Category: Climate Act Cap & Invest

There have been a couple of developments since my last status update on June 13, 2025 regarding the New York Cap and Invest (NYCI) Program. I previously described the decision issued on Oct. 24, 2025 by the Albany New York Supreme Court.  Last week the Hochul Administration appealed the ruling.  Last June I described the draft regulation that establishes mandatory greenhouse gas (GHG) emission reporting requirements.  The final rule has been released.  This post describes these items.

I have followed the Climate Act since it was first proposed, submitted comments on the Climate Act implementation plan, and have written over 600 articles about New York’s net-zero transition.  I have worked on every market-based program that affected electric generating facilities in New York including the Acid Rain Program, Regional Greenhouse Gas Initiative (RGGI), and several Nitrogen Oxide programs. I follow and write about the RGGI and New York carbon pricing initiatives so my background is particularly suited for NYCI.   The opinions expressed in this article do not reflect the position of any of my previous employers or any other organization I have been associated with, these comments are mine alone.

Overview

The Climate Act established a New York “Net Zero” target (85% reduction in GHG emissions and 15% offset of emissions) by 2050.  The Climate Action Council (CAC) was responsible for preparing the Scoping Plan that outlined how to “achieve the State’s bold clean energy and climate agenda.”  After a year-long review, the Scoping Plan that outlines how to achieve the targets 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. 

The CAC’s Scoping Plan recommended a market-based economywide cap-and-invest program.  NYCI is supposed to work by setting an annual cap on the amount of greenhouse gas pollution that is permitted to be emitted in New York: “The declining cap ensures annual emissions are reduced, setting the state on a trajectory to meet our greenhouse gas emission reduction requirements of 40% by 2030, and at least 85% from 1990 levels by 2050, as mandated by the Climate Act.”  Affected sources purchase permits to emit a ton (also known as allowances) and then surrender them at the end of the year to comply with the rule.  As is the case with all aspects of the Climate Act, this approach is not simple and is riddled with complications that make it unlikely that it will work as advocates expect.  I have explained  that proponent claims that the program will simultaneously raise money, ensure compliance, and be affordable are wishful thinking and have described other concerns on my Carbon Pricing Initiatives page.

To implement the carbon pricing initiative, the Department of Environmental Conservation (DEC) has proposed three regulations: mandatory GHG emissions reporting, a cap-and-invest rule that sets the cap or limit on emissions, and an auction rulemaking that establishes how the allowances will be allocated.  The only regulation that was formally proposed this year was the reporting rule.

Court Decision and Order

On Oct. 24, 2025, the New York Supreme Court issued a decision and order in a case pitting environmental organizations against the New York State Department of Environmental Conservation (DEC).  The decision explained that the Climate Act implementation plan has three steps:

1. DEC was required to set emission limits for the reduction targets;
2. The Climate Action Council, “an advisory group made up of 22 members with relevant expertise”, was given two years to prepare a Scoping Plan containing recommendations for “attaining statewide greenhouse gas emissions limits”; and
3. The DEC was required to issue regulations that would achieve the mandated emissions reductions following the findings of the Scoping Plan.

The State met the first two requirements but the regulations that were supposed to be released by January 1, 2024, were not promulgated.  On March 31, 2025, a group of environmental advocates filed a petition pursuant to CPLR Article 78 alleging, among other things, that DEC had failed to comply with the timeframe.

The Attorney General Office submitted a supplemental letter during the trial stated that argued that promulgating regulations for the Climate Act target would cause “undue harm”.  Nonetheless,  the judge ordered DEC to issue final regulations establishing economy-wide greenhouse gas emission (GHG) limits on or before Feb. 6, 2026 or go to the Legislature and get the Climate Act 2030 GHG reduction mandate changed. 

The latest update is that DEC appealed the decision on November 25, 2025.  The table of contents of the argument gives three reasons: mandamus to compel applies only to ministerial acts, promulgation of regulations by the court’s deadline is impossible, and publication of proposed rulemaking by the court’s deadline is impossible.  The appeal concludes that “it is impossible for the Department to simultaneously comply with both the Court’s order and its substantive statutory obligations.”

I agree with the claim that it is impossible to comply with the regulation for the reasons given.  However, the Judge already ruled that DEC does not have the authority, however persuasive its arguments, not to comply with the law.  The law must be changed. 

Cap-and-Invest

The press release announcing the finalization of the proposed rule claimed that the data collected will “inform future strategies to reduce pollution”.

