Author: rogercaiazza

Recently I posed some questions that I think need to be resolved associated with the New York Cap-and-Invest Program (NYCI) because I believed that Governor Hochul would announce the next steps associated with the implementation of this program when she presented the 2025 State of the State.  I was completely wrong.  The policy initiatives in the 2025 State of the State book only included this reference to NYCI: “Over the coming months, the Department of Environmental Conservation (DEC) and the New York State Energy Research and Development Authority (NYSERDA) will take steps forward on developing the cap-and-invest program, proposing new reporting regulations to gather information on emissions sources, while creating more space and time for public transparency and a robust investment planning process.”  This post describes the official announcements and schedule impacts.  I will follow up with another post describing reactions later.

I am convinced that implementation of the New York Climate Leadership & Community Protection Act (Climate Act) net-zero mandates will do more harm than good if the future electric system relies only on wind, solar, and energy storage because of reliability and affordability risks.  I have followed the Climate Act since it was first proposed, submitted comments on the Climate Act implementation plan, and have written over 490 articles about New York’s net-zero transition.  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.  It includes an interim 2030 reduction target of a 40% GHG reduction by 2030. Two targets address the electric sector: 70% of the electricity must come from renewable energy by 2030 and all electricity must be generated by “zero-emissions” resources by 2040. The Climate Action Council (CAC) responsible for preparing the Scoping Plan to “achieve the State’s bold clean energy and climate agenda” recommended a market-based economywide cap-and-invest program. 

The program works 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.”  In addition to the declining cap, it is supposed to 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.  

I have looked for the original schedule for NYCI implementation but could not find anything to document my recollection that the program was planned to be in place and operating so that auction revenues would start in 2025.  There is no doubt that the announcement that the program is taking steps forward on developing the cap-and-invest program “over the coming months” admits that the program is being delayed.  Let’s take a look at the information available and possible reasons for the delay.

NYCI Schedule

The State of the State Book and the NYSERDA State of the State Announcement provided nothing concrete about the schedule.  The only reference to time was “over the coming months”. 

The Nature Conservancy in New York released a statement from Jessica Ottney Mahar, policy and strategy director that is likely to be the most accurate timeline because her husband is the acting Commissioner of the Department of Environmental Conservation.  Her statement included the following:

Unfortunately, in a concerning setback for climate action, Governor Hochul is delaying the implementation of a Cap and Invest Program that would reduce the air pollution that causes global warming. Rather than advancing draft regulations this month, as had been widely discussed, the Governor’s address states that partial program details will be released sometime this year”.

Discussion

Obviously, the Hochul Administration is stalling the progress of NYCI.  Not surprisingly, advocates are “concerned” but the fact is that the aspirational Climate Act schedule is at odds with reality as developments last summer showed. 

Administration descriptions of the 2025 State of the State said; “It includes more than 200 initiatives that will put money back in people’s pockets, keep New Yorkers safe, and ensure the future of New York is a place where all families can thrive.”  The reality is that NYCI will be expensive and at odds with the affordability theme of the State of the State.  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.  In my opinion, costs are primary driver for the delay.

Last September I wrote an article that discussed several reports that should also have influenced the decision to slow down NYCI implementation.  On July 16, 2024 the New York State Comptroller Office released an audit of the NYSERDA and Public Service Commission (PSC) of their implementation efforts for the Climate Act titled Climate Act Goals – Planning, Procurements, and Progress Tracking.  The key finding summary states: “While PSC and NYSERDA have taken considerable steps to plan for the transition to renewable energy in accordance with the Climate Act and Clean Energy Standard, their plans did not comprise all essential components, including assessing risks to meeting goals and projecting costs.”  It recommended:

• Begin the required comprehensive review of the Climate Act, including assessment of progress toward the goals, distribution of systems by load and size, and annual funding commitments and expenditures.
• Conduct a detailed analysis of cost estimates to transition to renewable energy sources and meet Climate Act goals. Periodically update and report the results of the analysis to the public.
• Assess the extent to which ratepayers can reasonably assume the responsibility for covering Climate Act implementation costs. Identify potential alternative funding sources

