The Real Cost of the Climate Act

On February 16, 2022 New Yorkers for Affordable Energy hosted a Zoom webinar titled The Real Cost of New York’s Climate Leadership and Community Protection Act.  The sponsor said to “feel free to share this with anyone you think would enjoy it” so this post describes the webinar.

I have written extensively on implementation of the Climate Act because I believe the ambitions for a zero-emissions economy outstrip available renewable technology such that it will adversely affect reliability and affordability, risk safety, affect lifestyles, will have worse impacts on the environment than the purported effects of climate change in New York, 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.

Climate Act Background

The Climate Act establishes a “Net Zero” target by 2050. The Climate Action Council is responsible for preparing the Scoping Plan that will “achieve the State’s bold clean energy and climate agenda”.  The Climate Act requires the Climate Action Council to “[e]valuate, using the best available economic models, emission estimation techniques and other scientific methods, the total potential costs and potential economic and non-economic benefits of the plan for reducing greenhouse gases, and make such evaluation publicly available” in the Scoping Plan. Starting in the Fall of 2020 seven advisory panels developed recommended strategies to meet the targets that were presented to the Climate Action Council in the spring of 2021.  Those recommendations were translated into specific policy options in an integration analysis by the New York State Energy Research and Development Authority (NYSERDA) and its consultants.  The integration analysis was used to develop the Draft Scoping Plan that was released for public comment on December 30, 2021. The public comment period extends through at least the end of April 2022, and will also include a minimum of six public hearings. The Council will consider the feedback received as it “continues to discuss and deliberate on the topics in the Draft as it works towards a final Scoping Plan for release by January 1, 2023”.

The The Real Cost of New York’s Climate Leadership and Community Protection Act webinar was organized by New Yorkers for Affordable Energy, “a coalition of community, labor, business and industry leaders from across the state who support greater access to clean, reliable and affordable sources of energy for residential and business consumers.”  They understand that reliability and affordability are at risk due to the Climate Act and are starting to get the word out to consumers who have no idea what is involved with the state’s plan to do “something” about climate change. There is a recording of the Zoom meeting but this article will focus on presentations made by six speakers.

New Yorkers for Affordable Energy

Michelle Hook, the Executive Director of New Yorkers for Affordable Energy (NYAE) gave the first presentation.  The mission for NYAE is “to educate New Yorkers about the impacts of New York energy policy on their personal livelihood and advocate for a pragmatic and balanced approach to our state’s energy decisions”.  She explained that there are active bills that could have major impacts:

• S.8008/A.9008 Budget Bill TED, Part EEE and S.6841 (Kavanaugh) A.8431 (Gallagher) – “All Electric Buildings Act”
  • Both bills prohibit any new construction that is not all electric.
• S.8198 (Krueger) – Statewide Natural Gas Transition Plan
  • Requires the PSC to develop a statewide gas transition plan that decreases gas sales and decommissions natural gas systems
• S.5939-A (Ramos)/A.6761-A (Mamdani) – “Clean Futures Act”
  • Prohibits the development of any new major electric generating facilities that would be powered in whole or part by any fossil fuels.

She also brought up the issue of aging power plants and the potential impact to reliability.

New York Independent Power Producers

Gavin Donohue, the President and CEO of the New York Independent Power Producers is also a member of the Climate Action Council.  He explained that of the 22 members of the Council only two appointees are from the traditional energy sector, him and Donna DeCarolis of National Fuel Gas Distribution Company His presentation outlined the requirements of the Climate Act.  I will reproduce much of his material and, in the rest of the article, highlight differences between his take and the other presentations.

He listed the following recommendations from the Draft Scoping Plan:

• Moratoriums on new gas infrastructure (NOT a Council-wide recommendation)
•  No new natural gas service to existing buildings
•  Prohibit propane, natural gas and oil equipment in new homes in 2024
•  Prohibit traditional heating systems in existing homes in 2030
•  Ban use of natural gas appliances (dryers, stoves, etc.) in homes in 2030
•  No gasoline vehicles sold in New York in 2035

Donohue described the following gaps and challenges:

• Gas and oil resources currently make up more than two-thirds of the energy downstate and one-third statewide overall
• New York’s grid operator (NYISO) says quick-start power options are essential
•  State power reserves are thin (no wiggle room for very hot/cold days or broken units)
  • NYSERDA says electrification and electric vehicles increases electric demand 65 to 80%
• No consensus on what qualifies as Zero-Emission Dispatchable Technologies for 2030 and beyond

