Category: Climate Act Games

New York’s Climate Leadership and Community Protection Act (Climate Act) has a legal mandate for New York State greenhouse gas emissions to meet the ambitious net-zero goal by 2050. The Climate Action Council is responsible for preparing the Scoping Plan that will “achieve the State’s bold clean energy and climate agenda” and voted to release the Draft Scoping Plan late last year.  I recently posted an article describing my fruitless search for cost number documentation that would enable me or anyone else to evaluate their cost claims.  This post describes an egregious example of hiding the true costs of the Scoping Plan.

I have written extensively on implementation of the Climate Act because I believe the ambitions for a zero-emissions economy outstrip available renewable technology such that it will adversely affect reliability and affordability, risk safety, affect lifestyles, will have worse impacts on the environment than the purported effects of climate change in New York, and cannot measurably affect global warming when implemented.   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 establishes a “Net Zero” target by 2050. The Climate Act requires the Climate Action Council to “[e]valuate, using the best available economic models, emission estimation techniques and other scientific methods, the total potential costs and potential economic and non-economic benefits of the plan for reducing greenhouse gases, and make such evaluation publicly available” in the Scoping Plan. Starting in the Fall of 2020 seven advisory panels developed recommended strategies to meet the targets that were presented to the Climate Action Council in the spring of 2021.  Those recommendations were translated into specific policy options in an integration analysis by the New York State Energy Research and Development Authority (NYSERDA) and its consultants.  The integration analysis was used to develop the Draft Scoping Plan that was released for public comment on December 30, 2021. The public comment period extends through at least the end of April 2022. 

I have been working my way through the massive draft document preparing comments on issues that I see.  I have assessed the claimed benefits which was relatively easy because there was a relatively adequate amount of documentation.   However, the cost documentation is very poor.  I have explained that the only description of the net direct costs is a bar chart without a breakdown of the cost components.  This article addresses a nuance to the net direct costs presented in the Draft Scoping Plan.

Net Direct Cost Information

In my latest assessment of direct costs in the Draft Scoping Plan I documented what information was provided for stakeholder assessment of costs.  Starting on page 80 the Draft Scoping Plan section 10.3 Key Benefit-Cost Assessment Findings describes costs.  However, the technical documentation is in Appendix G: Integration Analysis Technical Supplement.   On page 64 of Appendix G, Section I, the text describes the cost metrics included in the Draft Scoping Plan:

The integration analysis includes calculations for three different cost metrics: Net Present Value (NPV) of net direct costs, annual net direct costs, and system expenditure.

• • • • NPV of Net Direct Costs: NPV of levelized costs in each scenario incremental to the Reference Case from 2020-2050. All NPV calculations assume a discount rate of 3.6%. This metric includes incremental direct capital investment, operating expenses, and fuel expenditures.
      • Annual Net Direct Costs: Net direct costs are levelized costs in a given scenario incremental to the Reference Case for a single year snapshot. This metric includes incremental direct capital investment, operating expenses, and fuel expenditures.
      • System Expenditure: System expenditure is an estimate of absolute direct costs (not relative to Reference Case). Estimates of system expenditure do not reflect direct costs in some sectors that are represented with incremental costs only. These include investments in industry, agriculture, waste, forestry, and non-road transportation.

In my article I explained that the net direct costs represent the total costs of all the mitigation actions minus all the costs of a reference case.  Appendix G notes that “redirecting investment away from status quo energy expenditures and toward decarbonization is key to realizing the aims of the Climate Act” but that overlooks that their estimate of status quo expenditures is already $2.7 trillion.  At the time I found no discussion what was included in the $2.7 trillion estimate.

Draft Scoping Plan that Describes the Reference Case

In order to better understand what is included in the reference case I looked for the term.  This section lists the results of a word search of the Draft Scoping Plan document for the term “reference case”.   In the main body of text there were some references but the substantive information was in Appendix G.

Appendix G, Section I page 8 and 83:

Together, the benefits of avoiding economic impacts of damages caused by climate change and the improvements in public health total $400 – 420 billion. Realizing these benefits will require an incremental investment over the 30-year transition of approximately 10 percent in additional spending, or $290 – $310 billion, in addition to redirecting the approximately $2.7 trillion in expected system spending under the reference case towards New York’s low carbon future.

Appendix G, Section I page 12 there is a footnote for Figure 4: Gross Greenhouse Gas Emissions by Mitigation Scenario, without any accompanying text, presumably the caption for the figure.

6 The Reference Case is used for evaluating incremental societal costs and benefits of GHG emissions mitigation. The Reference Case includes a business as usual forecast plus implemented policies, including but not limited to federal appliance standards, energy efficiency achieved by funded programs (Housing and Community Renewal, New York Power Authority, Department of Public Service, Long Island Power Authority, NYSERDA Clean Energy Fund), funded building electrification, national Corporate Average Fuel Economy standards, a statewide Zero-emission vehicle mandate, and a statewide Clean Energy Standard including technology carveouts. For more details see Chapter 5.3.

Appendix G, Section I page 66:

When viewed in from a systems expenditure perspective (Figure 48), the NPV of net direct costs for Scenarios 2, 3, and 4 are moderate, ranging from 11-12% as a share of the NPV of reference case system expenditures ($2.7 trillion). Because significant infrastructure investment will be needed to maintain business as usual infrastructure within the state irrespective of further climate policy, redirecting investment away from status quo energy expenditures and toward decarbonization is key to realizing the aims of the Climate Act.

