Category: Climate Act Costs & Benefits

On July 11, 2023 the Partners for Climate Action, Hudson Valley hosted a morning coffee webinar titled “Bringing Climate Into the Classroom”.  The first presentation by Samrat Pathania included a slide that stated that climate change is not a technological problem because “most climate solutions exist and are economically feasible”.  I consider those statements net-zero transition myths that underpin the narratives of climate activists.  This article addresses them both in the context of New York’s Climate Leadership & Community Protection Act (Climate Act) 2040 mandate for a zero-emissions electric grid.

I have been following the Climate Act since it was first proposed, submitted comments on the Climate Act implementation plan, and have written over 300 articles about New York’s net-zero transition.  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.  It includes an interim 2030 reduction target of a 40% reduction by 2030 and a requirement that all electricity generated be “zero-emissions” by 2040. The Climate Action Council 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.  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 idea that the Climate Act has no technological issues and that the transition will be affordable is a basic component of the Act.  Robert W. Howarth, Ph.D., the David R. Atkinson Professor of Ecology & Environmental Biology at Cornell University claims that he played a key role in the drafting of the Climate Act.  His statement supporting the approval of the Scoping Plan explains (my emphasis added):

I further wish to acknowledge the incredible role that Prof. Mark Jacobson of Stanford has played in moving the entire world towards a carbon-free future, including New York State. A decade ago, Jacobson, I and others laid out a specific plan for New York (Jacobson et al. 2013). In that peer-reviewed analysis, we demonstrated that our State could rapidly move away from fossil fuels and instead be fueled completely by the power of the wind, the sun, and hydro. We further demonstrated that it could be done completely with technologies available at that time (a decade ago), that it could be cost effective, that it would be hugely beneficial for public health and energy security, and that it would stimulate a large increase in well-paying jobs. I have seen nothing in the past decade that would dissuade me from pushing for the same path forward. The economic arguments have only grown stronger, the climate crisis more severe. The fundamental arguments remain the same.

The presentation by Pathania included a slide that said that solving climate change was not a technological issue.  In the video he explains that most climate solutions exist and are economically feasible.  The remainder of this article will address those two components relative to the Climate Act requirement that all electricity generated be “zero-emissions” by 2040.  I assume New York will follow the advice of Howarth that New York can “rapidly move away from fossil fuels and instead be fueled completely by the power of the wind, the sun, and hydro”.

Before I address the claims, I want to address why academics like Howarth and the NGOs that evaluate electric energy net-zero transition programs generate misleading studies and reports. Russell Schussler wrote three articles after reading an argument that wind and solar could “easily” be made reliable.  In the first article he points out that analyses that claim reliability is not an issue don’t consider all the complex interactions in the electric system.  Frequently the difference between power and energy is not understood or misused either by the authors or those who reference the studies claiming current technology is adequate.  In the second article Schussler explains that “academics study some problems, determine those are solvable and that is then misinterpreted to imply that greater emerging problems are also solved or easily solvable”.  He states that “Barring major breakthroughs in the areas of critical technical challenges (which don’t seem to be receiving a lot of attention at the policy level) the grid cannot reliably support the envisioned increase penetration of wind and solar need to get anywhere close to a net zero goal.”  In the third article, he points out that we are a long way from figuring out how to solve for a net zero grid in terms of just theory and what might work on paper is not working as planned as new technology is deployed for many fundamental emerging grid problems.

Climate Solution Technology

A fundamental tenet of the Climate Act is that New York’s electric grid can be powered wind, solar, and hydro and that it can be done completely with currently available technologies.  In my opinion one of the greatest missed opportunities of the Climate Action Council was the failure of the Hochul Administration to confront this claim during Council deliberations.  .  On September 16, 2020 In their presentation to the Power Generation Advisory Panel E3 included a slide titled Electricity Supply – Firm Capacity.  Their presentation states: “As the share of intermittent resources like wind and solar grows substantially, some studies suggest that complementing with firm, zero emission resources, such as bioenergy, synthesized fuels such as hydrogen, hydropower, carbon capture and sequestration, and nuclear generation could provide a number of benefits.”  The Integration Analysis future generating resource projections project that this resource will equal the amount of existing fossil generation capacity in 2040.  The Scoping Plan mentions nuclear only in passing, the Council discouraged any thought of combustion with carbon capture and sequestration, and the amount of bioenergy and hydro resources that can be added to New York’s electric system are small relative to the need.   That leaves synthesized fuels.  That technology and any other possibilities are not commercially available.  Despite the best efforts of the New York State Independent System Operator (NYISO), the New York State Reliability Council (NYSRC), and several members of the Council to prod the Administration and Council into confronting the reliability ramifications of reliance on an unproven technology it was essentially ignored in the Scoping Plan.

