New York Pre-Proposal Cap and Invest Webinars

On May 19, 2023 the Department of Environmental Conservation (DEC) and New York State Energy Research and Development Authority (NYSERDA)  announced that they are hosting a pre-proposal webinar series to provide the public an opportunity to learn about the rulemakings under development for the Cap-and-Invest Program in New York State.   This post is an overview of the initiative and the webinar series.

I have been following the Climate Leadership & Community Protection Act (Climate Act) since it was first proposed. I submitted comments on the Climate Act implementation plan and have written over 300 articles about New York’s net-zero transition because I believe the ambitions for a zero-emissions economy embodied in the Climate Act outstrip available renewable technology such that the net-zero transition will do more harm than good.  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 established a New York “Net Zero” target (85% reduction and 15% offset of emissions) by 2050 and an interim 2030 target of a 40% reduction by 2030. The Climate Action Council is responsible for preparing the Scoping Plan that outlines how to “achieve the State’s bold clean energy and climate agenda.”  In brief, that plan is to electrify everything possible and power the electric grid with zero-emissions generating resources by 2040.  The Integration Analysis prepared by the New York State Energy Research and Development Authority (NYSERDA) and its consultants quantifies the impact of the electrification strategies.  That material was used to write a Draft Scoping Plan.  After a year-long review the Scoping Plan recommendations were finalized at the end of 2022.  In 2023 the Scoping Plan recommendations are supposed to be implemented through regulation and legislation.  The cap and invest initiative is one of those recommendations.

I recently posted my All Otsego Commentary overview on cap and invest that was published in early May that was written for a non-technical audience. In late March I summarized my previous articles on the New York cap and invest proposal in a post designed to brief politicians about the proposal if you want more technical information.  There also is a page that describes all my carbon pricing initiatives articles that includes a section about the New York Cap and Invest (NYIC, Their acronym not mine) proceeding.

New York Cap and Invest

DEC and NYSERDA have developed an official website for cap and invest.  It claims:

An economywide Cap-and-Invest Program will establish a declining cap on greenhouse gas emissions, limit potential costs to New Yorkers, invest proceeds in programs that drive emission reductions in an equitable manner, and maintain the competitiveness of New York businesses and industries. Cap-and-Invest will ensure the state meets the greenhouse gas emission reduction requirements set forth in the Climate Leadership and Community Protection Act (Climate Act).

According to the DEC announcement of the webinars:

This is the first set in a series of webinars to inform the public and encourage written feedback during the initial phase of outreach. Additional information will be provided as it becomes available at www.capandinvest.ny.gov. If you wish to continue receiving updates on the development of the Cap-and-Invest Program, please join the Climate Act mailing list at https://climate.ny.gov/email-list/.

Below is the full list of scheduled webinars for this first round. For more information on how to join the webinars, please visit www.capandinvest.ny.gov/meetings-and-events.

1. June 1, 1 to 3 p.m. – Cap-and-Invest Overview
2. June 6, 11 a.m. to 1 p.m. – Natural Gas focused webinar
3. June 8, 1 to 3 p.m. – Liquid Fuels focused webinar
4. June 13, 11 a.m. to 1 p.m. – Energy Intensive and Trade Exposed Industries focused webinar
5. June 15, 1 to 3 p.m. – Waste focused webinar
6. June 20, 11 a.m. to 1 p.m. – Cap-and-Invest Analysis Inputs and Methods
7. June 22, 1 to 3 p.m. – Electricity focused webinar

As New York begins drafting regulations, we are considering California’s existing economywide programs, as well as those operating in Quebec and Washington State. This webinar series will provide the public with a series of questions on topics that DEC and NYSERDA are seeking input. DEC and NYSERDA are interested in hearing what elements of other jurisdictions’ regulations would work well in New York, and what improvements or changes may best serve New York.

For more information, including instructions on how to provide comment, please visit www.capandinvest.ny.gov.

Stakeholder Process

The ostensible purpose of the webinars and workshops is to enable DEC and NYSERDA to gather feedback on the program as they “develop regulations to implement the Cap-and-Invest Program”.  There are three program design elements:

• Cap-and-Invest Rulemaking
• Auction Rulemaking
• Greenhouse Gas (GHG) Reporting Rulemaking

It appears to me that the State is worried that there will be an overwhelming response to the request for comments.  The request for comments includes specific questions  for each of the design elements that should enable them to categorize the comments.  The description notes:

DEC and NYSERDA have developed a template document [PDF] to assist commenters in providing feedback on these topics. 

