New York Senate Bill S4264A, proposes to amend Article 19 of the Environmental Conservation Law by adding a new Title 13, Value of Pollution and Mitigation Program but the short title is the Climate & Community Investment Act (CCIA). This bill was proposed in the last legislative session but when the costs became apparent it stalled. Because the Climate Leadership and Community Protection Act (Climate Plan) did not devote State resources and personnel to implementation, advocates of the proposal have introduced it again. This post documents my first look at the proposed fee structure relative to the Integration Analysis projected emissions.
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. An overview of the results of this integration analysis were presented to the Climate Action Council at the two October meetings and has since been updated. A draft scoping plan has been prepared and later in December the Council will vote on whether the plan can be released to the public to initiate the public comment period.
The underlying premise of the Climate Act was that transitioning the New York energy system to net-zero by 2050 was only a matter of political will. As a result, the targets were chosen without doing a detailed engineering analysis to determine how it might work, whether the technology is available for it to work, and how much it could cost. Now it is a law and, despite the fact that there is no funding mechanism, implementation plans are proceeding. This proposed legislation is supposed to provide some of the funding for implementation.
Last year I did a series of posts (summarized here) on the CCIA that covered many aspects of the law but I have not reviewed the current proposal relative to last year’s to determine if there have been many changes. This post only considers one aspect of the proposal the carbon pollution fee. In particular, I calculate the value of the fee based on the Integration Analysis scenario emission reduction trajectories.
CCIA Carbon Fee
The Climate and Communities Investment Authority will publish an annual fee for carbon dioxide equivalent emissions. Carbon dioxide equivalence is “a simple way to normalize all these greenhouse gases and other climate influences in standard units based on the radiative forcing of a unit of carbon dioxide over a specified timeframe”. In short, the fee applies to all of the regulated greenhouse gas emissions set to their CO2 equivalence value.
The authors of the law have drafted the calculation methodology to provide a dependable revenue stream and also to prod action by increasing the fee if the actual emissions reduction trajectory does not comport with their arbitrary target emission reduction trajectory. Anyone looking at New York greenhouse gas emissions is handicapped by the fact that the Climate Act emissions calculation methodology is inconsistent with everyone else and so complex and requires so much information that it is impossible for outsiders to calculate. The CCIA target trajectory is based on a 2018 baseline but that number is not available from the State. In addition, projecting the emissions reduction trajectory from the present out to 2050 is as complex a problem. Consequently, I was not able to provide any credible estimate of the expected fee structure last year. However data are now available for a look at the fees.
Since the legislation was drafted the Integration Analysis has generated the emissions reduction trajectory for a reference case and four scenarios. A spreadsheet entitled Integration Analysis – Key Drivers and Outputs (updated November 18, 2021)] provides most of the information needed to evaluate and estimate emissions. In the “Annual Emissions” tab the following figure and the data used to generate the figure are available and can be used to estimate the annual carbon fee.
Carbon Fee Annual Adjustment Calculation
The carbon fee includes an annual adjustment calculation that compares the environmental integrity metric to an arbitrary statewide greenhouse gas emissions trajectory. Presumably the idea is that if the observed emissions reductions are not happening fast enough then a larger fee will encourage faster reductions. The environmental integrity metric (EIM) calculation definition follows:
3041. (2) In two thousand twenty-four, and every year thereafter, the Commissioner shall, in consultation with the Department of Environmental Conservation:
(a) calculate the five-year environmental integrity metric, which shall equal a fraction, expressed as a percentage:
(i) the numerator of which is:
(A) the sum of the quantity of actual statewide greenhouse gas emissions, measured in short tons CO2e, in each of the preceding five years, minus
(B) the sum of the quantity of target statewide greenhouse gas emissions, measured in short tons CO2e, in each of the preceding five years, pursuant to subdivision four of this section; and
(ii) the denominator of which is the sum of the quantity of target statewide greenhouse gas emissions, measured in short tons CO2e, in each of the preceding five years, pursuant to subdivision four of this section; and
(b) calculate the cumulative environmental integrity metric, which shall equal a fraction, expressed as a percentage:
(i) the numerator of which is:
(A) the sum of the quantity of actual statewide greenhouse gas emissions, measured in short tons CO2e, in each of the preceding years that are after two thousand eighteen, minus
(B) the sum of the quantity of target statewide greenhouse gas emissions, measured in short tons CO2e, in each of the preceding years that are after two thousand eighteen, pursuant to subdivision four of this section; and
(ii) the denominator of which is the sum of the quantity of target statewide greenhouse gas emissions, measured in short tons CO2e, in each of the preceding years that are after two thousand eighteen, pursuant to subdivision four of this section;
The statewide greenhouse gas emissions trajectory is defined as follows:
3041. (4) For the purposes of calculating the five-year environmental integrity metric and the cumulative environmental integrity metric under subdivision two of this section, the authority shall refer to the following statewide greenhouse gas emissions targets:
(a) for the year two thousand twenty-one, eighty-five percent of two thousand eighteen emissions;
(b) for each year after two thousand twenty-one and before two thou sand twenty-seven, less than in the preceding year by four percent of the two thousand eighteen emissions; and
(c) for each year after two thousand twenty-six and before two thousand forty-two, less than in the preceding year by three percent of two thousand eighteen emissions; and
(d) for each year after two thousand forty-one, less than in the preceding year by two percent of two thousand eighteen emissions.
Carbon Fee Calculation
I spent a lot of trying to figure out how the annual adjustment was supposed to work. The fee starts at $55 in 2022. From 2023 to 2025 there is a five percent increase per year. It starts to get more complicated for the years 2026 to through 2031. There are limits for the five-year EIM relative to the observed five-year reductions. If the five-year EIM is less than -5% then the annual adjustment is 2%, between -5% and 5% the adjustment is 5%, if between 5% and 10% the adjustment is 7% and if it is over 10% the adjustment is 10%. In addition, a cost-of-living adjustment is added. The subsequent years incorporate an adjustment based on the cumulative EIM. If the cumulative EIM is less than -1% and the five-year EIM is less then 5% then the adjustment is 2%. If the cumulative EIM is greater than 3% or the five-year EIM is greater than 10% then the adjustment is 10%. The in between combinations are so complicated that I could not calculate the values. However, it turns out that based on my estimates that both the five-year EIM and the cumulative EIM exceed the 10% thresholds in 2026 and every year thereafter.