The New York State Public Service Commission (PSC) recently initiated an “Order initiating a process regarding the zero-emissions target” that will “identify innovative technologies to ensure reliability of a zero-emissions electric grid”.  The press release states:

Today’s action recognizes that as renewable resources and storage facilities are added to the State’s energy supply, additional clean-energy resources capable of responding to fluctuating conditions might be needed to maintain the reliability of the electric grid. The Commission’s work to meet the Climate Act targets must include exploration of technologies that can support reliability once fossil generation has been removed from the system. The order initiates a process to identify technologies that can close the anticipated gap between the capabilities of existing renewable energy technologies and future system reliability needs. Within the order, the Commission asks stakeholders a series of important questions, including how to define ‘zero-emissions’ for purposes of the zero emissions by 2040 target, and whether that definition should include cutting edge technologies such as advanced nuclear, long duration energy storage, green hydrogen, and demand response. The order further elicits feedback from stakeholders on how to best design a zero-emissions by 2040 program, consistent with the Climate Act’s requirement of delivering substantial benefits to disadvantaged communities and New York State’s electric grid reliability rules, while also leveraging other state and federal efforts to research, develop, and deploy zero-emission resources.

The organizations responsible for the reliability of the electric system in New York all say that additional clean-energy resources that do not have emissions and can be dispatched as necessary are needed.  Anyone who disagrees with that is naïve, ignorant or deliberately ignoring reality.

Affordability

The myth that converting to solar and wind resources will be cheaper than using fossil fuels is very persistent.  The only way it can be perpetuated is if only relative costs are considered or if the difference between power and energy is not recognized.  The Scoping Plan claims that “The cost of inaction exceeds the cost of action by more than $90 billion” but that realtive number reduces costs by subtracting value-laden benefits.   

The cost that matters to New Yorkers are the direct costs.  I recently described my response to the claim that “Solar power is now considerably cheaper than new coal, natural gas, or nuclear energy” by Richard Perez, Ph.D.  He claimed that “utility-scale solar electricity has become the least expensive form of electricity generation” but that is true for power capacity (MW).  Even if solar capacity is half the cost of fossil capacity the cost for delivered energy is much more.  We pay for the kWh electric energy we use each month and we expect it to be available 24-7 throughout the year.  In order to provide usable energy, other things must be considered that destroy the myth that utility-scale solar is cheaper than other types of power plants.  On average a well-designed solar facility can provide (round numbers) 20% of its potential energy possible in New York.  A natural gas fired power plant can operate to produce at least 80% of its potential energy over a year.  In order to produce the same amount of energy, that means that you need four times as much solar capacity.  Even if the solar capacity cost is half the cost for the capacity, the energy cost is double simply due to this capacity factor difference.  My response went on to describe other reasons why it cannot be cheaper: the cost of storage when the sun or wind is not available, the need for ancillary transmission services not provided by wind and solar, and the need for the zero-emissions resource described above.

Since then Alex Epstein published what he called The ultimate debunking of “solar and wind are cheaper than fossil fuels.”  His analysis is not confined to resources for the electric system. He explains that:

Solar and wind are only cheaper than fossil fuels in at most a small fraction of situations. For the overwhelming majority of the world’s energy needs, solar and wind are either completely unable to replace fossil fuels or far more expensive.

I encourage any doubters to read the article but provide some highlights below.

• On its face, justifying favoritism toward solar and wind by invoking their cheapness is highly suspicious. If they’re cheaper, why do they need coercive policies to throttle their fossil-fueled competitors (e.g., opposing fossil fuel investment, production, and pipelines) and reward solar and wind?
• That solar and wind aren’t actually cheaper than fossil fuels should be obvious from the fact that despite enormous cultural and political hostility toward fossil fuels that makes fossil fuels artificially expensive, fossil fuel use is still growing.
• When discussing “energy prices” we must recognize that “energy” refers to myriad specific use-cases involving different
  • Types of machines
  • Reliability requirements
  • Locations
  • Quantities
• For the vast majority of use-cases solar and wind can’t compete with fossil fuels.
• While it is very common to use the terms “energy” and “electricity” interchangeably, the fact is that the vast majority of machines in the world today don’t run on electricity—they run on the direct burning of fossil fuels, because that is the only or cheapest way to run them.
• Many instances of “solar and wind are cheaper than fossil fuels” not only ignore the non-electricity uses where solar and wind are totally uncompetitive, they use a bogus metric called “Levelized Cost of Energy” (LCOE) which by its own definition ignores the issue of reliability!
• The basic cost problem with solar and wind is their inherent unreliability. To use them to deliver reliable electricity we need to also pay for a reliable life-support grid (e.g., gas plants). This is very often wasteful; it’s usually cheaper just to pay for a reliable grid.
• When we look at large regions that use solar and wind a lot, we see a trend of price increases and/or reliability decreases, because solar and wind add costs to the reliable grids needed to support them—and if you try to save money by shrinking the reliable grid you get reliability problems.¹¹
• Whenever you hear someone rave about Southern California or Iowa or West Texas in making some general laudatory claim about solar and wind, you can be sure that the person is trying to dupe you through false generalization from one location to every location.
• Note that false generalization from one location to all locations is also common for geothermal energy.
• In addition to all their other problems, solar and wind have mining requirements that make them expensive to scale quickly.
  
  Yet today’s solar and wind prices are falsely generalized to be the same or lower if solar and wind scale on a crazy “net-zero-by-2050” timetable.
• Whenever we talk about the price of energy, we need to recognize that the price of energy can change dramatically depending on the scale it is being used on.
• Sometimes larger scales can reduce prices (economies of scale) and sometimes larger scales can increase prices (diseconomies of scale).

