Author: rogercaiazza

On February 15, 2024 Governor Hochul announced $200 million in utility bill relief for 8 million New Yorkers.  The press release quoted her as saying “Energy affordability continues to be a top priority in my clean energy agenda and this utility bill credit is just one of many actions New York is taking to reduce costs for our most vulnerable New Yorkers.” This post shows how some of the numbers given can be used to put implementation costs for the Climate Leadership & Community Protection Act (Climate Act) into context.

I have followed the Climate Act since it was first proposed, submitted comments on the Climate Act implementation plan, and have written over 400 articles about New York’s net-zero transition. 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 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% reduction by 2030 and a requirement that all electricity generated be “zero-emissions” by 2040. The Climate Action Council (CAC) 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 using zero-emissions electricity. 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.  In 2023 the Scoping Plan recommendations were supposed to be implemented through regulation, PSC orders, and legislation.  Not surprisingly, the aspirational schedule of the Climate Act has proven to be more difficult to implement than planned and many aspects of the transition are falling behind.  In addition, the magnitude of the necessary costs is coming into focus despite efforts to hide them.  A political reckoning is inevitable in my opinion.

Press Release

This section quotes the press release and includes my comments. 

The introduction outlines the rebate plan:

Governor Kathy Hochul today announced that the New York State Public Service Commission adopted a $200 million New York State energy bill credit to be administered by the large electric and gas utilities on behalf of their customers. The energy bill credit is a one-time credit using State-appropriated funds to provide energy bill relief to more than 8 million directly metered electric and gas customers. With today’s action, more than $1.4 billion has been or will be made available to New York consumers to help offset energy costs in 2024.

The rebate totals $200 million and gives a one-time credit to 8 million directly metered electric and gas customers.  Ry Rivard in the February 16 edition of Politico Pro NY & NJ Energy notes that “The money, which will be spread across eight million electric and gas customers, amounts to roughly a one-time bill credit of about $24.”

Hochul provides the rationale for the rebate:

“Every New Yorker deserves affordable and clean energy, which is why I fought to secure additional funds to provide financial relief for hardworking families,” Governor Hochul said. “Energy affordability continues to be a top priority in my clean energy agenda and this utility bill credit is just one of many actions New York is taking to reduce costs for our most vulnerable New Yorkers.”

In Albany there are always working groups, advisory councils, and other committees set up to deflect blame and/or claim benefits.  In this instance the Energy Affordability Policy working group, “a group of stakeholders that included the most prominent consumer advocacy groups in the state” made the recommendations.  The press release states:

The program, proposed by the Energy Affordability Policy working group, provides that the $200 million appropriation included in the FY24 State Budget will be allocated to customer accounts through a one-time credit within roughly 45 days of the utilities receiving budget funds. This utility bill relief builds on several other key energy affordability programs administered by New York State, including $380 million in energy assistance program (EAP) funding for consumers through utilities, $360 million in Home Energy Assistance Program (HEAP) funding, $200 million in EmPower+ funding through the State Budget, over $200 million in ratepayer funding to provide access to energy efficiency and clean energy solutions for low-to -moderate income (LMI) New Yorkers through the Statewide LMI portfolio and NY Sun, and more than $70 million annually through the Weatherization Assistance Program (WAP).

The Department of Public Service (DPS), in consultation with the Energy Affordability Policy working group, was tasked with designing a utility bill relief program related to the costs of utility affordability programs in recognition of energy commodity cost increases and the costs of utilities’ delivery rate increases. The working group considered multiple proposals over several months to effectuate the desired relief. The majority of the working group agreed to the staff proposal after several key modifications and recommended the PSC implement a one-time energy bill credit that would primarily benefit residential and small business electric and gas customers.

The Energy Affordability Policy working group is made up of leading consumer groups and advocates, municipalities, relevant state agencies, and utilities in New York.

Ry Rivard explains that the PSC was asked to divvy up the money in a few different ways:

New York City, for instance, urged the commission to provide different credits to gas customers depending on whether they used gas to heat their homes or just for cooking. And AARP, among others, argued the bill credits should be targeted to people who need the help most.

Ultimately, the PSC went with a simple, rough and ready way that gets money out the door quickly and just in time to help reduce winter heating bills: divide the money available by the number of customers.

A large section of the press release was devoted to congratulatory statements and descriptions of other ways the Hochul Administration wants to help:

PSC Chair Rory M. Christian said, “We applaud Governor Hochul for continuing to address the high cost of utility bills in New York State head on. While global commodity price volatility and utility delivery rate requests for increases, the Governor’s new and innovative energy affordability initiatives are coming at exactly the right time.”

Public Utility Law Project (PULP) Executive Director and Counsel Laurie Wheelock said, “PULP extends our sincere gratitude to Governor Hochul and the State Legislature for the allocation of a historic $200 million in the FY 2023-24 State Budget to address energy affordability. PULP and other stakeholders, including the Department of Public Service, Joint Utilities, and fellow consumer advocates, worked together to put forward a proposal that would provide relief to customers. The Commission’s decision today underscores a shared commitment to find ways to aid all New Yorkers, including our most vulnerable households, facing rising utility costs and volatile electric and natural gas prices. As we celebrate this milestone, PULP remains committed to identifying and advocating for additional measures to ensure energy is affordable in 2024 and beyond.”

