In a recent letter to the editor of the Syracuse Post Standard, Cicero Assemblyman Al Stirpe Jr. and Ethan Gormley from Citizen Action of New York, argued that Governor Hochul should “get moving on cap and invest.” This post documents my response. It is timely to revisit the New York Cap and Invest (NYCI) Program because the long promised next regulatory action is due any day now. I believe that it is time for NYCI advocates to be held accountable for their magical solutions to a problem that New York cannot unilaterally solve.
I have followed the Climate Act since it was first proposed, submitted comments on the Climate Act implementation plan, and have written over 500 articles about New York’s net-zero transition. I worked on every market-based program from the start that affected electric generating facilities in New York including the Acid Rain Program, Regional Greenhouse Gas Initiative (RGGI), and several Nitrogen Oxide programs. I follow and write about the RGGI and New York carbon pricing initiatives so my background is particularly suited for NYCI. The opinions expressed in this article do not reflect the position of any of my previous employers or any other organization I have been associated with, these comments are mine alone.
Overview
The Climate Act established a New York “Net Zero” target (85% reduction in GHG emissions and 15% offset of emissions) by 2050. The Climate Action Council (CAC) was responsible for preparing the Scoping Plan that outlined how to “achieve the State’s bold clean energy and climate agenda.” 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 develop the Draft Scoping Plan outline of strategies. After a year-long review, the Scoping Plan was finalized at the end of 2022.
Cap-and-Invest
The CAC’s Scoping Plan recommended a market-based economywide cap-and-invest program. NYCI is supposed to work by setting an annual cap on the amount of greenhouse gas pollution that is permitted to be emitted in New York: “The declining cap ensures annual emissions are reduced, setting the state on a trajectory to meet our greenhouse gas emission reduction requirements of 40% by 2030, and at least 85% from 1990 levels by 2050, as mandated by the Climate Act.” The prevailing perception of NYCI is exemplified by Colin Kinniburgh’s description in New York Focus. He describes the theory of a cap-and-invest program as a program that will kill two birds with one stone. “It simultaneously puts a limit on the tons of pollution companies can emit — ‘cap’ — while making them pay for each ton, funding projects to help move the state away from polluting energy sources — ‘invest.'”
In my opinion, the delays in the NYCI regulatory process suggest that the Hochul Administration is having second thoughts about the program. I have no illusions that the concerns are related to the fundamental flaws of carbon pricing. It is all about politics. Kinniburgh described the last-minute decision to pull any mention of timing about NYCI from the State of the State briefing book. Samanth Maldonado’s article Green Lawmakers Pressure Hochul to Speed up Action on Climate Act summarizes the status of NYCI last month. I also did an article about the response to the NYCI Delay. Since then, the political focus of the state has been on the budget. Tellingly there hasn’t been much mention of NYCI. Against that backdrop Stirpe and Gromley submitted a letter to the editor imploring Governor Hochul to get moving on cap and invest.
Letter to the Editor
The following letter to the editor of the Syracuse Post Standard was published on the electronic edition on March 18, 2025 and in the print edition on March 23, 2025.
It’s been over 50 days since Gov. Kathy Hochul’s State of the State address. That’s 50-plus days since the governor revealed that she was delaying crucial climate action in New York.
In that time, President Donald Trump has been steadily advancing the interests of oil and gas billionaires, wiping crucial climate resources from government websites and removing environmental justice workers from their positions. And that’s not all. The current situation at the federal level will have lasting, harmful impacts on our environment, frontline communities and transition to a clean, affordable, renewable energy economy.
Yet even as we see these damaging actions coming from the climate change denier in the Oval Office, Hochul continues to delay climate action by suppressing regulations for Cap and Invest.
The crucial Cap and Invest program is needed to fund New York state’s Climate Law, reduce pollution and invest in our communities. It puts corporate polluters on the hook for the amount that they pollute into the atmosphere while also reducing their emissions over time.
REVENUE WOULD HELP COMMUNITY
Perhaps just as importantly, the Cap and Invest revenue from corporate polluters has the potential to greatly benefit areas like Central New York.
Through this program, we can see new funds made available for energy affordability, which is especially important as National Grid seeks massive rate hikes across Upstate New York. Not only that, Cap and Invest has the ability to improve Central New York homes by funding projects to increase energy efficiency measures, like insulation and important home repairs, while also assisting in the transition to clean electric heat pumps to heat and cool homes without the use of polluting and harmful gas.