New York State Department of Environmental Conservation (DEC) Commissioner Amanda Lefton today announced the finalization of regulations establishing a Mandatory Greenhouse Gas Reporting Program. This rule will improve New York State’s understanding of the sources of greenhouse gas (GHG) emissions. As a result of the rule and reporting mechanism, New York State will know more about the largest polluters in the State, including those affecting disadvantaged communities and other sensitive populations, and will be able to more effectively monitor the State’s progress toward pollution reduction goals. This effort also supports the production of the annual GHG Emissions Report and will protect against anticipated federal rollbacks to ensure New York’s essential air pollution information remains accessible.

As part of the 2025 State of the State Address, Governor Kathy Hochul directed DEC to advance a Mandatory Greenhouse Gas Reporting Program. DEC released draft regulations in March 2025 and received more than 3,000 public comments through July 1, 2025. DEC also offered informational webinars in May to better inform stakeholders’ public comments on the proposal and held hearings in June to collect feedback

.  

DEC made some changes to the proposal based on comments received that will include additional flexibility for the regulated community. The final regulation extends the verification reporting deadline for the first two years, changed the requirement from three years to one year for reporting from facilities that closed or ceased operations, and clarifies some terms and definitions and better aligns with federal reporting. 

DEC’s Mandatory GHG Reporting Program is for data collection only. It does not impose requirements for facilities to reduce GHG pollution or to obtain emission allowances. A facility required to report emissions will annually provide certain GHG emission data and information to DEC starting in June 2027 to reflect the previous year’s emissions. Certain large emission sources will also be required to verify their emissions data report annually using DEC-accredited third-party verification services. 

The rule also helps minimize potential reporting requirement costs by utilizing data already required to be reported under existing State and federal requirements and other mandatory reporting programs. In light of the U.S. Environmental Protection Agency’s reconsideration of key federal air quality and GHG regulations, including the U.S. Greenhouse Gas Reporting Program, DEC’s regulation will also serve as a backstop to ensure the ongoing availability of critical GHG information. 

I will follow up with another post on the details of the final rule and the responses to the comments I submitted.

Part 253 Schedule

The rulemaking documents for the adopted regulation is Part 253 – Mandatory GHG Reporting Program are available here.  There are so many issues associated with this plan I am going to have to do another post.  For this summary just consider one aspect of the schedule.  These observations are based on my personal experience reporting emissions in Environmental Protection Agency and DEC market-based programs starting in 1993.

A universal component of reporting requirements is the monitoring Plan. In this regulation the definition states:  

Part 253-1.7 Record Keeping (e) GHG Monitoring Plan

(1) The GHG monitoring plan shall include these elements:

(i) identification of positions of responsibility (i.e., job titles) for collection of the emissions data;

(ii) explanation of the processes and methods used to collect the necessary data for the GHG calculations; and

(iii) description of the procedures and methods that are used for quality assurance, maintenance, and repair of all continuous monitoring systems, flow meters, and other instrumentation used to provide data for the GHGs reported under this Part.

The description of the monitoring plan states that affected entities “must submit to the department a GHG monitoring plan by December 31, 2026.  Basically this document just describes how the data will be collected and submitted.

However, according to DEC’s Mandatory GHG Reporting website the first Emissions Data Report is due to the Department. Annual emissions reports are due June 1, 2027, and it states that emission data reports and verification statements for the 2026 emissions data year would be due in 2027.  For all previous market-based program emission reporting requirements iI have worked on, there was a phase-in period before required reporting started.  I did not see any mention of the obvious need for DEC to review and approve the monitoring plans. Part 253-1.7 Record Keeping (e) GHG Monitoring Plan states “Each facility operator or supplier that meets the thresholds in section 1.2(f) of this Part must submit to the department a GHG monitoring plan by December 31, 2026”.  Clearly, requiring emission data starting one month after the regulation was finalized, before affected sources can figure out how they will collect the data consistent with the regulation, before they are required to submit a monitoring plan, and before the DEC approves the monitoring plan is inappropriate and very likely subject to litigation.

Discussion

Even though the Court decision said DEC does not have the authority to not follow the law, the Hochul Administration is appealing the decision.  This is a transparent ploy to prevent the costs of NYCI affecting the regulation.

The first of three implementing regulations has been promulgated.  I will follow up with another post describing the implementation issues that are common throughout the regulation.  As I noted in my last NYCI update stakeholders have had trouble interpreting the proposed rules and have found inconsistencies with past practices that will make this program unnecessarily more complicated and time-consuming than necessary.  The comments from stakeholders who have the most experience with these programs appear to have been ignored.

