Pragmatic Summary of the Climate and Community Investment Act

UPDATE 5/12/2021:  Contrary to my assertion, this legislation has not been passed by the New York Senate, it hasn’t even come up in committee yet in either house.

In the spring of 2021, the New York state Senate introduced and passed the Climate and Community Investment Act (CCIA).  At the time of this writing in early May 2021, the bill is being considered by the Environmental Committee of the Assembly.  Coming on the heels of the Texas energy debacle one might think that New York politicians would not propose any changes to energy and environmental laws until the causes of that disaster were understood or would at least make implementation contingent upon feasibility studies to determine if the ambitious goals of new legislation don’t risk a similar outcome in New York. Unfortunately, this summary of the proposed law shows that is not the case. 

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.

Background

The sponsor memo for this proposed regulation lists specific provisions in the proposed legislation.   I prepared an annotated version of the draft bill that includes internal links to the sections of the bill corresponding to those provisions.  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.

I reviewed the sponsor memo for this proposed regulation in my overview post.  The memo describes the sections of the legislation. I prepared posts on the following sections of the proposed law:

• • Section 2 establishes the legislative findings that justify the need for the law.
  • Section 3 amends an existing law to establish a value of pollution and mitigation program.
  • Section 8 creates the Climate and Community Investment Authority.
  • Section 9 amends the tax law to establish a climate pollution fee.

This post will summarize all the sections of the proposed law.

The rationale for the legislation in the legislative findings in section 2 follows the premise of all the New York legislative and regulatory initiatives: there is a climate crisis, the effects of climate change are observable today, changes in greenhouse gas (GHG) concentrations due to humans are responsible for the observed climate changes, and New York action to reduce emissions will mitigate those effects.  I addressed these claims in my post and found much evidence that does not support those claims.  I also recently reviewed the state of the science related to the climate emergency and found that behind the façade of crying wolf about the alleged climate emergency there is a large body of evidence contradicting that claim.  Even though advocates dismiss any contradictory evidence there is a gaping hole in their rationale for the value of mitigation.  In the state of the science post I showed that the global warming impacts of New York emission reductions projected with the climate models being used to claim a climate emergency are simply too small to be measured, much less have an effect on any of the purported damages of greenhouse gas emissions.  In the context of global emissions New York’s efforts will be subsumed quickly by emissions increases in other countries that are morally obligated to provide the tangible benefits of affordable, abundant energy to their citizens by using fossil fuels. 

The rationale for the legislation claims that “Climate change especially heightens the vulnerability of disadvantaged communities including communities of color and low-income communities, which bear environmental and socioeconomic burdens as well as legacies of racial and ethnic discrimination”.  It goes on to claim that air pollution is another disproportionate burden, that Covid-19 was exacerbated by those burdens, and somehow even managed to relate these impacts to the George Floyd murder.  The authors of this legislation were surely affected by environmental justice advocate arguments that the disproportionate burdens of the environmental justice communities are exacerbated by power plants located in those communities as exemplified by articles like Fossil Fuel Phase Out Must Begin Where the Industry Has Hurt People the Most.  There are two fatal flaws in those arguments however.  They assume that there is no threshold for air pollution impacts which I believe is unsupportable.  With regards to power plants themselves the primary health effects are from ozone and inhalable particulates which are not directly emitted by power plants so local effects are unlikely.  As a result, the campaigns to retire power plants in disadvantaged communities is based on a mis-conception and will not have the desired effect.

Section 3 mandates a new air pollution pricing program by establishing a value of pollution and mitigation program.  The authors of this legislation have heard about the social cost of carbon and propose to implement a similar approach for other air pollutants.  I think this is deeply flawed because existing Clean Air Act regulations already address most of the concerns incorporated into a social costs approach.  The only missing component is a negative externality fee to cover the alleged social costs that is included in the CCIA.  The law mandates that New York will establish its own values but I have no doubts that the authors of the legislation don’t understand the effort needed to develop such a metric.  The CLCPA includes a value of carbon requirement and the Department of Environmental Conservation developed its own value but that effort depended upon extensive previous work on the Federal level.   There is nothing similar available for the other pollutants proposed in the legislation so that effort would have to start from scratch.