Appendix G, Section I page 68:

Net direct costs are measured relative to the Reference Case, but system expenditures are evaluated on an absolute basis. System expenditures increase over time as New York invests in infrastructure and clean fuels to meet Climate Act emissions limits. As a share of overall system expenditures, costs are moderate: 9-11% in 2030 and 25-26% in 2050 relative to current estimated expenditure levels.

Appendix G, Section I page 76 in the title to Figure 56 there is a reference to footnote 49:

49 The costs presented represent the costs relative to a Reference Case with equivalent levels of electrification loads, and as a result are not directly comparable to the electric sector costs presented in the economy-wide analysis, in which costs are measured relative to a Reference Case with Reference loads.

Aside from similar statements on pages page 78, and 83 of Appendix G, Section I that is all the results for the search on “reference case”.

Discussion

One of the arguments in the discussion of costs and benefits is that the realizing these costs only represents an “incremental investment over the 30-year transition of approximately 10 percent in additional spending, or $290 – $310 billion, in addition to redirecting the approximately $2.7 trillion in expected system spending under the reference case”.  In my original analysis of these costs, I mentioned that it is important to understand exactly what is included in the reference case in order to accept this statement.  However, no explanation is prominently featured in documentation.

However, when I searched the document for the term “reference case” there was some information, buried in a footnote reference to a figure caption that was missing.  It states that “The Reference Case includes a business as usual forecast plus implemented policies, including but not limited to federal appliance standards, energy efficiency achieved by funded programs (Housing and Community Renewal, New York Power Authority, Department of Public Service, Long Island Power Authority, NYSERDA Clean Energy Fund), funded building electrification, national Corporate Average Fuel Economy standards, a statewide Zero-emission vehicle mandate, and a statewide Clean Energy Standard including technology carveouts.”  This exposes the scam.  Cynic that I am I suspect that someone, somewhere intended to completely delete the caption for this figure so that the damning footnote would not be available.

Why is this so egregious?  Recall that the presented net direct costs are relative to the reference case.  If the reference case costs are higher by including mitigation efforts that are required to meet the Climate Act targets this approach perverts the numbers presented.  Energy efficiency is a critical component of the mitigation strategies and this statement says we are going to include those costs in the reference case.  Electrification of buildings is another key component and “funded building electrification” costs are in the reference case.  The last two items take the cake however.  The authors of the Integration Analysis have slipped the costs for the statewide zero-emissions mandate and Clean Energy Standard into the reference case so that those costs do not show up as net direct costs of the Climate Act.

If this is on the up and up then the projected benefits, which are also allegedly relative to the reference case, should exclude the emission reductions and associated benefits for energy efficiency programs and building electrification that are already funded, the statewide zero-emissions mandate, and the Clean Energy Standard.  That may be the case but it is impossible to tell because the only numerical description of the net direct costs is a bar chart without a breakdown of the cost components.

Conclusion

I certainly could have mis-interpreted these numbers and normally when my evaluation shows significant differences from someone else’s work that is my first thought.  However, this finding fits a consistent pattern of over-estimated benefits and under-estimated costs in the Integration Analysis. 

The claimed benefits for the avoided cost of GHG emissions range between $235 and $250 billion, but I have shown that the Integration Analysis incorrectly calculates avoided GHG emissions benefits by applying the value of an emission reduction multiple times.  If that error is corrected then the total benefits range from negative $74.5 to negative $49.5 billion.  

It is very difficult to verify Draft Scoping Plan cost numbers because of the lack of documentation, but in two instances I have projected costs inconsistent with the Plan.  I evaluated the projected costs for residential retrofits to electric heating.  I estimated in the Draft Scoping Plan the entire building sector component cost is $230 billion relative to the reference case.  I calculated that just the residential retrofit heat electrification costs range between $259 billion and $370 billion using one methodology and between $295 billion and $370 billion using a different methodology. In the other analysis I estimated the costs and benefits of upgraded rail transportation.  The draft scoping plan claims a reduction of 200 million light duty vehicle miles at a per unit cost of $6 per mile or $1.2 billion between Scenarios 2 and 3 and Scenario 4.  I estimate that the only valid cost for the difference between the scenario rail alternatives is $8.4 billion and that it would only provide a vehicle mile reduction of 64.7 million miles. 

Were it not for this consistent pattern I would be reluctant to label this egregious example of hiding the true costs of the Scoping Plan as a deliberate attempt to obfuscate direct costs.  However, the lack of documentation, the complete absence of reference case details  and contrived way they present the cost numbers convinces me that this is deliberate.  In order to “prove” that the Climate Act benefits out-weigh the costs they have deliberately cooked the books.

The rebuttal for my claim is for the Climate Action Council to provide complete and transparent documentation.  It would be best if the Council would host an expert analysis session where the costing methodology used could be explained and the public could be given the opportunity to provide questions beforehand.  Obviously, this post could provide a number of those questions.  While it would not be possible to address all the sectors in such a session this format could provide answers to the cost projections most impactful to New York residents.  Residential electrification and personal transportation head that list.

There is a massive disconnect between the costs projected in the Draft Scoping Plan any by other authors.  Earlier this year I compared costs estimated in the Scoping Plan with costs in an article by Ken Gregory that is a critique of a report  by Thomas Tanton “Cost of Electrification: A State-by-State Analysis and Results”.  Tanton estimated that the New York overnight cost for a net-zero economy is $1.465 trillion.  Gregory’s estimate for net-zero consistent with the Climate Act is $18.2 trillion.  Until such time that the Climate Action Council produces documentation that enable independent verification of their estimates, I believe the actual costs will be consistent with these higher estimates.