The EIM calculates values using the 2020 total New York greenhouse gas emissions as a baseline. I assumed that value would equal the Climate Act total emissions and that is a problem. At this time the only annual emissions available to the general public that incorporate all the unique New York adjustments are the 1990 Climate Act baseline. I am hopeful that 2018 through 2020 Climate Act emissions totals will all be released by the end of the year when the 2020 values are supposed to be released.
In order to estimate how the CCIA emissions reduction trajectory compares to the Climate Act integration analysis emission reduction trajectories I considered a couple of examples that calculated the annual EIM adjustment and applied it to the CCIA fees starting in 2026 for Integration Analysis Scenarios 2-4. The two examples tried to bracket the possible emissions trajectory. The first assumed that the emissions in 2018 equaled the 1990 Climate Act baseline. The second assumed that the emissions in 2018 equaled the 2020 integration analysis emissions.
There really isn’t much difference between the examples. The CCIA emissions trajectory calls for more reductions earlier than any of the scenarios in either example. The Integration Analysis scenarios are tuned to match the 2030 emission target and are on the order of 2% lower. On the other hand, the CCIA emissions in 2030 are 20% less than the emissions target. Consequently, the CCIA emission fee methodology ends up using the highest annual adjustment each year.
Discussion
I am not impressed by the numeracy of the authors of the CCIA. The description of the emission fee conditions is unclear and I think there is an error relative to what I think they wanted to do. As far as I can tell there have been no substantive revisions to the text since it was first drafted last year. At the end of last year, DEC promulgated Part 496 that established the 2030 and 2050 emission limits for the state. As far as I can tell the methodology was not linked to the interim target so that the emissions trajectory calls for more reductions sooner. Furthermore, there were no estimates of emissions reductions expected as a result of the Climate Act implementation strategies. As a result, the emission fee adjustments are at the highest level throughout the period.
In 2034 and every year after, the CCIA emission fee exceeds the New York State value of carbon for all the scenarios in both examples but this analysis did not include a cost-of-living adjustment so the crossover point will be even sooner. The value of carbon is the avoided negative societal costs due to climate change caused by the reduction of one ton of CO2. When the emission fee exceeds that value, it means that the cost charged exceed the expected benefits. In a rational world the CCIA fee would be capped at the value of carbon value.
This work accepted the Integration Analysis emission estimates for 2020 through 2050 without modification. Note however, that the 2020 “modeled year reflecting historical trends” does not comport well with the observations. It is unfortunate that the Integration Analysis – Key Drivers and Outputs spreadsheet did not include the electric supply emissions with the capacity and generation results tables because we would be able to easily verify whether the E3 modeled year adequately represents 2020. What we can say is that the New York Independent System Operator Gold Book for 2021 stated that the gas and fuel oil generation in 2020 was 56,425 GWh and the Integration Analysis spreadsheet modeled value was 70,745 GWh, 25% higher. Consequently, the assumption that the Integration Analysis emissions were a reasonable estimate of future emissions seems pretty weak.
Conclusion
The Integration Analysis includes estimates of annual emissions that can be used to estimate how the CCIA fee will evolve over time. Based on the data available it appears that the CCIA emissions trajectory calculation requires early reductions greater than that necessary to meet the 2030 Climate Act target. As a result, all years after 2025 are adjusted upwards by 10% per year. It is not clear whether this is a feature or a bug in the minds of the CCIA authors.
I will update this analysis when the 2018 through 2020 emissions data are released.
UPDATE 5/12/2021: Contrary to my assertion, this legislation has not been passed by the New York Senate, it hasn’t even come up in committee yet in either house.
In the spring of 2021, the New York state Senate introduced and passed the Climate and Community Investment Act (CCIA). At the time of this writing in early May 2021, the bill is being considered by the Environmental Committee of the Assembly. Coming on the heels of the Texas energy debacle one might think that New York politicians would not propose any changes to energy and environmental laws until the causes of that disaster were understood or would at least make implementation contingent upon feasibility studies to determine if the ambitious goals of new legislation don’t risk a similar outcome in New York. Unfortunately, this summary of the proposed law shows that is not the case.
I have written extensively about implementation of the Climate Leadership and Community Protection Act (CLCPA) because I believe it will adversely affect affordability and reliability as well as create more environmental harm than good. The CCIA will make those impacts worse. 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 sponsor memo for this proposed regulation lists specific provisions in the proposed legislation. I prepared an annotated version of the draft bill that includes internal links to the sections of the bill corresponding to those provisions. The summary of Senate Bill S4264A states:
Enacts the climate and community investment act; prioritizes the allocation of public investments in disadvantaged communities; addresses climate change challenges through the expansion and growth of clean and renewable energy sources; adopts best value requirements for the solicitation, evaluation and award of renewable energy projects; establishes a community just transition program; establishes a climate pollution fee and a household and small business energy rebate; and creates the climate and community investment authority.
I reviewed the sponsor memo for this proposed regulation in my overview post. The memo describes the sections of the legislation. I prepared posts on the following sections of the proposed law:
Section 2 establishes the legislative findings that justify the need for the law.
This post will summarize all the sections of the proposed law.