Section 8 establishes the Climate and Community Investment Authority. In general, I am not a fan of governmental agencies and I am particularly unimpressed with New York authorities.  The particular problem is that despite the dedication in New York authorities of staff members chosen because of their background and experience, their work is co-opted by managers chosen by politicians.  Over time and, particularly in the Cuomo Administration, the authorities no longer answer to the citizens of New York but to the agendas of the politicians.  Setting up a new authority for a specific agenda-driven program is a recipe for public policy that is not necessarily in the best interests of the state as a whole.  The mandated requirements for membership and operations exacerbate my concerns because they cater to the ideological preconceptions of the authors of the legislation.

The CLCPA does not include a provision to fund the efforts needed to implement the reductions necessary to meet the emissions targets.  Section 9 establishes a climate pollution fee presumably to address that need.  The authors of the legislation have proposed a complicated fee structure that includes an environmental integrity metric that adjusts the fee based on an arbitrary assessment of how they think the CLCPA reductions should be scheduled.  Inexplicably, there is no reference to the CLCPA mandated value of carbon and the proposed emissions fees are inconsistent with the calculated social cost values.

The legislative findings also argue that good jobs and a thriving economy should be a key concern of climate policy.  The bill includes provisions to establish responsible contracting, labor and job standards and worker protection; 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”; and establish the climate change “just transition”.  The “just transition” slogan describes efforts to “ensure an equitable transition for New York’s workforce toward the State’s renewable energy future and will develop a forward-looking jobs report, identify workforce training needs, and assess opportunities to put former power plant sites to productive use”.  In my opinion all of these aspects of the law are included to cater to specific political demographics to engender support for the bill.

There is one aspect of the law that I completely support.  Section 4 of the bill amends the executive law to add a new section 184 to limit diversion of funds dedicated to the climate and community investment.  Too often in the past, funds that are supposed to be used for environmental control projects have been diverted to other politically expedient uses.

Discussion

I have previously described how the precautionary principle is driving the CLCPA mandates based on the work of David Zaruk, an EU risk and science communications specialist, and author of the Risk Monger blog.  His explanation that managing policy has become more about managing public expectations with consultations and citizen panels driving decisions describes the Advisory Panels to the Climate Action Council and the authors of this legislation.  He says now we have “millennial militants preaching purpose from the policy pulpit, listening to a closed group of activists and virtue signaling sustainability ideologues in narrowly restricted consultation channels”.  This legislation proposes to mandate that approach.  Instead of what they know, the Climate and Community Investment Authority directors will be determined by who they know.  Based on what happened during the CLCPA advisory panel process, the social justice concerns of many involved in the CCIA bureaucracy, including the most vocal, will be more important than providing the state affordable and reliable power.

This legislation will generate a lot of revenue with one estimate of $15 billion per year.  New York’s record investing the proceeds of the Regional Greenhouse Gas Initiative are often cited as an example of the value of New York’s support of clean and renewable energy.  The latest New York State Energy Research and Development Authority (NYSERDA) report New York’s RGGI-Funded Programs Status Report – Semiannual Report through June 30, 2020 describes the programs New York has set up to invest the proceeds from the Regional Greenhouse Gas Initiatives.  I found that NYSERDA supports 20 programs with associated CO2 reduction benefits and another 18 programs with no claimed CO2 reductions.  I compared the cost per ton reduced for those programs against the 2021 $127 New York Value of Carbon metric for cost effective investments.  Seventeen programs and the 18 programs with no claimed reductions do not meet this cost effectiveness standard.  I found that only 1.1% of the NYSERDA RGGI funds invested cost-effectively reduce CO2 emissions. This legislation has specifc mandates for Climate and Community Investment Authority funding including 33% for the “community just transition fund”, 30% for the “climate jobs and infrastructure fund”, 30% for the “low-income and small business and household energy rebate fund”, and 7% for the “worker community assurance fund”.  This will further dilute the cost effectiveness of emission reduction investments.