Saying “solar and wind are cheaper” because they might be cheaper at powering midday and afternoon air-conditioning in Dubai is like a CEO saying “teenage labor is cheaper” because it can fill some mailroom positions.

The evidence that solar and wind cannot reduce the price of electricity is overwhelming.

Conclusion

The myths that no new technologies are needed to transition away from fossil fuels and that wind and solar are cheaper than fossil fuels are common.  I recently had a commentary published that argued the solar could not be cheaper than a natural gas-fired turbine and rebuttals were published that ignored all the reasons I described here.  All that pragmatists can do is to continue to point out the facts and hope that policy makers will come to their senses before the economy is devastated by this nonsensical policy. Equally troubling is that the European experience is showing that wind is not viable, the costs of wind and solar in Germany are untenable, and that a rapid energy transition has many risks but that information is also being ignored.

The most troubling aspect of this story is that the “Bringing Climate Into the Classroom” webinar peddled these myths without any limitations.  The presentation by Samrat Pathania included a slide that stated that climate change is not a technological problem because “most climate solutions exist and are economically feasible”.  After making the statement his presentation argued that all we need to do is to make a cultural transformation.  He said that “Hope and Trust are two of the pillars of a classroom community”.  I worry that the constant barrage of existential climate Armageddon stories that can be easily solved  being peddled as in this webinar is going to destroy trust when the inevitability of reality eviscerates these myths.  Won’t the students lose hope when that happens?  Then what will they think?

On July 20, 2023 the first annual informational report on the implementation of the Climate Leadership & Community Protection Act (Climate Act)) was released.  There is a lot of information in this report that needs to be parsed out but because this is the first report that provides any Climate Act implementation estimated costs for ratepayers, I am publishing this initial summary.

I have been following the Climate Act since it was first proposed, submitted comments on the Climate Act implementation plan, and have written over 300 articles about New York’s net-zero transition.  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.  It includes an interim 2030 reduction target of a 40% reduction by 2030 and a requirement that all electricity generated be “zero-emissions” by 2040. The Climate Action Council 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.  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. 

According to the press release:

The Climate Act’s directives require the Commission to build upon its existing efforts to combat climate change through the deployment of clean energy resources and energy storage technologies, energy efficiency and building electrification measures, and electric vehicle charging infrastructure. In recognition of the scale of change and significant work that will be necessary to meet the Climate Act’s aggressive targets, the Commission directed DPS staff to assess the progress made in line with its directives under the Climate Act and to provide guidance, as appropriate, on how to timely meet the requirements of the Climate Act.

The Scoping Plan does not provide any ratepayer cost impacts but the New York State Department of Public Service First Annual Informational Report on Overall Implementation of the Climate Leadership and Community Protection Act does provide that information.  This post summarizes the ratepayer impacts provided in this report.  I will follow up with another post that delves into the details of this report later.

Programs

One of the difficulties trying to understand what expenses have been authorized to date that are covered by this report is the number of programs involved.  Seven authorized programs are covered: Clean Energy Standard (CES) Clean Energy Fund (CEF), certain Value of Distributed Energy Resources (VDER), Electric Vehicle Make Ready Program, Clean Heat programs, Integrated Energy Data Resource (IEDR), and Utility Energy Efficiency programs.  In a subsequent post I will try to address these programs and their place in the Scoping Plan strategies in detail.

The seven authorized programs support various components of Climate Act mandated strategies.  The Clean Energy Standard was originally adopted in 2016 and set a goal for 50% of the electricity consumed in the State by 2030 to be generated by renewable energy sources.  There were subsequent revisions and the initiatives been expanded, where necessary, to support Climate Act mandates.   The Clean Energy Fund provides support for innovation & research, market development, the NY Green Bank, and NY Sun.  Value of Distributed Energy Resources programs support energy generated by distributed energy resources such as solar photovoltaic, energy storage, combined heat and power, anaerobic digesters, wind turbines and small hydro and fuel cells. The Electric Vehicle Make Ready Program funds infrastructure for electric vehicles.  Clean Heat programs and promote the electrification of space and water heating by offering contractor and customer incentives for the installation of air- and ground-source heat pumps. The Integrated Energy Data Resource will be a “statewide resource to securely collect, integrate, and provide access to energy related information”. The Utility Energy Efficiency programs support energy conservation and efficiency programs.

Cost Recoveries

According to the press release:

For the average residential electric customer, the rate impacts for these critically important investments, not accounting for the overall societal benefits, range from 3.7 percent to 9.8 percent, depending on the utility. The rate impacts for non-residential customer varies depending on the utility and the amount of electricity consumed.

I am not familiar with the jargon of the Department of Public Service (DPS) rate descriptions.  I believe that when DPS talks about cost recovery they are referring to costs that the utilities have incurred to implement the Climate Act requirements that have been charged back to the ratepayers.  The report notes:

For purposes of estimating the cost recoveries of CLCPA related initiatives in 2022, Staff issued information requests to each of the utilities. Specifically, Staff requested the utilities provide 2022 cost recoveries for: CES (electric only), CEF (electric only), certain VDER (electric only), Electric Vehicle Make Ready Program (electric only), Clean Heat programs (electric only), Integrated Energy Data Resource (electric only), and Utility Energy Efficiency programs (electric and gas).