The rationale for the legislation in the legislative findings in section 2 follows the premise of all the New York legislative and regulatory initiatives: there is a climate crisis, the effects of climate change are observable today, changes in greenhouse gas (GHG) concentrations due to humans are responsible for the observed climate changes, and New York action to reduce emissions will mitigate those effects. I addressed these claims in my post and found much evidence that does not support those claims. I also recently reviewed the state of the science related to the climate emergency and found that behind the façade of crying wolf about the alleged climate emergency there is a large body of evidence contradicting that claim. Even though advocates dismiss any contradictory evidence there is a gaping hole in their rationale for the value of mitigation. In the state of the science post I showed that the global warming impacts of New York emission reductions projected with the climate models being used to claim a climate emergency are simply too small to be measured, much less have an effect on any of the purported damages of greenhouse gas emissions. In the context of global emissions New York’s efforts will be subsumed quickly by emissions increases in other countries that are morally obligated to provide the tangible benefits of affordable, abundant energy to their citizens by using fossil fuels.
The rationale for the legislation claims that “Climate change especially heightens the vulnerability of disadvantaged communities including communities of color and low-income communities, which bear environmental and socioeconomic burdens as well as legacies of racial and ethnic discrimination”. It goes on to claim that air pollution is another disproportionate burden, that Covid-19 was exacerbated by those burdens, and somehow even managed to relate these impacts to the George Floyd murder. The authors of this legislation were surely affected by environmental justice advocate arguments that the disproportionate burdens of the environmental justice communities are exacerbated by power plants located in those communities as exemplified by articles like Fossil Fuel Phase Out Must Begin Where the Industry Has Hurt People the Most. There are two fatal flaws in those arguments however. They assume that there is no threshold for air pollution impacts which I believe is unsupportable. With regards to power plants themselves the primary health effects are from ozone and inhalable particulates which are not directly emitted by power plants so local effects are unlikely. As a result, the campaigns to retire power plants in disadvantaged communities is based on a mis-conception and will not have the desired effect.
Section 3 mandates a new air pollution pricing program by establishing a value of pollution and mitigation program. The authors of this legislation have heard about the social cost of carbon and propose to implement a similar approach for other air pollutants. I think this is deeply flawed because existing Clean Air Act regulations already address most of the concerns incorporated into a social costs approach. The only missing component is a negative externality fee to cover the alleged social costs that is included in the CCIA. The law mandates that New York will establish its own values but I have no doubts that the authors of the legislation don’t understand the effort needed to develop such a metric. The CLCPA includes a value of carbon requirement and the Department of Environmental Conservation developed its own value but that effort depended upon extensive previous work on the Federal level. There is nothing similar available for the other pollutants proposed in the legislation so that effort would have to start from scratch.
Section 8 establishes the Climate and Community Investment Authority. In general, I am not a fan of governmental agencies and I am particularly unimpressed with New York authorities. The particular problem is that despite the dedication in New York authorities of staff members chosen because of their background and experience, their work is co-opted by managers chosen by politicians. Over time and, particularly in the Cuomo Administration, the authorities no longer answer to the citizens of New York but to the agendas of the politicians. Setting up a new authority for a specific agenda-driven program is a recipe for public policy that is not necessarily in the best interests of the state as a whole. The mandated requirements for membership and operations exacerbate my concerns because they cater to the ideological preconceptions of the authors of the legislation.
The CLCPA does not include a provision to fund the efforts needed to implement the reductions necessary to meet the emissions targets. Section 9 establishes a climate pollution fee presumably to address that need. The authors of the legislation have proposed a complicated fee structure that includes an environmental integrity metric that adjusts the fee based on an arbitrary assessment of how they think the CLCPA reductions should be scheduled. Inexplicably, there is no reference to the CLCPA mandated value of carbon and the proposed emissions fees are inconsistent with the calculated social cost values.
The legislative findings also argue that good jobs and a thriving economy should be a key concern of climate policy. The bill includes provisions to establish responsible contracting, labor and job standards and worker protection; require prevailing wage for building service employees that are “employed in any building or facility that has received grants or tax abatements of one million or more”; and establish the climate change “just transition”. The “just transition” slogan describes efforts to “ensure an equitable transition for New York’s workforce toward the State’s renewable energy future and will develop a forward-looking jobs report, identify workforce training needs, and assess opportunities to put former power plant sites to productive use”. In my opinion all of these aspects of the law are included to cater to specific political demographics to engender support for the bill.
There is one aspect of the law that I completely support. Section 4 of the bill amends the executive law to add a new section 184 to limit diversion of funds dedicated to the climate and community investment. Too often in the past, funds that are supposed to be used for environmental control projects have been diverted to other politically expedient uses.
Discussion
I have previously described how the precautionary principle is driving the CLCPA mandates based on the work of David Zaruk, an EU risk and science communications specialist, and author of the Risk Monger blog. His explanation that managing policy has become more about managing public expectations with consultations and citizen panels driving decisions describes the Advisory Panels to the Climate Action Council and the authors of this legislation. He says now we have “millennial militants preaching purpose from the policy pulpit, listening to a closed group of activists and virtue signaling sustainability ideologues in narrowly restricted consultation channels”. This legislation proposes to mandate that approach. Instead of what they know, the Climate and Community Investment Authority directors will be determined by who they know. Based on what happened during the CLCPA advisory panel process, the social justice concerns of many involved in the CCIA bureaucracy, including the most vocal, will be more important than providing the state affordable and reliable power.
This legislation will generate a lot of revenue with one estimate of $15 billion per year. New York’s record investing the proceeds of the Regional Greenhouse Gas Initiative are often cited as an example of the value of New York’s support of clean and renewable energy. The latest New York State Energy Research and Development Authority (NYSERDA) report New York’s RGGI-Funded Programs Status Report – Semiannual Report through June 30, 2020 describes the programs New York has set up to invest the proceeds from the Regional Greenhouse Gas Initiatives. I found that NYSERDA supports 20 programs with associated CO2 reduction benefits and another 18 programs with no claimed CO2 reductions. I compared the cost per ton reduced for those programs against the 2021 $127 New York Value of Carbon metric for cost effective investments. Seventeen programs and the 18 programs with no claimed reductions do not meet this cost effectiveness standard. I found that only 1.1% of the NYSERDA RGGI funds invested cost-effectively reduce CO2 emissions. This legislation has specifc mandates for Climate and Community Investment Authority funding including 33% for the “community just transition fund”, 30% for the “climate jobs and infrastructure fund”, 30% for the “low-income and small business and household energy rebate fund”, and 7% for the “worker community assurance fund”. This will further dilute the cost effectiveness of emission reduction investments.