In addition to the energy bill credit funds and EmPower+, New York State programs offer funding and technical assistance that can assist homeowners, renters, and businesses manage their energy needs. This includes:

Apply for HEAP: As of November 1, applications were being accepted for the Home Energy Assistance Program (HEAP) which can provide up to $976 to eligible homeowners and renters depending on income, household size and how they heat their home (e.g., family of four with a maximum monthly gross income of $5,838 can qualify). For more information visit NYS HEAP.

Energy Affordability Program/Low Income Bill Discount Program: This program provides income-eligible consumers with a discount on their monthly electric and/or gas bills, as well as other benefits, depending on the characteristics of the particular utility’s program. New Yorkers can be enrolled automatically if they receive benefits from a government assistance program. For more information, they should visit their utility website or links can be found at DPS Winter Preparedness.

Community-based Service Programs: Service organizations and local community agencies provide financial aid, counseling services and assistance with utility emergencies. New Yorkers can contact organizations like the American Red Cross (800-733-2767), Salvation Army (800-728-7825), and United Way (2-1-1 or 888-774-7633) to learn more.

Receive a customized list of energy-related assistance in the State: New York Energy Advisor can help income-eligible New Yorkers locate programs that help them spend less on energy and create healthier and more comfortable spaces. With New York Energy Advisor, consumers answer simple questions and get connected with energy-saving offers in New York State. Sponsored by NYSERDA and utilities, qualified New Yorkers can get help paying utility bills, receive special offers on heating assistance, and more.

EmPower+: Income-eligible households can receive a home energy assessment and no-cost energy efficiency upgrades through the EmPower+ program, administered by NYSERDA. Get more information about the program, including information on how to apply at https://www.nyserda.ny.gov/All-Programs/EmPower-New-York-Program.

Weatherization Assistance Program (WAP): Administered by New York State Homes and Community Renewal, WAP provides income-eligible households with no-cost weatherization services. Rental properties can also be served, though there are additional requirements for owners of rental properties. For more information on WAP, including how to apply, visit https://hcr.ny.gov/weatherization-applicants.

The press release ends with a bragging reference to the Climate Act.  Not mentioned here is how the  Climate Act initiative will affect consumer costs. It is the same oft-repeated drivel seen before so I will not comment here.

New York State’s Nation-Leading Climate Plan

New York State’s nation-leading climate agenda calls for an orderly and just transition that creates family-sustaining jobs, continues to foster a green economy across all sectors and ensures that at least 35 percent, with a goal of 40 percent, of the benefits of clean energy investments are directed to disadvantaged communities. Guided by some of the nation’s most aggressive climate and clean energy initiatives, New York is on a path to achieving a zero-emission electricity sector by 2040, including 70 percent renewable energy generation by 2030, and economywide carbon neutrality by mid-century. A cornerstone of this transition is New York’s unprecedented clean energy investments, including more than $40 billion in 64 large-scale renewable and transmission projects across the state, $6.8 billion to reduce building emissions, $3.3 billion to scale up solar, nearly $3 billion for clean transportation initiatives, and over $2 billion in NY Green Bank commitments. These and other investments are supporting more than 170,000 jobs in New York’s clean energy sector as of 2022 and over 3,000 percent growth in the distributed solar sector since 2011. To reduce greenhouse gas emissions and improve air quality, New York also adopted zero-emission vehicle regulations, including requiring all new passenger cars and light-duty trucks sold in the State be zero emission by 2035. Partnerships are continuing to advance New York’s climate action with 400 registered and more than 100 certified Climate Smart Communities, nearly 500 Clean Energy Communities, and the State’s largest community air monitoring initiative in 10 disadvantaged communities across the State to help target air pollution and combat climate change.

Discussion

In this section I will put some context around these numbers: rebate totals $200 million and gives a one-time credit to 8 million directly metered electric and gas customers which “amounts to roughly a one-time bill credit of about $24.”  In my opinion it is disappointing that this rebate apparently is being given to everyone and not limited to those who can least afford high energy costs.  I calculated the rebate as function of the number of household percentiles.  Using 7.5 million households as the state total and dividing by the $200 million rebate gives $26.67 per household.  If only half the households are eligible for the rebate the $200 million is divided by 3,375,000 the rebate goes up to $53.33.  The numbers quoted earlier are different simply because a different number of households was used.

Last year legislation mandated that auction funds from the New York Cap-and-Invest (NYCI) program be allocated to the Consumer Climate Action Account (CCAA) as part of the overarching investment framework established for the New York Cap-and-Invest (NYCI) program  A recent webinar on plans for NYCI noted that the first 37% of revenue generated by NYCI auctions is “set aside for the affordability accounts, the Consumer Climate Action Account, the industrial small business climate action account and administrative expenses.”  The Consumer Climate Action Account itself is supposed to get 30% of the revenues.  Recall that 2030 total revenue is “estimated to be between $6 and $12 billion per year” so the Consumer Climate Action Account should get between $3.3 and $1.5 billion in 2030.