The following figure summaries the costs recovered in 2022 by the utilities associated with these gas and electric programs.  The Climate Act program costs paid by New York gas ratepayers totaled $112,967,498 in 2022 (Table 3).  Electric ratepayers paid $1,175,788,000 in 2022 (Table 4). 

These totals were converted to gas and electric ratepayer impacts in the report.

The report estimates the effect of the Climate Act programs typical monthly gas bills in Table 6 using the following assumptions:

Staff issued information requests to each of the utilities to help estimate the bill impacts associated with the CLCPA related cost recoveries. Staff requested the utilities provide typical gas delivery and supply bills for 2022 for the following customer types:

A. Residential heating customers (83 therms per month),

B. Small commercial customers (2,500 therms per month),

C. Commercial customers (10,000 therms per month), and

D. Industrial customers (100,000 therms per month).

The report estimates the effect of the Climate Act programs on typical monthly electric bills in Table 7 using the following assumptions:

Staff requested the utilities provide typical electric delivery and supply bills for 2022 for the following customer types:

A. Residential customers (600 kWh per month),

B. Non-residential customers (50 kW & 12,600 kWh per month),

C. Non-residential customers (2,000 kW & 720,000 kWh per month), and

D. Non-residential high load factor customers (2,000 kW & 1,296,000 kWh per month).

The 2022 combined total costs recovered from gas and electric ratepayers is $1,288,755,498.  Table 8 lists the costs that have been authorized but not yet captured and that total is 43,756,000,000.  Clearly ratepayer costs will have to increase more to cover these additional costs.  The report states:

This annual report is a review of actual costs incurred by ratepayers to date in support of various programs and projects to implement the CLCPA and does not fully capture potential future expenditures, including estimated costs already authorized by the Commission but not yet recovered in rates. To complement this overview of cost recoveries incurred to date, we also present below a table of the various programs and the total amount of estimated costs associated with each authorized by the Commission to date. Table 8 gives a sense of expenditures that ratepayers could ultimately see recovered in rates. These values are conservative and reflect both past and prospective estimated costs.

Conclusion

There is a lot to unpack in this report.  I plan to look at the numbers in various programs and try to reconcile them with other cost estimates.  The report also includes estimates of benefits that need to be addressed. 

Based on this first review it is already obvious that costs are significant and this is only the beginning.  Many more programs will be required to implement the net-zero transition. Stay tuned.

The expected costs associated with the  Climate Leadership & Community Protection Act (Climate Act) are poorly documented.  There are very few instances where the Hochul Administration provides specific estimates of ratepayer costs. As I run across reports that include costs, I will update my scorecard of residential ratepayer costs.   This article reviews the Department of Public Service Staff Electric Vehicle Make-Ready Program Midpoint Review and Recommendations Whitepaper (Make Ready report)which provide recommendations for modification to the Make-Ready Program that subsidizes electric vehicle supply equipment and infrastructure.

Everyone wants to do right by the environment to the extent that they can afford to and not be unduly burdened by the effects of environmental policies.  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.  Every indication is that the costs will be astronomical as well.  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

The implementation plan for New York’s Climate Act “Net Zero” target (85% reduction and 15% offset of emissions) by 2050 is underway.  At the end of 2022 the Climate Action Council completed a Scoping Plan that makes recommends strategies to meet the targets.   The Hochul Administration is developing regulations and proposing legislation to respond to those recommendations in 2023.

Unfortunately, the Scoping Plan is just a conglomeration of control strategies that are projected to provide the emission reductions required.  The inadequate documentation does not demonstrate the feasibility of the recommended strategies.  Furthermore the costs of the program and potential costs to individual New Yorkers are hidden in a shell game con for hiding the true costs.  In the Scoping Plan costs are compared to a Reference Case that includes already “incremented programs”.  As a result, the costs that are presented do not include all the costs of the net-zero transition.  There has been no attempt to provide the expected ratepayer cost increases.

Climate Act Cost Scorecards

Given the lack of cost information I am starting to keep track of the observed costs of the Climate Act.  My initial thought was that I would try to account for all the documented costs to a typical residential customer in a single scorecard.  However, the effort involved trying to consolidate disparate cost estimates into this parameter is beyond my capabilities so I am going to track costs in several ways.

I naively thought that all the Department of Public Service rate cases associated with Climate Act related decisions would include typical residential customer information.  However, I have found that is the exception rather than the rule.  I have set up one scorecard for those rate case decisions that provide these data.

In order to simplify interpretation of the cost numbers provided I am going to use four other scorecards.  One way to hide Climate Act costs is with subsidies.  I am going to track direct subsidies and indirect subsidies in separate scorecards.  I have a scorecard that tracks increased costs for various components of the Climate Act transition plan.  Finally, I have a scorecard that tracks the differences between cost estimates in the Integration Analysis with what has been observed.

The format of each scorecard is similar.  The specific program or component is listed along with the costs for the specific reference.  I try to make an estimate of the total costs.  For example, the residential rate cost increases necessary to support 3.5 GW of renewable energy transmission are listed but I also extrapolated the costs for an additional 6.9 GW target in the Scoping Plan.  Each entry also includes a reference that provides more details for the costs.

The following section documents one example.

