At the October 14, 2021 meeting of New York’s Climate Leadership and Community Protection Act (CLCPA) Climate Action Council Carl Mas from the New York State Energy Research & Development Authority (NYSERDA) presented the first estimates of costs and benefits. Not surprisingly they conjure up a way to claim that the benefits out weighed the costs. This will be my first post on those claims.
I have written extensively on implementation of the CLCPA because I believe the solutions proposed will adversely affect reliability and affordability, will have worse impacts on the environment than the purported effects of climate change, and cannot measurably affect global warming when implemented. 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 responsible for submitting the Scoping Plan that will outline a plan to implement strategies to meet the ambitious targets of the CLCPA. Of particular interest are the targets to reduce greenhouse gas emissions by 40% relative to the 1990 baseline by 2030. In 2030 70% or the electrical energy is supposed to come from renewable resources and by 2040 all electricity is supposed to come from zero-emissions sources. The Council is composed of political appointees chosen more for their direct involvement in the CLCPA transition than their expertise in the energy sector so the New York State Energy Research and Development Authority (NYSERDA) is providing technical support by developing an integration analysis.
The October 14, 2021 Climate Action Council meeting included the following topics:
- Overview of scenarios and recap of sectoral results
- Costs and Benefits Analysis
- Electric System Sensitivities
- Air Quality and Health Effects
- Update on Approach for Potential Carbon Pricing Analysis
There is fodder for multiple posts in this material but most will have to wait until another day.
Last spring advisory panels submitted their recommendations to the Climate Action Council for strategies in seven sectors to meet the targets. NYSERDA and their consultants determined that those recommendations did not meet the targets and prepared an integration analysis to provide alternatives. The following scenario overview lists three scenarios that meet or exceed the limits. (For this post I will concentrate on Scenario 2: Strategic Use of Low-Carbon Fuels.) The integration analysis will be incorporated into the draft scoping plan in October and in November the Climate Action Council will discuss the strategies and provide feedback on the draft scoping plan. The plan is to finalize scoping plan by the end of the year and next year put it out for public comment.
The focus of this post will be on the first mention of cost and benefit data at the October 14, 2021 Climate Action Council meeting. As expected, they made up a way to claim that the benefits out-weigh the costs. Readers should keep in mind that the costs are real. Completely re-building the entire New York energy sector will cost enormous sums of money and, at first glance, estimates of several hundred billion for the complete transition are laughably low for the all-in costs. On the other hand, estimates of benefits are heavily dependent upon value judgements and analysis assumptions to the point that there are such a wide range of possible outcomes that claiming a single value is fantasy.
According to the presentation the integration analysis approach will include three components as shown in the following slide captures. The integration analysis will evaluate societal costs and benefits of greenhouse gas (GHG) mitigation for the different scenarios relative to a reference scenario. The value of avoided GHG emissions will be calculated based on guidance provided by the Department of Environmental Conservation (DEC). The third component is an analysis of health co-benefits. In the remainder of this post, I will focus on the alleged benefits.
According to the presentation the cost of inaction exceeds the cost of action by more than $80 billion. For the Strategic Use of Low Carbon Fuels scenario the estimated costs are $340 billion and the benefits total $420 billion.
The benefits breakdown in the Strategic Use of Low Carbon Fuels scenario into two categories. In the first there are $160 billion in benefits due to improvements in air quality, increased active transportation, and energy efficiency interventions in low- and moderate- income homes. Reducing GHG emissions avoid social costs due to climate change to the tune of $260 billion.
Value of Avoided Carbon
I described problems with the DEC Value of Avoided Carbon Guidance in a couple of posts earlier this year. In my first post I noted that the Guidance includes a recommendation how to estimate emission reduction benefits for a plan or goal. I believe that the guidance approach is wrong because it applies the social cost multiple times for each year of an emission reduction. In the second post I described how I submitted comments on this topic to DEC and NYSERDA in February and followed up in June. The response “We ultimately decided to stay with the recommendation of applying the Value of Carbon as described in the guidance as that is consistent with how it is applied in benefit-cost analyses at the state and federal level.” I will just summarize my arguments and the effect on the estimated benefits here.
In section §75-0113, Value of Carbon the CLCPA 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” and that “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.” The Social Cost of Carbon (SCC) is the present-day value of projected future net damages from emitting a ton of CO2 today.
In my comments to DEC, I explained that it is inappropriate to claim the benefits of an annual reduction of a ton of greenhouse gas over any lifetime or to compare it with avoided emissions. . The social cost calculation that is the basis of their carbon valuation sums projected benefits for every year subsequent to the year the reductions are made out to the year 2300. Clearly, using cumulative values for this parameter is incorrect because it cumulatively counts those benefits repeatedly. I contacted social cost of carbon expert Dr. Richard Tol about the use of lifetime savings and he stated that “The SCC should not be compared to life-time savings or life-time costs (unless the project life is one year)”. Note that Dr. Tol is using the social cost of carbon nomenclature rather than value of carbon label.