The amount of CCAA rebates to individual households is a function of the set-aside and the number of households eligible for the rebate.  I previously found an overview of New York household income at Statistical Atlas that I used to estimate income percentiles and number of households at different levels in the following table. Note that the total number of households from this source is slightly different than what was used before.  The NYCI webinar presentation stated that there will be no benefit for households in the top 20% which according to the table corresponds to an income exceeding $126,900.  There are six million households under that threshold which means that around 1.5 million households in the top 20% of income will get no benefit.  Low-income households are those below $35,000 and there are 2.3 million households in that category.  There are 2.1 million households above $35,000 but below $75,000.  Middle income is identified as the income band that contains the median annual household income in NYS, i.e., $50-75,000 for the purpose of the NYCI analysis.  That leaves 1.6 million households with income between $75,000 and $126,900. 

The following table lists the CCAA rebates for the four income categories described above.  I assumed  that the rebates would be assigned across the income categories included for the two NYCI revenue categories ($6 to $12 billion).  If the auction revenues are distributed only to low-income households with incomes less than $35K, then each household will get between $774 and $1547 per year.  At the other end of the range where every household with incomes less than the 80^th percentile gets an equal share then the CCAA rebate will be between $300 and $600.  I think it is more equitable to focus benefits on the lower brackets.  The lower table apportions the rebates so that the upper bracket gets 20% while the lower two brackets each get 40%.  In this example, rebates range from $225 to $619 per year. 

Hochul’s press release noted “Energy affordability continues to be a top priority in my clean energy agenda and this utility bill credit is just one of many actions New York is taking to reduce costs for our most vulnerable New Yorkers.”  This program is a $200 million appropriation coming from some never mentioned pot of money in the 2024 budget.  This utility bill relief builds on several other key energy affordability programs administered by New York State: $380 million in energy assistance program (EAP); $360 million in Home Energy Assistance Program (HEAP) funding; $200 million in EmPower+ funding through the State Budget; over $200 million in ratepayer funding for energy efficiency and clean energy solutions for low-to -moderate income (LMI) New Yorkers; and more than $70 million annually through the Weatherization Assistance Program (WAP). 

The hypocrisy of this press release is astonishing.  It claims a total of $1.41 billion for programs that help with energy affordability.  Today energy affordability is affected by the energy policy of the Hochul Administration and in the future those costs will increase much more.  The Administration has never quantified how these investments will affect global GHG emissions.  My analysis has shown that while there is interannual variation, the five-year annual average increase in global GHG emissions has always been greater than 0.79% until the COVID year of 2020.  I also found that New York’s share of global GHG emissions is 0.42% in 2019 so this means that global annual increases in GHG emissions are greater than New York’s total contribution to global emissions.  Anything we do will be supplanted by emissions elsewhere in less than a year.  In that context, it is appropriate to ask whether the Climate Act transition plan is appropriate because it is forcing over a billion dollars to help reduce the cost impacts of the transition.  Eventually all this money must come out of the pockets of New Yorkers for no quantifiable benefit to global emissions.

Conclusion

The Hochul Administration has never admitted how much households can expect to pay to implement the Climate Act net-zero transition plan.  The plan is to electrify as much energy use as possible.  That means we will be required to electrify home heating, cooking, and hot water as well as moving to electric vehicles.  Recent electric rate cases have included double digit increases needed so support the Climate Act transition.   I have no doubt that the costs of the transition for households will far exceed these rebates described in the press release.  I urge all New Yorkers to demand an open and transparent accounting of the costs so we can all decide if we are willing to foot the enormous bills coming our way. There is no way the State can rebate its way to prevent those who can least afford the regressive increases in energy prices to not be adversely affected.

To her credit Susan Arbetter, the host of Spectrum News Capital Tonight program, has tried to expose viewers to issues related to the Climate Leadership & Community Protection Act (Climate Act).  Unfortunately, she allows speakers from the Hochul Administration to constantly conflate extreme weather with climate change and misleadingly claim that the costs of inaction are more than the costs of action.  In this post I comment on her February 12 interview with Basil Seggos on the climate transition.

I have followed the Climate Act since it was first proposed, submitted comments on the Climate Act implementation plan, and have written over 400 articles about New York’s net-zero transition. 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 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% reduction by 2030 and a requirement that all electricity generated be “zero-emissions” by 2040. The Climate Action Council (CAC) 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 using zero-emissions electricity. 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.  In 2023 the Scoping Plan recommendations were supposed to be implemented through regulation, PSC orders, and legislation.  Not surprisingly, the aspirational schedule of the Climate Act has proven to be more difficult to implement than planned and many aspects of the transition are falling behind.  In addition, the magnitude of the necessary costs is coming into focus despite efforts to hide them.  A political reckoning is inevitable in my opinion.

Seggos Interview: Climate transition will be ‘the toughest thing we ever do’

The video of the interview is available but I am going to concentrate on two paragraphs from the cover story on the Capital Tonight webpage:

The cost of the doing nothing on climate will far outweigh the cost of a climate transition for New York, according to state Department of Environmental Conservation (DEC) Commissioner Basil Seggos, who addressed concerns on Capital Tonight. 

