New York Climate and Community Investment Act – Overview

This spring the New York state Senate has introduced the Climate and Community Investment Act (CCIA).  This first post provides an overview of the proposed legislation.  Subsequent posts will address the many problems of this proposal. 

I have written extensively about implementation of the Climate Leadership and Community Protection Act (CLCPA) because I believe it will adversely affect affordability and reliability as well as create more environmental harm than good. The CCIA will make those impacts worse.  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 April 13 the New York Senate’s Standing Committee on Environmental Conservation and Standing Committee on Energy and Telecommunications host a public hearing to discuss and receive input from stakeholders on the Climate and Community Investment Act.  The summary of Senate Bill S4264A states:

Enacts the climate and community investment act; prioritizes the allocation of public investments in disadvantaged communities; addresses climate change challenges through the expansion and growth of clean and renewable energy sources; adopts best value requirements for the solicitation, evaluation and award of renewable energy projects;  establishes a community just transition program; establishes a climate pollution fee and a household and small business energy rebate; and creates the climate and community investment authority

The sponsor memo for this proposed regulation lists the following specific provisions.  I will address these provisions briefly here (indented and italicized) and in more detail in subsequent articles.  I prepared an annotated version of the draft bill that includes internal links to the sections of the bill that are described below.

Section 1 of the bill establishes that the bill shall be cited as the Climate and Community Investment Act.

No comment

Section 2 of the bill establishes legislative findings that climate change is adversely affecting economic well-being, public health, natural resources, and the environment of New York; and actions undertaken by New York to reduce greenhouse gas emissions will have an impact on the global greenhouse gas emission and the rate of climate change.

The findings list the New York alleged impacts of climate change on the state that are common to all laws and regulations in recent years.  One aspect that is different is an emphasis on arguments that those impacts “heighten vulnerability” of disadvantaged communities.  Also included is an argument that disadvantaged communities experience “greater exposure to air pollution and subsequent negative health impacts”.  There are several arguments that that COVID-19 makes the air quality, disadvantaged community and economic problems worse.  They even managed to get a reference to George Floyd in these findings.  The final arguments claim that climate change is having a detrimental effect on the New York economy so community investment will be a good thing.

 The findings then go on to claim that addressing these effects has value.  They argue that “it is vital that the state’s investments in clean and renewable energy be protected and monitored through all stages of development to make certain that they are effective in producing the intended results”.  They suggest that “properly trained craft personnel” and “project labor agreements, responsible contracting and prevailing wage requirements” are needed. 

 The findings then claim that New York actions will be affected by the actions undertaken by New York to reduce GHG emissions and that global warming must be limited to no more than 2^o C “by reducing emissions at least 80 percent below 1990 levels by 2050” from industrialized nations.  They note that in order to meet the Climate Leadership and Community Protection Act that it is in the interest of the state to promote and provide resources for the infrastructure transformation.

Finding 18 states

“By exercising a global leadership role on greenhouse gas mitigation and climate change adaptation, New York will continue to position its economy, technology centers, financial institutions, and businesses to benefit from national and international efforts to address climate change. Action undertaken by New York to reduce greenhouse emissions will have an impact on global greenhouse gas emissions and the rate of climate change. In addition, such action will encourage other jurisdictions to implement complementary greenhouse gas reduction strategies and provide an example of how such strategies can be implemented. It will also advance the development of green technologies and sustainable practices within the private sector, which can have far-reaching impacts such as a reduction in the cost of renewable energy components, and the creation of jobs and tax revenues in New York.”

 The findings wind up concluding that it is in the interest of New York to take rapid action to reduce GHG emissions and “transition to a just clean energy economy”.  The recommend that the way to do this is to establish a dedicated authority to “nimbly” manage the proceeds from polluter fees, disburse funds and prioritize projects and funds for impacted communities, reduction strategies, and assist workers impacted by the transition. 

Section 3 of the bill amends article 19 of the environmental conservation law to add a new title 13 addressing air pollution pricing regarding methodology, and air pollutant price index, implementation of fees, allocation of revenues, inventory, transportation pollution and reporting.

This section establishes “Methodology and valuation of pollution price index” that mandates a social cost of pollution for all regulated air contaminants.  Not surprisingly once they are established then “all covered sources shall be required to pay the fee”.  There will be a “value of pollution and mitigation program fund” trust fund established and the funds will be allocated as follows:

• • • • 40% to the environmental justice office
      • 20% to “expanding, operating, and maintaining” the Title V emissions inventory
      • 20% to “expanding, operating, and maintaining” air quality and point source monitoring within DEC
      • 20% to be allocated at the discretion of the authority
      • “No funds shall be allocated to fund police, prisons or related infrastructure”

The regulation specified that the “authority shall update and publish the inventory of emissions from Title V sources to:

1. 1. 1. 1. assess the extent to which given regulated air contaminants, especially air contaminants that have highly adverse health impacts, are co-emitted with greenhouse gas emissions;
         2. assess the extent to which regulated air contaminants that have especially adverse health impacts are likely to be reduced over time as a result of:
            1. the fee established in section three thousand forty of the tax law; and
            2. the investment programs established in title nine-C of article eight of the public authorities law;
         3. identify and analyze emissions hotspots and cumulative burdens, pertaining to regulated air contaminants in order to prioritize emissions reductions in these areas;
         4. assess emissions and pollution-related health impacts associated with the transportation sector; and
         5. make the Title V emissions inventory more accessible to the public including, but not limited to, taking action to release the related data, analysis and assumptions of agency websites.