The Climate Act requires the Public Service Commission (PSC) issue a biennial review for notice and comment that considers “(a) progress in meeting the overall targets for deployment of renewable energy systems and zero emission sources, including factors that will or are likely to frustrate progress toward the targets; (b) distribution of systems by size and load zone; and (c) annual funding commitments and expenditures.”  The draft Clean Energy Standard Biennial Review Report released on July 1, 2024 fulfills this requirement.  Key findings from the report include:

• New York is likely to miss its 2030 target of achieving 70% renewable electricity.
• The state is projected to reach this goal by 2033 instead.
• There is a significant gap of 42,145 GWh or 37% towards meeting the 70% renewable energy goal by 2030

The Final report was due by the end of 2024, but Department of Public Service staff recently announced that publication would be delayed.

The Scoping Plan is an outline of possible strategies that could reduce emissions consistent with the Climate Act mandates.  The State Energy Plan is a comprehensive roadmap to build a clean, resilient, and affordable energy system for all New Yorkers.  That process started last fall with the release of a draft scope of the plan.  The energy plan required analyses have not been updated since 2015.  Section 6-104, State Energy Plan (2) (b) says the state energy plan shall include:

(b) Identification and assessment of the costs, risks, benefits, uncertainties and market potential of energy supply source alternatives, including demand-reducing measures, renewable energy resources of electric generation, distributed generation technologies, cogeneration technologies, biofuels and other methods and technologies reasonably available for satisfying energy supply requirements which are not reasonably certain to be met by the energy supply sources identified in paragraph (a) of this subdivision, provided that such analysis shall include the factors identified in paragraph (d) of this subdivision.

The expectation is that the final Energy Plan scope will be completed in early 2025 and the document will be released for public review in the summer of 2025.  I do not see any way that the Plan will be completed before the end of 2025.

In summary, there are several on-going initiatives that are going to put costs and schedule issues out in the open.  In my opinion, they all should be completed before implementation proceeds.  The Comptroller report emphasized the need for transparent costs.  The Biennial Review is supposed to address those costs albeit I am sure that the Hochul Administration does not want to provide those numbers in the detail that the Comptroller requested.  The Energy Plan also must fulfill a cost documentation mandate and will address issues glossed over in the Scoping Plan or made obsolete by industry and financial changes since the publication of the Scoping Plan.  A major unresolved issue is how to pay for these expected costs.

Conclusion

There are clear reasons for delaying implementation of NYCI.  I have commented numerous times on what I think is the biggest issue associated with the aforementioned initiatives – the obvious need for a feasibility analysis to determine a viable decarbonization strategy for New York.  The Scoping Plan and the organizations responsible for New York State electric system reliability agree that a new technology is needed to support the proposed wind, solar, and energy storage electric energy system envisioned by the Climate Act during extended periods of low resource availability.  It is ridiculous to proceed full speed down an implementation path without knowing if the necessary technology is available to maintain current standards of system reliability.

The other viability constraint is cost.  I believe that it is becoming evident even to the true believers in the Hochul Administration that the costs are so large that they are a political liability.   I believe that costs are the likely reason that the Hochul Administration is delaying NYCI implementation.

I believe that the NYCI reporting regulations will be enacted in 2025.  Based on my extensive reporting experience I think it would be appropriate to give the affected sources time to implement the reporting infrastructure necessary to comply with the new regulations.  I also believe that the Hochul re-election plan will avoid having the auction start in the 2026 election year because this billions a year tax is inimical to claiming to be concerned about affordability.

Politico’s Marie French recently reported that “Two reports backed by environmental advocates found distributing money raised from a cap-and-trade program would leave households better off.”  New York’s Affordable Energy Future included recommendations for allocating the revenues from the New York Cap-and-Invest program.  I did not address the primary claim but did calculate the expected emission reductions from the investments in the proposed allocations to the reductions needed to meet the Climate Leadership & Community Protection Act (Climate Act) 2030 and 2050 targets.  