SUBMIT COMMENTS

DEC and NYSERDA will review comments and further develop pre-proposal materials to define New York’s program. Notices will be sent to the distribution list when the second round of pre-proposal materials are posted. To inform the development of the pre-proposal, DEC and NYSERDA request first round feedback no later than July 1, 2023.

The template document requests comments for the following topics:

• Applicability and Thresholds – Defines which sources and at what emissions thresholds sources are covered by the regulations, who must report emissions, and who must obtain and surrender allowances equal to their GHG emissions. Establishes obligated and non-obligated sources.
• Allowance Allocation – Defines how allowances are made available: auctions, set asides and free allocations.
• Auction Rules – Defines structure and mechanics of allowance auctions
• Market Rules – Defines rules for participation in market and trading of allowances.
• Program Ambition – Defines the cap and the allowance budget for how many allowances will be available year by year to reach the Climate Act greenhouse gas limits.
• Program Stability Mechanisms – Defines the automatic and planned program adjustments to moderate costs and sustain program ambition if emissions are higher or lower than anticipated.
• Compliance, Enforcement and Penalties – Defines compliance periods and types of enforcement mechanisms.
• Reporting and Verification – Defines what sources must report, when reporting will begin and how often, how reporting should be verified, and how to leverage existing reporting programs.
• Use of Proceeds – Defines the process for how auction proceeds are invested.
• Other – You can submit questions or letters or any comments that didn’t fit into the above in this box

Processing Comments

In order to handle the expected volume of comments they are trying something I have never seen before.  The comments go to a third party vendor, Comment Management:

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TURNING COMMENTS INTO INFORMATION

At CommentManagement.com, our application contains features designed to bring consistency, integrity, and enjoyment to the online comment and response management process. This digital public involvement process helps discover issues raised by the public and turns this data into usable information that can then be used to make better decisions, improve processes, and improve quality.

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The SUBMIT COMMENTS link goes to a comment form that includes extensive descriptive information:

If commenting on behalf of a group:

• * Are you commenting on behalf of a group (any kind of organization, company, association, union, tribe, etc.)?
• Please share the name of the group
• What is your title or role within the group?
• * What geographical area does the group represent?
  • National
  • Regional (e.g., Mid-Atlantic)
  • New York State
  • New York Region (e.g., the Hudson Valley)
  • County, Town, Municipality in New York
  • Community in New York (eg, neighborhood assoc., classroom, congregation)
  • Not applicable
  • Other, please specify below:
  • Other Geographic Area:
• * Which of the following interests (if any) does the group represent?
  • Environmental justice or underserved communities
  • Labor unions/union training centers
  • Consumers
  • Transportation (e.g., biking, public transit)
  • Environment or conservation
  • Public health
  • Education
  • Agriculture
  • Rural areas
  • Energy
  • Housing or smart growth (e.g., land use, community boards)
  • Economic development (e.g., Regional Economic Development Councils, or other community-based economic development)
  • Local government
  • Tribal government
  • Regional government
  • Not applicable
  • Other, please specify below:
  • Other Interests:
• * Which of the following commercial interests (if any) does the group represent?
  • Petroleum fuel producers, distributors, and trade associations (includes transportation and heating fuels)
  • Industrial process facility owners within emissions-intensive industries (such as cement, aluminum, and steel)
  • Waste operations (including municipal and private landfills, incinerators, and wastewater treatment facilities)
  • Utilities (includes non-utility electricity power producers and importers)
  • Carbon market traders
  • Automakers and dealers
  • Alternative fuel providers
  • Clean energy investment or development
  • Infrastructure development
  • Transportation (e.g., freight carriers)
  • Not applicable
  • Other, please specify below:
  • Other Commercial Interests:
• * Where is your place of residence?
  • Western New York
  • Finger Lakes
  • Southern Tier
  • Central New York
  • North County
  • Mohawk Valley
  • Capital District
  • Hudson Valley
  • New York City
  • Long Island
  • Outside New York State
  • Prefer not to specify
  • Other, please specify below:
  • Other Place of Residence:
• *Which of the following constituencies do you most closely identify with?
  • Environmental justice or underserved communities
  • Labor unions/union training centers
  • Environment or conservation advocates
  • Public health professionals
  • Education (teachers, professors, etc.)
  • Agricultural workers and farmers
  • Transportation professionals (e.g., public transit, truckers, rail workers, etc.)
  • Energy (utility/renewable energy workers, etc.)
  • Government staff or elected official
  • Economic development (e.g., Regional Economic Development Councils, other community-based economic developers, etc.
  • Smart growth (e.g., land use planners, community boards)
  • Housing (homeowners, housing developers, affordable housing advocates, renters, etc.)
  • Business (e.g., small business owner or employee)
  • Rural communities
  • Suburban communities
  • Urban communities
  • Other, please specify below:
  • Other Constituency:
• *Does your comment provide feedback on any of the following themes?
  • Applicability & Thresholds: Which sources are covered by the regulations, and at what emissions thresholds.
  • Allowance Allocation: How allowances are made available.
  • Auction Rules: The structure and mechanics of allowance auctions
  • Market Rules: The rules for market participation, and the trading of allowances
  • Ambition: The economywide emissions cap, and allowance budget.
  • Program Stability: The automatic and planned program adjustments to moderate costs and sustain program ambition if emissions are higher or lower than anticipated.
  • Compliance, Enforcement and Penalties: Compliance periods and types of enforcement mechanisms.
  • Reporting and Verification: The start and frequency of reporting, how reporting should be verified, and how to leverage existing reporting programs.
  • Use of Proceeds: The process for how auction proceeds are invested.
  • N/A: Not Applicable

