According to a new report from Environmental Defense Fund (EDF) and Greenline Insights, New Yorkers will “realize significant economic benefits, including household savings and new job creation, with the Clean Air Initiative.” This article explains why this report is bogus on multiple levels.
I have extensive experience with market-based pollution control programs. I have been involved in the Regional Greenhouse Gas Initiative (RGGI) program process since its inception and have no such restrictions when writing about the details of the RGGI program. I have worked on every cap-and-trade program affecting electric generating facilities in New York including RGGI, the Acid Rain Program, and several Nitrogen Oxide programs. I have also been following the New York Cap-and-Invest (NYCI) program and other similar programs in New York The opinions expressed in this post do not reflect the position of any of my previous employers or any other organization I have been associated
Clean Air Initiative
My first thought when I read this was what is the Clean Air Initiative? The report states: “state agencies have developed proposals for an economy-wide cap-and-invest program – known as the Clean Air Initiative (CAI).” I have been following the economy-wide cap-and-invest program and I was unaware of any agency calling the economy-wide program anything other than the New York Cap-and-Invest (NYCI) program. So, I used Perplexity AI to ask if any New York agencies used CAI instead of NYCI. The response stated:
No New York State agency officially refers to the cap-and-invest program as the “Clean Air Initiative.” Throughout all Department of Environmental Conservation (DEC) and New York State Energy Research and Development Authority (NYSERDA) official documentation, press releases, regulatory proposals, and public communications from 2023 through early 2026, the program is consistently designated as:
- New York Cap-and-Invest (NYCI) – the primary official name
- Cap-and-Invest Program – the standard reference
I believe the answer to why these organizations use this nomenclature is directly related to the mission of the organizations. Greenline Insights “provides non-partisan research to drive smart decision-making. We specialize in modeling, analysis, and policy design to maximize positive outcomes for local workforces, businesses, and communities.” Their description of services provided states: “We work with clients to develop compelling research questions and build the right mix of tools to answer them.” Reading between that line I think it means that if a client wants a particular answer, they will get that result.
EDF claims “Guided by science and economics, and committed to climate justice, we work in the places, on the projects and with the people that can make the biggest difference.” According to another Perplexity AI query EDF has “strongly supported the economy-wide cap and invest program proposal included in the Climate Leadership and Community Protection Act (CLCPA) Scoping Plan” finalized in 2022 and since then “has engaged in extensive and sustained lobbying and advocacy efforts to advance New York’s economy-wide cap-and-invest program since early 2023.” EDF has a vested interest in the success of an economy-wide program.
The Perplexity AI “Deep Research” response to my query about the use of CAI the AI program concluded “The Environmental Defense Fund and allied advocacy organizations strategically adopted “Clean Air Initiative” as alternative branding to frame the program around air quality and public health benefits in their campaigns to pressure Governor Hochul to finalize and implement the regulations.”
In other words, the Clean Air Initiative terminology is all about the messaging.
Clean Air Initiative Claims
The January 8, 2026 CAI report announcement states:
NEW YORK — New Yorkers will realize significant economic benefits, including household savings and new job creation, with the Clean Air Initiative, a new report from Environmental Defense Fund and Greenline Insights finds.
The report comes as New Yorkers continue to await the launch of the Clean Air Initiative: an economywide cap-and-invest program that works by simultaneously putting a limit on the tons of pollution companies can emit — “cap” — while requiring them pay for each ton of emissions, funding clean energy projects that create health and cost-saving benefits for communities — “invest.” At the same time, energy affordability remains an issue that’s top of mind for New York voters.
“Our analysis shows that the vast majority of New Yorkers are missing out on savings and economic opportunities across the state due to delays in implementing the Clean Air Initiative,” said Kate Courtin, Senior Manager for State Climate Policy & Strategy. “The sooner this program is implemented, the sooner communities will see billions in investments that will expand access to cleaner, cheaper energy, cut pollution and create healthier, more resilient communities.”
The report finds that, over its first decade, the Clean Air Initiative would deliver:
$6.9 billion in net savings, or an average of $1,060 per household earning $200k per year or less — about 85% of households in the state.
Over 300,000 new jobs, with job growth strongest in fields like construction and transit as a result of investments in clean transportation services, decarbonization of buildings, and the build-out of clean energy infrastructure.
$48 billion in economic growth supported by program investments across the state.
“The data is clear that the Clean Air Initiative is a potent job creator and economic development tool.” said Jonah Kurman-Faber, Founder and Principal at Greenline Insights. “The program’s investments play to the state’s economic strengths and provide meaningful financial benefits to an overwhelming majority of the population.”
Pollution Control
EDF claims without any evidence that setting a cap ensures compliance with the arbitrary limits of the Climate Leadership & Community Protection Act (Climate Act). The report claims that the “economywide cap-and-invest program works by simultaneously putting a limit on the tons of pollution companies can emit — “cap” — while requiring them pay for each ton of emissions, funding clean energy projects that create health and cost-saving benefits for communities — “invest.” That is the theory.
I recently published several articles about RGGI, the existing New York cap-and-invest program for electric utility generating units that shows reality is different. I showed that the reason NY utility emissions have dropped is because NY power plants switched from using coal and oil to using natural gas. Natural gas emits less CO2 and was cheaper, so the observed reductions are mostly because of economic fuel switching not RGGI. I compared the observed reductions and RGGI investment emission savings and found that the total cumulative annual emission savings represents a reduction of only 4.2% from the pre-RGGI baseline. That comparison also found that the observed cost per ton of emissions removed is $583. None of these results suggest that the CAI will work as claimed.