I have been involved in the RGGI program process since it was first proposed prior to 2008.  I follow and write about the details of the RGGI program because the results of that program need to be considered for Climate Act implementation.   The opinions expressed in these comments 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.  It includes an interim 2030 reduction target of a 40% GHG reduction by 2030.  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 Scoping Plan was finalized at the end of 2022 and included a recommendation for a market-based economywide cap-and-invest program. 

In response to that recommendation, the New York State Department of Environmental Conservation (DEC) and New York State Energy Research & Development Authority (NYSEDA) have been preparing implementation regulations for the New York Cap-and-Invest (NYCI) program.    The program works 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.”  In addition to the declining cap, it is supposed to 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.  I recently summarized some of my concerns with the proposed program.

My decades long experience with market-based pollution control programs has always been from the compliance side.   Starting with the Acid Rain Program in 1990 I spent 20 years tracking electric generating station emissions, submitting emissions data to EPA, and working internally to assure that the compliance obligations of the company were assured before I retired.  Over that period, DEC and EPA modified the regulations setting the caps on emissions.  I was responsible for evaluating whether the company could meet the new caps.  When EPA set new limits, the new standard was based on an evaluation of what the generating units could do, arguments revolved around whether their assessment was appropriate for individual units, and whether their schedule for implementing the new limits was achievable.  The Climate Act mandates were arbitrary with no regard to feasibility of limits or timing.

One of the concerning elements of NYCI is the near total disregard for the compliance obligations of affected sources.  Last month I evaluated the performance of RGGI relative to compliance obligations in a series of three articles.  In the first article I evaluated Environmental Protection Agency (EPA) emission data and NYSERDA documentation and found that the investments funded by RGGI auction proceeds would have been only 4.2% higher if the NYSERDA program investments did not occur.  In the second article I showed that the cost per ton reduced from the NYSERDA RGGI operating plan investments was $582 per ton of CO2. The final article described the program allocations in the NYSERDA  2025 Draft RGGI Operating Plan Amendment.  I showed that the observed  49% emission reduction since 1990 were primarily due to fuel switching and there are no more fuel switching opportunities available. These analyses also generated a cost per ton of CO2 removed for different NYSDERDA programs that was used in the following analysis.

New York Affordable Energy Future

One of the reports described by Marie French “was produced by Switchbox and paid for by WE ACT for Environmental Justice, Environmental Defense Fund, and Earthjustice”.  The recommended citation is

Smith, Alex, Rina Palta, Max Shron, and Juan-Pablo Velez. 2025. “New York’s Affordable Energy Future.” Switchbox. January 13, 2025.  I will refer to the report as Smith et al., 2025.  I asked Marie about Switchbox and she explained that it was “set up basically to do research for environmental groups in NY/other parts of the country. The project is described by Earthjustice here. 

This kind of report bothers me because it is grey literature.  One description of grey literature emphasizes the point that it is not subject to peer review but another claims that “it may be the best source of information on policies and programs”.  My problem with grey literature performed at the behest of environmental advocacy organizations is that those organizations promote the results without acknowledging the biases.  Incredibly, these reports have impacted New York policy.  Policy makers cite these works without critical appraisal of the analyses and citations used. The biggest problem is when policy makers neglect to account for potential publication bias when including grey literature in their decision-making process.  Of course, I must admit that all of my work is grey literature.  The reason that my articles are so long is because I provide the background and data necessary for my readers to assess my results and conclusions.  I included this discussion because this report is unique as it is only available on-line at the Switchbox website.  That makes assessment of their analysis and data more difficult which I think is the point of that approach.