One of my biggest problems with this proposed legislation is mandates for specific information and programs that are already available elsewhere. The value of pollution and mitigation program replicates the standards setting process of the Clean Air Act but proposes to go beyond that process and conjure up emission fees based on the social cost of carbon model. There already is a pollutant emission fee and the effort necessary to develop social cost indices are clearly under-estimated. The only rationale for these components of the legislation is disappointment that the existing programs don’t give the answers the authors want.
Conclusion
The rationale for the CCIA epitomizes the belief that manmade climate change is a factor in many of today’s societal problems. Judith Curry describes and responds to the cover story, “Climate is Everything” in the April 26 issue of Time Magazine. She concludes:
The ever-expanding narrative of climate change entrains a range of social values into the proposed solutions. The momentum of the climate change narrative leads to claims that there is a solution to many other societal problems within the climate change cause – an example is social justice in the context of the U.S. Green New Deal. This link acts to energize both causes, and leverages the climate change narrative to blame or attack those opposed to the separate cause.
Climate change has thus become a grand narrative in which human-caused climate change has become a dominant cause of societal problems. Everything that goes wrong then reinforces the conviction that that there is only one thing we can do prevent societal problems – stop burning fossil fuels. This grand narrative misleads us to think that if we solve the problem of manmade climate change, then these other problems would also be solved. This belief leads us away from a deeper investigation of the true causes of these problems. The end result is narrowing of the viewpoints and policy options that we are willing to consider in dealing with complex issues such as public health, weather disasters and national security.
I leave it to readers to determine if their value judgements support the link between societal benefits and climate change mitigation but I believe that other risks must be considered. For example, there are reliability risks. The legislative findings note that Superstorm Sandy in 2012 “caused at least 53 deaths and $32 billion in damage in New York state”. It is notable that the February 2021 blackout in Texas caused similar impacts. One disaster was caused by nature and many impacts of the other were caused by a failure in the planning for the electric energy system. New York’s proposed energy transition goes well beyond the recent changes to the Texas energy system and risks a similar outcome unless all identified problems are addressed.
Energy cost affordability is another major risk. WHAM reports that the carbon tax alone would bring in $2.3 billion a year and could increase gasoline costs 55 cents a gallon. The sponsor, Senator Kevin Parker says: “We do believe that the benefits way outweigh the hurt that people may be feeling with this legislation”. I believe the purported benefits are illusions. Eliminating New York’s GHG emissions will not have any measurable effect on global warming and will be replaced by emissions elsewhere in the world in a matter of months. The social cost benefits of carbon are numbers developed to “prove” cost-effectiveness but the reality is the costs are real and the benefits illusions.
A primary objective in this legislation is environmental justice. I believe that if you want to protect the environment, you must fight poverty. On a global level the poor are trying to make it from one day to the next and don’t have energy or resources for protecting the environment. They have poorer health outcomes, lower quality of life, shorter lives, and worse education. In New York any additional costs of energy for this virtue-signaling legislation will increase energy poverty and exacerbate similar issues. The fact that those costs in aspects of this legislation are for efforts that duplicate Clean Air Act programs is especially troubling. My entire career has been related to air quality regulation and impacts and I am comfortable that the existing regulations are adequately protecting health and welfare.
To sum up the rationale for this law is that there is a climate crisis, the effects of climate change are observable today, changes in greenhouse gas (GHG) concentrations due to humans are responsible for the observed climate changes, and New York action to reduce emissions will mitigate those effects. The most important takeaway from this post is that even if one accepts the premise that human emissions are affecting the climate in observable ways, New York’s contribution to the global greenhouse gas emissions is so small that eliminating New York’s GHG emissions will have no observable effect. Given the enormous costs this means that this legislation is a poor deal for New Yorkers.
In the spring of 2021, the New York state Senate introduced the Climate and Community Investment Act (CCIA). Coming on the heels of the Texas energy debacle one might think that New York politicians would not propose any changes to energy and environmental laws until the causes of that disaster were understood or would at least make implementation contingent upon feasibility studies to determine if the ambitious goals of this legislation don’t risk a similar outcome in New York. This post on the proposed amendment to Article 19 is one of a series of posts about this legislation. Posts to date include an overview, summaries of the climate pollution fee and legislative findings, and a description of the Climate and Community Investment Authority.
I have written extensively about implementation of the Climate Leadership and Community Protection Act (CLCPA) because I believe it will adversely affect affordability and reliability as well as create more environmental harm than good. The CCIA will make those impacts worse. 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 sponsor memo for this proposed regulation lists specific provisions in the proposed legislation. I prepared an annotated version of the draft bill that includes internal links to the sections of the bill corresponding to those provisions. The summary of Senate Bill S4264A states:
Enacts the climate and community investment act; prioritizes the allocation of public investments in disadvantaged communities; addresses climate change challenges through the expansion and growth of clean and renewable energy sources; adopts best value requirements for the solicitation, evaluation and award of renewable energy projects; establishes a community just transition program; establishes a climate pollution fee and a household and small business energy rebate; and creates the climate and community investment authority.
Value of Pollution and Mitigation Program
This post describes the proposed amendment to Article 19 of the Environmental Conservation Law that adds a new title: Value of Pollution and Mitigation Program. The title includes the following sections: methodology and valuation of pollution price index, implementation of fees, allocation of revenues,
inventory, transportation pollution, and reporting. I will address each in turn.