The integration analysis claims reducing GHG emissions will provided societal benefits of avoided economic damages of $260 billion. The correct value is much less. DEC promulgated the 1990 baseline GHG emission inventory consistent with the CLCPA last year. According to §496.4 Statewide Greenhouse Gas Emission Limits (a) For the purposes of this Part, the estimated level of statewide greenhouse gas emissions in 1990 is 409.78 million metric tons of carbon dioxide equivalent, using a GWP20 as provided in Section 496.5 of this Part. The DEC Value of Avoided Carbon Guidance recommends a social cost of $121 in 2020 and $172 in 2050. If New York had magically eliminated all of the 409.78 million tons of GHG in 2020 the societal benefit of those reductions would have been $49.6 billion making the integration analysis 5.24 times too high. If all the reductions occurred in 2050 the societal benefit would be $70.5 billion making the integration analysis 3.7 times too high.
Public Health Impacts
The health benefits of the strategic use of low carbon fuels scenarios total $160 billion. While the health effects analysis considered multiple air pollutants and health benefits from energy efficiency the primary pollutant of concern is inhalable particulates or PM2.5. I did a post on claims of inhalable particulates impacts in New York City last year. The New York City Department of Health and Mental Hygiene’s (DOHMH) Air Pollution and the Health of New Yorkers report is often referenced and provides a typical and consistent health benefit estimate from inhalable particulates. The DOHMOH report concludes: “Each year, PM2.5 pollution in [New York City] causes more than 3,000 deaths, 2,000 hospital admissions for lung and heart conditions, and approximately 6,000 emergency department visits for asthma in children and adults.” These conclusions are for average air pollution levels in New York City as a whole over the period 2005-2007.
The DOHMOH report specified four scenarios for comparisons (DOHMOH Figure 4) and calculated health events that it attributed to citywide PM2.5 (DOHMOH Table 5). Based on their results the report notes that:
Even a feasible, modest reduction (10%) in PM2.5 concentrations could prevent more than 300 premature deaths, 200 hospital admissions and 600 emergency department visits. Achieving the PlaNYC goal of “cleanest air of any big city” would result in even more substantial public health benefits.
Based on years of developing and using models I prefer observed results any time as opposed to model projections. In this regard it is important to note that the NYS DEC air quality monitoring system has operated a PM2.5 monitor at the Botanical Garden in New York city since 1999 which provides inhalable particulate trends for New York City. I compared the data from that site for the same period as this analysis relative to the most recent data available (Data from Figure 4. Baseline annual average PM2.5 levels in New York City). The Botanical Garden site had an annual average PM2.5 level of 13 µg/m3 for the same period as the report’s 13.9 µg/m3 “current conditions” city-wide average (my estimate based on their graph). The important thing to note is that the latest available average (2018-2020) for a comparable three-year average at the Botanical Garden is 7.4 µg/m3 which represents a 43% decrease. That is substantially lower than the PlaNYC goal of “cleanest air of any big city” scenario at an estimated city-wide average of 10.9 µg/m3.
Until such time that the CLCPA Scoping Plan bases its inhalable particulate health benefits on the observed health outcome benefits observed from the reductions that have occurred, then I do not accept the health benefits suggested in the Integration Analysis. If an analysis were done using actual data, I believe that the results would most likely show a much smaller benefit. Note that the reduction in PM2.5 annual average concentrations in the Strategic Use of Low Carbon Fuels scenario predicts at most a reduction in PM 2.5 of 0.35 µg/m3. The observed reduction in New York City since 2005-2007 is 5.6 µg/m3.
In the effort to prove that the costs of the New York transition to the CLCPA goals is out-weighed by benefits the integration analysis comes up with energy efficiency benefits. I am not going to discuss this claim in detail so I provide the methodology slide below.
The following slide lists the health-related measures and I am leery of the claims. They expect to reduce asthma-related incidents by increasing weatherization presumably to keep polluted ambient air out. It is my understanding that asthma rates have increased even as pollution rates have gone down so this measure may have the perverse effect of increasing whatever is causing the observed asthma incidents. I have no idea how this strategy can reduce trip or fall injuries. Health benefits from reduced hot and cold thermal stress are claimed. Note that increased costs of energy in England have forced lower-income residents to lower their thermostats thus increasing thermal stress from cold. This is a likely outcome in New York.
I have no doubts that when I evaluate their costs for the transition that I will find markedly higher costs. Even if estimated costs end up being reasonable, the incorrect valuation of the societal benefits of carbon reductions drops the benefits to no more than $70.5 billion. Coupled with their values for health effects benefits that reduces total benefits to $230.5 billion as opposed to costs of $340 billion.
Moreover, the costs will be real but the benefits are something else again. The social cost of carbon is the greater alleged benefit. Because that represents the societal benefits of reducing a ton of carbon today totaled out to 2300 and the impacts of climate change are more expensive closer to 2300 that means that most of those alleged benefits will not accrue to this generation of New York residents, their children, their grandchildren, or even their great grandchildren. In addition, I have major reservations with the alleged health benefits.
The bottom line is that CLCPA is not cost effective relative to societal benefits.