Had Cap and Invest been rolled out already, the state Department of Environmental Conservation (DEC) and New York State Research and Development Authority (NYSERDA) estimated that we could see somewhere between $3 billion and $5.1 billion in revenue in 2025.
At a time when federal funding is under threat, it’s imperative that we consider creative and fair sources of revenue to invest in our communities, clean our air and cut consumer costs.
Done well, the Cap and Invest program can do just that.
STOP DELAYING REGULATIONS
The Cap and Invest regulations were supposed to be released to the public last year. Those regulations would then be rightfully subject to public engagement through hearings and public comments. Unfortunately, Hochul is suppressing those regulations from the public and has proposed a much delayed timeline for their release. Organizations, businesses, faith groups and unions across the state have already spoken out urging Hochul to promptly release all the regulations.
It’s been over 50 days since we learned about the governor’s latest efforts to slow-walk Cap and Invest. Every additional day that goes by without the regulations is another day of delayed climate action, polluter accountability and much needed investment in our communities. With so much at stake at the federal level, New York needs to be a climate leader.
Gov. Hochul: Please release all the regs immediately and fund climate now. Al Stirpe Jr. Cicero, Member of Assembly, 127th District
Ethan Gormley Clay, Climate Justice Organizer, Citizen Action of New York
Response Letter
I submitted the following 250 word response on March 26, 2025:
In a recent letter to the editor, Cicero Assemblyman Al Stirpe Jr. and Ethan Gormley Citizen Action of New York, argued that Governor Hochul should get moving on cap and invest.
The proposed New York Cap and Invest (NYCI) program is a magical solution. In theory corporate polluters will pay for their emissions, the proceeds will be used to reduce costs while simultaneously funding emission reduction projects. In reality, NYCI is nothing more than a regressive tax that will not live up to its promises.
NYCI will require gasoline distribution companies to pay for each ton emitted. The authors state that we could see somewhere between $3 billion and $5.1 billion. The latest NYCI proposal outline suggested prices that work out to an increase in gasoline prices of 21 cents per gallon in 2025, 48 cents per gallon in 2027 and 57 cents per gallon in 2030. It is magical thinking to suggest that the companies will not simply pass those costs on.
The authors go on to say: “Through this program, we can see new funds made available for energy affordability”. It is magical thinking to presume that the increased gasoline prices will get reimbursed in a timely fashion for those who cannot afford the increases. Just think of the tracking logistics needed to ensure that the price paid for gas can be made affordable.
It is time for Climate Act proponents to be held accountable for their magical solutions to a problem that New York cannot unilaterally solve.
What I Really Wanted to Say
The succinct response to the Stirpe and Gormley letter is best described by Vinny Gambini.
Alas that response is in the wrong medium. A proper response requires more description than possible in 250 words. Alberto Brandolini explains: “The amount of energy necessary to refute BS is an order of magnitude bigger than to produce it.” Space considerations preclude documenting all the problems in a newspaper response. But I can do that here.
The proposed New York Cap and Invest (NYCI) program is a magical solution. In theory corporate polluters will be put on the hook for their emissions, the proceeds will be used to reduce citizen costs while simultaneously funding emission reduction projects. In reality, carbon pricing schemes like NYCI are nothing more than a regressive tax that will not live up to the hype. Earlier this year I described questions about NYCI that I believe need to be resolved before proceeding. Last year the Citizen’s Budget Commission commented on NYCI. In this post I want to focus on the issues associated with gasoline impacts that I mentioned in my response letter.
Stirpe and Gormley insinuate that the costs of the program will be absorbed by “corporate polluters”. With respect to gasoline prices the implication is that the oil companies will provide revenues that “has the potential to greatly benefit areas like Central New York.”
In 2023 Washington State started their version of cap and invest and their gasoline prices immediately jumped. I published articles on what happened. Washington State Gasoline Prices Are a Precursor to New York’s Future was a variation of an article published at Watts Up With That – Do Washington State Residents Know Why Their Gasoline Prices Are So High Now?. I also published Washington State Gasoline Prices and Public Perceptions that consolidated responses from Washington residents in the comments from the Watts Up With That article.
There is no official position on expected revenues for NYCI. At the Energy Access and Equity Research webinar sponsored by the NYU Institute for Policy Integrity on May 13, 2024 Jonathan Binder stated that the New York Cap and Invest Program would generate proceeds of “between $6 and $12 billion per year” by 2030. Administration officials estimate that NYCI auctions will generate “between $6 [billion] and $12 billion per year” by 2030.