The Draft Scoping Plan that outlines the implementation strategy for New York’s Climate Leadership and Community Protection Act (Climate Act) has been released for public comment by the Climate Action Council. This article discusses the implications of the Climate Act requirement to consider upstream emissions from fossil fuels imported into New York.  I believe that only considering the impacts of fossil fuels and not the impacts of “clean” energy development is biased and hypocritical.

If you are more interested in a video that addresses the point of this article there is an option.  Ron Clutz at Science Matters provides a post with a link and excerpted transcript to a video prepared by Deutsche Welle News, the German international broadcaster.  He explains:

The theme is described by adding a bit to the title: The Price of Green Energy Will Destroy Us.  The message is not about the exorbitant expense so much as the destruction of the world’s environment in order to save it.  The imagery in the video is compelling.

I have written extensively on implementation of the Climate Act because I believe the ambitions for a zero-emissions economy outstrip available renewable technology such that it will adversely affect reliability and affordability, risk safety, affect lifestyles, will have worse impacts on the environment than the purported effects of climate change in New York, and cannot measurably affect global warming when implemented.   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 establishes a “Net Zero” target by 2050. The Climate Action Council is responsible for preparing the Scoping Plan that will “achieve the State’s bold clean energy and climate agenda”.  The Climate Act requires the Climate Action Council to “[e]valuate, using the best available economic models, emission estimation techniques and other scientific methods, the total potential costs and potential economic and non-economic benefits of the plan for reducing greenhouse gases, and make such evaluation publicly available” in the Scoping Plan. Starting in the Fall of 2020 seven advisory panels developed recommended strategies to meet the targets that were presented to the Climate Action Council in the spring of 2021.  Those recommendations were translated into specific policy options in an integration analysis by the New York State Energy Research and Development Authority (NYSERDA) and its consultants.  The integration analysis was used to develop the Draft Scoping Plan that was released for public comment on December 30, 2021. The public comment period extends through at least the end of April 2022, and will also include a minimum of six public hearings. The Council will consider the feedback received as it “continues to discuss and deliberate on the topics in the Draft as it works towards a final Scoping Plan for release by January 1, 2023”.  Once complete an updated Energy Plan will guide New York’s energy policy going forward.

The Draft Scoping Plan “Key Milestones and Implementation Steps To-Date” is on page 21 and states (my emphasis added):

This draft Scoping Plan and recommendations outline measures and other State actions to ensure attainment of the statewide GHG emission limits and net zero emission goal. The statewide GHG emission limit rulemaking is the first regulatory action to implement the Climate Act, the foundation for multiple components of the Climate Act, and critically important for successful implementation of the Climate Act. DEC promulgated 6 NYCRR Part 496 that established the two statewide GHG emission limits called for in the Climate Act: a limit for 2030 that is equal to 60% of 1990 GHG emission levels and a limit for 2050 that is equal to 15% of 1990 emission levels. Specifically, using a 20-year global warming potential (GWP) and including upstream emissions from fossil fuels imported into New York as required by the Climate Act, the statewide GHG emission limit for 2030 is 245.87 million metric tons (MMT) of carbon dioxide equivalent (CO2e), and the statewide GHG emission limits for 2050 is 61.47 MMT CO2e. DEC, in consultation with NYSERDA, continues to update the inventory of GHGs and will publish the annual statewide GHG emissions report that reflects these updates.

This article concentrates on the significance and utter hypocrisy of the implications of “including upstream emissions from fossil fuels imported into New York as required by the Climate Act” into the Climate Act implementation process. 

Zero Emissions

The Climate Act is hypocritical.  Throughout the Draft Scoping Plan electricity generated by wind and solar resources and the energy storage systems required to cover for the intermittency of those renewable resources is referred to as “zero” emissions.  Of course, there are no emissions when these resources generate electricity.  However, in the Climate Act accounting framework fossil fuel generation includes not only direct emissions but also any upstream GHG emissions attributable to the extraction, transmission, and use of fossil fuels or electricity imported into the State.  The development of wind, solar, and energy storage resources on the scale necessary for the Climate Act certainly have environmental and emissions impacts for extraction of the rare earth metals necessary for those technologies, the construction of the massive number of structures needed, and the disposal of the enormous quantities of wind turbine blades and solar panels at the end of their useful lives.  This article summarizes references to these issues that I have documented on my “Clean” Energy Environmental Issues page

Paul Driessen summarizes my concerns in the Real Climate Crisis where he argues that the ecological destruction and human death tolls of the green energy transition is worse than the purported impacts of climate change.  He states:

They would require mining on scales unprecedented in human history, much of it by slave and child laborers, and nearly all using fossil fuels – bringing massive habitat and wildlife losses, air and water pollution, and horrific human health and safety problems. But since most of the mining, ore processing and manufacturing will occur in other countries, far from the USA, politicians and promoters of climate crisis can say this “alternative energy” is “clean and green.”

Rare Earth Metals

The EIA special report, The Role of Critical Minerals in Clean Energy Transitions, is the most comprehensive global study to date on the central importance of minerals such as copper, lithium, nickel, cobalt and rare earth elements in a secure and rapid transformation of the global energy sector.   The report explains that:

The types of mineral resources used vary by technology. Lithium, nickel, cobalt, manganese and graphite are crucial to battery performance, longevity and energy density. Rare earth elements are essential for permanent magnets that are vital for wind turbines and EV motors. Electricity networks need a huge amount of copper and aluminum, with copper being a cornerstone for all electricity-related technologies.