The first section specifies a methodology for developing a pollution price index. A year after the effective date of the law the Climate and Community Investment Authority is required to develop a social cost index and methodology for regulated pollutants. The Authority is supposed to consider, at a minimum: “(a) public health impacts, including but not limited to: loss of life, loss of welfare, and employment impacts; (b) impacts to public and private property, including agricultural property; (c) impacts to ecosystems and the ability of ecosystems to provide ecosystem services; and (d) the full life-cycle of impacts”.
This apparently has its roots in the social cost of carbon approach to valuing social costs. There are issues with this. In the first place, while there is no equivalent Federal pollution social price index, the National Ambient Air Quality Standards in the Clean Air Act address health and welfare impacts. I believe that aside from the full life cycle of impacts requirement, these considerations are covered by the existing Clean Air Act process. In addition, to do this right requires a significant investment of resources to attract the subject matter experts necessary to develop a defensible index.
The next section implements fees based on the social cost indices developed in the previous section. New York already has a fee on regulated pollutants which are used to fund the Title V permitting process among other programs. It is not clear to me whether the legislation proposes to levy fees on sources not currently required to report detailed emissions reports. Note that as New York pollution has fallen the money necessary to maintain the permitting programs has become inadequate to cover those costs.
The revenues generated by the fee are allocated to more than the Title V permitting program. The proposed legislation states that “forty percent of funds shall go to the environmental justice office of the authority; twenty percent of funds shall go to expanding, operating and maintaining the New York state Title V emissions inventory within the department; twenty percent of funds shall go to expanding, operating and maintaining air quality monitoring, including ambient air quality monitoring and point source monitoring within the department; and twenty percent of funds shall be allocated at the discretion of the authority, based on the needs of the authority”. The proposal specifically states that “No funds shall be allocated to fund police, prisons or related infrastructure.” The annual per ton fee is established under 6 NYCRR 482-2. As of January 1, 2020 the fee per ton emitted ranges between $60 and $90 depending on the total emissions of the source. If the revenues provide equivalent funding for the Title V program, then the overall rates would be five times higher.
In my post on the Climate and Community Investment Authority I included some estimates of the revenues expected from this law and necessary to implement the CLCPA. According to this article, New York “will need an annual investment of about $31 billion per year in combined private and public spending to bring CO2 emissions down to 100 million tons by 2030, a 2017 study by economists at the University of Massachusetts-Amherst found. That equates to two percent of the state GDP. At a recent hearing a figure of $15 billion a year in revenues was mentioned. WHAM reports that the carbon tax alone would bring in $2.3 billion a year. According to the 2019 Title V emission inventory there were 41,084,926 tons of CO2 emitted and at $55 per ton that matches the news report. However, the total air emissions excluding CO2 in the 2019 Title V inventory are only 79,082 tons. The largest Title V permit fee is $90 per ton and that regulation caps the total tons. Note that 79,082 tons times $90 is $35.6 million, far short of the $15 billion. Therefore, in order to reach the $15 billion estimate the cost per ton of air pollutants would have to be $161,104 per ton. I conclude that I have no idea what the revenues will be other than “a lot”.
In order to implement the fees affected sources have to report their emissions. The Title V program already has an emissions reporting system in place. The proposed law defines “Regulated air contaminant” as the following:
a. oxides of nitrogen;
b. volatile organic compounds;
c. sulfur dioxide;
d. particulate;
e. carbon monoxide;
f. any class I or II substance subject to a standard promulgated pursuant to section 7671 of the Act;
g. any other air contaminant for which a national ambient air quality standard has been promulgated; or
h. any air contaminant that is regulated under section 7411 or 7412 (b) and (c) of the Act and which the commissioner has listed in regulation. The department may use emergency rulemaking pursuant to subdivision six of section two hundred two of the state administrative procedure act if necessary, in order to timely list such air contaminants.
While most of the major pollutants are already included in the existing inventory, I am not sure that it includes them all. One final note – DEC issues three types of air permits that have different reporting requirements. The naïve response is that not requiring reports is a loophole that subjects citizens of the state to undue risk. The reality is that there are so many small sources with so few total emissions that the time and effort necessary to report and process is unnecessary because there is no adverse risk.
There also is a provision in the law to “make the Title V emissions inventory more accessible to the public including, but not limited to, taking action to release the related data, analysis and assumptions of agency websites.” Frankly until I researched this post, I was not aware that the data were available but a quick internet search found the Title V emissions inventory data which fulfills the criterion for a publicly available inventory. The analysis and assumptions criteria are more difficult to address. I was responsible for submitting the emission statements and did the analysis because I had the background to do it. It was the one reporting task that I dreaded every year because documenting the analysis and assumptions was tedious and difficult to do in sufficient detail so that the Department of Environmental Conservation (DEC) technical staff could understand how my numbers were derived. This legal requirement reminds me of managers who would request information from different people until they got the answer they wanted or understood. Unless the emissions are directly measured at a source, emissions are estimated by multiplying an activity factor (e.g., the amount of the substance used) times an Environmental Protection Agency emission factor (derived from emissions testing programs). Is there really a need for the public to have that level of detail available? Isn’t sufficient to rely on the technical staff at the DEC to review the submitted documentation and confirm that the submittals are reasonable?
This title also addressed transportation pollution. In addition to my experience developing emission factors and using stationary source emission inventories, I also worked with transportation emissions. The transportation pollution aspects of this section entirely replicate the EPA Clean Air Act process apparently because the authors don’t like the current situation. I have sympathy for their concerns because I believe that in urban areas transportation sources are the primary source of air pollution. However, at the end of the day I doubt that this legislation can do anymore than what DEC is currently doing. There has been a long history of California attempting to impose stricter emission limits than the national levels and continuous litigation and settlement to resolve the differences. It could end up with car companies simply not offering cars in New York because of state limits and then the issue becomes one of enforcement at the borders to keep non-compliant cars out.