If not commenting on behalf of a group:

• Where is your place of residence?
• Western New York
• Finger Lakes
• Southern Tier
• Central New York
• North County
• Mohawk Valley
• Capital District
• Hudson Valley
• New York City
• Long Island
• Outside New York State
• Prefer not to specify
• Other, please specify below:
• Other Place of Residence:
• Which of the following constituencies do you most closely identify with?
• Environmental justice or underserved communities
• Labor unions/union training centers
• Environment or conservation advocates
• Public health professionals
• Education (teachers, professors, etc.)
• Agricultural workers and farmers
• Transportation professionals (e.g., public transit, truckers, rail workers, etc.)
• Energy (utility/renewable energy workers, etc.)
• Government staff or elected official
• Economic development (e.g., Regional Economic Development Councils, other community-based economic developers, etc.
• Smart growth (e.g., land use planners, community boards)
• Housing (homeowners, housing developers, affordable housing advocates, renters, etc.)
• Business (e.g., small business owner or employee)
• Rural communities
• Suburban communities
• Urban communities
• Other, please specify below:
• Other Constituency:
• Does your comment provide feedback on any of the following themes?
• Applicability & Thresholds: Which sources are covered by the regulations, and at what emissions thresholds.
• Allowance Allocation: How allowances are made available.
• Auction Rules: The structure and mechanics of allowance auctions
• Market Rules: The rules for market participation, and the trading of allowances
• Ambition: The economywide emissions cap, and allowance budget.
• Program Stability: The automatic and planned program adjustments to moderate costs and sustain program ambition if emissions are higher or lower than anticipated.
• Compliance, Enforcement and Penalties: Compliance periods and types of enforcement mechanisms.
• Reporting and Verification: The start and frequency of reporting, how reporting should be verified, and how to leverage existing reporting programs.
• Use of Proceeds: The process for how auction proceeds are invested.
• N/A: Not Applicable

Note that items with an asterix are required fields. 

Discussion

I wonder how this information will be used.  Cynically I suspect that some comments will be favored over others based on the constituency identified.  As far as I am concerned this is exactly what happened with the comments submitted on the Draft Scoping Plan so now the Hochul Administration’s appeasement of favored constituencies is made easier.

In my opinion, the public comment process associated with the Draft Scoping Plan was only used to fulfill a legislative mandate.  As far as the Hochul Administration was concerned the only thing that mattered was the number of comments supporting their narrative.  In that regard form letters constituted most of the comments received.  I am no expert on this kind of thing but I wonder how the organizations that set up systems to generate and submit form letter comments will deal with this system. 

It is not clear to me whether this public stakeholder process will be another obligation or a sincere attempt to garner information from subject matter experts.  The quality of comments should be a consideration.  If the comment is simply a statement without justification or documentation supporting the position of the comment then it should be treated differently than a quality comment statement that does provide supporting information.  It was very disappointing to me that there was never any response to the technical issues I raised and questions I posed in my draft scoping plan comments that did include documentation and analysis.

There is another aspect to this that is unclear.  There are some topics that are so complicated that dialogue via written comments is ineffective.  NYIC has many different topics and each one I have looked at in any detail has turned out to be more complicated than I initially thought.  In order to reconcile issues raised by subject matter experts there must be a dialogue.  I haven’t seen any indication that those meetings are being considered.

Conclusion

I have dealt with every emissions marketing control program that affected New York electric generating units over my career.  In addition, I took the time to do research and prepared analyses of the effectiveness of those programs with an emphasis on the Regional Greenhouse Gas Initiative.  There is a gap between the theory of these programs and how they are treated by affected entities that needs to be considered during this implementation.  I am not confident that my comments and those of my colleagues with similar experience will be heard and considered.