Also note that this is the easiest of the three regulations.  There are few impactful components of the reporting requirements for the affected sources and almost no impact on the public.  All the tough decisions that will be controversial have been delayed until after the next gubernatorial election.

Conclusion

Activists continue to agitate for implementing NYCI faster in the hopes that this magical solution will work as advertised. However, it is not moving quickly despite litigation designed to quicken the pace.  The first of the three implementing regulations is out, and the results do not inspire confidence that the other rules will be well written.

In a recent letter to the editor of the Syracuse Post Standard, Cicero Assemblyman Al Stirpe Jr. and Ethan Gormley from Citizen Action of New York, argued that Governor Hochul should “get moving on cap and invest.”  This post documents my response.  It is timely to revisit the New York Cap and Invest (NYCI) Program because the long promised next regulatory action is due any day now.  I believe that it is time for NYCI advocates to be held accountable for their magical solutions to a problem that New York cannot unilaterally solve.

I have followed the Climate Act since it was first proposed, submitted comments on the Climate Act implementation plan, and have written over 500 articles about New York’s net-zero transition.  I worked on every market-based program from the start that affected electric generating facilities in New York including the Acid Rain Program, Regional Greenhouse Gas Initiative (RGGI), and several Nitrogen Oxide programs. I follow and write about the RGGI and New York carbon pricing initiatives so my background is particularly suited for NYCI.   The opinions expressed in this article do not reflect the position of any of my previous employers or any other organization I have been associated with, these comments are mine alone.

Overview

The Climate Act established a New York “Net Zero” target (85% reduction in GHG emissions and 15% offset of emissions) by 2050.  The Climate Action Council (CAC) was responsible for preparing the Scoping Plan that outlined how to “achieve the State’s bold clean energy and climate agenda.” The Integration Analysis prepared by the New York State Energy Research and Development Authority (NYSERDA) and its consultants quantifies the impact of the electrification strategies.  That material was used to develop the Draft Scoping Plan outline of strategies.  After a year-long review, the Scoping Plan was finalized at the end of 2022. 

Cap-and-Invest

The CAC’s Scoping Plan recommended a market-based economywide cap-and-invest program.  NYCI is supposed to work by setting an annual cap on the amount of greenhouse gas pollution that is permitted to be emitted in New York: “The declining cap ensures annual emissions are reduced, setting the state on a trajectory to meet our greenhouse gas emission reduction requirements of 40% by 2030, and at least 85% from 1990 levels by 2050, as mandated by the Climate Act.”  The prevailing perception of NYCI is exemplified by Colin Kinniburgh’s description in New York Focus.  He describes the theory of a cap-and-invest program as a program that will kill two birds with one stone.  “It simultaneously puts a limit on the tons of pollution companies can emit — ‘cap’ — while making them pay for each ton, funding projects to help move the state away from polluting energy sources — ‘invest.'”  

In my opinion, the delays in the NYCI regulatory process suggest that the Hochul Administration is having second thoughts about the program.  I have no illusions that the concerns are related to the fundamental flaws of carbon pricing.  It is all about politics.  Kinniburgh described the last-minute decision to pull any mention of timing about NYCI from the State of the State briefing book.  Samanth Maldonado’s article Green Lawmakers Pressure Hochul to Speed up Action on Climate Act summarizes the status of NYCI last month. I also did an article about the response to the NYCI Delay. Since then, the political focus of the state has been on the budget.  Tellingly there hasn’t been much mention of NYCI.  Against that backdrop Stirpe and Gromley submitted a letter to the editor imploring Governor Hochul to get moving on cap and invest.

Letter to the Editor

The following letter to the editor of the Syracuse Post Standard was published on the electronic edition on March 18, 2025 and in the print edition on March 23, 2025.

It’s been over 50 days since Gov. Kathy Hochul’s State of the State address. That’s 50-plus days since the governor revealed that she was delaying crucial climate action in New York.

In that time, President Donald Trump has been steadily advancing the interests of oil and gas billionaires, wiping crucial climate resources from government websites and removing environmental justice workers from their positions. And that’s not all. The current situation at the federal level will have lasting, harmful impacts on our environment, frontline communities and transition to a clean, affordable, renewable energy economy.