• Increased electrification results in electric consumption doubling by 2050
  • Approximately 1 to 2 million homes will need to be electrified with heat pumps by 2030
• Approximately 3 million zero-emission vehicles will need to be sold by 2030
• Necessary to create emission-reducing or eliminating technologies like carbon capture, hydrogen fuel cells, offshore wind and battery storage
• Redefining/retraining state labor force
• Diversion of organic waste from landfills
• Management of manure and animal feeding practices

Donohue presented a list of Draft Scoping Plan positives:

• No recommendation to ban wood burning
• Acknowledges need for nuclear facilities through 2029
• Low-carbon fuels such as bioenergy or green hydrogen have a role
• Investments in development of zero emitting resources
• Includes carbon pricing as an option

Then he followed up with what he thought was the biggest issue: How much will this cost?

• No comprehensive cost analysis on how to pay for any of the recommendations:
  • Geothermal/heat pumps
  • Electric vehicles
  • Home appliances
  • Grid electrification
  • Expansion transmission, renewables and energy storage

I agree with most of the points raised by Donohue and all the gaps and challenges points raised.  I suppose it is unreasonable to expect that a member of the Climate Action Council could question the value of the law itself.  However, New York’s share of global GHG emissions is less than a half a percent of total emissions and, on average, over the last three decades the annual increase in GHG emissions is more than half a percent, so any reductions made in New York will be replaced by global emission increases in a year. As a result, I think that any presentation on the Climate Act should ask the question “What is the point”.   I agree that costs are the biggest issue. I would add that the Draft Scoping Plan does not document any of the costs provided so not only isn’t there an analysis on how to pay, but there isn’t satisfactory documentation supporting what it might cost.

National Fuel Gas

National Fuel Gas is a “diversified, integrated energy company with a complementary mix of natural gas assets located in the heart of the prolific Appalachian basin” that serves customers in western New York Donna DeCarolis is President and also a member of the Climate Action Council. Her presentation emphasized the need to balance the goals and objectives of the Climate Act with consumer impacts. 

Her list of items in the Draft Scoping Plan is the same as Donohue’s. 

The presentation by DeCarolis includes the following slide pointing out all the items that are not included in the natural gas system transition.  Clearly National Fuel Gas is in a fight for its existence so their plan is to support the New York narrative that a transition to low and no-carbon is necessary.  From what I have seen there isn’t enough renewable natural gas to make much of a difference and problems with metal embrittlement with hydrogen will prevent the use of the existing natural gas system for its use.

Her list of what is missing in the Draft Scoping Plan includes the following:

• Existing “electric-based clean energy technologies” can’t meet forecasted demand & maintain reliability
• Unprecedented level of NEW renewable energy generation development in next 8 years.
  • 26% current   
  • 70% required
• NYISO published its concern about declining levels of reliability beginning as early as 2023
• Measures will likely increase consumer cost for potentially less reliability
• Full assessment of affordability
• Recognition of upstate and downstate differences
  • Plan will be more burdensome for western New York residents
    • Weather is 56% colder
    • 94% of energy used on the coldest WNY winter day is natural gas
    • Older, larger Upstate housing stock
    • Burden falls hardest on Upstate residents – Downstate produces more emissions

National Fuel Gas proposes an “all-of-the-above” pathway based on three building blocks:

• Widespread energy efficiency that emphasizes weatherization
• Dual-energy heating and cooling systems
• Use of the existing natural gas infrastructure to incorporate low carbon fuels

The presentation expands on these points and DeCarolis argued that it is possible to meet the goals of the Climate Act.  Given that anyone who “questions” the value of reducing GHG emissions will be labeled a “denier”, National Fuel Gas has decided not to argue much about the futility of the Climate Act having an effect on global warming so they are presenting their plan as a more viable option to get the same result.

Empire Center

The Empire Center for Public Policy is an independent, non-partisan, non-profit think tank based in Albany, New York.  Their mission is “to make New York a better place to live and work by promoting public policy reforms grounded in free-market principles, personal responsibility, and the ideals of effective and accountable government.”  

Senior Policy Analyst James E. Hanley gave a presentation that did not have pull its punches because of vested interests within the organization.  He argued that utility customers expect electricity when and where needed at all times.   However, the drive for electrification will increase electricity demand by 65% to 80% at the same time New York policy is shutting traditional sources of electricity.  As a result, adequacy margins are already shrinking.  Donohue’s presentation claimed that electricity demand would double and I believe he is correct.

