is going to base its carbon pricing on the $50 global social cost of carbon at a 3% discount rate.  In other words, if we spend more today than $50 per ton then we exceed the future cost impact to society. The summary table lists data by different multiples of the $50 SCC cost and shows that only two programs are below that criterion.  Seven programs are under $100, 19 more are under $250, and 79 programs exceed five times the SCC threshold.

Programs

There are a wide range of project types in the 107 programs included in the analysis.  There are concerns about the quality of the CO2 reduction estimates especially with regards to a verifiable methodology and how the costs for the programs are calculated.

I worry more about the CO2 reduction estimates.  For example, compare NYSE&G Energy Marketing Gas Program (#6 in the Carbon Dioxide Equivalent Cost Effectiveness Reductions table) with Central Hudson Behavorial Modification (#7).   The NYSE&G program is an online Energy Marketplace that offers instant rebates to residential customers who purchase qualifying  Wi-Fi thermostats.  I imagine that the program managers for this project found some analysis that provided a range of CO2 reduction estimates for wi-fi thermostat installations and then combined that estimate with the number of thermostats sold to come up with the reduction.  However, this estimate has to assume that the installation of the thermostat led to an energy-saving change at the homes in question and how much of a change.  Unfortunately this assessment is a relatively strong one as compared to the Central Hudson behaviorial modification program.  In that project Central Hudson set up a customized web portal for customers to access and track energy usage, and to access energy saving tips and savings.  The only way I to see how to quantify how that access changed behavior that in turn reduced CO2 emissions is to guess.

As noted previously, there are only two programs with claimed CO2 reduction effectiveness less than the SCC target value of $50.  The better of the two, NYSERDA Clean Energy Communities program, claims 220,182 tons in reductions at a cost of $4,947,773.  The program provided  assistance, technical support, and tools and resources to local governments for implementing clean energy High-Impact Actions in local communities.  The NYSERDA website describes the Clean Energy Communities program:

“Building a more sustainable New York starts with building more sustainable communities. Local governments affect energy choices in their communities, from government operations to homes, businesses, and community institutions.  Local governments in New York State can use the Clean Energy Communities program to implement clean energy actions, save energy costs, create jobs, and improve the environment. In addition to providing tools, resources, and technical assistance, the program recognizes and rewards leadership for the completion of clean energy projects.”

I classify this program as more unverifiable than most others.   Digging down into the project descriptions for this program you find for example providing incentives to a local government to install an electric vehicle charging station.  There is no way to estimate how much use that charging station has been used and how much CO2 was avoided.  As a result, I am not comfortable that this program did in fact produce the CO2 emission reductions claimed.

On the other hand, the second program that was better than the SCC target, NYSERDA Industrial Transition program (#2), provided technical and financial support to assist industrial and data center facilities with process improvement projects to help link energy and their core mission.  Those facilities very likely quantified the before and after implementation energy usage and could therefore provide a emission reduction that can be traced to verifiable information.  Therefore, I am more comfortable that this program did produce the CO2 emission reductions claimed.

There also are issues with the cost estimates.  On the face of it this should be simpler because the project managers must know how much money is being spent.  However, it gets more complicated when you consider the lifetime effectiveness of the investment.  For example, if you pay for LED lighting to replace  incandescent bulbs the investment is effective over the lifetime of the LED lights.  For my calculation I made the simple assumption that it is appropriate to use the total cost to get the reduction irregardless of the expected lifetime of the investment.

Conclusion

There is political, personal, and organizational pressure for larger as compared to smaller CO2 reductions for these programs.  As shown above, many of the programs have largely unverifiable emission reduction calculation methodologies.  I conclude it is likely that the emission reduction estimates for these programs are higher than we can actually expect to see.  The costs over time could be different too.

Nonetheless, these are numbers that can be used to meet the Citizens Budget Commission recommendation that New York State “Establish a prioritization system to pursue renewables that provide the greatest GHG reductions at lowest cost.”  This post provides a first cut list to set those priorities.

My bigger concern is the very poor performance of these programs relative to the SCC target levels.  As Resources for the Future explains:

One of the primary ways the SCC is used in policy design and evaluation is through benefit-cost analysis. A benefit-cost analysis compares the total economic benefits of a proposed policy to its total economic costs. Take, for example, a regulation that limits air pollution: its total benefits—including those from improvements to public health and the environment due to better air quality—would be compared against the implementation costs, such as the purchasing and installation of equipment to control air pollution. Benefit-cost analysis has been a required part of federal regulatory analysis since it was implemented by the Reagan administration in 1981.

The SCC is used in benefit-cost analysis to quantify the dollar-value of a policy’s effect on climate change due to changes in greenhouse gas emissions. For policies that increase emissions, the expected increase in emissions (in tons) is multiplied by the SCC, and the result is included as part of the total estimated costs of the policy. For policies that decrease emissions, the change in emissions is multiplied by the SCC, and the result is added to the expected benefits of the policy.

The bottom-line concern is whether New York State should be pursuing any of the 105 programs whose decrease in emissions exceeds the SCC cost benefit threshold of $50.  The performance of these programs is not encouraging.  There are 79 programs that exceed five times the $50 SCC threshold that total $801,173,268 but only claim reductions of 1,494,548 tons for a cost effectiveness of $536 per ton reduced.  Combine those programs with the 52 programs that claim no CO2 reductions, REV programs in the Clean Energy Dashboard have spent over $914 million with very little emissions reductions to show for it.

Author: rogercaiazza

I am a meteorologist (BS and MS degrees), was certified as a consulting meteorologist and have worked in the air quality industry for over 40 years. I author two blogs. Environmental staff in any industry have to be pragmatic balancing risks and benefits and (https://pragmaticenvironmentalistofnewyork.blog/) reflects that outlook. The second blog addresses the New York State Reforming the Energy Vision initiative (https://reformingtheenergyvisioninconvenienttruths.wordpress.com). Any of my comments on the web or posts on my blogs are my opinion only. In no way do they reflect the position of any of my past employers or any company I was associated with.

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