Category: Climate Act Cap & Invest

In June 2023, the New York State Department of Environmental Conservation (DEC) and New York State Energy Research & Development Authority hosted a series of webinars addressing Governor Hochul announced plan to use a market-based program to raise funds for the Climate Leadership & Community Protection Act (Climate Act).  The webinars posed a number of questions for stakeholder comment.  This post describes my comments.

I submitted personal comments on the Climate Act implementation plan and have written over 320 articles about New York’s net-zero transition because I believe the ambitions for a zero-emissions economy embodied in the Climate Act outstrip available renewable technology such that the net-zero transition will do more harm than good.  I also follow and write about the Regional Greenhouse Gas Initiative (RGGI) market-based CO2 pollution control program for electric generating units in the NE United States.   Over the last three decades I have had extensive experience with air pollution control theory, implementation, and evaluation having worked on every cap-and-trade program affecting electric generating facilities in New York including the Acid Rain Program, RGGI, and several Nitrogen Oxide programs. The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

Climate Act Background

The Climate Act established a New York “Net Zero” target (85% reduction and 15% offset of emissions from a 1990 baseline) by 2050 and an interim 2030 target of a 40% reduction by 2030. The Climate Action Council 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 and power the electric grid with zero-emissions generating resources by 2040.  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 write a Draft Scoping Plan.  After a year-long review the Scoping Plan recommendations were finalized at the end of 2022.  In 2023 the Scoping Plan recommendations are supposed to be implemented through regulation and legislation.  One of these initiatives is the cap and invest program.

According to the New York Cap and Invest (NYCI) website:

An economywide Cap-and-Invest Program will establish a declining cap on greenhouse gas emissions, 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. Cap-and-Invest will ensure the state meets the greenhouse gas emission reduction requirements set forth in the Climate Leadership and Community Protection Act (Climate Act).

NYCI Webinars

In June 2023 a series of webinars  was hosted by DEC and NYSERDA “to gather feedback on the program as we develop regulations to implement the Cap-and-Invest Program.”  They asked for responses to questions posed (compiled here) during the webinars by July 1.  However, that is not a hard deadline and they still are accepting comments.  I submitted comments that addressed the major topics but did not attempt to respond to individual questions. 

In a departure from the public comment process for the Draft Scoping Plan the invitation to provide comments on the development of the regulations is much more structured. DEC and NYSERDA developed a template document [PDF] to “assist commenters in providing feedback on these topics”.   Actually, this approach is being used to categorize responses from the public to assist the agencies documenting the comments received.  The comments go to a third-party vendor, Comment Management.  In my opinion, the submittal methodology also includes extensive requests for location, constituencies, and interests which I worry could be used to prioritize attention to the comments.  For example, in response to the question: Which of the following constituencies do you most closely identify with, the first three options are:  Environmental justice or underserved communities, Labor unions/union training centers and Environment or conservation advocates.  Consumer advocacy is not even mentioned and the three categories correspond to political constituencies that are a key demographic to Governor Hochul.  It is disappointing that there aren’t any questions related to experience and background.  As a result, I fear that even though the approach is different, the Hochul Administration is again merely going through the motions for public comment.  The answer is in the back of the book and no comments that run contrary to the pre-conceived notion of the Administration will be considered seriously.

I think this is a mistake.  The industry people I work with in the electric generating sector have more experience with emission marketing programs than anyone at the state agencies.  I know my colleagues had hoped that we could have some frank discussions about our experiences and concerns.  That has not happened and our requests for meetings have been ignored.  As part of the implementation and program review for the Regional Greenhouse Gas Initiative a series of technical meetings were held that I believe led to a better product.  There is no sign that similar meetings are planned.  Personally, given what appears to be happening, there is very little incentive to provide detailed and referenced comments because I think they will simply be counting responses to specific questions by constituency and not by quality of the comments themselves. 

The following sections summarize my comments at a high level.  I submitted overarching comments and will follow up with more detail on my arguments in later posts.  This summary does not address my technical comments on the analysis inputs and methods.

NYCI Goals

I submitted overarching comments because I think that the Hochul Administration is not paying sufficient attention to what made previous emissions marketing programs work.  As a result, they are rushing ahead with implementation without considering fundamental issues.

The NYCI implementation plan is to “Advance an economywide Cap-and-Invest Program that establishes a declining cap on greenhouse gas emissions, limits potential costs to economically vulnerable New Yorkers, invests proceeds in programs that drive emission reductions in an equitable manner, and maintains the competitiveness of New York industries.”  These are political talking points and there will be significant consequences if the dynamics between these stated goals are not resolved.  In order to fund the control strategies necessary to reduce emissions on the schedule required by the Climate Act investments will be required.  The Hochul Administration has not admitted how much money will be needed but I believe that it is so large that the likely cost to “economically vulnerable New Yorkers” is incompatible with the idea that they will not be adversely impacted.  However, the Administration could pick a revenue target that is politically palatable but insufficient to fund the reductions needed.  If the emphasis is on equity rather than effective reductions then it is also possible that insufficient reductions will occur and the targets will not be met.  They can include all the politically correct language they want but in order to reduce the emissions necessary to meet the targets, then the costs will make New York industries uncompetitive with jurisdictions that do not have those requirements. There is no indication that tradeoffs between these goals are even being considered. 

There also is a scheduling problem.  Implementation of this sophisticated and complicated economy-wide program is handicapped by the aspirational legislative schedule constraints.  I understand that it took California five years with many more staff dedicated to the effort to implement their program.  New York is supposed to get this program in place by the end of the year and that is simply absurd.

If the influential book Making Climate Policy Work  had been considered by the Climate Action Council or Governor’s Office I believe that there would have been substantive changes to the plan.  Authors Danny Cullenward and David Victor show how the politics of creating and maintaining market-based policies render them ineffective nearly everywhere they have been applied.  They recognize the enormity of the challenge to transform industry and energy use on the scale necessary for deep decarbonization.  They write that the “requirements for profound industrial change are difficult to initiate, sustain, and run to completion.”  Because this is hard, they call for “realism about solutions.” 

I evaluated the Making Climate Policy Work analysis of RGGI.  I agree with the authors that the results of RGGI and other programs suggest that programs like the NYCI proposal will generate revenues.  However, we also agree that the amount of money needed for decarbonization is likely more than any such market can bear.  The problem confronting the Administration is that in order to make the emission reductions needed I estimate they have to invest between $15.5 and $46.4 billion per year.  The first fundamental issue that NYCI implementation must address is the revenue target relative to what is needed for investments to meet the Climate Leadership & Community Protection Act (Climate Act) 2030 GHG emission reduction target.  Without that information it is impossible to plan to implement the control strategies necessary to decarbonize New York.

The use of NYCI as a compliance mechanism is another problem.  The NYCI webinars have not acknowledged or figured out that the emission reduction ambition of the Climate Act targets is inconsistent with technological reality of the Climate Act schedule.  Because GHG emissions are equivalent to energy use, limiting GHG emissions before there are technological solutions that provide zero-emissions energy means that compliance will only be possible by restricting energy use.  It is essential that compliance enforcement consider this problem.  The second fundamental issue that NYCI implementation must address is a feasibility analysis whether there will be sufficient reductions to avoid limits on power plant operations, gasoline availability, and natural gas for residential use for the 2030 Climate Act 40% GHG emission reduction target.  

My comments also argued that there is no excuse to not consider changes to the schedule.  While the NYCI webinars have not acknowledged that there are relevant conditions relative to meeting the Climate Act targets, New York Public Service Law  § 66-p. “Establishment of a renewable energy program” has safety valve conditions for affordability and reliability that are directly related to the two issues described above.   § 66-p (4) states: “The commission may temporarily suspend or modify the obligations under such program provided that the commission, after conducting a hearing as provided in section twenty of this chapter, makes a finding that the program impedes the provision of safe and adequate electric service; the program is likely to impair existing obligations and agreements; and/or that there is a significant increase in arrears or service disconnections that the commission determines is related to the program”. 