Electric Vehicle Supply Equipment and Infrastructure – Direct Subsidies

This is an example of a direct subsidy.  I tried and eventually gave up trying to convert these costs to residential cost impacts.  Marie French wrote an article published in Politico’s Weekly NY and NJ Energy newsletter that described the 18-E-0138 proceeding and the mid-point review:

MORE EV CHARGER SUBSIDIES FLOATED: The New York Department of Public Service staff wants to boost a ratepayer-funded program to support electric vehicle charging infrastructure from $701 million to $1.1 billion. A mid-point review of the “make ready” program, which the Public Service Commission approved in July 2020, found uneven progress in different utility territories to achieve the public charger goals of the program. Overall, only 630 fast charger plugs of a targeted 1,500 and only 12,475 of a targeted more than 53,000 Level 2 chargers by 2025 have been completed or committed.

While Con Edison is about halfway to its fast charger and Level 2 charger targets, National Grid is only 16 percent of the way to its Level 2 goal and 44 percent of the way to its fast charger target. Central Hudson is 1 fast charger shy of its program goal but has only hit 16 percent for its Level 2 target. NYSEG/RG&E are far behind.

DPS staff concludes that the incentives in the make ready program are insufficient and proposes boosting the available subsidies. New targets for the number of plugs are also proposed, including a new sub-category for chargers at apartment buildings. The new targets increase the number of public fast chargers to about 6,300 and reduce the number of level 2 chargers to about 43,000. A new $25 million micro-mobility program for disadvantaged communities is also proposed and the staff supports increasing a medium- and heavy-duty vehicle electrification pilot by $30 million to $54 million.

Electric Vehicle Supply Equipment and Infrastructure – Cost Documentation

The Make Ready report lists costs that I put in two of my scorecards.  The numbers provided conflict with the Integration Analysis cost estimates:

The Make-Ready Order determined per-plug average costs for L2 chargers to be $11,298 within Con Edison’s service territory, and $6,000 for all other utilities’ territories. The per-plug average costs for DCFCs was determined to be $100,109 in Con Edison’s service territory, and $55,000 for all other utilities’ territories.

The integration analysis that provides the quantitative support to the Scoping Plan lists charger costs in Electric Vehicle Supply Equipment: Per-Vehicle Costs ($2020) table Light Duty Vehicle Battery Electric EVSE category for 2022 $2,716 per charger.  It appears that the Make Ready Report estimate of the cheaper residential charging system is four times higher than the Integration Analysis.

The Make Ready program is a direct ratepayer-funded program subsidy but no specific ratepayer costs are described.  The announced subsidies are $1.1 billion through 2025.  I estimate that the subsidy will increase to $1.3 billion by 2030

Discussion

There is an important aspect of the Make Ready example.  The Hochul Administration cost narrative is that the costs of inaction of outweigh the costs of action but that statement has an important caveat.  It is misleading because it only includes the costs of the Scoping Plan components and does not include the costs of “already implemented” programs.  The already implemented programs include the following:

• Growth in housing units, population, commercial square footage, and GDP
• Federal appliance standards
• Economic fuel switching
• New York State bioheat mandate
• Estimate of New Efficiency, New York Energy Efficiency achieved by funded programs: HCR+NYPA, DPS (IOUs), LIPA, NYSERDA CEF (assumes market transformation maintains level of efficiency and electrification post-2025)
• Funded building electrification (4% HP stock share by 2030)
• Corporate Average Fuel Economy (CAFE) standards
• Zero-emission vehicle mandate (8% LDV ZEV stock share by 2030)
• Clean Energy Standard (70×30), including technology carveouts: (6 GW of behind-the-meter solar by 2025, 3 GW of battery storage by 2030, 9 GW of offshore wind by 2035, 1.25 GW of Tier 4 renewables by 2030)

I assume that the Make Ready costs are part of the zero-emissions vehicle mandate.  As a result, the $1.3 billion just to support public electric vehicle charging infrastructure is not included in the cost claim narrative.  I suspect that detailed analysis of all the costs necessary to for just zero-emissions vehicles would exceed the alleged net benefits of between $115 and $130 billion.

Conclusion

Although trying to keep track of the hidden costs of the Climate Act is likely a Sisyphean task, I am going to give it a shot.  At least until I can document that the admitted costs of the Scoping Plan are biased low and incomplete anyway. Any reader contributions are welcome!

The expected costs associated with the  Climate Leadership & Community Protection Act (Climate Act) for the net zero transition plan are poorly documented.  This article describes costs associated with offshore wind transmission requirements as part of my on-going effort to consolidate cost estimates in one place.

Update 22 June 2023: NYISO chose Propel Alternate Solution 5 at $3.28 billion.

My original plan to track Climate Act costs was to provide expected additional costs to ratepayers for various implementation programs.  That information is not provided or is hidden so well that I could not find it for most programs.  In order to address other cost considerations, I am tracking costs in different categories: Typical Residential Customer Costs, Direct Climate Act Subsidies, Indirect Climate Act Subsidies, Climate Act Cost Overruns, and Climate Act Integration Analysis Assumed Costs and Updated Costs Differences. This article describes the cost to export power generated by offshore wind facilities from Long Island to the rest of the State which is an indirect cost subsidy that will be paid for by all New Yorkers.