Program Allocations

French notes that this report focuses on how the revenue from “cap and invest” should be spent and how households could benefit from electrifying their homes.  Two revenue scenarios corresponding to the range of expected proceeds proposed by NYSERDA and DEC were analyzed:

• Scenario A would set a $24 per-unit ceiling on allowances in 2025, rising to $26 in 2026, $58 in 2027, and by 6% annually thereafter.
• Scenario C would set a $14 per-unit ceiling on allowances in 2025, rising to $15 in 2026, $27 in 2027, and by 6% annually thereafter.

Smith et al., 2025 state that:

In 2030, the state would collect $6 billion in NYCI revenue under scenario C, and $13 billion under scenario A.

These sums would cover 54 – 115% of NYSERDA’s 2030 cost estimate and are equivalent to 3 – 5% of New York State’s $237 billion 2025 budget.

Their proposed funding scenario allocates resources to seven categories (Table 1).  In the revenue projections examined by the report, NYCI would raise a total of between $61 – $126 billion over the first 11 years of the program. 

Table 1: Funding by program under proposed spending program with 11-year total revenues

The NYSERDA RGGI Funded Program Status reports provide estimates of the effectiveness of the programs that NYSERDA manages using RGGI proceeds.  Table 2 uses data from NYSERDA’s Table 2. Summary of Expected Cumulative Annual Program Benefits through December 31, 2023 in the most recent status report.  The costs and emission savings columns in Table 2 are directly from the NYSERDA report.  I assigned different NYSERDA programs to the proposed programs in Smith et al., 2025 in the remaining columns. For example, the NYSERDA Charge New York programs support infrastructure deployment for electric vehicles.  I summed up all the relevant costs and benefits and calculated a cost effectiveness for each category by dividing the total costs by the expected emission savings:

• Transportation: $917 per ton of CO2e removed
• Commercial Decarbonization: $446 per ton of CO2e removed
• Residential Decarbonization: $457 per ton of CO2e removed
• Place-based Investments: $239 per ton of CO2e removed

Table 2: Summary of Expected Cumulative Annualized Program Benefits through 31 December 2023 Categorized by Smith et al, 2025 NYCI Proposed Programs

Combining these data, it is possible to determine how effective the proposed allocations will be for providing the emission reductions necessary to meet the Climate Act goals.  The expected reductions in each for each program equal the funds available divided the cost per ton expected.  The question is whether the investments will achieve compliance.   The Scoping Plan did not provide a schedule for emission reductions expected for their reduction strategies, so we must do our own estimate.  In 2022, the total GHG emissions for New York equaled 371.08 million tons.  In 2030 GHG emissions must meet a 40% reduction of 1990 emissions or 294.07 million tons.  To get to that level emissions must go down 9.6 million tons per year.  For Scenario A we expect to reduce emissions 119.63 million tons and there is a surplus of 13.75 million tons over the 11 year period total to reach the 2030 target.  However, Scenario C does not meet the target and the 2050 target will not be met for either scenario.

Table 3: Funding by program , expected cost efficiency and projected 11-year reductions

Discussion

While most advocates do not acknowledge that cap-and-invest programs probably will not guarantee compliance with the emission reduction goals, this report did.  One of the features of the proposed program is a price ceiling on the allowance cost that will limit the impact on consumers.  Smith et al., 2025 note that “This is why economists often describe a price ceiling as converting cap-and-trade into a carbon tax at that price point.”  In my opinion NYCI is simply a re-branded carbon tax.  The authors’ described price ceilings:

However, they have the effect of weakening the cap: if the auction price ended up being higher than the price ceiling for a given year, the state would sell unlimited allowances at the ceiling price, resulting in more allowances sold than the cap would otherwise allow.

Price ceilings therefore sacrifice the state’s ability to control the level of climate pollution in exchange for the ability to control the price of climate pollution. A declining cap would thus be unable to single-handedly decarbonize New York by 2050, and Cap-and-Invest would need to be paired with complementary policies.