“I just want to make sure viewers are clear. People are already paying for the impacts of climate change. That is a certainty. We spent $36 billion to recover from Superstorm Sandy,” Seggos said. “We see a $55 billion bill, potentially, if we don’t do the right things in New York, just on adaptation over the next 10 years.”

The political slogan “the cost of the doing nothing on climate will far outweigh the cost of a climate transition” is repeated as often as possible by representatives of the Hochul Administration.  It is a deeply flawed argument for multiple reasons. 

It is misleading because it refers to the costs in the Scoping Plan that do not include the costs of “already implemented” programs that exist solely to reduce GHG emissions.  In other words, it does not include all the costs to reach net zero Climate Act targets only the costs of programs started after the Climate Act itself. The two biggest programs not included in the cost side of the slogan are the Zero-emission vehicle mandate (8% LDV ZEV stock share by 2030) and the Clean Energy Standard (70×30), including technology carveouts: (6 GW of behind-the-meter solar by 2025, 3 GW of battery storage by 2030, 9 GW of offshore wind by 2035, 1.25 GW of Tier 4 renewables by 2030).  These programs, among others, are listed in Section 5.3: Scenario Assumptions in New York State Climate Action Council Scoping Plan Appendix G: Integration Analysis Technical Supplement Section I page 130.

The ”cost of doing nothing” does not include benefits of GHG emission reductions.  The basis for the benefits are described in the  Scoping Plan Costs and Benefits white paper documents.  The actual numbers in that document have been updated since its release.  The Plan describes health benefits due to improvements in air quality but observed improvements in recent years are 16 times greater than those projected for the Climate Act.  If the State can show that the health benefits projected have been observed comparable to those observed then these benefits are supportable but there has never been any attempt to validate the estimates. 

The benefits include a couple of tenuous estimates.  The first is for “active transportation”. The active transportation health theory claims that as people are forced out of their personal vehicles some will switch to walking and biking.  Those activities are healthier so there is a benefit.  The increased active transportation benefit of $39.5 billion is based on a first-order approximation based on state-wide numbers but the benefits will likely only occur in certain areas.  As a result, the benefit estimate is far too high.  The second is for energy efficiency interventions benefits in low- and middle-income homes.  The majority of the health benefits claimed are the result of “non-energy interventions”.  The Climate Act intends to transform the energy sector so it is disingenuous to claim health benefits not directly related to energy efficiency programs themselves.  Of the $8.7 billion in benefits claimed $3 billion is due to reduction in asthma-related incidents resulting from better ventilation not directly due to energy efficiency.  The $2.4 billion in benefits from reduced trip or fall injuries and reduced carbon monoxide poisoning benefits are non-energy interventions and should not be claimed as benefits for GHG emission reduction programs. 

The final reason that the slogan is flawed is the biggest.  There are issues with the benefits for the societal avoided cost of GHG emissions known as the social cost of carbon or value of carbon.  The values used are determined by a wide range of value judgements and economic projections.  The Climate Act manipulates emissions to increase benefits and uses a lower discount rate than current Federal guidance resulting in societal benefits of GHG emission reductions that are 4.5 times higher for 1990 emissions and 5.4 times higher for 2019 emissions than other jurisdictions.  The largest manipulation of these benefits is caused by incorrect guidance for calculating benefits.  In particular, the benefits of reductions are counted multiple times.  If only that error is corrected the total benefits do not outweigh the projected costs.

Another Climate Act narrative tactic is to claim that people are already paying for the impacts of climate change.  Seggos said “We spent $36 billion to recover from Superstorm Sandy” implying that climate change was responsible for those costs.  The difference between weather and climate is constantly misunderstood by Climate Act proponents that make this simplistic argument. 

According to the National Oceanic and Atmospheric Administration’s National Ocean Service “Weather reflects short-term conditions of the atmosphere while climate is the average daily weather for an extended period of time at a certain location.”  The referenced article goes on to explain “Climate is what you expect, weather is what you get.”  Seggos consistently claims that extreme weather is proof of climate change but the interview showed he has no meteorological expertise whatsoever.  More than once when described implementation challenges he stated that the state is facing trade winds but the appropriate term is head winds.

If, in fact, Superstorm Sandy was connected to climate change then the weather over extended periods of time should show increased hurricane activity and there should be a trend in disaster losses.  Roger A. Pielke, Jr, specializes in tracking these parameters so I checked his work.

He posted information in June 2022 on hurricane trends on Atlantic hurricane activity.  He noted that:

1. The Intergovernmental Panel on Climate Change, in its latest report, concluded that there remains “no consensus” on the relative role of human influences on Atlantic hurricane activity.

Here is what the IPCC says exactly:

“[T]here is still no consensus on the relative magnitude of human and natural influences on past changes in Atlantic hurricane activity, and particularly on which factor has dominated the observed increase (Ting et al., 2015) and it remains uncertain whether past changes in Atlantic TC activity are outside the range of natural variability.”

One reason for the inability to unambiguously attribute causality to Atlantic hurricane activity is the large interannual and interdecadal variability. 