Everyone wants to do right by the environment to the extent that they can afford to and not be unduly burdened by the effects of environmental policies.  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.  Every indication is that the costs will be astronomical as well.  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

The implementation plan for New York’s Climate Act “Net Zero” target (85% reduction and 15% offset of emissions) by 2050 is underway.  At the end of 2022 the Climate Action Council completed a Scoping Plan that recommends strategies to meet the targets.   The Hochul Administration is developing regulations and proposing legislation to respond to those recommendations in 2023.

Unfortunately, the Scoping Plan is just a conglomeration of control strategies that are projected to provide the emission reductions required.  The inadequate analysis and documentation do not demonstrate the feasibility of the recommended strategies.  Furthermore the costs of the program and potential costs to individual New Yorkers are hidden in a shell game con for hiding the true costs.  In the Scoping Plan, costs are compared to a Reference Case that includes already “incremented programs”.  As a result, the costs that are presented do not include all the costs of the net-zero transition. 

Long Island Offshore Wind

The Department of Public Service has an Order for Public Policy Transmission Need (PPTN) (Case 20-E-0497) regarding Climate Act requirements related to offshore wind that drive the need to expand the number of transmission facilities between Long Island and the rest of the State.  Climate Act goals include the development of 9,000 MW of offshore wind generation by 2035, with perhaps 6,000 MW connected into New York City. The Public Service Commission has concluded that offshore wind generation connected to Long Island is identified as “high” risk and would be curtailed unless something is done. Transmission expansion that increases the transfer capability from Long Island to the rest of New York is expected to significantly reduce the potential for offshore wind curtailment.

The New York Independent System Operator (NYISO) Electric System Planning Working Group  (March 24, 2023 and April 3, 2023) is addressing independent cost estimates developed by NYISO’s consultant for proposed projects to address this issue.  This is all preliminary work so the cost estimates are subject to change but they give an idea of what is needed to get the offshore wind generated to where it is needed.  The cost estimates considered required material and labor cost by equipment, engineering and design work, permitting, site acquisition, procurement and construction work, and commissioning.  The analysis found that the primary cost drivers were terrestrial and submarine cable length, HVDC converter systems and PARs, and the scope of the project (i.e., number/size of transmission facilities). 

Cost estimates for sixteen projects were evaluated as shown in the following table.    The average total cost estimate was $7.1 billion, the maximum was $16.9 billion and the minimum was $2.1 billion.

The draft NYISO Long Island Public Policy Transmission Need (PPTN) report predicts that the transmission upgrades will provide savings to the system:

The Long Island PPTN project simulations all show improvements in the export capability of Long Island by adding tie lines between Long Island and the lower Hudson Valley. This added transfer capacity and upgrades to the internal Long Island system reduce the amount of curtailment from offshore wind resources. The energy produced through reduced curtailment of offshore wind resources can then be used to offset more expensive generation to meet New York’s energy demand and, therefore, produce a production cost savings. Production cost savings are also created by offsetting high-cost energy imports from neighboring regions with lower cost New York-based generation that was previously inaccessible due to transmission congestion.

In general, all of the proposed projects produce savings by unbottling offshore wind resources in Long Island and reducing the amount of imports from neighboring regions. The figure below shows the estimated production cost savings for each project over a 20-year period in 2022 real million dollars.

The baseline scenario estimated 20-year production cost savings (2022 $M) average $99 million, the maximum is $110 million, and the minimum is $39 million.  The policy case scenario savings average $347 million, the maximum is $458 million, and the minimum is $291 million.  (I don’t have the costs for the Policy + B-VS scenario so I do not discuss that scenario.)  The difference between the total estimated cost and the production cost savings is the amount that must be subsidized indirectly to the ratepayers.  The annual subsidies over 20 years range from $823 million to $90 million and average $339 million.

I am not impressed.  Without this connection upgrade as much as 92% of the 3000 MW of off-shore wind which costs $15 billion would not be deliverable.  However, it comes at an annual average subsidy of $339 million.

Discussion

Unfortunately, the indirect subsidy costs described are not the only costs.  These costs are only for the new transmission and do not include additional costs associated with the impacts on the existing transmission and distribution systems on Long Island.  In addition, this is the cost associated with 3,000 MW of offshore wind.  The Climate Act goal is for 9,000 MW and the Scoping Plan Integration Analysis projects that 12,675 MW of offshore wind will be needed by 2040 in the Strategic Use of Low-Carbon Fuels mitigation scenario.  If the transmission costs are proportional that would mean that this indirect subsidy alone would be at least $1,356 million a year for the Integration Analysis.

There are a couple of other things to keep in mind.  The Integration Analysis cost documentation is inadequate so I cannot be sure but I am confident that none of these costs were included in the Integration Analysis.  This further weakens any claim that the net zero transition will provide cost-effective emission reductions.  The other thing is that the only cost number associated with the cap and invest program proposed by the Hochul Administration is for a universal Climate Action Rebate that is “expected to drive more than $1 billion in annual cap-and-invest proceeds to New Yorkers.”   In other words, the State will make a big deal about giving New Yorkers a rebate at the same time there will be indirect cost subsidies that are approximately the same.  This is yet another example of shell game scams with the Climate Act costs.