GHG emissions are directly related to energy generation. When a GHG pollution control program caps emissions it caps energy use so capping emissions essentially rations energy use. Combined with the RGGI results, that means that compliance with the cap can only occur if energy use is rationed
Economic Benefits
According to the announcement, Kate Courtin, Senior Manager for State Climate Policy & Strategy said that “The sooner this program is implemented, the sooner communities will see billions in investments that will expand access to cleaner, cheaper energy, cut pollution and create healthier, more resilient communities.” I am not an economist so I submitted another Perplexity AI query asking about opportunity costs and the Greenline Insights analysis. The summary notes:
The “Investments for New York’s Future” report by Environmental Defense Fund (EDF) and Greenline Insights, released in January 2026, projects that New York’s Clean Air Initiative (cap-and-invest program) would generate $6.9 billion in household savings, create over 300,000 jobs, and support $48 billion in economic growth over the program’s first decade (2026-2035). While the specific methodological details of this report remain inaccessible through the provided URL, extensive research into Greenline Insights’ comparable analyses, standard input-output (I-O) modeling practices, and economic impact assessment literature reveals fundamental concerns about the treatment—or more precisely, the omission—of opportunity costs in such economic analyses.
Even a non-economist like me understands that if an analysis does not consider how the money raised by NYCI might have been used elsewhere is not considered, then that is a problem:
Opportunity cost represents “the value of the alternative foregone by choosing a particular activity”—the benefits that could have been realized if the same resources were deployed differently. In climate policy analysis, this concept is essential because government spending and regulatory mandates redirect capital, labor, and productive resources from alternative uses. A comprehensive economic evaluation must compare not just the projected benefits of a policy against its direct costs, but also assess what economic activity would have occurred absent the intervention—the counterfactual baseline.
The response to my query raised the following issues with the Greenline Insights methodology:
1. The “Missing Peter” Problem
As economists from the Beacon Hill Institute articulated in critiquing renewable energy economic impact studies: “They are robbing Peter [existing economic activities] to pay Paul [the supported sector], and claiming the program increased total spending because now Paul spends more, but they ignore accounting for Peter”.
Every dollar collected through allowance auctions or allocated to climate investments is a dollar unavailable for alternative economic uses—whether private consumption, business investment in other sectors, or different government priorities. Standard I-O models “cannot compute possible reductions in output and jobs elsewhere in the economy, due to the reallocation of resources towards the supported project”.
2. Assumption of Idle Resources
The typical economic impact study assumes “that the dollar that flows through the industries identified by model’s I-O tables, and the resources that they are commanding, would not otherwise be used”. This assumption may be defensible during severe recessions with high unemployment and underutilized productive capacity, but becomes increasingly problematic as economies approach full employment.
New York State added over 1 million private sector jobs since April 2020 and reached record employment levels as of September 2024. In this context, labor and capital redirected to clean energy investments necessarily displace activity in other sectors. One analysis noted explicitly: “IMPLAN cannot be used to model nonresidential sector opportunity costs, so those were not included”—a tacit acknowledgment of the methodology’s inherent limitation.
Rigorous policy evaluation requires comparing outcomes under the policy scenario against a well-specified counterfactual: what would have happened in the policy’s absence. This counterfactual must account for:
- Alternative deployment of capital: If the $61-126 billion in projected cap-and-invest revenues were instead left with households and businesses, what consumption and investment would occur?
- Baseline economic trajectories: What job growth, wage increases, and economic output would materialize under business-as-usual conditions?
- Displaced economic activity: Which sectors contract as resources shift toward clean energy, and what are the productivity implications?
Standard I-O models do not construct this counterfactual. They measure gross economic activity associated with program spending but do not subtract the economic activity that would have occurred with alternative resource allocation.
The academic economics community has long criticized the misapplication of I-O analysis for policy advocacy. As one prominent critique states: “There’s a joke among economists who look at economic impact studies, and we say ‘Define all costs as benefits, and double them'”. This captures the tendency of such analyses to:
- Present gross job creation without netting out job displacement
- Calculate multiplier effects on program spending without comparable analysis of opportunity cost multipliers
- Report total economic output without addressing whether this represents additional output or reallocated output
The response to my query concludes:
For policymakers and stakeholders evaluating the economic case for New York’s Clean Air Initiative, this means:
- The reported economic benefits are overstated to the extent they represent reallocation of economic activity rather than net additions
- The true net economic impact depends on the relative productivity of clean energy investments versus displaced alternatives—a comparison the analysis does not make
- The strongest case for the policy rests on climate and health benefits, not the economic multiplier effects emphasized in the report’s communications
- More rigorous analysis following a similar Resources for the Future approach or comprehensive cost-benefit frameworks would provide better-informed decision-making
Conclusion
This report is simply a lobbying presentation that was commissioned by EDF to support their arguments that NYCI is a good idea. One common aspect of all these analyses is that the benefits are overstated, the costs are minimized if not ignored, and the methodology is sketchy. I do not think that any of the job estimates and economic projections are credible.
Pragmatic Environmentalist of New York 