Applicability and Thresholds

The webinars requested comments related to affected sources and what emissions thresholds sources should be covered by the regulations, who must report emissions and which entities must obtain and surrender allowances equal to their GHG emissions.  I made the point that regulatory obligations should be based on the potential for realistic and meaningful emission reductions.  For example, there is no realistic opportunity to replace aviation fuel for long-distance flights so the only option to reduce emissions is restricting flights.  I suggested excluding those emissions.  To their credit, the webinars did broach the subject of excluding various sectors.   The whole-economy target mandate of the Climate Act is inconsistent with the reality that there are limited financial resources such that it might be appropriate to phase in allowance obligations for sources based on the relative magnitude of emissions and the cost per ton reduced.

Allowance Allocations

The webinars asked how allowances should be allocated.  I commented that the Regional Greenhouse Gas Initiative (RGGI) provided most of the allowances through an auction system and concluded that because this aspect of RGGI works the NYCI proposal should be consistent with this aspect and any variations or exceptions to the RGGI allocation process should be avoided.

The webinars also asked for recommendations for rules in market and trading of allowances.  I am particularly concerned about comments made by environmental justice activists and environmental advocates on this topic. This economy-wide strategy is supposed to be a market-based program but the suggestions that limitations on trading and site-specific constraints in the Climate Action Council recommendations are incompatible with a market-based program. To on one hand claim the benefits of existing cap-and-invest programs but on the other hand to exclude the components that provided those benefits is a mistake.

The first component is trading.  The ability for market participants to buy, sell, or trade allowances is a prerequisite.  The RGGI Secondary Market Reports (e.g., Q1 2023) explain how the trading of physical allowances and financial derivatives, such as futures, forward, and option contracts, enable affected sources to manage risks and reduce costs to their customers.  If there is no trading then this is not an emissions market program,  it is simply a tax.

My second concern are the requests for site-specific constraints.  A prerequisite for a trading program is that it is designed to control pollutants that have regional or global impacts not local impacts.  The Climate Action Council and Climate Act emphasis on environmental justice in disadvantaged communities has raised the idea that NYCI can also be used to address local impacts.  In the first place there is no obvious way to limit allowance use for a particular area.  Allowances are not labelled for specific areas.   Excess allowance surrender proposals ignore the fact that air quality impacts are not solely based on emissions but also local transport and diffusion.  The poster child for this particular problem is a peaker power plant, but I have shown that the alleged peaker power plant problems are based on selective choice of metrics, poor understanding of air quality health impacts,  and ignorance of air quality trends. Power plants are not the only sources affecting dis-advantaged communities and it is not clear how, for example, transportation sector allowance requirements could be traced to any location.  I stated that there should be no site-specific constraints on allowances in NYCI.

This issue is most concerning in the context of the apparent approach for stakeholder comments.  I am convinced that there will be many comments from environmental justice activists and environmental advocates demanding limits on trading and requiring site-specific allowance constraints.  However strong the emotional attachment to those demands, the fact is that those constraints are incompatible with an emissions trading system.  If ten people argue the facts and thousands argue the emotions, it is likely that the Hochul Administration will simply use the numbers to establish the policy.

Program Ambition

The webinars requested input on the cap and the allowance budget for how many allowances will be available year-by-year to reach the Climate Act GHG limits. As noted in my discussion of the goals, I commented that NYCI implementation must should include a feasibility analysis to inform the allowance cap ambitions.    I also suggested that NYCI follow the approach used by RGGI wherever possible because that system has worked.  I made the point that the California Air Resources Board 2022 Scoping Plan for Achieving Carbon Neutrality (2022 Scoping Plan) that “lays out a path to achieve targets for carbon neutrality and reduce included an Uncertainty Analysis that addressed the feasibility issues I believe should be considered.

My primary interest is the electric energy system.  Because of its importance, I recommended that DEC and NYSERDA convene a panel to review electric grid reliability that includes the New York State Independent System Operator, New York State Reliability Council, Public Service Commission, and representatives from the generation and transmission industry.

Program Stability Mechanisms

The webinars asked for comments on automatic and planned program adjustments to moderate costs and sustain program ambition if emissions are higher or lower than anticipated.  RGGI has developed program adjustments and I recommended that similar adjustments be included in NYCI.

Compliance, Enforcement and Penalties

The webinars also asked for comments on compliance periods and types of enforcement mechanisms.  I suggested using a three-year compliance period because it addresses inter-annual variability.

There is an important consideration related to compliance mechanisms.  My analysis of the current state of emissions relative to the 2030 Climate Act goals leads me to believe that compliance with the arbitrary schedule is impossible.   The ultimate compliance strategy for any GHG emission limitation program is stop using fossil fuels.  If there is no replacement energy available that means that compliance will lead to an artificial energy shortage unless there is a safety valve or affected sources pay a penalty. 

If no safety valve is included then in order to prevent artificial energy shortages, the other option is for affected sources to pay penalties.  I recommended a penalty of two times the average cost of allowances over the compliance period.  That provides an incentive to meet the Climate Act target as opposed to creating an artificial energy shortage.  I said that any allowance surrender options will only exacerbate the allowance shortage so they should not be included.

Use of Proceeds

As noted in the first section, there is an unacknowledged dynamic between the use of proceeds for political goals and funding the control strategies necessary to make the required reductions.  The New York Independent System Operator has stated that the Climate Act net-zero transition is “driving the need for unprecedented levels of investment in new generation to achieve decarbonization and maintain system reliability”.  The first step for determining the use of the auction proceeds should be to provide an estimate of how much these investments will cost in order determine how much money must be raised by the Cap-and-Invest program.  If the investments are insufficient then the energy system will fail to meet the cap limits. 

Dedicating auction proceeds to the limiting potential costs to New Yorkers is a politically expedient goal.  However not only does it divert funding needed to reduce GHG emissions it also perversely discourages emissions reductions.  Higher energy costs are supposed to make changes to behavior that reduce emissions but rebates do not encourage those changes.

The Climate Act focus on environmental justice in disadvantaged communities’ mandates at least 35% of the proceeds be dedicated to those areas.  While this is entirely appropriate because the inevitable increased costs of the energy transition will have regressive impacts, it is also necessary to prioritize the investments to provide emission reductions.  Energy conservation and energy efficiency investments that reduce energy burdens for low- and middle- income citizens should be the priority for the disadvantaged  community revenues.

Emission reductions must be a priority or the oft-touted compliance certainty feature could cause artificial energy shortages

Conclusion

The allure of a source of revenues and compliance certainty using climate policies that apparently have worked in the past led the Council and Governor to put the cart before the horse.  The Cap-and-Invest Program recommended by the Climate Action Council’s final Scoping Plan and proposed in Governor Kathy Hochul’s 2023 State of the State Address and Executive Budget has not paid adequate attention to what made previous policies work and whether there are significant differences between the Climate Act requirements and previous policy goals in those other programs that might impact NYCI.  If the tradeoffs are not resolved then this program will do more harm than good.

I published Washington State Gasoline Prices Are a Precursor to New York’s Future a couple of days ago that 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?.  The Watts Up With That article asked for feedback from Washington residents about the cost impacts of this cap-and-invest program policy.

Recent reports note that gasoline prices in the State of Washington are now higher than California.  This is also the first year of Washington’s cap-and-invest program  a “comprehensive, market-based program to reduce carbon pollution and achieve the greenhouse gas limits” set in the Climate Commitment Act.  The posts show that there is an obvious link between Washington’s new cap and trade program and gasoline prices.  This article discusses the comments on the Watts Up With That article.

I have been following the Climate Leadership & Community Protection Act (Climate Act) since it was first proposed. I submitted comments on the Climate Act implementation plan and have written over 300 articles about New York’s net-zero transition.  I have extensive experience with air pollution control theory, implementation, and evaluation having worked on every cap-and-trade program affecting electric generating facilities in New York including the Acid Rain Program, RGGI, and several Nitrogen Oxide programs since the inception of those programs. I follow and write about the RGGI cap and invest CO2 pollution control program so my background is particularly suited for this proposal.   I have devoted a lot of time to the Climate Act because I believe the ambitions for a zero-emissions economy embodied in the Climate Act outstrip available renewable technology such that the net-zero transition will do more harm than good.  The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

Background

I refer readers to either previous article Washington State Gasoline Prices Are a Precursor to New York’s Future or Do Washington State Residents Know Why Their Gasoline Prices Are So High Now? for background information on the New York and Washington cap-and-invest programs. 