Yet even as we see these damaging actions coming from the climate change denier in the Oval Office, Hochul continues to delay climate action by suppressing regulations for Cap and Invest.

The crucial Cap and Invest program is needed to fund New York state’s Climate Law, reduce pollution and invest in our communities. It puts corporate polluters on the hook for the amount that they pollute into the atmosphere while also reducing their emissions over time.

REVENUE WOULD HELP COMMUNITY

Perhaps just as importantly, the Cap and Invest revenue from corporate polluters has the potential to greatly benefit areas like Central New York.

Through this program, we can see new funds made available for energy affordability, which is especially important as National Grid seeks massive rate hikes across Upstate New York. Not only that, Cap and Invest has the ability to improve Central New York homes by funding projects to increase energy efficiency measures, like insulation and important home repairs, while also assisting in the transition to clean electric heat pumps to heat and cool homes without the use of polluting and harmful gas.

Had Cap and Invest been rolled out already, the state Department of Environmental Conservation (DEC) and New York State Research and Development Authority (NYSERDA) estimated that we could see somewhere between $3 billion and $5.1 billion in revenue in 2025.

At a time when federal funding is under threat, it’s imperative that we consider creative and fair sources of revenue to invest in our communities, clean our air and cut consumer costs.

Done well, the Cap and Invest program can do just that.

STOP DELAYING REGULATIONS

The Cap and Invest regulations were supposed to be released to the public last year. Those regulations would then be rightfully subject to public engagement through hearings and public comments. Unfortunately, Hochul is suppressing those regulations from the public and has proposed a much delayed timeline for their release. Organizations, businesses, faith groups and unions across the state have already spoken out urging Hochul to promptly release all the regulations.

It’s been over 50 days since we learned about the governor’s latest efforts to slow-walk Cap and Invest. Every additional day that goes by without the regulations is another day of delayed climate action, polluter accountability and much needed investment in our communities. With so much at stake at the federal level, New York needs to be a climate leader.

Gov. Hochul: Please release all the regs immediately and fund climate now. Al Stirpe Jr. Cicero, Member of Assembly, 127th District

Ethan Gormley Clay, Climate Justice Organizer, Citizen Action of New York

Response Letter

I submitted the following 250 word response on March 26, 2025:

In a recent letter to the editor, Cicero Assemblyman Al Stirpe Jr. and Ethan Gormley Citizen Action of New York, argued that Governor Hochul should get moving on cap and invest. 

The proposed New York Cap and Invest (NYCI) program is a magical solution.  In theory corporate polluters will pay for their emissions, the proceeds will be used to reduce costs while simultaneously funding emission reduction projects.  In reality, NYCI is nothing more than a regressive tax that will not live up to its promises.

NYCI will require gasoline distribution companies to pay for each ton emitted.  The authors state that we could see somewhere between $3 billion and $5.1 billion.  The latest NYCI proposal outline suggested prices that work out to an increase in gasoline prices of 21 cents per gallon in 2025, 48 cents per gallon in 2027 and 57 cents per gallon in 2030.  It is magical thinking to suggest that the companies will not simply pass those costs on.

The authors go on to say: “Through this program, we can see new funds made available for energy affordability”.  It is magical thinking to presume that the increased gasoline prices will get reimbursed in a timely fashion for those who cannot afford the increases.  Just think of the tracking logistics needed to ensure that the price paid for gas can be made affordable.

It is time for Climate Act proponents to be held accountable for their magical solutions to a problem that New York cannot unilaterally solve.

What I Really Wanted to Say

The succinct response to the Stirpe and Gormley letter is best described by Vinny Gambini.

Alas that response is in the wrong medium.  A proper response requires more description than possible in 250 words.  Alberto Brandolini explains: “The amount of energy necessary to refute BS is an order of magnitude bigger than to produce it.”   Space considerations preclude documenting all the problems in a newspaper response.  But I can do that here.

The proposed New York Cap and Invest (NYCI) program is a magical solution.  In theory corporate polluters will be put on the hook for their emissions, the proceeds will be used to reduce citizen costs while simultaneously funding emission reduction projects.  In reality, carbon pricing schemes like NYCI are nothing more than a regressive tax that will not live up to the hype.  Earlier this year I described questions about NYCI that I believe need to be resolved before proceeding.  Last year the Citizen’s Budget Commission commented on NYCI.  In this post I want to focus on the issues associated with gasoline impacts that I mentioned in my response letter.