Pielke, Jr. argues that in order to assess disaster loss trends ”it is necessary to normalize disaster losses by taking into account changes in exposure and vulnerability.”  He explains that:

The UN Sendai Framework recommends looking at disaster losses as a proportion of GDP as a method of normalization.

Since 1990, the toll of disasters as a proportion of the global economy has gone down from about 0.25% of GDP to less than 0.20%. That is good news and indicates progress with respect to the goals of the Sendai Framework.

Some quick questions and answers.

• Can we conclude from this data that climate change is making disasters more frequent or costly? No
• Can we conclude from this trend that climate change signals are not detectable in trends in various extreme events? No
• What can we say about climate change by looking at this graph? Nothing
• What about those journalists and campaigners who claim that economic losses from disasters indicate the detection and attribution of trends in extreme weather? They are wrong
• How would we know if disasters are becoming more costly due to climate change? Follow this methodology

Needless to say the Scoping Plan ignored these recommendations and observations when it justified the Climate Act.  It is also obvious that these inconvenient results are routinely ignored by apologists for the Climate Act.

There is one final aspect of the slogan “the cost of the doing nothing on climate will far outweigh the cost of a climate transition” that needs to be considered.  The implication is that New York’s investments for the climate transition will make a difference.  I recently updated my post Climate Act Emission Reductions in Context that documented how New York GHG relate to global emission increases.  I found CO2 and GHG emissions data for the world’s countries and consolidated the data in a spreadsheet.  There is interannual variation, but the five-year annual average has always been greater than 0.79% until the COVID year of 2020.  The Statewide GHG emissions inventory came out in December but the comparable GWP-100 data that I used from Open Data NY through 2021 are not available.  This analysis relies on last year’s data.  New York’s share of global GHG emissions is 0.42% in 2019 so this means that global annual increases in GHG emissions are greater than New York’s total contribution to global emissions.  Our actions will have no effects on the next superstorm because the increase in annual global emissions are greater than our total emissions. Implying other wise is disingenuous.

With all due respect to Commissioner Seggos, his cost benefit rationale for the Climate Act transition or his claim that climate change is affecting costs now do not stand up to scrutiny. Consider that the largest benefit claimed is based on counting benefits multiple times.  If I managed to lose five pounds and keep it off for five years I cannot claim that I lost 25 pounds but that is what the basis for the slogan is doing. The IPCC science directly contradicts the insinuation that hurricane trends are outside the range of normal variability.

Conclusion

Seggos claimed that the climate transition will be ‘the toughest thing we ever do’. I think it might be the worst thing we ever do.   The Climate Act transition plan is poorly documented, results are obfuscated, and there are no transparent cost estimates.  As a result, I do not believe that the Hochul Administration has made a persuasive case that the transition is feasible with regards to affordability and reliability.  I am disappointed that the media does not call them out on this.

On January 26, 2024 the New York State Department of Environmental Conservation (DEC) and the New York Energy Research & Development Authority (NYSERDA) hosted the third  webinar (slides and recording) of this year’s New York Cap-and-Invest (NYCI) Program stakeholder engagement process.  I described the first webinar “The Role of Cap and Invest” in an earlier post.  This post presents my initial impressions of the third webinar of the series, “Preliminary Scenario Analyses”, with particular emphasis on the projected costs.

I have followed the Climate Leadership & Community Protection Act (Climate Act)  since it was first proposed, submitted comments on the Climate Act implementation plan, and have written over 380 articles about New York’s net-zero transition. 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 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% reduction by 2030 and a requirement that all electricity generated be “zero-emissions” by 2040. The Climate Action Council (CAC) 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 using zero-emissions electricity. 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.  In 2023 the Scoping Plan recommendations were supposed to be implemented through regulation, PSC orders, and legislation.  Not surprisingly, the aspirational schedule of the Climate Act has proven to be more difficult to implement than planned.  Many aspects of the transition are falling behind, and the magnitude of the necessary costs is coming into focus.  When political fantasies meet reality, reality always wins.

Cap-and-Invest

The Climate Action Council’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 Leadership & Community Protection Act (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. The stakeholder engagement process will refine the proposal over the next several months, DEC will and NYSERDA will propose regulations by summer, and the final rules are supposed to be in place by the end of the year.

The reality is different particularly because the proposal changes components that have worked in other jurisdictions and environmental activists want to remove certain components that have made similar programs work in the past.  The proposed regulations keep many of the necessary features but still make changes that threaten viability.  Further background information is available at my carbon pricing initiative page.

Preliminary Scenario Analysis Webinar

The slides and recording for the webinar are available.  Note that in the following text there are links to sections of the webinar recording corresponding to specific topics. 

The entire webinar was scripted.  Each presenter read their remarks and it even appeared that the responses to questions were vetted.  Vlad  Gutman-Britten (NYSERDA) read the script that gave an overview of the webinar outline. The goal of this webinar was to describe the preliminary scenario analysis that projects how the NYCI allowance market will operate, present expected costs to households, and describe potential benefits of associated emission reductions.  I focus on the costs to households in this post.

NYCI Modeling

The preliminary scenarios analysis relies on econometric models.  The presentation was pretty vague on exactly which models were used and who did the work.  It appears that it relies heavily on the analyses done for the Scoping Plan.  If that is true then note that there was no suggestion that those analyses had been updated since they were done in 2022.