The reason this is an issue is because the clean energy technologies require more of these materials.  The report notes that:

A typical electric car requires six times the mineral inputs of a conventional car, and an onshore wind plant requires nine times more mineral resources than a gas-fired power plant. Since 2010, the average amount of minerals needed for a new unit of power generation capacity has increased by 50% as the share of renewables has risen.

The following graphic shows the increases needed.

 

French journalist and documentary filmmaker Guillaume Pitron has been following the global trade in rare earth metals. Unfortunately, mining these materials come with heavy environmental and social costs. Mining generates massive amounts of polluted wastewater, which left untreated, poisons crops and makes people sick. Guillaume documents these issues in his 2018 book “Rare Metals War’. Recently his work was summarized in the article Toxic secrets behind your mobile phone:

Above all, our dependence on rare metals brings two very big problems. The first is that mining, refining and recycling them is immensely polluting, thereby giving the lie to the idea that our increasingly digital and electricity-powered life is greener than one reliant on fossil fuels.

Second, one country – China – has a near stranglehold on the production and supply of rare metals. The Beijing government is not just seeking to control the metals found in its lands but also to control the production of rare metals wherever they are found on the globe. It has used barely credible chicanery to position itself as the sole supplier. It’s as if Saudi Arabia, which holds the world’s largest oil reserves, took it upon itself to control the reserves of the 13 other main petroleum-exporting countries.

The fact is that the European Union and the United States have little leverage to prevent Russia from invading Ukraine because they rely on Russia for the fossil fuels necessary to keep the lights on, homes heated, and transportation systems operating.  It seems obvious to me that it is imprudent to set up an energy system that is entirely dependent upon another nation whose interests may not be in our best interests.

Mark Mills’ Mines, Minerals, and “Green” Energy: A Reality Check paper from the Manhattan Institute picks up on the same themes: 

This paper turns to a different reality: all energy-producing machinery must be fabricated from materials extracted from the earth. No energy system, in short, is actually “renewable,” since all machines require the continual mining and processing of millions of tons of primary materials and the disposal of hardware that inevitably wears out. Compared with hydrocarbons, green machines entail, on average, a 10-fold increase in the quantities of materials extracted and processed to produce the same amount of energy.

This means that any significant expansion of today’s modest level of green energy—currently less than 4% of the country’s total consumption (versus 56% from oil and gas)—will create an unprecedented increase in global mining for needed minerals, radically exacerbate existing environmental and labor challenges in emerging markets (where many mines are located), and dramatically increase U.S. imports and the vulnerability of America’s energy supply chain.

Renewable Waste Disposal

Because the quantity of materials needed for wind turbines and solar panels is so much larger and those machines have shorter life expectancies, the inevitable result will be a waste disposal problem.  Consider wind turbine waste disposal.  They are so big that they have to be cut up and because they were designed to handle strong winds they cannot be “crushed, recycled or repurposed”.   As a result, the sheer volume of material is an issue.

Robert Bradley describes a Harvard Business Review article, The Dark Side of Solar Power, that concludes that “given the current very high recycling costs, there’s a real danger that all used panels will go straight to landfills”.  Bradley excerpts some passages from the article:

• • • Economic incentives are rapidly aligning to encourage customers to trade their existing panels for newer, cheaper, more efficient models. In an industry where circularity solutions such as recycling remain woefully inadequate, the sheer volume of discarded panels will soon pose a risk of existentially damaging proportions.
    • The International Renewable Energy Agency (IRENA)’s official projections assert that “large amounts of annual waste are anticipated by the early 2030s” and could total 78 million tonnes by the year 2050. That’s a staggering amount, undoubtedly. But with so many years to prepare, it describes a billion-dollar opportunity for recapture of valuable materials rather than a dire threat. The threat is hidden by the fact that IRENA’s predictions are premised upon customers keeping their panels in place for the entirety of their 30-year lifecycle. They do not account for the possibility of widespread early replacement.
    • The industry’s current circular capacity is woefully unprepared for the deluge of waste that is likely to come. The financial incentive to invest in recycling has never been very strong in solar. While panels contain small amounts of valuable materials such as silver, they are mostly made of glass, an extremely low-value material. The long lifespan of solar panels also serves to disincentivize innovation in this area.
    • The direct cost of recycling is only part of the end-of-life burden, however. Panels are delicate, bulky pieces of equipment usually installed on rooftops in the residential context. Specialized labor is required to detach and remove them, lest they shatter to smithereens before they make it onto the truck. In addition, some governments may classify solar panels as hazardous waste, due to the small amounts of heavy metals (cadmium, lead, etc.) they contain. This classification carries with it a string of expensive restrictions — hazardous waste can only be transported at designated times and via select routes, etc.
    • The same problem is looming for other renewable-energy technologies. For example, barring a major increase in processing capability, experts expect that more than 720,000 tons worth of gargantuan wind turbine blades will end up in U.S. landfills over the next 20 years. According to prevailing estimates, only five percent of electric-vehicle batteries are currently recycled – a lag that automakers are racing to rectify as sales figures for electric cars continue to rise as much as 40% year-on-year. The only essential difference between these green technologies and solar panels is that the latter doubles as a revenue-generating engine for the consumer. Two separate profit-seeking actors — panel producers and the end consumer — thus must be satisfied in order for adoption to occur at scale.