Stirpe and Gormley insinuate that the costs of the program will be absorbed by “corporate polluters”.  With respect to gasoline prices the implication is that the oil companies will provide revenues that “has the potential to greatly benefit areas like Central New York.”

In 2023 Washington State started their version of cap and invest and their gasoline prices immediately jumped.  I published articles on what happened.  Washington State Gasoline Prices Are a Precursor to New York’s Future was a variation of an article published at Watts Up With That – Do Washington State Residents Know Why Their Gasoline Prices Are So High Now?.  I also published Washington State Gasoline Prices and Public Perceptions that consolidated responses from Washington residents in the comments from the Watts Up With That article. 

There is no official position on expected revenues for NYCI.  At the Energy Access and Equity Research webinar sponsored by the NYU Institute for Policy Integrity on May 13, 2024 Jonathan Binder stated that the New York Cap and Invest Program would generate proceeds of “between $6 and $12 billion per year” by 2030. Administration officials estimate that NYCI auctions will generate “between $6 [billion] and $12 billion per year” by 2030.

I used those estimates to project potential gasoline costs. The last NYCI proposal outline analyzed allowance prices starting at $23 per ton of CO2 in 2025 with 5% escalation for 2026, and an increase to a higher ceiling in 2027, escalating by 6% annually thereafter. According to the U.S. Energy Information Administration, 17.86 pounds of CO2 are emitted per gallon of finished motor gasoline; 112 gallons burned equals 1 ton of CO2. A price of $23 per ton of CO2 translates to an increase in gasoline prices of 21 cents per gallon in 2025, 48 cents per gallon in 2027 and 57 cents per gallon in 2030.

NYCI will require gasoline distribution companies to purchase authorizations to emit each ton of GHG pollution.  It is magical thinking to suggest that the polluting corporations will not simply pass those costs on.  Those companies cannot do anything to reduce their emissions.  As a result, it is the consumer who will end up paying for emissions.

Stirpe and Gromley go on to say: “Through this program, we can see new funds made available for energy affordability”.  Hochul’s five core principles for NYCI includes affordability: “Governor Hochul’s Consumer Climate Action Account will deliver at least 30 percent in future cap-and-invest proceeds to New Yorkers every year to mitigate consumer costs.”  These slogans are well intentioned, but the reality is that making the gasoline price increases affordable is a logistical nightmare.  Consider the following issues.

The first issue is eligibility.  To make gasoline cost increases affordable for those least able to afford the increase a program must be put in place to reimburse them.  I think that reimbursements should target the rural poor who have no other alternatives and thus are most affected by the increased cost of gasoline. 

Consider reimbursement fairness.  The most impacted are those who rely on their vehicles the most.  This means that a flat rebate is unfair and that necessitates rebates based on fuel use.  Tracking fuel use for reimbursement will be a logistical headache.  Affected New Yorkers will have to keep receipts and submit claims then wait for reimbursement.  Worse, the time lag between paying the higher price and the mitigation on consumer costs is a real hardship for those least able to afford it.

Theory and Reality

The theory of carbon pricing schemes is that the higher prices due to the price of carbon will incentivize corporate polluters to seek lower carbon and lower price alternatives.  However, the corporate gasoline distribution companies have no incentives to do either.  They will simply pass the costs on as if this were a tax. 

Proponents of these schemes argue that higher fuel prices will make people want to buy electric cars so the fuel prices are not impactful.  There are many tradeoffs for electric vehicles that make them not one for one choice, so I think this is a weak argument.  Moreover, the Governor’s affordability rebates reduce this incentive. 

The rebates also reduce the amount available for the transition.  It is appropriate to ask just how much infrastructure would be required to make electric vehicles a viable alternative.  Think of all the public charging infrastructure necessary to provide equivalent capacity to today’s cars.  Don’t forget that the electric power requirements will also need upgrades and that because electric vehicles are more expensive subsidies are needed.  Will the proceeds from NYCI be enough?

The cap and invest variant dilutes the original intent that the carbon price would trigger a free-market response.  Advocates for this feature argue that the free-market is more efficient than a government dictate but cap and invest provides revenues for the government to invest.  New York’s investment record for infrastructure projects peaked with the completion of the Erie Canal 200 years ago and has gone downhill ever since.