To give context for the cost results I briefly describe the modeling.  The analyses must project allowance supply and demand.  Gutman-Britten described the following slide that gives an overview of the analysis approach. 

Allowance supply is based on the statewide greenhouse gas emissions cap:

The cap was defined by interpolating between 2025 starting point emissions (described subsequently) and the 2030 emissions limit, and then interpolating between 2030 and 2050 limits. The modeling employs non-linear interpolation, with gradual reductions at first followed by acceleration to the target year. The cap is economywide covering all sectors. The State would retire allowances for all non-obligated emissions.

In general, the allowance budget represents the allowable number of tons for each year of the emissions cap.  However, the NYCI proposal treats different sectors of the economy differently to address distinctions between the sectors.  To appease particular political constituencies, specific exemptions to all or part of sector  allowance requirements have been incorporated into the proposed plan. 

The modeling analysis balances the cap with expected emissions to estimate allowance demand for each sector.  All the obligated entities will be required to “surrender emissions allowances following a three-year compliance period, the first one being 2025-2027.”  For each ton emitted they must submit one allowance.  The modeling estimates the expected emissions based on “technology pathways”.  I think this technological jargon hides the fact that feasibility is not incorporated into these modeling results. 

The final aspect of this modeling is financial sector participation: “The model assumes that “the financial sector participates in the market freely by arbitraging on changes in the price of allowances.”  This is an aspect of the modeling where I think theory is not fully aligned with what actually happens in a market-based pollution control program.

The point I wanted to make in this summary of the modeling is that all these projections are subject to enormous uncertainty.  There are many aspects of each energy sector transition that are subject to interpretation and the biases of the modelers.  As a result, it is easy to get results that coincide with the pre-determined outcomes consistent with the political narrative.

At this time, the modeling analyses for the auction project that 2030 total revenue is “estimated to be between $6 and $12 billion per year ($4-8 billion available for investments).”  Sparse details for this calculation were provided and I was not able to reproduce those numbers.

Household Costs

The projected costs from the modeling analysis are included for three scenarios described by Gutman-Britten in the following slide.  The analysis modeled three different price ceiling trajectories. The price ceiling value represents the allowance price that triggers a safety valve that would make additional allowances available “for buyers until demand is fully met limited to actual emissions.”  The scenarios “follow similar paths but have different price levels for each one.”  No explanation was provided justifying the initial price ceiling for each scenario or the timing of the jump step in allowance prices in 2027. 

I have always maintained that the primary concern of the general public is Climate Act costs.  This presentation does not provide comprehensive cost estimates.  In the following table I list the ceiling prices by year for the different scenarios and the corresponding gasoline cost adder as an example of potential costs.   According to the US Energy Information Administration, 17.86 lbs of CO2 are emitted per gallon of finished motor gasoline which means that 112 gallons burned equals one ton. 

At first glance the 2025 gasoline price adder is not that large.  However, the market price for allowances has always been noticeably higher at the start of all allowance trading programs.  The uncertainty of a new program lead to higher prices that typically fall back as the program matures.  I think the actual price adder at the start of the program will be higher.  The other notable feature is the step change increase in 2027.  The values listed in 2027 are comparable to the California/Quebec and Washington program allowance prices so I think those prices are more reasonable for eventual New York prices.  I suspect there is a connection between the proposed low ceiling prices through 2026 and the 2026 gubernatorial election year that explains the timing of the step change in 2027.

Last year legislation mandated that funds be allocated to the Consumer Climate Action Account (CCAA) as part of the overarching investment framework established for NYCI.  As noted in the following slide and explained by Guttman-Britten the first 37% of revenue generated by NYCI auctions is “set aside for the affordability accounts, the Consumer Climate Action Account, the industrial small business climate action account and administrative expenses.”  The Consumer Climate Action Account itself is supposed to get 30% of the revenues.  Recall that 2030 total revenue is “estimated to be between $6 and $12 billion per year” so the Consumer Climate Action Account should get between $3.3 and $1.5 billion in 2030.

In the summary of the modeling overview Gutman-Britten read the script claiming that NYCI has the ability to effectively manage total costs:

• Initial analysis shows that millions of households would break even after NYCI, especially lower income and low energy use households.
• Although some households, especially high fossil fuel users, are likely to have residual costs after benefits, total cost impacts may be managed for a very large percentage of households.
• In addition to driving emission reductions, NYCI investments are an essential affordability strategy. The program’s support for EV, heat pump, transit, and other related incentives and programs reduces cost exposure for households across New York, with a growing share receiving more benefits than costs.

The analysis relies on the 30% of revenues allocated to the CCAA to offset much of the cost.  Insufficient detail was provided in the webinar to evaluate those claims and if the past is any guide there will never be sufficient documentation to verify them.  In my opinion this modeling was designed to get specific answers consistent with the Hochul Administration narrative.