Hanley pointed out that the Climate Act forces an unprecedented shift to variable renewable resources.  The Draft Scoping Plan projects that in addition to a massive buildout of wind and solar that dispatchable emissions-free resources are needed for reliability.  He explains that the Plan suggests advanced fuels such as green hydrogen and renewable natural gas might fill the reliability gap: ”if scalability, feasibility, and environmental impact and air quality issues can be addressed.”  The biggest problem is that it is not known if any advanced technology will be deployable at scale and how much it will cost by 2040 when fossil fuels are banned from the New York grid.  He also argues that energy storage on the necessary scale is “science fiction”.  He concludes that “nuclear closures, non-permitting of new sources, and aging and closure of existing fossil-fuel sources could mean NY inadvertently “sleepwalks” into an era of energy unreliability”.  These points all imply that the Climate Act targets and schedule are not likely to be achieved so Council members Donohue and DeCarolis steered clear of these arguments.  I personally think that Hanley’s feasibility assessment is optimistic.

New York Business Council

Ken Pokalsky, Vice President of the NY Business Council, also gave a presentation.  The Business Council is the “voice of business and employers in New York State Representing 3,500 business of all sizes, in all sectors Including nearly 100 local chambers and business groups”.  He referenced a summary of the Draft Scoping Plan that he prepared and made the point that feedback during the public comment process is essential. 

Pokalsky described how the Draft Scoping Plan handles the industrial, transportation, buildings, and waste management sectors.  He described key considerations for business:

• Most businesses will feel multiple impacts
• Limited focus on direct costs, opportunity costs, return on investments
  • Risk for emission and economic leakage is real
• The legislature wants to act now!
  • S.4264-A (Parker)/A.6967 (Cahill) – “Climate and Community Protection Act”
  • S 6843-A  (Kavanagh)/A.8431 (Gallagher) – Electric building mandate
  • S.8198 (Krueger) – Mandated restructuring of electric and gas utilities
  • Others and more to come . . .
• You need to be engaged!!

For the most part his arguments were consistent with Donohue.

United Association

John Murphy is the International Representative for New York State, United Association Plumbers & Pipefitters and was a member of the Environmental Justice and Just Transition Working Group. (I am not sure if this was one of the Climate Act working groups.) His presentation argued that the costs of the Climate Act will be astronomical if not done right. 

Murphy argued that high utility bills, escalating consumer prices and massive job losses are likely and that the poor and energy workers will be hit the hardest.  As an example, he pointed out the Department of Environmental Conservation’s permit denials for a couple of natural gas generating plants will eliminate over 1,000 jobs and two sources of clean and reliable power.  This is just the tip of the iceberg because the Climate Act will phase out 66 natural gas plants and 3 nuclear plants which will “eliminate tens of thousand of good middle-class jobs”.  He argued that an all-of-the-above approach is the sensible solution.  He concluded that “following the narrow path of renewables only will drive high costs, result in widespread outages & massive job losses”, but that the all-of-the-above strategy can ensure adequate and reliable power, generate tens of thousands of good jobs and provide a big part of carbon-free power.

The Draft Scoping Plan argues that Climate Act implementation will create job growth and some unions have bought into that argument.  Murphy’s presentation points out that there will be significant job losses too.  However, he also supports the idea that we have to act using a strategy that includes nuclear and natural gas.  I agree that if you want to keep the lights on that is absolutely necessary.

Conclusion

The webinar offered good summaries of issues and alternative solutions for New York’s energy future.  It is notable that the vested interests and corporate business plans of most of the organizations represented influence their recommendations for the Climate Act.  Only Hanley from the Empire Center emphasized the point that technical feasibility of wind, solar, and energy storage should be a primary concern.  The Business Council did not address feasibility.  The IPPNY, National Fuel Gas, and United Association presentations all suggested that renewable energy issues could be addressed by an all-of-the-above strategy. I think the risks and costs of an electric system that relies mostly on wind, solar, and energy storage out-weigh the benefits of this unprecedented transition.

One of the major themes of the webinar was that New Yorkers must get educated and involved if they want to have an affordable and reliable energy system in the future.  In my opinion that boils down to preventing passage of the proposed legislation described in the presentations.  I encourage all New York residents to contact your legislators and tell them that you are not willing to give up natural gas.