The articles explained that “The average cost of regular gasoline in Washington state has jumped by 32 cents over the past month to $4.93 a gallon, according to AAA” according to an article

California is no longer America’s most expensive state for gas.  Another article says that some experts connected the dots to the new legislation.  In my opinion, the key point is that the cost of Washington gasoline has risen more relative to the price increases elsewhere so that now Washington has the highest prices in the nation.  The first two auctions for the Washington cap-and-invest program sold 14,770,222 allowances and raised $780,829,117 averaging $52.87 per allowance.  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.  That works out to $0.47 a gallon needed to cover the cost of allowances necessary to purchase the allowances and that is a unique Washington cost adder. 

I concluded that there is a clear link between the pass-through cost that gasoline suppliers must pay and the fact that Washington State gasoline prices have increased more than other states.  One of the reasons for my obsession following similar policies in New York is that observed significant cost increases with little real benefits should engender a political response.  If it can be shown that there are real and significant costs as opposed to the “no real impact” claims made by net-zero proponents the politicians who supported these policies should be held accountable.  The question is whether the residents of Washington have figured out that their gasoline prices are so high because of the politicians who promulgated this policy.  I closed that I would appreciate any feedback from Washington residents about the cost impacts of this cap-and-invest program policy.

Comments

The article was published in the middle of the night in the USA so the first comments were from Great Britain where it was pointed out that the Washington costs of gasoline were a fraction of the costs there. 

Ron Long and ToldYouSo  brought up the overarching issue.  Washington and New York emissions are so low relative to global emissions that nothing they will do will have any chance of affecting climate change even if there is a relationship between GHG emissions and global warming.

Alex Long submitted the first comment relative to accountability.  He argued that abortion is an overriding issue for many democrats. 

The point of this is simple: It does not matter how high gasoline will cost, it does not matter how bad crime gets, it does not matter if people’s rights are taken away because of a virus — the democrat can safely get re-elected only because they support abortion. A politician’s only concern is to get elected or re-elected. The democrats know a significant number of people will blindly vote for them because abortion. Thus, all the democrats have to do is keep abortion legal and they will safely win the election. That was the lesson I learned in 2022.

Accountability Comments

Steve Oregon said that Washington residents are clueless about the politician’s gas price hike.  He went on:

An associate of mine owns a major gas station in southern Washington and raises the issue with his customers often. The have no idea their legislature and governor raised the price of gas as the did.

ALL of the Washington media parrots the politicians with NEVER any additional clarification or truth provided.

The short of it is Washington State is a thoroughly Democrat cesspool of public deceit and dysfunction.

Jebstang66 pointed out that Washington’s hydro power is a tremendous and clean asset.  He described Washington politics.

The State is run by extreme Leftist politicians who have the majority in every important place in government here including the WA State Supreme Court. So they pass draconian climate laws without viable opposition. Cap and trade along with “The Clean Energy Transformation Act (CETA) in 2019 which requires that all utilities eliminate coal by 2025 and provide carbon neutral electricity by 2030. Many stakeholders, utility officials and industry leaders warned that losing baseload sources like coal would increase the probability of brownouts and blackouts if demand increased, a likely occurrence in the next ten years.”  It is tax scheme to increase the size and control of State Government. The media here controls the narrative so most people are misinformed.

A comment from kvt1100 described the cost difference between Washington and Oregon:

I live in Eastern WA and gas here today is $4.75/gallon and 30 miles south in Oregon it is $4.35/gallon. Last year the prices in Oregon and Washington were near equal. WA is abusing its constituents by taxing us to pay for our Governor’s pet environmental projects. None of which will amount to any meaningful decrease in wicked CO2. Neighbors and family members are unaware of the price gouging by our governor.

Waforests summarized the situation well:

I am *extremely* aware of what’s causing the price hike (in part because i pay attention; I also follow the WPC’s analysis).

This is a perfect example of politicians not understanding the policies they put in place. Inslee said it would simply be an increase of “pennies” (unless he meant 50 of them).

And it doesn’t even *do* anything: it doesn’t help the planet in a meaningful way, and it just hurts poor and rural folk the most.

John Hultquist described the situation in Washington and raised the point that this will disproportionately hit the poor:

 Without looking stuff up:
A Washington State initiative was passed a few years ago to raise taxes by about 25¢/gallon for each of two years. Roads and bridges were in need of repair and cost of labor and materials were increasing. Work around the State is noticeable. That is good.

Washington has no internal sources of petroleum. Imports have come from Alaska and B.C. to the Cherry Point Refinery. Also, gasoline reaches central WA at Moses Lake via the 531 mile Yellowstone Pipeline from Billings, MT. From Moses Lake, it is delivered by truck to farther destinations, such as where I live 71 miles west. All not so good.

I do not think most people in Washington State are aware of the cap-and-invest program. The State is about 60% Democrat affiliated and the elites from the Inslee administration on down are pleased with themselves. Summarizing: WA is leading in the green movement to save the Planet.
If the poor suffer – we don’t give a schist.Dreadful.

There were a couple succinct responses.  I liked Janice Moore’s response to the question whether residents are aware of the problem and the reason: “Yes, some of us do. Answer: Democrats.” 

Alexei stated: “The “cap & invest” program is clearly a carbon tax and promoted by our departing governor Inslee but I doubt it will be met with much resistance by the credulous climate electorate here that have kept him in office for so long.”

Beta Blocker gave a detailed response:

I live in a rural area of the southeastern corner of the state in a place which is a wide spot in the road you would miss altogether if you didn’t already know it was there.

Concerns are being raised inside the local public utility districts, and among knowledgeable people familiar with energy issues in the US Northwest, that the coal plants which serve the region are being closed faster than they are being replaced.

A decade ago, the plan was to replace those coal plants with gas-fired power plants. Ten years later, new-build gas-fired power generation is completely off the table as an alternative to coal.

Nuclear hasn’t been formally rejected in Washington State, but the hard reality is that new-build nuclear couldn’t be delivered in a time-frame which would make any real difference to the emerging situation.

This trend towards closing coal-fired plants without replacement by equivalent generation is certain to continue and is even likely to accelerate as the Biden Administration and the EPA put more pressure on the region’s politicians and on the power utilities to reduce their carbon emissions in accordance with the EPA’s new emission rules.

The Western Electricity Coordination Council and the Northwest Power and Conservation Council are both downplaying the risks of electricity shortages in the US west and in the US northwest.

Inside the power planning models, megawatt-hours saved through energy conservation measures are being employed as fully equivalent to megawatt-hours generated and consumed. This is the means by which the risk of blackouts is being pencil-whipped away.

The bottom line is that the risk of blackouts occurring in the US Northwest is increasing rapidly. One independent risk analysis cited in a recent behind-the-paywall article in ANS Nuclear News sees our blackout risk increasing from 5% today in the year 2023 to greater than 25% after 2025.

Just like it is in California and in New York State, there isn’t one person in a hundred living in the US Northwest who has a clue about what is now happening with the reliability of our electricity supply.

Finally, Major Meteor describes the ultimate response to this kind of program:

The impact this is having on Washington residents is that some of them are moving to states that have common sense. So moving to Tennessee I figure my cost of living is easily $5K to $6K less with about $500 per year of that being gas taxes and I don’t even drive much. So if I am handing them $6K per year, I just want to know what they do with that extra money. Doesn’t look like society or my family benefits from the extra burden at all. I’m out.

Conclusion

Unfortunately, these responses are completely consistent with my experiences in New York.  Very few people know about these programs and the potential ramifications.  I am disappointed that even when Washington residents are confronted with inarguable proof that the programs are leading to significant cost increases that many of those affected still have not caught on.

I think the problem is that this issue and the programs to address it are just background noise.  Every day there is another story claiming it is climate change is here now and once in a while there is a political statement bragging about doing something.  When the time comes to vote, other issues are more important and the Progressives still get elected.  The point is that they did not get elected to pursue the cockamamie climate change control programs even if they think that they did.  How about a referendum to ask the people whether they want to proceed down this path?