This regulation also mandates development of a plan to accelerate the reduction of regulated air contaminants from mobile sources.  The plan is required to consider specific mechanisms such as electrification of freight transportation and market-based mechanisms.

Section 4 of the bill amends the executive law to add a new section 184 to limit diversion of funds dedicate to the climate and community investment.

“Diversion of funds dedicated to climate and community investment to the general fund of the state for any other purpose is prohibited”.  This section addresses other potential ways the funds could be diverted.

Section 5 of the bill amends the labor law by adding article 8-b which establishes responsible contracting, labor and job standards and worker protection.

This is way beyond my expertise but I believe that it is simply a mandate that all climate infrastructure funded by the state be done by union labor.  Please refer to the attachment for further information.

Section 6 of this bill amends section 231 of labor law to add a new subdivision 8 to require prevailing wage for building service employees that are employed in any building or facility that has received grants or tax abatements of one million or more.

The summary covers the section.  Please refer to the attachment for further information.

Section 7 of this bill amends the public authorities law by adding a new title 9-c b which establishes the climate change just transition.

For this overview the following list of the contents of the proposed amendments will suffice:

GENERAL PROVISIONS

Section 1910. Definitions.

1. 1. 1. 1911. Coordination of programs.
         1912. Transparency and accountability.
         1913. Report on community ownership.

 SUBTITLE II

COMMUNITY JUST TRANSITION

Section 1914. Definitions.

1. 1. 1. 1915. Office of community just transition.
         1916. Establishment of community just transition program.
         1917. Administration by the authority.
         1918. Allocation of funds.
         1919. Selection process.
         1920. Identification of disadvantaged community needs.
         1921. Community decision-making and accountability mechanisms.
         1922. Criteria for implementing community accountability mechanisms.
         1923. Consultation with the working group.

 SUBTITLE III

CLIMATE JOBS AND INFRASTRUCTURE

Section 1924. Definitions.

1. 1. 1. 1925. Establishment of climate jobs and infrastructure program.
         1926. Administration by the authority.
         1927. Allocation of funds.
         1928. Funding instruments.
         1929. Selection process and criteria.
         1930. Consultation with the advisory council.
         1931. Comprehensive approach to existing structures.
         1932. Advisory council of the climate jobs and infrastructure program.

 

SUBTITLE IV

JUST TRANSITION FOR IMPACTED WORKERS AND COMMUNITY ASSURANCE

Section 1933. Definitions.

1. 1. 1. 1934. Establishment of worker and community assurance board.
         1935. Establishment of worker assurance program.
         1936. Establishment of community assurance program.
         1937. Administration.
         1938. Allocation of funds.
         1939. Selection process.

1939-a. Designation of significant impact.

1939-b. Public engagement and social dialogue.

1939-c. Reporting.

Section 8 of this bill amends article 8 of the public authorities law to add a new title which establishes the climate and community investment authority.

This is another instance where I haven’t the experience to comment on the powers and duties.  The annotated version of the proposed law contains a link to § 2799-yyyy Powers and Duties that includes some powers I found surprising.  For our purposes the primary duty of interest is the power to fix and collect “such fees, rentals, and charges” to provide sufficient revenue to meet the obligations of the authority.

Section 9 amends the tax law to add new articles 42 and 43 which establishes climate pollution fee and the Household and Small Business Energy Rebate.

The climate fee is complicated.  A border carbon adjustment fee is mandated.  The fee itself is based on carbon dioxide equivalent so is it inconsistent with the Part 496 methane and nitrous oxide carve outs.  It covers any carbon-based fuel sold, used or brought in the state by an applicable entity and fugitive methane emissions and sets its own price on carbon which is inconsistent with the value of carbon guidance prepared by DEC.  The price is adjusted by year and a newly defined environmental integrity metric.  That metric adjusts the price based on the state’s reductions relative to a defined trajectory.  

Section 10-11 of this bill establishes a severability clause. Section 12 of this bill sets the effective date.

No comment

Conclusion

The February Texas blackouts should be a cautionary tale for politicians who think their political will is sufficient impetus not only for an unprecedented transition of the energy system but also to use the transition to redress “legacies of racial and ethnic discrimination”.  The legislative findings and declaration roll up every possible effect of climate change on dis-advantaged communities not only as a rationale for the legislation but also to define the proposal as a moral issue unworthy of criticism. 

Unfortunately, there is much to criticize in the proposal.  It is not clear why a new air pollution fee program is needed to replace the existing fee program and disingenuous to not provide that explanation in the findings.  It layers requirements and mandates on existing programs and processes.  The carbon price scheme ignores DEC value of carbon guidance.  The law establishes an emission reduction trajectory target that is a goal for the CLCPA Climate Action Council process that is underway and will not develop its trajectory for months.  Carbon pricing appears to be the preferred Progressive policy approach to fund the transition but, in many cases, and in this proposal in particular, the suggested methods deviate substantially from carbon pricing theory (and not in a good way).

The foundation of this legislation and the Climate Leadership and Community Protection Act is that present renewable energy technology can be used to safely transition the energy system away from fossil fuels while maintaining affordability and reliability in the next 30 years.  No jurisdiction, however small, has actually achieved the zero-emissions goal of New York’s climate ambitions.  Jurisdictions that have tried to achieve less ambitious goals have had issues with affordability and reliability.  I believe that unless a feasibility requirement is incorporated in this proposed regulation, that blackouts similar to the what occurred in Texas in February 2021 are inevitable in New York.  Importantly the worst effects of those blackouts and higher energy costs will be on the dis-advantaged communities that this law purports to want to help.