One of my biggest problems with this proposed legislation is mandates for specific information and programs that are already available elsewhere.  The value of pollution and mitigation program replicates the standards setting process of the Clean Air Act but proposes to go beyond that process and conjure up emission fees based on the social cost of carbon model.  There already is a pollutant emission fee and the effort necessary to develop social cost indices are clearly under-estimated.  The only rationale for these components of the legislation is disappointment that the existing programs don’t give the answers the authors want.

Conclusion

The rationale for the CCIA epitomizes the belief that manmade climate change is a factor in many of today’s societal problems.  Judith Curry describes and responds to the cover story, “Climate is Everything” in the April 26 issue of Time Magazine.  She concludes:

The ever-expanding narrative of climate change entrains a range of social values into the proposed solutions. The momentum of the climate change narrative leads to claims that there is a solution to many other societal problems within the climate change cause – an example is social justice in the context of the U.S. Green New Deal.  This link acts to energize both causes, and leverages the climate change narrative to blame or attack those opposed to the separate cause.  

Climate change has thus become a grand narrative in which human-caused climate change has become a dominant cause of societal problems. Everything that goes wrong then reinforces the conviction that that there is only one thing we can do prevent societal problems – stop burning fossil fuels. This grand narrative misleads us to think that if we solve the problem of manmade climate change, then these other problems would also be solved. This belief leads us away from a deeper investigation of the true causes of these problems. The end result is narrowing of the viewpoints and policy options that we are willing to consider in dealing with complex issues such as public health, weather disasters and national security. 

I leave it to readers to determine if their value judgements support the link between societal benefits and climate change mitigation but I believe that other risks must be considered.  For example, there are reliability risks.  The legislative findings note that Superstorm Sandy in 2012 “caused at least 53 deaths and $32 billion in damage in New York state”. It is notable that the February 2021 blackout in Texas caused similar impacts.  One disaster was caused by nature and many impacts of the other were caused by a failure in the planning for the electric energy system.  New York’s proposed energy transition goes well beyond the recent changes to the Texas energy system and risks a similar outcome unless all identified problems are addressed.

Energy cost affordability is another major risk.  WHAM reports that the carbon tax alone would bring in $2.3 billion a year and could increase gasoline costs 55 cents a gallon.  The sponsor, Senator Kevin Parker says: “We do believe that the benefits way outweigh the hurt that people may be feeling with this legislation”.   I believe the purported benefits are illusions.  Eliminating New York’s GHG emissions will not have any measurable effect on global warming and will be replaced by emissions elsewhere in the world in a matter of months.  The social cost benefits of carbon are numbers developed to “prove” cost-effectiveness but the reality is the costs are real and the benefits illusions.

A primary objective in this legislation is environmental justice.  I believe that if you want to protect the environment, you must fight poverty.  On a global level the poor are trying to make it from one day to the next and don’t have energy or resources for protecting the environment. They have poorer health outcomes, lower quality of life, shorter lives, and worse education.  In New York any additional costs of energy for this virtue-signaling legislation will increase energy poverty and exacerbate similar issues.  The fact that those costs in aspects of this legislation are for efforts that duplicate Clean Air Act programs is especially troubling.  My entire career has been related to air quality regulation and impacts and I am comfortable that the existing regulations are adequately protecting health and welfare.

To sum up the rationale for this law is that there is a climate crisis, the effects of climate change are observable today, changes in greenhouse gas (GHG) concentrations due to humans are responsible for the observed climate changes, and New York action to reduce emissions will mitigate those effects.  The most important takeaway from this post is that even if one accepts the premise that human emissions are affecting the climate in observable ways, New York’s contribution to the global greenhouse gas emissions is so small that eliminating New York’s GHG emissions will have no observable effect.  Given the enormous costs this means that this legislation is a poor deal for New Yorkers.