The New York State Department of Environmental Conservation (DEC) and New York State Energy Research and Development Authority (NYSERDA)  are hosting webinars designed “to inform the public and encourage written feedback during the initial phase of outreach” for New York’s proposed cap and invest program.  When I get around to submitting my feedback one of my major themes will be the need to do a feasibility analysis to ensure that the resources necessary to enable the reductions required to meet the net-zero transition can be deployed as necessary.  This post addresses this concern.

I have been following the Climate Leadership & Community Protection Act (Climate Act) since it was first proposed. I submitted comments on the Climate Act implementation plan and have written over 300 articles about New York’s net-zero transition.  I have extensive experience with air pollution control theory, implementation, and evaluation having worked on every cap-and-trade program affecting electric generating facilities in New York including the Acid Rain Program, RGGI, and several Nitrogen Oxide programs since the inception of those programs. I follow and write about the RGGI cap and invest CO2 pollution control program so my background is particularly suited for this proposal.   I have devoted a lot of time to the Climate Act because I believe the ambitions for a zero-emissions economy embodied in the Climate Act outstrip available renewable technology such that the net-zero transition will do more harm than good.  The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

Climate Act Background

The Climate Act established a New York “Net Zero” target (85% reduction and 15% offset of emissions) by 2050 and an interim 2030 target of a 40% reduction by 2030. The Climate Action Council 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 and power the electric grid with zero-emissions generating resources by 2040.  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 write a Draft Scoping Plan.  After a year-long review the Scoping Plan recommendations were finalized at the end of 2022.  In 2023 the Scoping Plan recommendations are supposed to be implemented through regulation and legislation.  The cap and invest initiative is one of those recommendations.

DEC and NYSERDA have developed an official website for cap and invest.  It states:

An economywide Cap-and-Invest Program will establish a declining cap on greenhouse gas emissions, 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. Cap-and-Invest will ensure the state meets the greenhouse gas emission reduction requirements set forth in the Climate Leadership and Community Protection Act (Climate Act).

I have written other articles that provide background on NYCI.  I recently posted a Commentary overview for the New York Cap & Invest (NYCI) program that was written for a non-technical audience. In late March I summarized my previous articles on the New York cap and invest proposal in a post designed to brief politicians about the proposal if you want more technical information.  There also is a page that describes all my carbon pricing initiatives articles that includes a section listing articles about the New York Cap and Invest (NYCI) proceeding.

The Need for a Safety Valve

The NYCI implementation plan is to “Advance an economywide Cap-and-Invest Program that establishes a declining cap on greenhouse gas emissions, limits potential costs to economically vulnerable New Yorkers, invests proceeds in programs that drive emission reductions in an equitable manner, and maintains the competitiveness of New York industries.”  In my opinion, the State has not considered that there will be significant consequences if the dynamics between these stated goals are not resolved.  There is no indication that tradeoffs between these goals are even being considered.  Furthermore, implementation of this sophisticated and complicated economy-wide program is handicapped by the aspirational legislative constraints on timing and targets.

If the influential book Making Climate Policy Work  had been considered by the Climate Action Council or Governor’s Office I believe that there would be substantive changes to the plan.  Authors Danny Cullenward and David Victor explain how the politics of creating and maintaining market-based policies render them ineffective nearly everywhere they have been applied.  They recognize the enormity of the challenge to transform industry and energy use on the scale necessary for deep decarbonization.  They write that the “requirements for profound industrial change are difficult to initiate, sustain, and run to completion.”  Because this is hard, they call for “realism about solutions.” 

NYCI proponents point to the “success” of the Regional Greenhouse Gas Initiative (RGGI) and presume that their proposed program will work as well.  I evaluated the Making Climate Policy Work analysis of RGGI.  I agree with the authors that the results of RGGI and other programs suggest that programs like the NYCI proposal will generate revenues.  However, we also agree that the amount of money needed for decarbonization is likely more than any such market can bear.  The problem confronting the Administration is that in order to make the emission reductions needed I estimate they have to invest between $15.5 and $46.4 billion per year.  The first issue that NYCI implementation must address is the revenue target relative to what is needed for investments to meet the Climate Act 2030 GHG emission reduction target.

The use of NYCI as a compliance mechanism is also a problem.  The NYCI webinars have not acknowledged or figured out that the emission reduction ambition of the Climate Act targets is inconsistent with the technological reality of the Climate Act schedule.  Because GHG emissions are equivalent to energy use, limiting GHG emissions before there are technological solutions that provide sufficient zero-emissions energy means that compliance will only be possible by restricting energy use.  The second issue that NYCI implementation must address is a feasibility analysis whether there will be sufficient allowances to avoid limits on power plant operations, gasoline availability, and natural gas for residential use for the 2030 Climate Act 40% GHG emission reduction target.  This issue is the focus of this post.

There is no excuse to not include a safety valve that could make changes to the schedule based on the results of a feasibility analysis.  The NYCI webinars have not acknowledged that there are conditions relative to meeting the Climate Act targets, but there is one available.  New York Public Service Law  § 66-p. “Establishment of a renewable energy program” has safety valve conditions for affordability and reliability that are directly related to the two issues described above.   § 66-p (4) states: “The commission may temporarily suspend or modify the obligations under such program provided that the commission, after conducting a hearing as provided in section twenty of this chapter, makes a finding that the program impedes the provision of safe and adequate electric service; the program is likely to impair existing obligations and agreements; and/or that there is a significant increase in arrears or service disconnections that the commission determines is related to the program”.   If the feasibility analysis finds that reliability or affordability issues are likely due to implementation issues, then this could be used to modify the schedule.

California Uncertainty Analysis

One of the principles of NYCI is Climate Leadership which is defined as: “Catalyze other states to join New York, and allows linkage to other jurisdictions”.  In order to link to other jurisdictions, it is necessary to be consistent with their cap and invest programs.  The California Air Resources Board (CARB) has a GHG emissions cap-and-trade program that has been in place since 2019.  Even though the Climate Act differs from the California plan because the Climate Act requires that all GHG emissions must be accounted for rather offering some exemptions, I am disappointed that there does not seem to be much sign that New York is considering using the methodological approaches used by California. 

Last year CARB prepared a 2022 Scoping Plan for Achieving Carbon Neutrality (2022 Scoping Plan) that “lays out a path to achieve targets for carbon neutrality and reduce anthropogenic greenhouse gas (GHG) emissions by 85 percent below 1990 levels no later than 2045, as directed by Assembly Bill 1279.”  This is one example where New York’s efforts could be informed by the California process and it addresses my feasibility concern.  The California Air Resources Board 2022 Scoping Plan issued in November 2022 included a 2030 Uncertainty Analysis.  The report explains that the implementation effort requires additional efforts beyond those already in place but notes:

There is also uncertainty that the current mix of policies (regulations, incentives, and carbon pricing) will be sufficient to achieve California’s 2030 target, at least 40% below 1990 greenhouse gas (GHG) emissions. Uncertainty is an inherent part of emissions forecasting and modeling – there is no model capable of predicting the future with perfect accuracy. As the on-going global COVID-19 pandemic and recovery has demonstrated, unexpected events can dramatically impact human welfare, economic activity, and GHG emissions.

In this analysis, we identify the drivers of uncertainty and analyze the potential impact of implementation delays on GHG emissions in 2030. That is, what if delayed implementation of actions as defined in the Scoping Plan Reference Scenario fail to achieve anticipated GHG reductions by 2030? This uncertainty analysis focuses on progress in achieving the 2030 target of at least 40% below 1990 levels by 2030 and does not include an assessment of the uncertainty faced in implementing the Scoping Plan scenario for achieving carbon neutrality by 2045.

We construct two scenarios that capture the largest emissions impact in 2030 from delays in implementation under the Scoping Plan Reference Scenario: delayed renewable capacity and delayed transportation electrification. We quantify the magnitude of the emissions impact under these two scenarios, highlighting the importance of these two actions in achieving the reductions outlined in the Scoping Plan Reference Scenario to hit California’s 2030 climate target.