There also is a reporting requirement to document the implementation of the policies. The report must address reduction effectiveness of the fees, an overview of social benefits, compliance costs, and administrative costs, whether the fees are “equitable, minimize costs and maximize the total benefits to the state”, and include recommendations for policy changes and future regulatory actions. I agree that these are appropriate requirements but believe that it would be appropriate to do a feasibility report before implementing the requirements. I don’t think that any added costs to energy can ever be “equitable” because energy use is inelastic and extra costs will always disproportionally impact those least able to pay the most. A transparent and unbiased feasibility study could very well find other flaws that indicate that this agenda-driven is poor policy. In my opinion, many of the “wish list” components of this law would not stand up to scrutiny.
Conclusion
The social costs of pollution mandate included in the legislation is a naïve requirement. I believe that the authors heard about social costs someplace, thought it sounds good, believe it probably can be used to their advantage so they threw it into the regulation even though they don’t understand it fully. I believe the concept, if not the jargon, is already included in the Clean Air Act. The National Ambient Air Quality Standards are established based on health and welfare impacts at levels designed to protect the public. The rationale for this mandate comes back to the authors’ belief that existing air quality regulations don’t give us the answer we want so we will make up our own regulations.
The social costs approach is also included because it justifies the need for a pollution fee. Dr. Steven McKitrick evaluated carbon pricing policies in Canada that are the template for this approach. He explained that “a beneficial outcome is not guaranteed” because certain rules must be observed in order for social cost pricing to reduce emissions without unduly hurting the economy. He believes that social cost pricing only works in the absence of any other emission regulations. “If pricing is layered on top of an emission-regulating regime already in place (such as emission caps or feed-in-tariff programs), it will not only fail to produce the desired effects in terms of emission rationing, it will have distortionary effects that cause disproportionate damage in the economy.” As I explained before, nearly everything in this legislation replicates existing programs with established emission limits. The only exception is changing the pollutant fees to a flat fee to one indexed to a social cost parameter.
Ultimately, the Value of Pollution and Mitigation Program section of the CCIA replicates many aspects of existing programs in the Clean Air Act and New York regulations. I think the authors don’t fully understand existing regulations or don’t care because they are not getting the answer they want which is zero impacts. This law will impose reporting burdens and added costs to any sources that emit anything to the atmosphere and major commitments by NY agencies to implement a new regulatory reporting system. I believe that those burdens are all redundant because existing programs address their concerns. I also think that the authors do not understand the magnitude of the effort needed to develop air pollution social cost indices or that their plan will not work as they expect.
In the spring of 2021, the New York state Senate introduced the Climate and Community Investment Act (CCIA). Coming on the heels of the Texas energy debacle one might think that New York politicians would not propose any changes to energy and environmental laws until the causes of that disaster were understood or would at least make implementation contingent upon feasibility studies to determine if the ambitious goals of this legislation don’t risk a similar outcome in New York. This is one of a series of posts about this legislation. Posts to date include an overview and summaries of the climate pollution fee and legislative findings.
I have written extensively about implementation of the Climate Leadership and Community Protection Act (CLCPA) because I believe it will adversely affect affordability and reliability as well as create more environmental harm than good. The CCIA will make those impacts worse. 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 sponsor memo for this proposed regulation lists specific provisions in the proposed legislation. I prepared an annotated version of the draft bill that includes internal links to the sections of the bill corresponding to those provisions. The summary of Senate Bill S4264A states:
Enacts the climate and community investment act; prioritizes the allocation of public investments in disadvantaged communities; addresses climate change challenges through the expansion and growth of clean and renewable energy sources; adopts best value requirements for the solicitation, evaluation and award of renewable energy projects; establishes a community just transition program; establishes a climate pollution fee and a household and small business energy rebate; and creates the climate and community investment authority.
Climate and Community Investment Authority
This post describes a proposed addition to the Public Authorities Law that adds the Climate and Community Investment Authority (Authority). The legislative findings explain the purpose of this authority:
21. It is in the interest of the state to establish a dedicated authority to ensure that New York’s climate goals are accomplished. Such an authority would be able to nimbly manage the proceeds from a polluter fee which will amass significant revenue and require ongoing management. This authority would also disburse funds for clean energy community scale projects in a timely and efficient manner while employing best value procurement practices. In addition, a new authority would have the capacity to ensure prioritization of projects and funds for impacted communities, coordinate statewide emissions reduction strategies and assist impacted workers in a transition away from fossil fuels through specialized assistance programs
The Authority’s board of trustees establishes the following offices: environmental justice, household and small business energy rebates, climate jobs and infrastructure, community just transition, worker and community assurance, value of pollution and mitigation program, procurement, public engagement and independent ombudsperson, and any other offices as necessary. Each office created by the authority shall: “Abide by the principles of environmental justice, including the federal executive order 12898 of 1994, relating to environmental justice, and the Jemez principles of democratic organizing. Such principles shall include: being inclusive; placing an emphasis on bottom-up organizing; letting people speak for themselves; working together in solidarity and mutuality; building just relationships among ourselves; and making a commitment to self-transformation.”
The Board of Trustees consists of five trustees from state agencies, two appointees from the Governor, three from the temporary president of the Senate and three from the speaker of the Assembly. At least one appointee must live in eight regions outside of New York City. A minimum of three trustees “shall be representative of environmental justice communities” and one shall be a representative of a youth organization under the age of 21. However, “All trustees appointed under this section shall have relevant experience in any or all of the following areas: utility, environmental justice, energy markets, energy systems, organized labor, workforce development, sustainable land use, transportation, and clean energy.”
Comments
In general, I am not a fan of governmental agencies and I am particularly unimpressed with New York authorities. The particular problem is that despite the dedication in New York authorities of staff members chosen because of their background and experience, their work is co-opted by managers chosen by politicians. Over time and, particularly in the Cuomo Administration, the authorities no longer answer to the citizens of New York but to the agendas of the politicians. Setting up a new authority for a specific agenda-driven program is a recipe for public policy that is not necessarily in the best interests of the state as a whole.