There is a reference to the last sentence that states “As documented in the book Making Climate Policy Work (Cullenward and Victor 2020), this is true of all real-world cap-and-trade systems.”  In a recent article I made the same point that Cullenward and Victor believe that the level of expenditures needed to implement the net-zero transition vastly exceeds the “funds that can be readily appropriated from market mechanisms”.  The numbers derived from the New York RGGI experience corroborates that conclusion. 

I worry that there are limited emission reduction options for the compliance entities.  There are no add-on controls that can achieve zero emissions for any sector.  The only strategy is to convert to a different source of energy which takes time because some components are out of the control of the entity that is responsible for compliance.  For example, fuel suppliers are responsible for transportation sector compliance, but the strategy is to convert to zero-emission vehicles.  They have no control over that.  As noted previously, the Climate Act schedule was determined by politicians.  I have long argued that New York needs to do a feasibility study to confirm that the Scoping Plan emission reduction strategies themselves and the arbitrary schedule of the Climate Act are possible. 

The problem with NYCI is that it establishes a compliance schedule.  If the schedule or the reduction technologies are not feasible, then there will be compliance implications.  Organizations are unwilling to knowingly violate compliance requirements because the programs are designed to severely penalize non-compliance.  The only remaining option for the fuel suppliers to ensure compliance is to simply stop selling fuel.  I do not think that the resulting artificial energy shortage will be received well by anyone.

I did not address any aspects of the Smith et al., 2025 analysis other than the compliance obligation aspect.  This analysis shows the investments from the NYCI program cannot achieve the annual emission reduction rate necessary to meet the 2050 goal but for the highest revenue scenario the rate could be achieved.  This does not mean that NYCI investments will ensure that the 2030 goal can be met.  The program hasn’t even been proposed.  There won’t be any revenues available until 2026 and the programs need to be proposed, contracts let, and deployment started before there will be any emission reductions. Frankly, I doubt that there will be any meaningful emission reduction from NYCI investments by 2030.  This finding emphasizes the need for a pause in implementation until the funding requirements for meaningful reductions are identified.

I expect to follow up with another post on this report later to address the main claim that the higher revenue scenario would “reduce household costs”.

Conclusion

The Smith et al., 2025 analysis proposes an allocation scheme for NYCI revenues.  I did not address the specifics of their proposal.  My interest was the acknowledgement of the Cullenward and Victor work that persuasively argues that the level of expenditures needed to implement the net-zero transition vastly exceeds the “funds that can be readily appropriated from market mechanisms”.  The performance of NYSERDA investment of RGGI proceeds confirms that argument. 

The biggest question is the appetite of New Yorkers to accept a $13 billion-dollar annual carbon tax whatever the investment benefits claimed.  Governor Hochul will be running for re-election in 2026 so I believe the political machinations regarding costs will be the over-riding factor in the choice of the allowance ceiling price and the costs to consumers.  Unacknowledged by most are the compliance obligations that could have massive unintended consequences.  Stay tuned.

After spending most of my time dealing with the December rush of comments submitted for various Climate Leadership & Community Protection Act (Climate Act) initiatives, I finally have time for issues that I would like to see resolved in 2025.  At the top of the list are concerns associated with the New York Cap-and-Invest Program (NYCI).

I am convinced that implementation of the New York Climate Act net-zero mandates will do more harm than good if the future electric system relies only on wind, solar, and energy storage because of reliability and affordability risks.  I have followed the Climate Act since it was first proposed, submitted comments on the Climate Act implementation plan, and have written over 490 articles about New York’s net-zero transition.  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.  It includes an interim 2030 reduction target of a 40% GHG reduction by 2030. Two targets address the electric sector: 70% of the electricity must come from renewable energy by 2030 and all electricity must be generated by “zero-emissions” resources by 2040. 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 quantified 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.  Since then, the State has been trying to implement the Scoping Plan recommendations through regulations, proceedings, and legislation. 