This is exactly what I believe is necessary for NYCI.  The report notes that:

The main drivers of future GHG emissions – technology costs, energy prices, macroeconomic conditions, and policy implementation – are not known with perfect certainty. Modelers make informed assumptions about these drivers and estimate a range of GHG emissions based on historic, current, and potential future trends.

Unanticipated changes in these variables impact GHG emissions, however they are largely outside the control of policy makers. In just the past few years, we have seen global geopolitical and macroeconomic events dramatically alter energy prices, technology costs, and GHG emissions in California. The impacts of these events are still being felt and will continue to impact California’s economy and emissions – but are largely outside the control of the State.

The uncertainty analysis considered two scenarios: one for delayed renewable development and another for delayed transportation electrification.  The delayed renewable capacity scenario description notes:

In the Scoping Plan Reference Scenario, California has a 38 MMT GHG constraint in the power sector and achieves a 60% Renewable Portfolio Standard (RPS) by 2030 as required in SB 100. Under the delayed renewable capacity scenario, we construct an emissions trajectory from 2022 to 2030 under a 5-year delay in renewable capacity including infrastructure for existing renewable facilities as well as delays in permitting and construction for new renewable generation and transmission.

The delayed transportation electrification scenario description explains:

In the transportation sector, there are two assumptions driving emissions in 2030 in the Scoping Plan Reference Scenario- per-capita vehicle miles travelled (VMT) are reduced 4% below 2019 levels by 2045 and 40% of light-duty vehicle (LDV) sales are zero emission vehicles (ZEV) by 2030 (with minimal medium-duty and heavy-duty vehicle decarbonization) aligned with California Institute for Transportation Studies (ITS) BAU scenario. In California, per-capita VMT increased from 2017 to 2019. Therefore, the assumption that VMT decreases, even marginally, without additional action is a risk to achieving the 2030 emissions under the Scoping Plan Reference Scenario. However, the overall emissions impact in 2030 of failing to achieve the 4% per capita VMT reduction is relatively small under the Scoping Plan Reference Scenario as compared to the emissions impact of near-term transportation electrification.

The analysis concludes:

California’s path to carbon neutrality by 2045 is predicated on achieving the emission reductions outlined in the Scoping Plan Reference Scenario. We find that delaying renewable capacity by 5 years will increase California emissions by 8% in 2030 while delaying vehicle electrification will increase emissions by 6% in 2030. While the magnitude of these values may seem small, the risks are high. 2030 is just over seven years away and the gap to achieving the sector targets in the Scoping Plan Reference Scenario are large.

These emission reductions outlined in the Scoping Plan Reference Scenario are not guaranteed and while some of the risk and uncertainty is global and largely exogenous, there are risks associated with implementation. These risks can potentially be reduced or eliminated with targeted policy interventions. While in this analysis we have highlighted the impact of delayed renewable capacity and transportation electrification, there are uncertainties in each implementation assumption across California’s economic sectors. The magnitude of the emissions impact will vary as will any potential policy or regulatory intervention.

This analysis has focused on the risks associated with California achieving the GHG emissions outlined in the Scoping Plan Reference Scenario. Any increase in emissions on the pathway to 2030 will impact California’s ability to achieve carbon neutrality by 2045. In addition, the technologies and fuels needed to achieve carbon neutrality will also face significant uncertainties in the future. While outside the scope of this analysis, the same implementation risks discussed in relation to renewable capacity may be relevant to emerging technologies like carbon dioxide removal or carbon capture and renewable hydrogen production.

Discussion

The California analysis found that delays in renewable energy deployment would increase emissions 8% (~ 28 million metric tons) and vehicle electrification would increase emissions by 6% (~21 million metric tons).  These are significant emission increases.  If there are similar issues relative to the New York implementation plans, then it would threaten the compliance with the cap.

The NYCI implementation plan includes a goal for a declining cap on greenhouse gas emissions that provides compliance certainty.  In my opinion, the State has not considered that there will be significant consequences related to the use of NYCI as a compliance mechanism if the deployment of zero-emissions resources necessary to make the reductions is delayed.  The Hochul Administration has not acknowledged or figured out that the emission reduction ambition of their Climate Act targets is inconsistent with technology reality.  Because GHG emissions are equivalent to energy use, limiting GHG emissions before there are technological solutions that provide zero-emissions energy means that compliance will only be possible by restricting energy use. 

I do not understand why Climate Act proponents don’t acknowledge that restrictions on energy use because there are insufficient allowances available would catastrophically impact their ambitions.  It is indisputable that New York GHG emissions are less than one half of one percent of global emissions and global emissions have been increasing on average by more than one half of one percent per year since 1990.  I would not want to argue to the public that they cannot have gasoline for their cars or fossil fuels for their homes because the allowances ran out attempting to reduce New York emissions a fraction of the total when the total emissions are globally irrelevant.  It is not necessarily inappropriate to do something but disallowing changes to the schedule based on feasibility or the reality that emissions are greater than the aspirational targets leading to artificial energy shortages will surely cause massive pushback by most New Yorkers.

Conclusion

The allure of a source of revenues and compliance certainty using climate policies that apparently have worked in the past led the Council and Governor to put the cart before the horse with their NYCI recommendations.  The Cap-and-Invest Program recommended by the Climate Action Council’s final Scoping Plan and proposed in Governor Kathy Hochul’s 2023 State of the State Address and Executive Budget has not paid adequate attention to what made previous policies work and whether there are significant differences between the Climate Act requirements and previous policy goals in those other programs that might impact NYCI.   There are provisions for a safety valve that enable adjustments to the schedule.  The recent announcements that there are delays in the offshore wind projects suggests that there are potential issues. Failing to plan and incorporate a feasibility analysis to determine the reasonableness of the deployment of wind and solar resources necessary to meet the targets relative to the Climate Act schedule will likely lead to serious problems in the future. 

On June 1, 2023 the Department of Environmental Conservation (DEC) and New York State Energy Research and Development Authority (NYSERDA)  hosted the first webinar in a series “to inform the public and encourage written feedback during the initial phase of outreach” for New York’s proposed cap and invest program.  At the time of this writing the only documentation available for the webinar are the slides so this article only addresses one question.  Where does the state stand relative to the 2030 transition target of a 40% reduction of GHG emissions from the 1990 baseline.

I have been following the Climate Leadership & Community Protection Act (Climate Act) since it was first proposed. I submitted comments on the Climate Act implementation plan and have written over 300 articles about New York’s net-zero transition because I believe the ambitions for a zero-emissions economy embodied in the Climate Act outstrip available renewable technology such that the net-zero transition will do more harm than good.  The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

Climate Act Background

The Climate Act established a New York “Net Zero” target (85% reduction and 15% offset of emissions) by 2050 and an interim 2030 target of a 40% reduction by 2030. The Climate Action Council 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 and power the electric grid with zero-emissions generating resources by 2040.  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 write a Draft Scoping Plan.  After a year-long review the Scoping Plan recommendations were finalized at the end of 2022.  In 2023 the Scoping Plan recommendations are supposed to be implemented through regulation and legislation.  The cap and invest initiative is one of those recommendations.

DEC and NYSERDA have developed an official website for cap and invest.  It claims:

An economywide Cap-and-Invest Program will establish a declining cap on greenhouse gas emissions, 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. Cap-and-Invest will ensure the state meets the greenhouse gas emission reduction requirements set forth in the Climate Leadership and Community Protection Act (Climate Act).

I recently posted my All Otsego Commentary overview on cap and invest published in early May that was written for a non-technical audience. In late March I summarized my previous articles on the New York cap and invest proposal in a post designed to brief politicians about the proposal if you want more technical information.  There also is a page that describes all my carbon pricing initiatives articles that includes a section about the New York Cap and Invest (NYCI) proceeding.

NYS GHG Emissions

One of the fundamental issues relative to NYCI is the status of New York State GHG emissions.  The DEC is required to prepare an annual report for statewide greenhouse gas emissions, pursuant to Section 75-0105 of the Environmental Conservation Law.  The DEC website described the report issued at the end of 2022:

This current report covers the years 1990 through 2020. The emission information will also be made available for download from Open Data NY (leaves DEC website).