Conclusion

Andy West’s statement about another aspect of net-zero policies is equally applicable to the Climate Act mandate to consider upstream fossil fuel emissions while ignoring the impacts of “zero” emissions environmental impacts: “Ardent belief in cultural fairy-stories creates a pretty effective blindfold against glaring truths”.  The Climate Act’s war on fossil fuels is based entirely on the popular belief that climate change is an existential threat.  Authors of the law incorporated every opportunity to inflate the impact of fossil fuels and ignored any negative ramifications.  It is evident that there are significant issues associated with the materials necessary for the clean energy transition.  The Climate Act ignores them in a blatant example of hypocrisy.

The Climate Leadership and Community Protection Act (Climate Act) establishes a “Net Zero” target by 2050 and the Draft Scoping Plan defines how to “achieve the State’s bold clean energy and climate agenda”.   It is the right of every New Yorker to know how the agenda will affect affordability and reliability.  This post documents my fruitless search for the cost number documentation that would enable me or anyone else to evaluate their cost claims.

I have written extensively on implementation of the Climate Act because I believe the ambitions for a zero-emissions economy outstrip available technology such that it will adversely affect reliability and affordability, risk safety, affect lifestyles, will have worse impacts on the environment than the purported effects of climate change in New York, and cannot measurably affect global warming when implemented.   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 Action Council is responsible for preparing the Scoping Plan that will “achieve the State’s bold clean energy and climate agenda”.  The Climate Act requires the Climate Action Council to “[e]valuate, using the best available economic models, emission estimation techniques and other scientific methods, the total potential costs and potential economic and non-economic benefits of the plan for reducing greenhouse gases, and make such evaluation publicly available” in the Scoping Plan. Starting in the fall of 2020 seven advisory panels developed recommended strategies to meet the targets that were presented to the Climate Action Council in the spring of 2021.  Those recommendations were translated into specific policy options in an integration analysis by the New York State Energy Research and Development Authority (NYSERDA) and its consultants.  The integration analysis was used to develop the Draft Scoping Plan that was released for public comment on December 30, 2021. This draft includes results from the integration analysis on the benefits and costs to achieve the Climate Act goals. The public comment period extends through at least the end of April 2022, and will also include a minimum of six public hearings. The Council will consider the feedback received as it continues to “discuss and deliberate on the topics in the Draft” as it works towards a final Scoping Plan for release by January 1, 2023.

The Climate Action Council claims that the integration analysis was developed to estimate the economy-wide benefits, costs, and GHG emissions reductions associated with pathways that achieve the Climate Act greenhouse gas emission limits and carbon neutrality goal. It incorporates and builds from Advisory Panel and Working Group recommendations, as well as inputs and insights from complementary analyses, to model and assess multiple mitigation scenarios. In addition, there is historical/archived information is available through the Support Studies section of the Climate Resources webpage, and can found as part of the Pathways to Deep Decarbonization in New York State – Final Report.

During the development of the Draft Scoping Plan, consumer affordability was a major Climate Action Council feedback topic of discussion.  The Draft Scoping Plan provides societal net direct costs but does not provide any consumer costs.  The leader of the Integration Analysis effort at NYSERDA is Carl Mas.  At 17:45 of the Climate Action Council meeting recording where this issue was debated, he explained that they were able to analyze for the technologies and the system changes in the scenarios to determine incremental cost to society. 

In order to determine the actual costs to society you need to have specificity to distribute those costs.  Is it going to be a ratepayer program?  It is going to be a tax credit or incentive?  How much is the Federal government going to weigh in to help buy down some of the cost.  Without those types of programmatic specifics, we can’t actually analyze how much individual parts of our society should pay. 

He went on to claim that: “It is really important to have articulated what the incremental costs would be and what the benefit cost analysis is, which is that we’ve done.”  He concluded at 18:37 that:

I hope people don’t walk away thinking that waiting for implementation means that somehow there is kind of a done deal at that point.  I mean, at that point is when we see the specific policy proposals that flow from a scoping plan.  That’s when we can continue to debate and discuss how we implement these proposals.

Draft Scoping Plan Documentation

The purpose of this post is to document what information was provided for stakeholder assessment of costs.  Starting on page 80 the Draft Scoping Plan section 10.3 Key Benefit-Cost Assessment Findings describes costs.  However, the technical documentation is in Appendix G: Integration Analysis Technical Supplement and two spreadsheets:

• Appendix G: Annex 1: Inputs and Assumptions [XLSX]
• Appendix G: Annex 2: Key Drivers and Outputs [XLSX]

The following section lists all references to “direct costs” in the Appendix G text with some clarifying additions and my indented and italicized comments.

Page 61:  Estimated system expenditures do not reflect direct costs in some sectors that are represented with incremental costs only. These include investments in industry, agriculture, waste, forestry, and non-road transportation.

No comment

Pages 64-68: Integration Analysis Costs

This whole section is included because it is the primary documentation source.

The integration analysis includes calculations for three different cost metrics: Net Present Value (NPV) of net direct costs, annual net direct costs, and system expenditure.

• NPV of Net Direct Costs: NPV of levelized costs in each scenario incremental to the Reference Case from 2020-2050. All NPV calculations assume a discount rate of 3.6%. This metric includes incremental direct capital investment, operating expenses, and fuel expenditures.
• Annual Net Direct Costs: Net direct costs are levelized costs in a given scenario incremental to the Reference Case for a single year snapshot. This metric includes incremental direct capital investment, operating expenses, and fuel expenditures.
• System Expenditure: System expenditure is an estimate of absolute direct costs (not relative to Reference Case). Estimates of system expenditure do not reflect direct costs in some sectors that are represented with incremental costs only. These include investments in industry, agriculture, waste, forestry, and non-road transportation.