Conclusion

There are two reasons that the Hochul Administration has not provided comprehensive cost estimates.  The first is that they don’t know the all-in costs because those numbers can only be developed on the basis of detailed analyses like this proceeding.  The second is that they don’t want to know and they certainly don’t want the voters to know the mind-numbing costs.  

This example of one aspect of the transition plan shows that the capital costs for getting the offshore wind to where it can be used most effectively are enormous, and the savings are miniscule which means enormous subsidies to be paid for by all New Yorkers.  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.  This does not necessarily mean that we should not do something, but it does mean that we have time do something that we can afford.  Until such time that detailed analyses like the kind of analysis described here are completed this process should be paused.

One recurring narrative by proponents of the Climate Leadership & Community Protection Act (Climate Act) is that it will create significant economic activity.  However, it has always seemed counter-intuitive to me that all this economic activity requires subsidies but I have not been able to make that point well enough for an article.  A recent post at Climate Discussion Nexus does an excellent job refuting that narrative and I reprint it in its entirety here.

Everyone wants to do right by the environment to the extent that they can afford to and not be unduly burdened by the effects of environmental policies.  I submitted comments on the Climate Act implementation plan and have written over 290 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.  Every indication is that the costs will be astronomical as well.  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

The Climate Act Growing Economic Opportunities webpage extolls the value of the Climate Act and jobs.

Our actions and investments are creating new economic activity right here in New York. The clean energy industry is growing before our eyes and the number of clean energy jobs in New York State reached a record level of 165,000 workers at the end of 2021. These jobs have helped lead New York’s COVID-19 economic recovery, the clean industry showing a faster recovery than other sectors. This recent growth is part of a larger trend in the State, with clean energy employment growing 17 percent since 2015 and continued growth on the horizon.

In partnership with businesses, schools, labor and trade organizations, we are supporting the creation of a clean energy workforce pipeline and providing new training opportunities for workers of all experience levels. These opportunities include programs designed to enhance skills in clean heating, energy efficiency, renewables, and other clean technology sectors. Our programs also assist businesses with recruiting, hiring, and onboarding costs for new employees. These efforts prioritize training programs for the state’s most underserved populations – low-income individuals, veterans, disabled workers, single parents, and the formerly incarcerated – and will also help integrate displaced workers into this new promising industry.

That means long-term economic opportunities for all New Yorkers.

I have looked at the New York Clean Energy Industry Report and found that the state’s clean job estimate claims are misleading and inaccurate.  However, I have not described the basic fallacy.  These jobs only occur because the entire existing energy system will be destroyed.  The Climate Discussion Nexus article explains this problem very well.  The following section presents the entire article.

 Stop them if you’ve heard it before

“Stop!” shouts Terry Corcoran in the Financial Post, saying all the “green economy” hype basically repeats the “Broken Window Fallacy” Frederic Bastiat smashed in his 1850 essay that inspired Henry Hazlitt’s 1944 Economics In One Lesson which is one more lesson than the “parade of corporate and political heavyweights, such as U.S. climate czar John Kerry” have had. As Corcoran writes, “In the parable, a boy smashes the window in a town shop, creating an expense and loss for the shopkeeper.

But a bystander observes that there is an economic benefit to smashing windows: Glassmakers get more business, a conclusion glibly summarized in one commentary: ‘It’s a good thing to break windows — money gets circulated and the industry thrives.’” And so, Corcoran laments, this nonsense is even more prevalent in 2023 than in 1850 because now there actually are formal programs to go about breaking glass on a massive scale to enhance prosperity: “as governments in the Western world attempt to smash the windows of the energy system and replace it with an all-new net-zero energy regime.” And chortle about the opportunities they’re creating for glass-makers, freight carriers, window-installers, painters, and who knows what all? For instance Canary Media burbling “Chart: US climate law to spur thousands of new jobs in every state”.

They don’t. As Corcoran growls, “The broken window fallacy in such thinking, if I can presume to condense Bastiat, is that the real cost of breaking windows is ignored.”

In some sense the Canary claim that “Each U.S. state could gain between 2,000 and 140,000 clean energy jobs by 2030 thanks to investments spurred by the Inflation Reduction Act, according to a new analysis by the think tank RMI” is a no-brainer. But we don’t mean it in a good way. They say that:

“RMI analyzed the amount of money that could be invested in the 48 contiguous U.S. states as consumers, manufacturers and other businesses take advantage of tax credits and rebates provided by the climate law.”

But quite apart from the fatuity of trying to figure out how much “could be invested” in the United States’ incredibly complex $23 trillion economy, if something is only profitable with subsidies it is another way of saying it is not profitable, which means it is worth less than it cost to make so this “investment” destroys wealth rather than creating it. Thus for David Wallace-Wells to snicker in the New York Times that “G.O.P. elites are simply lagging behind their states” because the Inflation Reduction Act offers subsidies so huge even Republicans will take the money is not proof that the climate zealots have won the debate or that they are boosting prosperity, just that far too few commentators understand the very basic economic point that you have to subtract the subsidy from the nominal profit to see if the thing actually benefited society.

Heck no, he says. Rather:

“The Inflation Reduction Act is a spigot of spending designed to produce a decarbonization boom — indeed, while it is often described as a $370 billion piece of legislation, that analysis seems likely to significantly underestimate the ultimate size of its tax incentives, which could stretch much closer to $1 trillion with rapid renewable development.”