The book by Danny Cullenward and David Victor Making Climate Policy Work shows how the “politics of creating and maintaining market-based policies render them ineffective nearly everywhere they have been applied.”    They go on to explain that this vision has completely failed:

Many pollution markets exist, but nearly all are smokescreens that create the impression that market forces are cutting emissions when, in fact, other policies are doing most of the real work of decarbonization. Almost everywhere that market systems are in place they operate at prices that are so low as to have little impact on key decisions such as whether to invest in or deploy new technologies.

Two years ago I explained why the conclusions of this book are relevant to NYCI and later argued in my comments on the draft rules that a reassessment was necessary.  Under the Hochul Administration, state agencies consider the stakeholder process an obligation and not an opportunity to improve the rules.  There is no real attempt to consider comments received and pretty much zero acknowledgement much less action for any comments received.  There never has been a response indicating that anyone has read the book.

Conclusion

The issues described here have not been addressed so far during the discussion of NYCI.  The only noise is from advocates who argue without any evidence that the program will simultaneously raise money, ensure compliance, and be affordable.  It is long past due for proponents of the NYCI and the Climate Act like Assemblyman Stirpe to acknowledge that the transition to zero emissions has irreconcilable challenges that risk affordability and reliability.  All this is purely political so when the inevitable negative consequences occur, supporters should be held accountable.

Recently I described the status of the New York Cap-and-Invest Program (NYCI) and reactions to the decision to delay its implementation.  In the 2025 State of the State address Governor Kathy Hochul announced a $1 billion climate investment.  This post describes the references to climate in the FY2026 NYS Executive Budget Book that described Hochul’s budget for the next fiscal year.

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. 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 is supposed to work by setting an annual cap on the amount of greenhouse gas pollution that is permitted to be emitted in New York: “The declining cap ensures annual emissions are reduced, setting the state on a trajectory to meet our greenhouse gas emission reduction requirements of 40% by 2030, and at least 85% from 1990 levels by 2050, as mandated by the Climate Act.”  The prevailing perception of NYCI is exemplified by Colin Kinniburgh’s description in his recent article in New York Focus.  He describes the theory of a cap-and-invest program as a program that will kill two birds with one stone.  “It simultaneously puts a limit on the tons of pollution companies can emit — ‘cap’ — while making them pay for each ton, funding projects to help move the state away from polluting energy sources — ‘invest.'” I described questions about NYCI that I believe need to be resolved here.

Stopgap Climate Funding

According to a Perplexity AI search: Governor Hochul announced a $1 billion climate investment as part of her 2025 State of the State address. This investment, described as the single largest climate investment in New York’s history, aims to address the climate crisis and achieve a more sustainable and affordable future for the state.  The $1 billion funding package includes:

• Retrofitting homes and incentivizing heat pump installations
• Building sustainable energy networks, including thermal energy upgrades at SUNY campuses
• Expanding green transportation options
• Supporting businesses in their decarbonization efforts

I concluded in the previous articles about NYCI that the costs were incompatible with the political narrative that Governor Hochul is concerned about affordability.  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.  That certainly would have increased costs for New Yorkers but it also was a primary source of revenue for the emission reduction strategies necessary to meet Climate Act targets.

Colin Kinniburgh’s description in a recent article in  New York Focus described the last-minute decision to delay NYCI implementation.  Kinniburgh described the reaction of the environmental justice community:

It is not clear where that funding would come from — whether it would be new or “cannibalizing other existing funding sources,” in the words of Stephan Edel, executive director of the climate justice coalition NY Renews.

Even if it is entirely new funding, $1 billion would be considerably less than the $3 billion or more the state had expected to raise in the first year of the cap and invest program.

“We don’t want a band-aid solution here,” Courtin said. “We need a long-term, sustainable funding solution.”

He noted that Hochul explained that more data was necessary to design the program well.  “I’m not walking back on all of our commitments… I’m not letting these projects go unfunded,” Hochul said, referring to the stopgap $1 billion in climate funding she announced on Tuesday. 

Fiscal Year 2026 Executive Budget

The press release for Governor Hochul’s executive budget was captioned “More money in your pocket”.  There are specific recommendations in the FY2026 NYS Executive Budget Book (Budget Book) for programs including the $1 billion in climate funding.  Given the dynamic between Hochul and the environmental organizations upset at the pause in NYCI I searched the Budget Book for the work climate to see how she planned to appease them.  The complete search is at the end of this article.  Here are some highlights.

The Hochul Administration continues to invoke the existential threat of climate change as a driver for budget planning.  They do not understand the difference between weather and climate.  They attribute every extreme weather event to climate change with the implication that reducing emissions will alleviate those weather conditions.  Climate change was listed as a financial risk in several places.  