There are many issues that remain unresolved even while the Hochul Administration rushes ahead to build as much solar, wind, and energy storage as possible as quickly as possible.  This post poses questions related to NYCI;

The CAC’s Scoping Plan recommended a market-based economywide cap-and-invest program.  The program works 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.”  In addition to the declining cap, it is supposed to 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.  

New York Cap-and-Invest Concerns

The draft cap-and-invest rule was originally slated for release in summer 2024 after the last public comment period ended in March 2024.  The first question is when are the regulations going to come out?  At the August 2024 Update on the New York Cap-and-Invest Plan  the following slide was included that states that the “Allocation of funds will be finalized through State Budget Process.“   Consequently, I believe that the NYCI regulations will be released in conjunction with the State Budget process that will consume everyone’s attention in Albany for the next couple of months.

There are many questions related to how NYCI fund allocation would be done.  At the top of that list is the revenue goals.  I don’t see any way to include something in the budget unless they estimate costs.  Do not ever forget that these climate initiatives are primarily about scoring political points.  Governor Hochul appears to have figured out that the costs of implementing the Climate Act are enormous.  I am sure that packaging the costs of NYCI as a benefit and not just another tax is a major reason why the regulations have been delayed.  The resulting question is how much will this cost?

Two years ago, the Hochul Administration floated the idea of changing the GHG emissions accounting to the one used by nearly every jurisdiction in the world. That would enable New York to participate in trading programs with other jurisdictions, eliminate the need to develop an entirely new accounting framework, and would reduce the number of allowances in the auction.  The last reason was the primary driver because it was alleged that it would reduce costs.  There was immediate and intense blowback from environmental organizations and the proposal was dropped.  I would not be shocked if it reappears.  It is fair to ask how New York will ever be able to participate with other jurisdictions as long as New York insists on a unique accounting system.

The Regional Greenhouse Gas Initiative (RGGI) is often cited as a model for the NYCI program, but last month I showed that RGGI electric sector performance and New York State Energy Research & Development Authority (NYSERDA) investment effectiveness raise concerns.  I question whether NYCI can improve on the results shown in NYSERDA reports that indicate RGGI has not been a very effective emission reduction mechanism.

• I evaluated Environmental Protection Agency (EPA) emission data and NYSERDA documentation.  The figure below shows that electric sector economic fuel switching from oil and coal to natural gas is the primary reason for the observed reduction in emissions.  It also shows that there are no more fuel switching emission reductions possible.
• On a regular basis NYSERDA publishes a status update of the progress of their program activities, implementation, and evaluation.   According to the latest update, the total cumulative annual emission savings due to NYSERDA program investments of RGGI proceeds through the end of 2023 is 1,976,101 tons.  That means that emissions from RGGI sources in New York would have been only 4.2% higher if the NYSERDA program investments did not occur.  I showed that according to the report, cumulative combined costs for those programs was $1,149 million which means that the cost per ton reduced is $582.
• I also showed that the results in the Funding status reports show that since the start of the program NYSERDA has allocated 10% of its investments to programs that directly reduce utility emissions by 199,733 tons, 58% to programs that indirectly reduce utility emissions by 1,205,780 tons, and 32% to programs that will increase utility emissions by 678,804 tons.  When those savings that do not affect RGGI source emissions are removed, total savings are 1,297,297 and the emissions from RGGI sources in New York would have been only 2.8% higher if the NYSERDA program investments did not occur.
• The proposed NYSERDA Amendment to the RGGI Operating Plan allocates only 22% to programs that directly, indirectly, or could potentially decrease RGGI-affected source emissions.  Programs that will add load that could potentially increase RGGI source emissions total 37% of the investments.  Programs that do not affect emissions are funded with 29% of the proceeds and administrative costs total another 8%. 

The proposed Amendment to the RGGI Operating Plan indicates that NYSERDA has not incorporated the need to fund RGGI emission reduction programs now that fuel switching is no longer an effective option.  Before we start implementing NYCI it is appropriate to check on implementation plans for RGGI.  Where does NYSERDA expect the emission reductions necessary for RGGI compliance to come from?