• Summary Report (PDF)
• Sectoral Report 1: Energy (PDF)
• Sectoral Report 2: Industrial Processes and Product Use (PDF)
• Sectoral Report 3: Agriculture, Forestry, and Land Use (PDF)
• Sectoral Report 4: Waste (PDF)
• Appendix: CLCPA Emission Factors (PDF)

Supplemental Information

• The 2022 report includes the results of analyses that are described in more detail in supplemental reports available through the New York State Energy Research and Development Authority (NYSERDA) Greenhouse Gas Emissions Studies (leaves DEC website).
• Instructions for Accessing Statewide GHG Information from Open NY (PDF)

According to the Environmental Protection Agency, one of the necessary components for an effectively designed emissions trading program is “accountability for reducing, tracking and reporting emissions”.  While on the face of it the DEC annual GHG emissions report might seem to fulfill that condition, it does not.  The DEC annual report takes two years to develop so it is unusable for the proposed program.  The data provided are not detailed enough to breakdown emissions by potential NYCI sectors.  Finally, there are insufficient supporting data to document the accuracy of the reported emissions.

The impetus for this article is slide 7, GHG Emissions Reduction Requirements, in the presentation.  The slide includes two figures: current emissions by sector and New York State GHG emissions.  My concern is the numbers used for the figures. 

The New York State GHG emissions figure includes three numbers from Part 496 the statewide GHG emission limits for the Climate Act.  In 2030 the statewide greenhouse gas emission limit (in million metric tons of carbon dioxide equivalent or MMT CO₂e) is 245.87 and in 2050 it is 61.47.  Those limits are 60% and 15% respectively of the 1990 baseline emissions which works out to 410 MMT CO₂e.  The 2019 emissions (376.18 MMT CO₂e are from the 2022 GHG emissions inventory.  Note that the State uses 2019 instead of 2020 for trends analysis because 2020 values are anomalous due to the pandemic shutdowns.

My concern is that the numbers used to derive the graph “Current estimated GHG emissions by sector are not publicly available.  The DEC annual report does not break out emissions from the different sectors by the categories shown.  For example, for the buildings sector there is no table that lists space heating, water heating, other, and cooking sub-category emissions.  The emission information available from Open Data NY does not include those categories either.  The DEC 2022 report references  supplemental reports available through the NYSERDA Greenhouse Gas Emissions Studies website.  There are no relevant references to emissions from those categories in those reports.

Emissions Reporting

I have been dealing with emissions reporting for cap-and-trade programs for three decades starting with  the Acid Rain Program in the early 1990’s.  The Environmental Protection Agency standard for the accountability for tracking and reporting emissions is very high.  Developing the infrastructure to record, report, and comply with their standards took enormous effort but the data are completely transparent and verifiable to national standards.  Note, however, that this high level is only possible because the emissions are measured directly.  That approach is not possible for many sectors covered by the Climate Act but it does not mean that there should not be accountability for the emissions.

Instead of directly measuring the pollution emissions at the source, many sectors must rely on emission  factors.  EPA describes emissions factors as follows:

An emissions factor is a representative value that attempts to relate the quantity of a pollutant released to the atmosphere with an activity associated with the release of that pollutant. These factors are usually expressed as the weight of pollutant divided by a unit weight, volume, distance, or duration of the activity emitting the pollutant (e.g., kilograms of particulate emitted per megagram of coal burned). Such factors facilitate estimation of emissions from various sources of air pollution. In most cases, these factors are simply averages of all available data of acceptable quality, and are generally assumed to be representative of long-term averages for all facilities in the source category (i.e., a population average).

In order to calculate emissions using an emission factor the following equation is used:

E = A x EF x (1-ER/100)

where:

• E = emissions;
• A = activity rate;
• EF = emission factor, and
• ER =overall emission reduction efficiency, %

In order for the NYCI emissions to be accountable, all four of those values should be documented and available to the public.  Unfortunately, the state has net even provided the data used to generate the graphics used much less this supporting information.

There is another important difference between the emissions reported based on direct measurements at the source and emissions derived from emission factors.  The measured values cannot change but if there are refinements to the emission factors or activity rate measurements the values can change.  For example, the 2022 Sectoral Report 1: Energy  report has a chapter entitled Planned Improvements that lists known issues where improved estimates are desired.  In my opinion, there are numerous examples where the DEC emission factors used are questionable and I expect that affected sources will likely make the investments to improve the emission factors for more realistic emission estimates.  There have already been changes such that the Part 496 1990 baseline value of 410 MMT is different than the 2022 GHG emission inventory estimated 1990 emissions of 404.26 MMT.

Where Do We Stand?

In the absence of data from the DEC and NYSERDA that can be used to determine where the sectors stand relative to the 2030 Climate Act targets,  I used the Data NY and the Statewide GHG Emissions dataset available there to breakdown the differences between the 1990 baseline and the 2019 and 2020 emissions for various sub-sectors and fuels.  The caveat is that these are only estimates and not the official sub-sector emissions.  The following tables present data by the agriculture, buildings, electricity, industry, transportation, and waste economic sectors. 

The first table summarizes the emissions using the New York State global warming potential accounting approach for 20 years and the Intergovernmental Panel on Climate Change accounting for 100 years for each of the sectors and the overall totals.  It is not clear exactly which components of each sector will be subject to NYCI obligations but the totals suggest that the aspirational goals will be a challenge to meet.  The agriculture, buildings, transportation, and waste sectors all need to reduce emissions over 40% between 2019 and 2030.  While the electricity sector seems to be in good shape relative to the target the 2019 data does not reflect the shutdown of 2,000 MW of zero-emissions nuclear generation at Indian Point which raised the sector emissions by over 20%. 

Statewide Greenhouse Gas Emissions (MMT) by Sector Relative to 2030 Target

The following tables list data for unique combinations within each sector for the category, and sub-category labels   For example, within the agriculture economic sector there were two categories: livestock and soil management.  Within those categories there were five additional sub-categories. I listed data for the entire agriculture sector in the first row of the table.  The baseline 1990 emissions were 15.3 million metric tons CO2e using the global warming potential 20 year approach.  The 2030 limit is 9.2 MMT CO2e 20yr.  In 2019 the emissions were 21.3 MMT CO2e 20yr which represents a 6.0 MMT CO2e 20yr 39%) increase from the 1990 baseline.  In order to get to the 2030 limit a reduction of 12.1 MMT CO2e 20yr -57% is needed.  Note that DEC has mentioned that due to the pandemic that 2020 is not a representative year so I only show 2019 data.  .  Within the agriculture sector I list the livestock 1990 emissions (13.6 MMT CO2e 20yr) and the soil management 1990 emissions (1.7 MMT CO2e 20yr).  Note that the sum of these categories equals the total of the sector.  The data for the sub-categories is also presented.  In the agriculture sector I believe some of the categories will be exempt.  Nonetheless it is obvious that there is a long way to go to meet the 2030 target.

Agriculture Sector GHG Emissions Trends Relative to 2030 Target

The buildings sector has the largest emissions of any sector.  Note that the Climate Act mandates that emissions from upstream sources as well as direct emissions.  This places an emphasis on eliminating the use of fossil fuels because New York sources have no way to reduce emissions from upstream sources other than to stop importing the fuel.  I doubt very much that the proposed goals can be met by displacing the use of fossil fuels with electrification.  The compliance certainty feature associated with the cap means that the ultimate compliance strategy will be to limit fossil fuel use even if the replacement electrification technologies are not available.

Building Sector GHG Emissions Trends Relative to 2030 Target

The inherent biases in the Climate Act GHG emissions accounting approach is evident in the electricity sector trends.  Note that in 2019 the New York accounting claims that direct GHG emissions are only slightly more than the upstream imported fossil fuel emissions.  Those numbers are not credible and I predict that there will be concerted efforts to refine the emission factors used to generate them.

Electricity Sector GHG Emissions Trends Relative to 2030 Target

The industry sector also appears to be relatively close to the 2030 target.  However, it is not clear if this is due to decarbonization efforts or New York’s de-industrialization since 1990.  More importantly is the question whether the 10% overall reduction necessary to get to the 2030 target is feasible for the remaining industrial operations.