I don’t have the appropriate background, so cannot speak to the calculation choices for these different cost metrics.  However, I have been unable to find any numerical documentation (e.g., spreadsheets) that support the estimated cost metric expenditures.

Cost categories included in the metrics listed above are shown in Table 4.

 

The spreadsheet Annex G: Inputs and Assumptions lists some of these costs and some of the assumptions made for these categories.

The NPV of net direct costs in Scenarios 2, 3, and 4 are in the same range given uncertainty and are primarily driven by investments in buildings and the electricity system (Figure 47). All scenarios show avoided fossil fuel expenditures due to efficiency and fuel-switching relative to the Reference Case (shown in the chart as negative costs). Scenario 2: Strategic Use of Low-Carbon Fuels includes significant investment in renewable diesel, renewable jet kerosene, and renewable natural gas. Scenario 3: Accelerated Transition Away from Combustion meets emissions limits with greater levels of electrification, which results in greater investments in building retrofits, zero-emission vehicles, and the electricity system. Scenario 4: Beyond 85% Reductions includes additional investment in transportation (rail, aviation, VMT reductions) and methane mitigation, and mitigates the need to invest in any negative emissions technologies. Scenario costs are sensitive to the price of fossil fuels and technology cost projections, as reflected in error bars.

In order to provide meaningful comments on these estimates much more information is needed.  At an absolute minimum there should be a table that lists the values of the components of the Figure 47 bar charts.  The Appendix G spreadsheet annexes document many of the figures in the Scoping Plan but none of the figures with direct costs are documented. 

When viewed in from a systems expenditure perspective (Figure 48), the NPV of net direct costs for Scenarios 2, 3, and 4 are moderate, ranging from 11-12% as a share of the NPV of reference case system expenditures ($2.7 trillion). Because significant infrastructure investment will be needed to maintain business as usual infrastructure within the state irrespective of further climate policy, redirecting investment away from status quo energy expenditures and toward decarbonization is key to realizing the aims of the Climate Act.

Not only are the Draft Scoping Plan Integration Analysis cost calculations undocumented but there is mis-leading reporting as in this paragraph.  These numbers represent the total costs of all their mitigation actions minus all the costs of a reference case.  The statement “redirecting investment away from status quo energy expenditures and toward decarbonization is key to realizing the aims of the Climate Act” overlooks their estimate that status quo expenditures are already $2.7 trillion.  There is no discussion whether that $2.7 trillion only represents current consumer costs or includes additional infrastructure spending.  I expect that investments above and beyond what consumers are already are paying are needed so the actual consumer costs are being understated by this way of presenting the societal costs.

Annual net direct costs show the timing of key investments required to meet Climate Act emissions limits. Scenario 2 includes significant investment in renewable diesel, renewable jet kerosene, and renewable natural gas starting in the mid-2020s. Scenario 3 includes greater levels of electrification compared to Scenario 2, which results in greater investments in building retrofits, zero-emission vehicles, and the electricity system. Scenario 4 layers on even further investments in transportation and non-energy mitigation than Scenario 3 and includes a targeted investment in low-carbon renewable fuels, although not as intensive as that in Scenario 2. Both Scenarios 2 and 3 include investment in negative emissions technologies (NETs) to achieve net zero emissions by 2050, while Scenario 4 does not require any NETs to meet carbon neutrality by 2050. In 2030, annual net direct costs are on the order of $15 billion per year, approximately 0.6% of GSP; in 2050, costs increase to $45 billion per year, or roughly 1.4% of GSP.

This represents the description of the cost differences between the three scenarios.  In order to provide full documentation, all the numbers associated with the assumptions used to derive the numbers have to be presented and they don’t even list the component numbers of the bar charts.  For example, consider NETs.  Obviously, the final cost needs to be presented but we also need to know the costs per type of negative technology, the control efficiency expected, the number of these magical technology systems that do not exist at commercial scale that will be needed, and the assumed location assume for them because all those factors affect cost.  I could find no reference to these technologies in the Appendix G appendices.  Moreover, I have been unable to find the necessary documentation for any of the technologies proposed for the mitigation scenarios at a level where it is possible to provide meaningful comments.

Net direct costs are measured relative to the Reference Case, but system expenditures are evaluated on an absolute basis. System expenditures increase over time as New York invests in infrastructure and clean fuels to meet Climate Act emissions limits. As a share of overall system expenditures, costs are moderate: 9-11% in 2030 and 25-26% in 2050 relative to current estimated expenditure levels.

This figure also demonstrates the need for more information for meaningful comments.  If the current system expenditures were documented then we could understand what is incorporated in their numbers.  It would also be possible to verify their approach by comparing their estimates to other sources of data.  It might also be possible to figure out whether their reference estimated expenditure costs represent increases to current levels? 

Page 70: Benefit-Cost Findings

• Net direct costs are small relative to the size of New York’s economy. Net direct costs are estimated to be 0.6-0.7% of GSP in 2030, and 1.4% in 2050.

No comment

Page 70: 3.5 Uncertainty and Sensitivity Analysis

There also are references to “direct cost” associated with the following figures in this section:

• Figure 52. NPV of Net Benefit of Mitigation Scenarios (2020-2050): Range Including Uncertainty in Fuel Cost, Technology Cost
• Figure 53. NPV of Scenario Net Direct Costs: Fuel cost sensitivity for Scenarios 2 through 4 For biofuels
• Figure 54. NPV of Scenario Net Direct Costs: Biofuel cost sensitivity for Scenarios 2 through 4
• Figure 55. NPV of Scenario Net Direct Costs: Technology cost sensitivity

This represents the Integration Analysis information that is supposed to address the concerns I raised here.  Clearly without complete documentation it is impossible to agree or disagree that these cost sensitivities are complete or accurate.