I used those estimates to project potential gasoline costs. The last NYCI proposal outline analyzed allowance prices starting at $23 per ton of CO2 in 2025 with 5% escalation for 2026, and an increase to a higher ceiling in 2027, escalating by 6% annually thereafter. According to the U.S. Energy Information Administration, 17.86 pounds of CO2 are emitted per gallon of finished motor gasoline; 112 gallons burned equals 1 ton of CO2. A price of $23 per ton of CO2 translates to an increase in gasoline prices of 21 cents per gallon in 2025, 48 cents per gallon in 2027 and 57 cents per gallon in 2030.
NYCI will require gasoline distribution companies to purchase authorizations to emit each ton of GHG pollution. It is magical thinking to suggest that the polluting corporations will not simply pass those costs on. Those companies cannot do anything to reduce their emissions. As a result, it is the consumer who will end up paying for emissions.
Stirpe and Gromley go on to say: “Through this program, we can see new funds made available for energy affordability”. Hochul’s five core principles for NYCI includes affordability: “Governor Hochul’s Consumer Climate Action Account will deliver at least 30 percent in future cap-and-invest proceeds to New Yorkers every year to mitigate consumer costs.” These slogans are well intentioned, but the reality is that making the gasoline price increases affordable is a logistical nightmare. Consider the following issues.
The first issue is eligibility. To make gasoline cost increases affordable for those least able to afford the increase a program must be put in place to reimburse them. I think that reimbursements should target the rural poor who have no other alternatives and thus are most affected by the increased cost of gasoline.
Consider reimbursement fairness. The most impacted are those who rely on their vehicles the most. This means that a flat rebate is unfair and that necessitates rebates based on fuel use. Tracking fuel use for reimbursement will be a logistical headache. Affected New Yorkers will have to keep receipts and submit claims then wait for reimbursement. Worse, the time lag between paying the higher price and the mitigation on consumer costs is a real hardship for those least able to afford it.
Theory and Reality
The theory of carbon pricing schemes is that the higher prices due to the price of carbon will incentivize corporate polluters to seek lower carbon and lower price alternatives. However, the corporate gasoline distribution companies have no incentives to do either. They will simply pass the costs on as if this were a tax.
Proponents of these schemes argue that higher fuel prices will make people want to buy electric cars so the fuel prices are not impactful. There are many tradeoffs for electric vehicles that make them not one for one choice, so I think this is a weak argument. Moreover, the Governor’s affordability rebates reduce this incentive.
The rebates also reduce the amount available for the transition. It is appropriate to ask just how much infrastructure would be required to make electric vehicles a viable alternative. Think of all the public charging infrastructure necessary to provide equivalent capacity to today’s cars. Don’t forget that the electric power requirements will also need upgrades and that because electric vehicles are more expensive subsidies are needed. Will the proceeds from NYCI be enough?
The cap and invest variant dilutes the original intent that the carbon price would trigger a free-market response. Advocates for this feature argue that the free-market is more efficient than a government dictate but cap and invest provides revenues for the government to invest. New York’s investment record for infrastructure projects peaked with the completion of the Erie Canal 200 years ago and has gone downhill ever since.
The book by Danny Cullenward and David Victor Making Climate Policy Work shows how the “politics of creating and maintaining market-based policies render them ineffective nearly everywhere they have been applied.” They go on to explain that this vision has completely failed:
Many pollution markets exist, but nearly all are smokescreens that create the impression that market forces are cutting emissions when, in fact, other policies are doing most of the real work of decarbonization. Almost everywhere that market systems are in place they operate at prices that are so low as to have little impact on key decisions such as whether to invest in or deploy new technologies.
Two years ago I explained why the conclusions of this book are relevant to NYCI and later argued in my comments on the draft rules that a reassessment was necessary. Under the Hochul Administration, state agencies consider the stakeholder process an obligation and not an opportunity to improve the rules. There is no real attempt to consider comments received and pretty much zero acknowledgement much less action for any comments received. There never has been a response indicating that anyone has read the book.
Conclusion
The issues described here have not been addressed so far during the discussion of NYCI. The only noise is from advocates who argue without any evidence that the program will simultaneously raise money, ensure compliance, and be affordable. It is long past due for proponents of the NYCI and the Climate Act like Assemblyman Stirpe to acknowledge that the transition to zero emissions has irreconcilable challenges that risk affordability and reliability. All this is purely political so when the inevitable negative consequences occur, supporters should be held accountable.
Pragmatic Environmentalist of New York 