The Budget Book also claims that New York is “leading the nation:

From the beginning of her administration, Governor Hochul has made it clear that responding to climate change remains a top priority for New York State. Acknowledging that the cost of inaction greatly outweighs the cost of any actions we can take together, New York will continue to pursue an aggressive agenda in transitioning to a sustainable green energy economy, in a way that is both environmentally effective and economically affordable for all New Yorkers.

The slogan that the costs of inaction are greater than the costs of action has been the mantra of the Administration regarding costs.  However, that statement is misleading and inaccurate as I documented in my verbal comments and in my written comments on the Draft Scoping Plan.  I described the machinations based on reality used to mislead and harm New York as a shell game in a summary post. 

In brief, one reason that this claim is a shell game is that the cost estimate everyone wants to know is how much it is going to cost to achieve all the New York “Net Zero” targets (85% reduction in GHG emissions and 15% offset of emissions) by 2050 and all the other mandates in the Climate Act.  The Scoping Plan cost estimates only include a subset of the total costs by excluding costs of programs that are needed to meet the Climate Act targets but were implemented before the Climate Act was passed.  The argument is that the “already implemented” projects were not mandated by the Climate Act itself so they are not included.

This is a political document, so it is not surprising that the Budget Book bragged that:

Governor Hochul is directing New York to embark on the single-largest climate investment in the history of the state budget, directing over $1 billion in new funding towards achieving a more sustainable future. This landmark investment will generate new jobs, help reduce household energy bills, and cut down on harmful pollution and its impacts on our families.

What is missing is the specifics about the expenditures.  The $1 billion is intended to “reduce the State’s carbon emissions by building out thermal energy networks at SUNY campuses, making clean energy investments in State-owned buildings, retrofitting homes and incentivizing the installation of heat pumps, expanding green transportation options across the State, and supporting businesses of all sizes in their decarbonization journey.”

I asked Perplexity AI how many buildings does New York State own.  The response said it was not possible to provide an exact number but noted that the Office of General Services manages 22 state office facilities.  A quick check indicates that the NYSERDA office building is not listed so I believe that the buildings used by the various state authorities are not included. There are 64 SUNY campuses.  I went to school at one and it had a thermal energy system.  I suspect that is the rule and not the exception.  Presumably the plan is to convert all those systems to zero carbon emissions.  In round numbers there are 100 buildings and campuses operated by New York State.  I would not be surprised if the average price to convert is at least $10 million.  To convert them all would cost a billion dollars.

The bottom line is that the one billion dollars is just a fraction of the amount needed to reduce carbon emissions as needed to meet the Climate Act targets.

Discussion

The Climate Act requires the State to invest or direct resources in a manner designed to ensure that disadvantaged communities receive at least 35 percent, with the goal of at least 40 percent, of overall benefits of spending.  Last year’s NYCI proposal included carveouts from the proceeds for this mandate. 

Hochul is being pilloried for delaying implementation of NYCI and the distribution of these funds.  The Climate Justice Working Group has” had an important advisory role in the Climate Action Council process, providing strategic advice for incorporating the needs of disadvantaged communities in the Scoping Plan.”  That process is in disarray.  I have been told that there was a working group meeting recently but could not find any announcement for the meeting or other descriptive documentation.  I also found out that three prominent members of the Working Group resigned because Governor Hochul was not moving ahead fast enough.

Against that backdrop Hochul’s announcement of the $1 billion, the single-largest climate investment in the history of the state budget, appears to be a bid to maintain her credibility with the environmental justice political constituency.  In my opinion, this demographic will never be happy.  The leaders of the movement require a problem for their business model to succeed.  They never can admit that the problem is solved or even progressing satisfactorily because then the reason for their organization to exist disappears.  Keep in mind that a common recommendation in all the funding proposals is for local control of how the proceeds will be invested and who better to provide that expertise than the members of the Climate Justice Working Group.

Conclusion

Reality bats last.  The reality that the Climate Act transition has affordability and reliability issues can no longer be ignored by Progressive Democrats.  I believe that they are insurmountable issues, but it is now apparent that even Governor Hochul has recognized that costs are an issue.  The slogan that the costs of inaction are more than the costs of action does not resonate as it becomes obvious that the costs to New Yorkers are real and significant.  When the public figures out that the benefits are biased and mostly imaginary, the illusion will be completely shattered.  Hochul’s re-election campaign is coming to grips with the reality that voters are not going to be mollified by any political slogan.  Stay tuned.