Household Impacts

James Wilcox read the script for the Household Impacts discussion. His presentation emphasized the point that these estimates were illustrative examples and not a formal proposal.  The following slide is an overview and makes the point that these results are “focused on the impact of NYCI on affordability for low and middle- income households”.  Those households are defined as follows:

• Low income is identified as all income bands entirely below 60% of state median annual household income, i.e., below $35,000 for the purpose of this analysis.
• Middle income is identified as the income band that contains the median annual household income in NYS, i.e., $50-75,000 for the purpose of this analysis.

The illustrative benefit design flow chart from the key assumptions slide deserves more discussion especially because if you are like me these numbers have no context.  I found an overview of New York household income at Statistical Atlas that included two graphs.  I combined data from the income percentiles and webinar income distribution graphs in the following table.  The webinar assumes that there will be no benefit for households in the top 20% which according to the table corresponds to an income exceeding $126,900.  There are six million households under that threshold which means that 1.5 million households in the top 20% of income will get no benefit.  Low-income households are those below $35,000 and there are 2.3 million households in that category.  There are 2.1 million households above $35,000 but below $75,000.  Middle income is identified as the income band that contains the median annual household income in NYS, i.e., $50-75,000 for the purpose of the NYCI analysis.  That leaves 1.6 million households with income between $75,000 and $126,900.  No information for expected benefits was provided for this last category.  Left unsaid was how the CCAA funds are distributed across these categories.

I have not been able to find a reference for the expected CCAA monthly distribution.  The household numbers can be used to guess at the distribution. Previously I noted that the CCAA should get between $3.3 and $1.5 billion in 2030. According to this table about six million households are eligible for a CCAA distribution so if every eligible household gets the same share, then the monthly distributions will range between $45 and $21 per month.

The script for the household impacts by type, location, and income slide described the monthly program net impacts for the first year of the program.  The title “monthly program net impact” says that the values are netted out from something, but it is not clear what. It is likely that these are net relative to the costs less the CCAA benefit. It is also possible that the values are relative to the Reference Case.  However, the Reference Case includes the costs of New York City Local Law 97 and the advanced clean car rule among other things. It is not clear how those could be separated out in the analysis.  The net impact costs table is excerpted below.

This is a busy slide that describes the monthly net cost impacts.  The rows list the regions (NYC, Downstate, and Upstate) including the low- and middle-income household categories.  There are four categories of columns.  The first column covers households that use gasoline vehicles and heat with fossil fuels.  The second column covers households that use gasoline vehicles but use “green” electric heating.  One of the unexplained details is whether using electricity for heating was limited to heat pumps or includes resistance heating.  The third column is households that do not use gasoline vehicles but use fossil heating.  Another detail is whether hybrid vehicles that are not zero-emissions vehicles are considered green.  The fourth column is for the small number of households that do not use gasoline vehicles or fossil heat.  Within each of those four columns the results for the three allowance scenarios are shown.

The script explanation for the first column stated that:

Depending on the household income level and the part of the state, the cost may range. From as little as $12 a year to up to $180 with net impacts lower under Upstate scenarios B and C.

Infuriatingly, the script description describes annual benefits, but the graph lists monthly values.  For example, the Scenario A monthly net cost impact ranges from $1 per month ($12 a year) for Downstate, Low Income to $15 per month ($180 per month) for Upstate, Middle Income. Inconsistent nomenclature makes it difficult to figure out exactly what is proposed.

The script narrative is that as people transition away from fossil fuels people will be financially better off. In the rightmost column for both green alternatives the Scenario A monthly benefits range from $11 to $28 per month or $132 to $336 per year.  Presumably this represents an incentive to convert but it is left unsaid whether converting to an EV and a heat pump will cost less than this program benefit.

The script for this concludes that “It’s essential to remember that NYCI investments will be designed to move state households from the right column to the left column.”  This appears to be a mis-statement because the left column is all fossil and the right column is all “zero-emissions” so the goal should be opposite direction.  The narrative also argues that revenues raised will provide support for households to electrify their homes and cars and the CCAA rebates will be an additional incentive. 

Wilcox provides a couple of more slides that break out the household impacts.  The following is the second slide that describes the Upstate “middle-income household journey” to decarbonized nirvana as envisioned by this modeling.  For a household with two internal combustion vehicles and a home that is not weatherized and uses gas heating the slide describes two decarbonization scenarios: moderate and increased decarbonization.  The graphs list the NYCI program impact per month (Real $ 2022) for the net program impact faced by household; increases cost due to NYCI; the surplus benefit; decreased cost for efficient appliances, weatherization, switching one of two cars to an electric vehicle and switching to a heat pump; and program impact covered by differentiated distribution.

I cannot say that I can fully explain these household impacts values.  The script states:

This household sees an initial net cost. The consumer climate action account offsets approximately two thirds of the total NYCI impact.

The increase in NYCI price is $78 which I assume is the total NYCI impact.  The sum of the net program impact faced by household ($15) and program impact covered by differentiated distribution ($28) is $43 and that is about two thirds of the total NYCI impact.  But the graph states that the net program impact is $15. I cannot figure out what the program impact covered by differentiated distribution represents.  Recall that if every eligible household gets the same share the monthly distributions will range between $45 and $21 per month in 2030 but the 2025 estimated revenues were not provided. 