The legislative findings note that this authority “would be able to nimbly manage the proceeds from a polluter fee which will amass significant revenue and require ongoing management.” It is not clear to me how a new authority with six agenda-driven offices could ever “nimbly” manage anything much less money. Unfortunately, the nimble goal gets much less likely given the organizational mandates that dictate how decisions are supposed to be made.
The reference to “significant” revenues is a key point for New Yorkers to understand. In conversations with people familiar with Albany politics one of the major drivers of this law is to provide the funding needed for CLCPA target implementation. So far, the Climate Action Council and its advisory panels have avoided mentioning any cost estimates. However, according to this article, New York “will need an annual investment of about $31 billion per year in combined private and public spending to bring CO2 emissions down to 100 million tons by 2030, a 2017 study by economists at the University of Massachusetts-Amherst found. That equates to two percent of the state GDP. At a recent hearing a figure of $15 billion a year in revenues was mentioned. WHAM reports that the carbon tax alone would bring in $2.3 billion a year and that measure could increase gas prices 55 cents a gallon and raise home heating costs 26%. As egregious as these costs estimates are, the total cost of the CLCPA will likely be even more.
Each of the offices has a politically appointed director. I am uncomfortable with this language:
Pursuant to authority duly delegated to him or her, a director from time to time shall hire, without regard to any personnel or civil service law, rule, or regulation of the state and in accordance with guidelines adopted by the board, such officers, employees and consultants, as they may require for the performance of their duties and shall prescribe the duties and compensation of each such officer, employee or consultant. Notwithstanding the provisions of any general, special or local law, the board may determine that, if any pension or retirement plan becomes inapplicable or is terminated, all or such class or classes of employees of the authority as the board may determine may elect to become members of the New York state employees’ retirement system on the basis of compensation payable to them by the authority.
Maybe it is just me but this seems to be a recipe for bureaucratic abuse.
Finally, there are 13 trustees all chosen because of who they know rather than what they know. They all are politically appointed and despite the requirement that they will have “relevant experience” that requirement rings hollow when one of the trustees is supposed to be under 21. The only relevant experience for the child trustee that I can think of is membership in an environmental organization.
Conclusion
New York’s record for clean energy development is not good because the cost per ton of CO2 reduced using the proceeds from the Regional Greenhouse Gas Initiative far exceeds the states social cost of carbon. My impression is that some of the reason for that poor performance is because of the cost of New York bureaucracy. This legislation would compound that problem significantly. It will be a windfall for the politically connected and the crony capitalists but will just mean increased costs of living for the citizens of New York.
In the spring of 2021, the New York state Senate introduced the Climate and Community Investment Act (CCIA). Coming on the heels of the Texas energy debacle one might think that politicians would not propose any changes to energy and environmental laws until the causes of that disaster were understood or would at least make implementation contingent upon feasibility studies to determine if the ambitious goals of this legislation don’t risk a similar outcome in New York. Such is not the case as shown by the legislative findings for this proposal.
I have written extensively about implementation of the Climate Leadership and Community Protection Act (CLCPA) because I believe it will adversely affect affordability and reliability as well as create more environmental harm than good. The CCIA will make those impacts worse. 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 sponsor memo for this proposed regulation lists specific provisions in the proposed legislation. I prepared an annotated version of the draft bill that includes internal links to the sections of the bill corresponding to those provisions. The summary of Senate Bill S4264A states:
Enacts the climate and community investment act; prioritizes the allocation of public investments in disadvantaged communities; addresses climate change challenges through the expansion and growth of clean and renewable energy sources; adopts best value requirements for the solicitation, evaluation and award of renewable energy projects; establishes a community just transition program; establishes a climate pollution fee and a household and small business energy rebate; and creates the climate and community investment authority.
This post evaluates Section § 2, legislative findings and declaration. In the following section I list the findings and my indented and italicized comments. I will confine my comments to technical findings and not comment on social justice findings that are personal value judgements.
Discussion
1. Climate change is adversely affecting economic well-being, public health, natural resources, and the environment of New York.
In general, the underlying premise in all the New York legislative and regulatory initiatives is that there is a climate crisis, that the effects of climate change are observable today, and that changes in greenhouse gas concentrations due to humans are responsible for the observed climate changes. The politicians and regulators who prepare the rationales that climate change needs to be addressed frequently confuse weather and climate. It happens so often that I have a page that references my evaluations of alleged climatic effects that turned out to be weather events and examples by other authors.
According to the National Oceanic and Atmospheric Administration’s National Ocean Service “Weather reflects short-term conditions of the atmosphere while climate is the average daily weather for an extended period of time at a certain location.” The referenced article goes on to explain “Climate is what you expect, weather is what you get.” Also keep in mind that the standard climatological average is 30 years. In order to think about a change in today’s climate averages you really should at least compare the current 30 years against the previous 30 years. In order to get a trend, you need to look at as much data as possible. On the face of it that might seem easy but the reality is that the conditions for a representative trend are difficult to achieve. Ideally you need to use the same instruments, the same methodology, and keep the conditions around the observing location the same. No recent New York legislative or regulatory description of climate change impacts has presented any claims that make the distinction between weather and climate so they all their claims are suspect.
Dr. William Briggs shows that attempts to blame extreme weather on human-caused global warming are “overconfident and probably wrong”. He explains that the first problem is how to define natural because “some have the curious and false idea that earth’s climate never changed before mankind began ‘interfering’ with it.” Those people reason that the industrial revolution changed the environment due to man’s interference starting on the order of a hundred years ago. Briggs argues:
Now it is true that man, like every other creature, influences the climate and the environment to some extent. It is impossible for any creature, man included, not to have an effect. After all, every living thing is part of the environment. There is therefore no ‘natural’ state of the climate, defined as one operating without man’s influence.
