NYSERDA RGGI-Funded Program Results

The New York State Energy Research and Development Authority (NYSERDA) report New York’s RGGI-Funded Programs Status Report – Semiannual Report through December 31, 2018 (“Status Report”) describes how New York invested the proceeds from the RGGI auctions.  I previously described the report by summarizing the results by sector.  This post provides results by program.

Background

The Regional Greenhouse Gas Initiative (RGGI) is ten years old and has been touted as a successful example of a “cap and dividend” pollution control program.  New York State has been involved in the program since its inception and touts its success.  I have written extensively on the results and have shown that in fact its successes have been limited.   For example, the fundamental assumption for any carbon pricing program is that the proceeds can be invested effectively.  However, the observed results for New York’s experience in RGGI suggests that this may not be the case.

The Social Cost of Carbon (SCC) is supposed to represent the future cost impact to society of a ton of CO2 emitted today.  It is a policy tool that attaches a price tag to the long-term economic damage caused by one ton of carbon dioxide, hence the cost to society.  It was extensively by the Obama Administration to justify the Clean Power Plan, has been proposed for use in the New York Independent System Operator carbon pricing initiative and is included in New York’s Climate Leadership and Community Protection Act.  In that law § 75-0113. Value of carbon, states that

      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.

Therefore, it is entirely fair to use it as a metric to determine if the investments made from carbon pricing income are cost effectively reducing CO2.  I believe New York will base their carbon pricing on a $50 global social cost of carbon at a 3% discount rate so that is the cost benefit effectiveness threshold metric I will use.

NYSERDA RGGI Program Status

The key table in the Status Report is Table 2 Summary of Expected Cumulative Annualized Program Benefits through 31 December 2018.  It provides costs, energy savings, electricity savings or renewable energy production, greenhouse gas emission savings and the calculated cost benefit ratio.  The $/ton reduced metric is presented on an annual basis and as expected lifetime savings.  For the purpose of this post I use the annual numbers because all the reduction targets are based on an historic annual level (usually 1990).  In order to have an appropriate comparison it has to be annual to annual.

The NYSERDA RGGI Status Report Table 2 – Ranked Cost Benefit Ratio Datatable lists all the programs in the NYSERDA report ranked by the annual cost benefit ratio with just that parameter.  It lists 19 programs with associated CO2 reduction benefits and another 18 programs with no claimed CO2 reductions.  None of the 19 programs with CO2 reduction benefits meets the $50 SCC metric for cost effective investments.  Clearly the 18 programs with no claimed reductions would not be able to meet the metric either.

I prepared a brief summary overview of each of the programs in NYSERDA RGGI Program Cost Effectiveness  After reading the report and summarizing them for the overview I am not impressed and in fact I question the results.  The most cost-effective program, Multifamily Performance Program Assessments in the Green Jobs Green New York sector, had a cost effectiveness value of $58/Ton CO2e.  The program provides financing and co-funding for comprehensive energy assessments and the development of an Energy Reduction Plan, serving market-rate and low- to moderate-income residential buildings with five or more units to increase adoption of clean energy in NYS. Accomplishments.  According to the summary table, they managed to do a total of 316 assessments through December 2018 that resulted in 61,795 residential units served with installed measures for a cost of $3.3 million in “total incentives” and another $1.4 million in “total associated costs”.  Summing the incentives and associated costs and dividing by the 61,795 residential units yields $76.06 per unit.  The summary indicates that this is the cost the comprehensive energy assessment and development of a reduction plan and that rate per unit is reasonable.  But this also means that the actual costs to implement the energy reduction are not included.  So how did NYSERDA claim any CO2 reduction benefits and what are the chances that the actual CO2 reductions were double-counted?

There is another concern. A quick perusal of the programs listed with no reduction benefits demonstrates justifiable cynicism of yet another government program controlled by politicians.  The programs range from practical to clear pork barrel.  New York wants to be able to track emissions from generation sources within the State and from imported sources to create “tradable generation attribute certificates”.  Rather than fund this through the general fund it is easy to justify this as a necessary expense for these funds.  The research projects are another segment of funding where there is a justifiable rationale for funding projects that have no reduction benefits short-term because they could lead to long-term reductions.  At the extreme of clearly unjustified funding is the Brookhaven National Laboratory Ion Collider.  I have no idea the tortured logic that was used to justify spending any RGGI funds on this.

Conclusion

Advocates for carbon pricing schemes assume that the investments from the proceeds are worthwhile.  I think these results and the results from New York’s Clean Energy Dashboard demonstrate that is not the case.  The Regulatory Analysis Project (RAP) study: Economic Benefits and Energy Savings through Low-Cost Carbon Management notes that “Many advocates of carbon pricing begin with the proposition that the main point is to charge for carbon emissions “appropriately” and that carbon reductions will surely follow in the most efficient manner. While carbon pricing is a useful tool in the fight against climate change, there is now substantial experience to suggest that wise use of the resulting carbon revenues is equally important, or even more important, if the goal is to actually reduce emissions at the lowest reasonable cost.”

The other concern is the cost of the New York program relative to the social cost of carbon. The NYSERDA RGGI Status Report does not include a single program that reduces carbon dioxide more cost efficiently than $50 per ton.  Because I have shown that eliminating New York CO2 emissions that would provide a reduction, or a “savings,” of approximately 0.0026°C by the year 2050 and 0.0054°C by the year 2100.  Because you cannot measure that small a temperature difference there will be no tangible benefit of the CLCPA.

My primary concern with New York’s clean energy mandates is the cost.  If the cost is small then signaling New York’s virtue might have value. According to the Clean Energy Dashboard, New York has invested $1,051,359,837 through the third quarter of 2019 but can only claim 3,057,131 tons of reductions giving a CO2 invesment efficiency of $343.90 per ton of CO2 equivalent reduced.

It is not clear how advocates of these programs can justify the costs given these results.  The cost efficiency does not even approach the supposed appropriate cost of carbon dioxide and the there is no tangible expected change to global warming.

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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