The graphic and the script describe the household journey:

However, under a moderate decarbonization journey where this household installs efficient appliances, weatherizes their home, and switches one of the 2 cars to an EV.

They nearly break even. Facing a small net cost of $2 after receiving an illustrative consumer climate action account benefit.

The graphic claims that efficient appliances save $7 a month, weatherizing the home saves $10, and switching one of the 2 cars to an EV saves $36 for a total of $53 in savings per month.  In 2030 the sum of the net program impact faced by household ($2) and program impact covered by differentiated distribution ($66) is $68. In this instance the differentiated distribution is described as the “illustrative consumer climate action account benefit” but that estimate is at odds with my calculated CCAA benefits of around $45 per month.  This is another inconsistency that I cannot explain.

The script goes on to say:

Again, in addition to NYCI offering direct support for energy affordability, program revenue can be used to reduce the cost to households of investments like residential heat pumps and EVs.

This is an addition, and this applies to both slides to support from federal programs to the Inflation Reduction Act.

While others will see some costs that the consumer climate action count helps to manage. However, taking even moderate steps to decarbonize by 2030 leads to surplus benefits in nearly every region and income level analyzed, while taking increased measures leads to significant surplus benefits across all regions and income levels analyzed.

I have not been able to reproduce these claims.  Note that the claim that there are “surplus benefits in nearly every region and income level analyzed” ignores the fact that the 1.6 million households with incomes lower than the no-benefit threshold and above the middle-income $75K threshold are not addressed in their presentation of results.

Wilcox summarized the cost impact results in the following slide.  The script says that this “illustrative distribution of the Consumer Climate Action Account shows that millions of households break even due to NYCI, especially low-income households and those that rely on clean energy like EVs, transit, and heat pumps.”  These are average values.  The distribution of impacts that would describe costs for those households that do not have the option for EVs, transit, and heat pumps is not available.  The summary claims that the “Consumer Climate Action Account has the potential to manage impacts for a very large percentage of households in New York” but does not quantify that percentage.  The modeling analysis notes that the building and transportation sector modeling was custom built.  Optimistic implementation assumptions can easily be used to torture the data into the result desired.  Without complete documentation I do not think that the results are credible, so I am reserving judgement on these claims.

Discussion

I have always maintained that the primary concern of the general public is Climate Act costs.  As far as I can tell the Hochul Administration deliberately hid those costs in the Scoping Plan and that politically motivated approach is apparent in this webinar. 

The Energy Policy Institute at the University of Chicago did a poll in early 2023 poll with “the Associated Press–NORC Center for Public Affairs Research” explored Americans’ attitudes on climate change, their views on key climate and energy policies, and how they feel about electric vehicles and the policies to encourage them.  The following chart from that report shows that 38% would be willing to pay an additional $1 a month for a fee to combat change and only 21% would be willing to pay $100 a month. 

This webinar talked about a single component of the total cost of the net-zero transition.  When NYCI starts auctioning allowances the price of energy is guaranteed to go up.  The Upstate “middle-income household journey” states that households in that category will pay at least $73 a month before the rebates are applied.  The rebates are subject to the whim of Albany politicians, so the rebate amounts are not guaranteed.  In addition, the electric bill supply costs are not included in these modeled costs.  I recently discussed the Central Hudson revisions to its double-digit gas and electric delivery rate increases. The public outcry has been intense and the costs described here are in addition to the rate case costs. There is insufficient documentation available to determine exactly what costs were included in the heat pump and electric vehicle examples given.

The Energy Policy Institute poll described above found that less than a third of respondents were willing to pay even $10 a month.  The willingness to pay at other levels in the poll shows that less than a third are willing to pay as little as $10 a month for a carbon fee.  Little wonder that the true costs are a closely guarded secret.

The Climate Action Council’s Scoping Plan has been described as a  “true masterpiece in how to hide what is important under an avalanche of words designed to make people never want to read it.”  Similarly, the modeling analysis portrayal in this webinar uses an avalanche of technical jargon and impressive sounding phrases to suggest credibility and discourage questions.  In reality, all the modeling relies on guessing how society will react to incentives and regulations using parameters that can lead to wildly different results depending upon the biases of the model developer.  John von Neumann allegedly summed up the problem with parameters stating that “With four parameters I can fit an elephant, and with five I can make him wiggle his trunk”[1].  In other words, he could develop a mathematical model that described an elephant simply by fudging the parameters.  In this instance the model parameters produce the politically correct result that people will, for example, switch to electric vehicles in response to the incentives but don’t account for the many people who have weighed the pros and cons of an electric vehicle and decided never.

Conclusion

“A goal without a plan is just a wish.”, Antoine de St. Exupery.  The Scoping Plan should properly be called the Scoping Goals because there is no plan.  There has been no accountability for proving that the control strategies proposed are feasible on the schedule mandated by the Climate Act and that the costs of all the components of the energy system that must be changed to achieve the net-zero transition will maintain current standards of affordability.  It is just wishing.

[1] Attributed to von Neumann by Enrico Fermi, as quoted by Freeman Dyson in “A meeting with Enrico Fermi” in Nature 427 (22 January 2004) p. 297