To borrow from Adam Smith, since we’re taking a trip to the land of economic fundamentals, for a trillion dollars you could support a wine industry in Wales. But the net cost would be huge.

It may seem futile to seek to refine economic theory in the face of such persistent obtuseness. Including Clean Prosperity’s:

“The government could also look at strategic financial support for industries where Canada can compete globally and generate significant economic benefits, good jobs, and manufacturing value added. We point to direct air capture, sustainable aviation fuel, and the electric-vehicle value chain.”

Ooooh. Strategic. Sure beats the other kind of financial support where you hurl money out windows and hope it hits voters. But if “Canada” can compete globally, and we didn’t even know it was a company, then why in the name of all handouts does something that generates significant economic benefits and add value require a subsidy?

Having thus harrumphed we need to stress that Bastiat’s metaphor goes even deeper than Adam Smith’s pointed observation that those who clamour for government support in the national interest are by no means such fools as those who believe them. It actually is true that, once the window is broken, the process of making a new one in the marketplace is socially beneficial because it plugs the ugly gap in the store front, protecting the merchandise and sheltering customers and staff from inclement weather, something we already knew was worth the expense because the shop keeper previously incurred it to install the former window.

So yes, once the window has been broken, replacing it is economically rational including for the shopkeeper. But the cost incurred a second time, to replace the broken window, merely restores what was previously there, so the shopkeeper ends up poorer by the cost of replacing the window than they were before it was broken. So if something flattened all our power plants, we’d be better off after we replaced them (if we replaced them with something that worked) than if we didn’t. But we would be worse off than we were before they got flattened.

The whole Green New Deal, Just Transition, Energiewende and all its ignorant destructive cousins around the world miss this key insight. They are not proposals to make us better off, they are proposals to vandalise the economy then incur costs repairing it. They include the vandalism as a feature not a bug, and hope to get us back to where we were (though as we’ve made clear elsewhere we have grave doubts about the enormous engineering obstacles to generating enough power with wind and solar let alone distributing it) with the entire cost of the replacement a net loss.

If proponents of the “energy transition” understood this point, and insisted that it was actually beneficial to smash the old window anyway because it refracted light in such a way that it would necessarily set the shop on firea much better way we could engage them in rational discussion. But as long as they babble that it’s all gain, that “It’s a good thing to blow up power plants” it is not possible to talk sense with them, just at them.

They do babble it, in forum after forum. For instance The Economist with its headline “Saving the rainforests would be a bargain/ Far more money is needed to make conservation more profitable than slash and burn”. Um no. If it’s a “bargain”, it requires less money than other deals on the table.

The people at The Economist are not quite the economic illiterates their like-minded fellows at most other publications seem to be. They actually claim that:

“Profits from chopping down rainforests are surprisingly meagre. The land is not particularly fertile. A freshly cleared hectare of the Amazon fetches an average price of only around $1,200. By contrast, the social costs of clearing it are immense. Some 500 tonnes of carbon dioxide are pumped into the atmosphere. By a conservative estimate, that does $25,000 of harm by accelerating climate change.”

So they are making a version of the argument that the existing window, while seeming to provide shelter, entice customers and so on, actually is going to ignite the merchandise and the occupants. It’s just that their $25,000 number is highly suspicious despite bearing the PR-friendly label “conservative”. Others are not even that lucid.

In something called The Liberal Patriot, another in a long weary line of attempts to make modern progressive thought rational and palatable to normal people, Brian Katulis writes that what really concerns normal people is economic security. Thus, he notes:

“During his first two years in office, President Joe Biden introduced three pieces of legislation totaling at least $2 trillion of public investments in high-tech and clean energy aimed at re-making America’s economy…. it will require a strong focus on implementation and clear arguments for how these measures are making the lives of working-class Americans better. Advancing a clear argument on this front will be make-or-break for Biden’s re-election chances.”

He then takes a fairly level-headed look at the implementation challenges and the risks of the mercantilist “Buy American” provisions of the IRA. But when he gets off onto “a public communications strategy that convinces the American public about the value of these investments and how they are improving their lives in tangible ways” he misses the point. Scrapping America’s energy infrastructure then spending trillions to get back to the same level of production will leave the nation as a whole poorer.

Katulis says “The story is simple. No place in America will be left behind.” But the simple story is that Bastiat had it right. If you break every window in America then replace them all, the nation will be better off with fixed windows than with broken ones. But it cannot be better off than before the windows were broken because fixing them all only restores the benefits of having the original windows, but all the labour and raw material required to replace them is gone for good.

As for the guff about job creation, as Hazlitt said, if you want to make work ban trucks and require goods to be transported on people’s backs, and ban power tools and force them to dig with hand shovels. They will be poorer not despite there being more work, but because it now takes more work to get anything. It is incredible that such things must be explained again in 2023. But if we have forgotten Bastiat and Smith, there is nothing we have not forgotten.

Conclusion

I agree with everything in this article, but I do want to emphasize one point.  The Climate Act is an ignorant cousin in the Green New Deal, Just Transition, Energiewende family and they all not only want to destroy the existing energy system but they don’t have a replacement that has any chance of working.  The advocates who claim all these new jobs will occur should also, for example, include the costs to repair broken water pipes when the power goes out in the winter when there is no wind.