Addendum – Budget Book references to Climate

FY2026 NYS Executive Budget Book

In the Financial Plan Review on Page 16:

At the same time, uncertainty looms. Risk as varied as policies and plans of the new Federal administration, the potential for a slowdown in economic growth, geopolitical risks, the ongoing implications of climate change, and sustained trends of rising enrollment and costs in public health insurance programs all present the potential for fiscal challenges in the future.

In the discussion of Reserves and Risks on Page 24:

The Financial Plan faces ongoing economic risks, including: slowing economic growth; continued price inflation; geopolitical uncertainties; immigration policy; climate change and natural disasters; programmatic cost pressures; uncertainty about the fiscal conditions of outside entities relying on State assistance; risks due to the State’s dependence on Federal funding and approvals; and possible policy changes under the new Federal administration.

In the discussion of Climate Change Adaptation and Mitigation on Page 31:

The Executive Budget includes funding to protect our environment and make our future more sustainable; supporting New York’s ability to adapt to everchanging climate effects and mitigate damage from extreme weather events, including: 

• $1 billion to reduce the State’s carbon emissions by building out thermal energy networks at SUNY campuses, making clean energy investments in State-owned buildings, retrofitting homes and incentivizing the installation of heat pumps, expanding green transportation options across the State, and supporting businesses of all sizes in their decarbonization journey;
• $78 million for coastal resiliency projects;
• $30 million increase in Green Resiliency Grants to support flood control infrastructure projects;
• $50 million to support sustainability in New York’s dairy industry, and
• $50 million to bolster the Resilient and Ready program, which will support low and moderate income homeowners with resiliency improvements and assist with repairs in the event of a catastrophic event.

In the discussion of Federal Infrastructure, Energy and Manufacturing Investments Page 44:

Federal investments included in the Inflation Reduction Act (IRA) are providing funding to address the climate crisis, lower utility costs, and lower emissions.

The next four references were in the section titled “Environment, Energy, and Agriculture”.

Page 60:

New York State’s environmental, energy and agriculture agencies are on the front lines of the ongoing fight against climate change; are tasked with conserving and protecting precious natural resources; promoting New York State as a natural destination for tourism and recreation; ensuring the integrity of freshwater resources; and supporting the kind of agricultural development that is critical to New York State’s robust farming industry.

Page 60:

Leading the Nation

From the beginning of her administration, Governor Hochul has made it clear that responding to climate change remains a top priority for New York State. Acknowledging that the cost of inaction greatly outweighs the cost of any actions we can take together, New York will continue to pursue an aggressive agenda in transitioning to a sustainable green energy economy, in a way that is both environmentally effective and economically affordable for all New Yorkers.

Page 61:

Proposed FY 2026 Budget Actions

In addition to announcing critical new programs and advancing new investments related to climate change, Governor Hochul’s proposed budget will provide the funding New York needs to preserve, protect, and enhance our natural resources, expand our outdoor recreation opportunities, and drive economic growth through sustainable agriculture and eco-tourism. Highlights of the FY 2026 Executive Budget include:

Historic Climate Investment.

Governor Hochul is directing New York to embark on the single-largest +climate investment in the history of the state budget, directing over $1 billion in new funding towards achieving a more sustainable future. This landmark investment will generate new jobs, help reduce household energy bills, and cut down on harmful pollution and its impacts on our families.

Decarbonizing State Government.

An additional $50 million is included to support New York’s ongoing efforts to reduce its own carbon footprint. This continued investment will accelerate State facilities’ decarbonization efforts and provide resources to initiate procurement practices that prioritize sustainable and climate-resilient design initiatives.

Environmental Protection Fund.

$400 million for the Environmental Protection Fund (EPF) is again provided to support critical projects that work to mitigate the effects of climate change, improve agricultural resources, protect our water sources, advance conservation efforts, and provide recreational opportunities.

In the section Supporting the NY State of Health on Page 76:

Expand Access to Air Conditioning Units.

The escalating threat of climate change poses significant risks to public health. Climate-induced health risks, such as extreme heat, can both exacerbate existing health conditions and contribute to new health issues. The Budget adds to a FY 2025 Enacted Budget action which provided air conditioning units for Essential Plan enrollees with persistent asthma by expanding eligibility for additional conditions exacerbated by heat such as diabetes, cardiovascular disease, heart disease and hypertension.

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.