Governor Cuomo and the New York State Legislature passed the Climate Leadership and Community Protection Act (CLCPA) in 2019 and planning for the transition of New York’s energy system is underway. Because I am convinced that the general public has no idea what is going on with this energy policy and the possible ramifications, I have been preparing posts on this process. This post addresses a webinar (slides and recording) by DEC on the value of carbon and the comments I submitted about the webinar.
The Citizens Budget Commission has developed an overview of the CLCPA and its targets, Green in Perspective: 6 Facts to Help New Yorkers Understand the Climate Leadership and Community Protection Act, that provides good background information. The CLCPA was described as the most ambitious and comprehensive climate and clean energy legislation in the country when Cuomo signed the legislation. Unfortunately, the politicians that passed this law assumed that their political will was sufficient to make it happen and included no provision to determine whether it can work or how much it will cost. I have written a series of posts on the feasibility, implications and consequences of this aspect of the law based on evaluation of data.
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. My posts on New York energy policy are here. 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.
The Climate Action Council is charged with developing a scoping plan to implement the CLCPA requirements. When developing the plan, they are supposed to take into account the “economic and social benefits of greenhouse gas emissions reductions” taking into account the value of carbon. In a previous post, I described the requirement, the social cost of carbon, and concerns I have about this parameter.
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.
In order to fulfill their required response to this requirement the DEC is in the process of developing guidance to establish the social cost of carbon that will be used in New York. The webinar presentation on July 24, 2020 provided the public an opportunity to learn and ask questions. DEC noted that comments and questions can be sent to ClimateAct@dec.ny.gov and this post describes comments I submitted on August 6, 2020.
The automatic response I received when I submitted the comment was interesting. The automatic reply stated: “Thank you for your message. Your message will be directed to the Climate Action Council or one of the Advisory Panels, as appropriate.” I thought the message would be directed to the staff at DEC responsible for the webinar not the Climate Action Council. This illustrates one of the problems I have with the CLCPA. For all the talk about best available science and consultation with the public in CLCPA presentations, there isn’t any clear description of how public input will be considered, indication that public comments will be documented, or whether there will be responses to comments.
The webinar gave an overview of valuing carbon and included questions on specific topics. I sent Comments on the DEC Guidance for Establishing a Value of Carbon Webinar to the email address listed on the DEC website. I will summarize those comments below.
I had two general comments. DEC has decided that the value of carbon will be established as guidance not as a regulation. While I agree with that in general, it also means that DEC has no obligation to provide documentation responding to comments or justify the choice of the value used. I also commented that given the importance of this parameter and its inherent complexity that the guidance document should include a layman’s summary that explains how the parameter is developed, used and provide the full range of potential values along with the justification for the value chosen.
I also called attention to the fact that the New York State Energy Research and Development Authority (NYSERDA) is mis-using the SCC in its press releases touting the benefits of their carbon reduction programs. The CLCPA value of carbon is supposed to define the economic and social benefits of greenhouse gas emissions reductions so it is important that it be done correctly. NYSERDA applies the SCC to the lifetime value of avoided carbon emissions. However, the SCC is the present-day value of projected future net damages from emitting a ton of CO2 today so it should not be used with lifetime emissions.
One of the key considerations in calculating the SCC is the choice of the discount rate used. The webinar attempted to explain how it is used but I believe a more general and more complete explanation is needed. Another item for discussion is whether the state’s value of carbon should address global impacts or, for the sake of argument, just state-wide impacts.
The webinar presentation asked how the social costs of pollutants other than CO2 should be addressed. I found a reference that I believe made a persuasive argument that using directly calculated societal values should be used.
Another question asked was “How can state agencies use the damages-based value of carbon?”. The webinar slides explicitly stated “This is not a carbon price and will not impose any fees” but I think that will be the inevitable outcome at some date. The webinar slides notes that the Federal government uses it in regulatory benefit-cost analyses and environmental reviews and I believe that it should be used the same way for the Climate Act.
The primary purpose of this post was to document my comments made on the value of carbon webinar. The value chosen and the venues where it is used will have important implications for the CLCPA. I will continue to monitor this and report on the social cost of carbon.