Industry Sector GHG Emissions Trends Relative to 2030 Target

It is not clear how the Hochul Administration plans to decarbonize the transportation sector to the extent necessary in the next seven years.  Transportation emissions went up 10% from 1990 to 2019 and need to decrease 49% by 2030.  According to the webinar “Large-scale GHG emitters and distributors of heating and transportation fuels will be required to purchase allowances for the emissions associated with their activities”.  For the transportation sector that means when the allowances for transportation fuels run out, suppliers will not provide gasoline and diesel fuel to the retailers.  The resulting fuel shortage will be entirely due to the non-existent feasibility planning by the state.

Transportation Sector GHG Emissions Trends Relative to 2030 Target

I am glad I am not associated with the waste sector.  It is my impression that there are very few options available for solid waste management.  So what did the Scoping Plan suggest.  Increased recycling and waste minimization to reduce the waste stream.  In this case the only option I can think of when the allowances run out is to stop accepting waste.

Waste Sector GHG Emissions Trends Relative to 2030 Target

Conclusion

There are many questions about the NYCI proposal that must be addressed this year.  Frankly I think the Hochul Administration is going down the wrong path in its implementation plan because they are already mired in details but have not addressed fundamental issues. 

Before proceeding it is necessary to determine what has to be done to meet the 2030 target and whether it is feasible to make the reductions on the required schedule.  If it is feasible that is one thing but given these numbers that appears to be a high hurdle.  The compliance certainty “feature” of NYCI is great as long as the targets are achievable but if they are not met, then the draconian compliance alternatives are going to cause a backlash of monumental proportions.

The other thing that should be done before proceeding any further is to determine the costs of the technologies necessary to achieve the goals using the compliance strategies in the feasibility analysis.  Even if the technologies are deemed feasible, if investments are insufficient to deploy the technologies as needed then the targets won’t be met.  If it turns out that the revenues necessary for successful  investments are politically unpalatable, then it is time to reconsider the implementation plan.

I am not optimistic that this could possibly end well.  Watch this space for more information as this unfolds.

On May 19, 2023 the Department of Environmental Conservation (DEC) and New York State Energy Research and Development Authority (NYSERDA)  announced that they are hosting a pre-proposal webinar series to provide the public an opportunity to learn about the rulemakings under development for the Cap-and-Invest Program in New York State.   This post is an overview of the initiative and the webinar series.

I have been following the Climate Leadership & Community Protection Act (Climate Act) since it was first proposed. I submitted comments on the Climate Act implementation plan and have written over 300 articles about New York’s net-zero transition because I believe the ambitions for a zero-emissions economy embodied in the Climate Act outstrip available renewable technology such that the net-zero transition will do more harm than good.  The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.

Climate Act Background

The Climate Act established a New York “Net Zero” target (85% reduction and 15% offset of emissions) by 2050 and an interim 2030 target of a 40% reduction by 2030. The Climate Action Council 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 and power the electric grid with zero-emissions generating resources by 2040.  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 write a Draft Scoping Plan.  After a year-long review the Scoping Plan recommendations were finalized at the end of 2022.  In 2023 the Scoping Plan recommendations are supposed to be implemented through regulation and legislation.  The cap and invest initiative is one of those recommendations.

I recently posted my All Otsego Commentary overview on cap and invest that was published in early May that was written for a non-technical audience. In late March I summarized my previous articles on the New York cap and invest proposal in a post designed to brief politicians about the proposal if you want more technical information.  There also is a page that describes all my carbon pricing initiatives articles that includes a section about the New York Cap and Invest (NYIC, Their acronym not mine) proceeding.

New York Cap and Invest

DEC and NYSERDA have developed an official website for cap and invest.  It claims:

An economywide Cap-and-Invest Program will establish a declining cap on greenhouse gas emissions, 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. Cap-and-Invest will ensure the state meets the greenhouse gas emission reduction requirements set forth in the Climate Leadership and Community Protection Act (Climate Act).

According to the DEC announcement of the webinars:

This is the first set in a series of webinars to inform the public and encourage written feedback during the initial phase of outreach. Additional information will be provided as it becomes available at www.capandinvest.ny.gov. If you wish to continue receiving updates on the development of the Cap-and-Invest Program, please join the Climate Act mailing list at https://climate.ny.gov/email-list/.

Below is the full list of scheduled webinars for this first round. For more information on how to join the webinars, please visit www.capandinvest.ny.gov/meetings-and-events.

1. June 1, 1 to 3 p.m. – Cap-and-Invest Overview
2. June 6, 11 a.m. to 1 p.m. – Natural Gas focused webinar
3. June 8, 1 to 3 p.m. – Liquid Fuels focused webinar
4. June 13, 11 a.m. to 1 p.m. – Energy Intensive and Trade Exposed Industries focused webinar
5. June 15, 1 to 3 p.m. – Waste focused webinar
6. June 20, 11 a.m. to 1 p.m. – Cap-and-Invest Analysis Inputs and Methods
7. June 22, 1 to 3 p.m. – Electricity focused webinar

As New York begins drafting regulations, we are considering California’s existing economywide programs, as well as those operating in Quebec and Washington State. This webinar series will provide the public with a series of questions on topics that DEC and NYSERDA are seeking input. DEC and NYSERDA are interested in hearing what elements of other jurisdictions’ regulations would work well in New York, and what improvements or changes may best serve New York.

For more information, including instructions on how to provide comment, please visit www.capandinvest.ny.gov.

Stakeholder Process

The ostensible purpose of the webinars and workshops is to enable DEC and NYSERDA to gather feedback on the program as they “develop regulations to implement the Cap-and-Invest Program”.  There are three program design elements:

• Cap-and-Invest Rulemaking
• Auction Rulemaking
• Greenhouse Gas (GHG) Reporting Rulemaking

It appears to me that the State is worried that there will be an overwhelming response to the request for comments.  The request for comments includes specific questions  for each of the design elements that should enable them to categorize the comments.  The description notes:

DEC and NYSERDA have developed a template document [PDF] to assist commenters in providing feedback on these topics. 

SUBMIT COMMENTS

DEC and NYSERDA will review comments and further develop pre-proposal materials to define New York’s program. Notices will be sent to the distribution list when the second round of pre-proposal materials are posted. To inform the development of the pre-proposal, DEC and NYSERDA request first round feedback no later than July 1, 2023.

The template document requests comments for the following topics:

• Applicability and Thresholds – Defines which sources and at what emissions thresholds sources are covered by the regulations, who must report emissions, and who must obtain and surrender allowances equal to their GHG emissions. Establishes obligated and non-obligated sources.
• Allowance Allocation – Defines how allowances are made available: auctions, set asides and free allocations.
• Auction Rules – Defines structure and mechanics of allowance auctions
• Market Rules – Defines rules for participation in market and trading of allowances.
• Program Ambition – Defines the cap and the allowance budget for how many allowances will be available year by year to reach the Climate Act greenhouse gas limits.
• Program Stability Mechanisms – Defines the automatic and planned program adjustments to moderate costs and sustain program ambition if emissions are higher or lower than anticipated.
• Compliance, Enforcement and Penalties – Defines compliance periods and types of enforcement mechanisms.
• Reporting and Verification – Defines what sources must report, when reporting will begin and how often, how reporting should be verified, and how to leverage existing reporting programs.
• Use of Proceeds – Defines the process for how auction proceeds are invested.
• Other – You can submit questions or letters or any comments that didn’t fit into the above in this box

Processing Comments

In order to handle the expected volume of comments they are trying something I have never seen before.  The comments go to a third party vendor, Comment Management:

Our software suite is an enterprise level web-based application that assists you throughout the entire Comment Management and Response process of Public Involvement projects. Our Public Involvement application offers unsurpassed value, saving you a tremendous amount of time. It’s inexpensive, and you get unlimited user accounts, comments, and disk space! Our application was built from the ground-up using enterprise level software, servers, and security.

Here at CommentManagement.com, we specialize in aiding companies and government organizations efficiently manage the comment and response process in public involvement projects, being the integral piece of the public participation puzzle. We pride ourselves on being the bridge between the client, and their desired target audience. No matter how small or large your project may be, we’re up to the task!