Integration Analysis Documentation

The Integration Analysis technical documentation is in Appendix G: Integration Analysis Technical Supplement and two spreadsheets:

• Appendix G: Annex 1: Inputs and Assumptions [XLSX]
• Appendix G: Annex 2: Key Drivers and Outputs [XLSX]

This section describes the cost information provided in these spreadsheets.

As noted previously, neither spreadsheet documents the numbers presented in Figures 45-55 in Appendix G: Integration Analysis Technical Supplement.  In addition, there is insufficient information to determine how the numbers were calculated.  Some of the assumed technology costs are included but there are gaps in either information or methodology that prevent replication of the values presented.  Consequently, it is impossible to provide substantive comments on the costs claimed.

Conclusion

The Climate Act requires the Climate Action Council to “[e]valuate, using the best available economic models, emission estimation techniques and other scientific methods, the total potential costs and potential economic and non-economic benefits of the plan for reducing greenhouse gases, and make such evaluation publicly available” in the Scoping Plan (my emphasis added).  The fact that the only description of the net direct cost is a bar chart without a breakdown of the cost components clearly demonstrates that this Climate Act requirement has been ignored in the Draft Scoping Plan.

If it were not so important for the future of New York State it would be tempting to laugh at the coverup of the numbers.  Unfortunately based on everything I have seen the coverup is deliberate because the projected costs are extremely high.  This is an inevitable result as shown in the United Kingdom where “the press seems to have finally woken up to the huge damage already being wreaked on the country, all as a result of successive governments’ climate policies”.  It is almost as if the authors of the Draft Scoping Plan are hoping to get the plan approved before the public catches on.

In the absence of sufficient publicly available information to evaluate the cost projections, New Yorkers are expected to trust these numbers.  I was able to evaluate the Draft Scoping Plan benefit numbers to verify whether trust is warranted.  The Draft Scoping Plan claims that “The cost of inaction exceeds the cost of action by more than $90 billion.”  I have shown that the Integration Analysis incorrectly calculates avoided GHG emissions benefits by applying the value of an emission reduction multiple times.  If only that error is corrected the total benefits range from negative $74.5 to negative $49.5 billion instead of net benefits ranging from $90 billion to $120 billion.  I conclude that New Yorkers should not trust the cost values in the Draft Scoping Plan and that comments demanding adequate documentation be provided are appropriate.

The Climate Leadership and Community Protection Act (Climate Act) establishes a “Net Zero” target by 2050. The Draft Scoping Plan defines how to “achieve the State’s bold clean energy and climate agenda” and claims that there are significant direct and indirect benefits, including improved public health.  This post summarizes all the benefit claims made in the Scoping Plan.

I have written extensively on implementation of the Climate Act because I believe the ambitions for a zero-emissions economy outstrip available technology such that it will adversely affect reliability and affordability, risk safety, affect lifestyles, will have worse impacts on the environment than the purported effects of climate change in New York, and cannot measurably affect global warming when implemented.   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 Action Council is responsible for preparing the Scoping Plan that will “achieve the State’s bold clean energy and climate agenda”.  Starting in the fall of 2020 seven advisory panels developed recommended strategies to meet the targets that were presented to the Climate Action Council in the spring of 2021.  Those recommendations were translated into specific policy options in an integration analysis by the New York State Energy Research and Development Authority (NYSERDA) and its consultants.  The integration analysis was used to develop the Scoping Plan that was released for public comment on December 30, 2021.

According to a Gothamist summary of the Climate Act: “Seggos, the DEC commissioner, said the draft plan is meant to generate a framework and solicit input on how the state can meet its climate goals, not provide a policy-by-policy cost estimate.” In my opinion, that is a serious shortcoming for the Scoping Plan cost and benefits assessment because a framework is not a feasibility study. Both the costs and benefits are societal estimates. There are no guesses of the direct costs to consumers or rate-payer impacts.  Similarly, the benefit values are to society and do not directly offset the ultimate costs to consumers.  Until such time that direct consumer costs and benefits are known New Yorkers cannot decide whether it is appropriate to proceed with the ambition and schedule of the Climate Act.

The Scoping Plan estimates societal health benefits and avoided economic damages caused by climate change as a result of GHG emission reductions.  Improvements in air quality, increased active transportation, and energy efficiency interventions in low- and middle-income homes generates health benefits ranging from approximately $165 billion to $170 billion. Reduced GHG emissions avoids the economic impacts of damages caused by climate change equaling approximately $235 to $250 billion. The combined benefits range from approximately $400 billion to $420 billion. 

This post summarizes all these benefits claims.  I have addressed some of them before but this consolidates all the analyses.  Complete documentation for this evaluation is contained in the Scoping Plan Costs and Benefits white paper.

Scoping Plan Benefits Summary

The Scoping Plan claims net benefits range from $90 billion to $120 billion. The Plan describes health benefits totaling $165 to $170 billion due to improvements in air quality, increased active transportation ($39.5 billion), and energy efficiency interventions in Low- and Middle- Income (LMI) homes ($8.7 billion).  The benefit claims are not documented well enough to confirm those estimates but they appear to be biased high.  The claimed benefits for the avoided cost of GHG emissions range between $235 and $250 billion.  However, Climate Act guidance incorrectly calculates avoided GHG emissions benefits by applying the value of an emission reduction multiple times.  When the multiple-counting error is corrected, the avoided carbon damage benefits range from negative $74.5 to negative $49.5 billion.