With respect to NYCI and the non-electric sector economy, there are no fuel switching opportunities that will save fuel costs.  Has NYSERDA determined how much auction revenue is needed to fund the emission reduction strategies necessary to meet the Climate Act mandates?  When that amount is combined with the mandates c to fund benefits to disadvantaged communities and Hochul Administration promises for rebates what is the expected starting cost for the allowance auctions? According to the latest GHG emission inventory, the 2022 GHG emissions were 371.08 MMT CO₂e and need to reach 245.47 by 2040 which means that NYS must reduce emissions by 33.8% over 18 years.  Will NYCI target auction prices increase to make up for the reduced number of allowances?

In addition to these relatively broad issues there are numerous technical concerns.  NYCI is supposed to be an economy-wide program.  Does that mean every sector will participate?  The electric sector is already covered by RGGI.  Will the electric sector be exempt from NYCI or will there be some accounting mechanism to ensure that ratepayer don’t pay twice. 

There are technical issues associated with timing for the start of the program.  The 2024 Statewide GHG Emission Report released at the end of December covers data from 1990 to 2022.  RGGI emissions are reported by the end of the following January and compliance determined 30 days later.  Will NYCI mandate reporting similar to that schedule or one compatible with the official inventory.  I spent more time than I care to remember dealing with emission inventories during my career and a major concern was compatibility.  How will that be resolved in NYCI considering the report timing?

Discussion

California was the first in the nation legislate a “solution” to climate change with its AB32 Global Warming Solutions Act of 2006.  I recently posted an article describing the Breakthrough Journal article by Jennifer Hernandez and Lauren Teixeira entitled Time to reset California’s climate leadership.  After fourteen years the inevitable effects of reality are getting the attention of the politicians that supported the law.  The authors explained:  

California’s Democratic Assembly leader Richard Rivas opened the new Legislative session signalling a strong focus on meeting voter concerns about housing and the state’s extraordinarily high cost of living, specifically calling out the state’s climate policies: “California has always led the way on climate. And we will continue to lead on climate,” he told his Assembly colleagues. “But not on the backs of poor and working people, not with taxes or fees for programs that don’t work, and not by blocking housing and critical infrastructure projects. It’s why we must be outcome driven. We can’t blindly defend the institutions contributing to these issues.”

I think it is incumbent upon the Hochul Administration to consider whether the Climate Act will have similar impacts to New York.  My analysis of the RGGI program indicates that RGGI is a hidden tax that is not working as advertised.  My overarching concern is that any increase in costs is regressive and affects those least able to afford them the most.  The Hochul Administration has included promises to reduce those impacts, but the reality is that it is easier said than done.  For example, rebates to those adversely affected will lag payments and there is the danger that many in need will not get rebates. 

New York’s stakeholder process is another hinderance to effective policy.  Comments submitted go off into the bureaucracy and there is no indication which comments are addressed and how.  When the regulations come out agencies are not allowed to discuss issues.  Revolving issues requires dialogue, and the New York process effectively shuts that down. 

There is another stakeholder issue.  The desire for inclusivity is a laudable goal and the State has committed to encouraging participation by constituencies that claim that past practices have ignored their concerns.  In theory that is great.  In practice, if those aggrieved parties demand zero impacts and are unwilling to consider compromises or the existing structure of environmental protections, then the stakeholder process gets mired down, off track, and becomes ineffective.  The Hochul Administration has yet to resolve that problem.

Conclusion

The premise for NYCI was that it would be an effective policy that would provide funding and ensure compliance because existing programs worked.  The RGGI program results show that cap-and-invest programs can raise money but have not shown success in reducing emissions.  My biggest concern is that NYCI has not acknowledged this problem.  Past results are no guarantee of future success, especially when past results are not triumphs.  This is another instance where I believe that the Climate Act implementation will do more harm than good.