TURNING COMMENTS INTO INFORMATION

At CommentManagement.com, our application contains features designed to bring consistency, integrity, and enjoyment to the online comment and response management process. This digital public involvement process helps discover issues raised by the public and turns this data into usable information that can then be used to make better decisions, improve processes, and improve quality.

INTUITIVE & ROBUST

Easy to use, yet extremely powerful! Its integrated work flow ensures items are allocated, processed, reviewed, and finalized. This allows your team to focus their time on what’s important, and not on the minutia of tracking items throughout the life cycle of the project.

CONVENIENT & INEXPENSIVE

No need for servers or IT staff! You only need a computer with internet access and CommentManagement.com. And since it’s 100% web-based, your team can be geographically dispersed and still operate like a team. Our application is available 24 hours a day, 7 days a week, 365 days of the year whether you’re at home, work, or on the road.

The SUBMIT COMMENTS link goes to a comment form that includes extensive descriptive information:

If commenting on behalf of a group:

• * Are you commenting on behalf of a group (any kind of organization, company, association, union, tribe, etc.)?
• Please share the name of the group
• What is your title or role within the group?
• * What geographical area does the group represent?
  • National
  • Regional (e.g., Mid-Atlantic)
  • New York State
  • New York Region (e.g., the Hudson Valley)
  • County, Town, Municipality in New York
  • Community in New York (eg, neighborhood assoc., classroom, congregation)
  • Not applicable
  • Other, please specify below:
  • Other Geographic Area:
• * Which of the following interests (if any) does the group represent?
  • Environmental justice or underserved communities
  • Labor unions/union training centers
  • Consumers
  • Transportation (e.g., biking, public transit)
  • Environment or conservation
  • Public health
  • Education
  • Agriculture
  • Rural areas
  • Energy
  • Housing or smart growth (e.g., land use, community boards)
  • Economic development (e.g., Regional Economic Development Councils, or other community-based economic development)
  • Local government
  • Tribal government
  • Regional government
  • Not applicable
  • Other, please specify below:
  • Other Interests:
• * Which of the following commercial interests (if any) does the group represent?
  • Petroleum fuel producers, distributors, and trade associations (includes transportation and heating fuels)
  • Industrial process facility owners within emissions-intensive industries (such as cement, aluminum, and steel)
  • Waste operations (including municipal and private landfills, incinerators, and wastewater treatment facilities)
  • Utilities (includes non-utility electricity power producers and importers)
  • Carbon market traders
  • Automakers and dealers
  • Alternative fuel providers
  • Clean energy investment or development
  • Infrastructure development
  • Transportation (e.g., freight carriers)
  • Not applicable
  • Other, please specify below:
  • Other Commercial Interests:
• * Where is your place of residence?
  • Western New York
  • Finger Lakes
  • Southern Tier
  • Central New York
  • North County
  • Mohawk Valley
  • Capital District
  • Hudson Valley
  • New York City
  • Long Island
  • Outside New York State
  • Prefer not to specify
  • Other, please specify below:
  • Other Place of Residence:
• *Which of the following constituencies do you most closely identify with?
  • Environmental justice or underserved communities
  • Labor unions/union training centers
  • Environment or conservation advocates
  • Public health professionals
  • Education (teachers, professors, etc.)
  • Agricultural workers and farmers
  • Transportation professionals (e.g., public transit, truckers, rail workers, etc.)
  • Energy (utility/renewable energy workers, etc.)
  • Government staff or elected official
  • Economic development (e.g., Regional Economic Development Councils, other community-based economic developers, etc.
  • Smart growth (e.g., land use planners, community boards)
  • Housing (homeowners, housing developers, affordable housing advocates, renters, etc.)
  • Business (e.g., small business owner or employee)
  • Rural communities
  • Suburban communities
  • Urban communities
  • Other, please specify below:
  • Other Constituency:
• *Does your comment provide feedback on any of the following themes?
  • Applicability & Thresholds: Which sources are covered by the regulations, and at what emissions thresholds.
  • Allowance Allocation: How allowances are made available.
  • Auction Rules: The structure and mechanics of allowance auctions
  • Market Rules: The rules for market participation, and the trading of allowances
  • Ambition: The economywide emissions cap, and allowance budget.
  • Program Stability: The automatic and planned program adjustments to moderate costs and sustain program ambition if emissions are higher or lower than anticipated.
  • Compliance, Enforcement and Penalties: Compliance periods and types of enforcement mechanisms.
  • Reporting and Verification: The start and frequency of reporting, how reporting should be verified, and how to leverage existing reporting programs.
  • Use of Proceeds: The process for how auction proceeds are invested.
  • N/A: Not Applicable

If not commenting on behalf of a group:

• Where is your place of residence?
• Western New York
• Finger Lakes
• Southern Tier
• Central New York
• North County
• Mohawk Valley
• Capital District
• Hudson Valley
• New York City
• Long Island
• Outside New York State
• Prefer not to specify
• Other, please specify below:
• Other Place of Residence:
• Which of the following constituencies do you most closely identify with?
• Environmental justice or underserved communities
• Labor unions/union training centers
• Environment or conservation advocates
• Public health professionals
• Education (teachers, professors, etc.)
• Agricultural workers and farmers
• Transportation professionals (e.g., public transit, truckers, rail workers, etc.)
• Energy (utility/renewable energy workers, etc.)
• Government staff or elected official
• Economic development (e.g., Regional Economic Development Councils, other community-based economic developers, etc.
• Smart growth (e.g., land use planners, community boards)
• Housing (homeowners, housing developers, affordable housing advocates, renters, etc.)
• Business (e.g., small business owner or employee)
• Rural communities
• Suburban communities
• Urban communities
• Other, please specify below:
• Other Constituency:
• Does your comment provide feedback on any of the following themes?
• Applicability & Thresholds: Which sources are covered by the regulations, and at what emissions thresholds.
• Allowance Allocation: How allowances are made available.
• Auction Rules: The structure and mechanics of allowance auctions
• Market Rules: The rules for market participation, and the trading of allowances
• Ambition: The economywide emissions cap, and allowance budget.
• Program Stability: The automatic and planned program adjustments to moderate costs and sustain program ambition if emissions are higher or lower than anticipated.
• Compliance, Enforcement and Penalties: Compliance periods and types of enforcement mechanisms.
• Reporting and Verification: The start and frequency of reporting, how reporting should be verified, and how to leverage existing reporting programs.
• Use of Proceeds: The process for how auction proceeds are invested.
• N/A: Not Applicable

Note that items with an asterix are required fields. 

Discussion

I wonder how this information will be used.  Cynically I suspect that some comments will be favored over others based on the constituency identified.  As far as I am concerned this is exactly what happened with the comments submitted on the Draft Scoping Plan so now the Hochul Administration’s appeasement of favored constituencies is made easier.

In my opinion, the public comment process associated with the Draft Scoping Plan was only used to fulfill a legislative mandate.  As far as the Hochul Administration was concerned the only thing that mattered was the number of comments supporting their narrative.  In that regard form letters constituted most of the comments received.  I am no expert on this kind of thing but I wonder how the organizations that set up systems to generate and submit form letter comments will deal with this system. 

It is not clear to me whether this public stakeholder process will be another obligation or a sincere attempt to garner information from subject matter experts.  The quality of comments should be a consideration.  If the comment is simply a statement without justification or documentation supporting the position of the comment then it should be treated differently than a quality comment statement that does provide supporting information.  It was very disappointing to me that there was never any response to the technical issues I raised and questions I posed in my draft scoping plan comments that did include documentation and analysis.

There is another aspect to this that is unclear.  There are some topics that are so complicated that dialogue via written comments is ineffective.  NYIC has many different topics and each one I have looked at in any detail has turned out to be more complicated than I initially thought.  In order to reconcile issues raised by subject matter experts there must be a dialogue.  I haven’t seen any indication that those meetings are being considered.

Conclusion

I have dealt with every emissions marketing control program that affected New York electric generating units over my career.  In addition, I took the time to do research and prepared analyses of the effectiveness of those programs with an emphasis on the Regional Greenhouse Gas Initiative.  There is a gap between the theory of these programs and how they are treated by affected entities that needs to be considered during this implementation.  I am not confident that my comments and those of my colleagues with similar experience will be heard and considered.