The Scoping Plan air quality improvement benefits range between $100 billion and $103 billion for the low values and the high values range between $165 billion and $172 billion.  These benefits are due to an air quality improvement for PM_2.5 of 0.35 µg/m³ that is supposed to “avoid tens of thousands of premature deaths, thousands of non-fatal heart attacks, thousands of other hospitalizations, thousands of asthma-related emergency room visits, and hundreds of thousands of lost workdays”. However, the modeled impacts rely on a linear no-threshold model.  The observed reduction in New York City since 2005-2007 is 5.6 µg/m³ and that is 16 times higher than the projected decrease due to the Climate Act.  Using the linear no-threshold model that means that we should be able to observe sixteen times tens of thousands of premature deaths, sixteen times thousands of non-fatal heart attacks, sixteen times thousands of other hospitalizations, sixteen times thousands of asthma-related emergency room visits, and sixteen times hundreds of thousands of lost workdays since 2007.  When the Scoping Plan verifies that these reductions have been observed I will accept these benefits.

The Scoping Plan admits that the health benefits from increased active transportation “should be considered a first-order approximation of the benefits of increased active transportation”.  The active transportation health theory claims that as people are forced out of their personal vehicles some will switch to walking and biking.  Those activities are healthier so there is a benefit.  However, the analysis was conducted at the state level, rather than modeling changes in walking and biking activity due to changes in vehicle miles traveled within counties or individual communities.  Because the actual number of places where this strategy could actually encourage more walking and bicycling to work is small relative to the state level, the $39.5 billion health benefit claim is far too high.

Upon examination the majority of the health benefits from energy efficiency interventions in LMI homes are the result of “non-energy interventions”.  The Climate Act intends to transform the energy sector so it is disingenuous to claim health benefits not directly related to energy efficiency programs themselves.  Of the $8.7 billion in benefits claimed $3 billion is due to reduction in asthma-related incidents resulting from better ventilation not directly due to energy efficiency.  The $2.4 billion in benefits from reduced trip or fall injuries and reduced carbon monoxide poisoning benefits are non-energy interventions and should not be claimed as benefits for GHG emission reduction programs. 

The Scoping Plan claims the largest proposed benefits come from avoided GHG emission impacts on climate change due to emission reductions.  The Climate Act Scoping Plan manipulates the emissions, the emissions accounting, and calculation of social cost of carbon benefits to inflate these benefits to claim that there are net benefits.  In order to maximize the benefits from emission reductions the Scoping Plan uses non-conventional assumptions to contrive increased emission estimates that are 1.9 times higher in 1990 and 2.3 times higher in 2019 than conventional, or UNFCCC, format for emissions accounting used by other jurisdictions.  New York’s Value of Carbon guidance chooses a lower discount rate that places lower value on immediate benefits relative to higher delayed benefits received in the future.  The combined effect of the higher emissions and lower discount rate means that New York’s societal benefits of GHG emission reductions are 4.5 times higher for 1990 emissions and 5.4 times higher for 2019 emissions than other jurisdictions. 

Even with that gamesmanship the Scoping Plan benefits were too low to claim that benefits out weighed the costs.  The Value of Carbon guidance incorrectly calculates benefits by applying the value of an emission reduction multiple times.  It is inappropriate to claim the benefits of an annual reduction of a ton of greenhouse gas over any lifetime or to compare it with avoided emissions.  Dr. Richard Tol confirmed that “The SCC should not be compared to life-time savings or life-time costs (unless the project life is one year)”.  Using that trick and the other manipulations results in New York societal benefits more than 21 times higher than benefits using everybody else’s methodology. When the over-counting error is corrected, the total societal benefits range between negative $74.5 billion and negative $49.5 billion. 

Conclusion

The Scoping Plan Costs and Benefits white paper documents the calculation results presented in this summary.  The Plan describes health benefits totaling $165 to $170 billion due to improvements in air quality but observed improvements are 16 times greater than those projected for the Climate Act.  If the State can show that the health benefits projected have been observed comparable to those observed then this claim holds water.  The increased active transportation benefit of $39.5 billion is based on a first-order approximation based on state-wide numbers but the benefits will likely only occur in certain areas.  As a result, the benefit estimate is far too high.  Energy efficiency interventions benefits in LMI homes are claimed to total $8.7 billion but $2.4 billion of that is from non-energy interventions and should not be claimed as benefits for Climate Act GHG emission reduction programs.  If the claims were documented better, I believe that the further reductions in the benefits would be found. 

The claimed benefits for the avoided cost of GHG emissions range between $235 and $250 billion.  However, Climate Act guidance incorrectly calculates avoided GHG emissions benefits by applying the value of an emission reduction multiple times.  The Climate Act manipulates emissions to increase benefits and uses a lower discount rate than current Federal guidance resulting in societal benefits of GHG emission reductions that are 4.5 times higher for 1990 emissions and 5.4 times higher for 2019 emissions than other jurisdictions.  The largest impact of the Climate Act for these benefits is based on an incorrect guidance for calculating benefits.  In particular, the benefits of reductions are counted multiple times.  If only that error is corrected the total benefits range from negative $74.5 to negative $49.5 billion instead of net benefits ranging from $90 billion to $120 billion.