Briggs explains the problems trying to attribute human-caused effect to weather and climate. No matter how you estimate that potential effect it is impossible to independently check that estimate. The primary tool used today to estimate effects is a climate model. In order to trust those models Briggs points out that “they first have to demonstrate forecast skill” and “if they can’t, or they are inaccurate, they can’t be trusted”. Finally, he explains that “we might pick a date and say all observations before it are ‘natural’ and all after are tainted by ‘climate change’. But this is not proof man caused the differences. It is mere assumption.” He concludes that “climate-change event attribution studies rely on all these kinds of guesses and claims. As such, they are either incorrect or are far too certain.”
The adverse impacts of climate change include:
an increase in the severity and frequency of extreme weather events, such as storms, flooding, and heat waves, which can cause direct injury or death, property damage, and ecological damage (e.g., through the release of hazardous substances into the environment);
This finding presumes that these events can be attributed to mankind’s impact on the climate. Briggs explains that these claims are based either on a comparison of current observations to historical observations or using climate models with and without the alleged effect of GHG emissions. He shows that it is not possible to verify what the “natural” atmosphere was in the past so these comparisons are highly uncertain. The fact is that the human effect on weather events is at best a tweak and trying to tease out that effect with climate models that are very large scale is “dicey”. He concludes that “the uncertainty in attribution claims is just too great and in ways not always recognized” to be relied upon to make decisions or, in this case, justify new legislation. In addition an evaluation of extreme weather in 2020 notes that there is little evidence of extreme event worsening and most can be linked to natural climate cycles.
rising sea levels, which exacerbate damage from storm surges and flooding, contribute to coastal erosion and saltwater intrusion, and inundate low-lying areas, leading to the displacement of or damage to coastal habitat, property, and infrastructure;
Sea levels have been rising at the Battery in New York City since record keeping began and local changes in the height of land relative to the height of the continental land mass are a significant factor of that sea-level rise that no amount of change to the greenhouse effect will affect.
exacerbation of air pollution;
The only climate change impact that could affect air pollution is an increase in temperature that could change the rate of the reactions that convert precursor emissions s to ozone and inhalable particulates. Note, however, that in both cases temperature is a minor actor in the conversion process and could only affect concentrations but several percent.
an increase in the incidences of infectious diseases, asthma attacks, heart attacks, and other negative health outcomes;
Absent supporting information for these health claims I cannot respond.
increased average temperatures, which increase the demand for air conditioning and refrigeration among residents and businesses; and
Recall that climate variability is over as long a period as possible. The EPA high and low temperature climate change indicators page shows that the 1930’s were the worst period for heat waves with a heat wave index four times higher than recent data. It is clear that temperatures are rising but it is not clear how much of the change is due to climate change and how much is due to land use changes like the urban heat island that are affecting temperature trends.
extensive environmental degradation with devastating impacts to wildlife and natural habitats, ecosystems and food supplies.
No examples of the devastating impacts are presented and there is no mention that in order to meet New York’s climate targets with wind and solar that thousands of wind turbines and square miles of solar panels will be required in the state or that the rare earth metals necessary for that technology will cause real environmental devastation somewhere else in the world. In order to justify this claim the authors would have to compare the life cycle impacts of renewable alternatives.
2. Many of the impacts of climate change are already observable in New York state and the northeastern United States. Annual average temperatures are on the rise, winter snow cover is decreasing, heat waves and precipitation are intensifying, and sea levels along New York’s coastline are approximately one foot higher than they were in 1900. New York has also experienced an increasing number of extreme and unusual weather events, like Hurricanes Irene and Lee and the unprecedented Superstorm Sandy in 2012, which caused at least 53 deaths and $32 billion in damage in New York state.
As noted previously these claims have high uncertainty. Nonetheless note that the sea level and the hurricane arguments are not supportable. Sea levels are approximately one foot higher than they were in 1900 but there is no change in the rate of sea level rise. NOAA’s Geophysical Fluid Dynamics Laboratory in Princeton NJ has concluded:
“In summary, it is premature to conclude with high confidence that increasing atmospheric greenhouse gas concentrations from human activities have had a detectable impact on Atlantic basin hurricane activity, although increasing greenhouse gases are strongly linked to global warming…Human activities may have already caused other changes in tropical cyclone activity that are not yet detectable due to the small magnitude of these changes compared to estimated natural variability, or due to observational limitations.”
New York was impacted by several hurricanes in recent years and that fact is used as “proof” that the climate is changing. However actually reviewing the data shows otherwise. Dr. Ryan Maue compiles data on the frequency of hurricanes across the globe and has found no trend.
Roger Pielke summarized hurricane landfalls and found a trend of decreasing landfalls since the early 1960’s.
3. New York should therefore minimize the risks associated with climate change through a combination of measures to reduce statewide greenhouse gas emissions and improve the resiliency of the state with respect to the impacts and risks of climate change that cannot be avoided.
I have shown that the alleged risks associated with climate change are nonexistent so reducing greenhouse gas emissions will have no effect. On the other hand, observed extreme weather has major effects on society. Even if there is no climate change signal increased resilience is a no regrets policy that is in the best interests of the state
4. Climate change especially heightens the vulnerability of disadvantaged communities including communities of color and low-income communities, which bear environmental and socioeconomic burdens as well as legacies of racial and ethnic discrimination. Disadvantaged communities are more likely to experience flooding and urban heat island effects, and to live in housing vulnerable to destruction from storms. Low-income New Yorkers lack emergency savings to keep up with necessary expenses following the disruption from a major storm or climate event.
As shown above I do not believe climate change is an existential threat to society. However, I agree that extreme weather heightens vulnerability of disadvantaged communities and that suggests that resilience measures should focus on reducing weather impacts in those communities.
5. Actions taken by New York state to reduce greenhouse gas emissions, and those taken to increase the resiliency of the state with respect to the impacts and risks of climate change, should prioritize the safety, health, and resiliency of disadvantaged communities, control potential regressive impacts of future climate change mitigation and adaptation policies on these communities, and prioritize the allocation of public investments in these areas.
I agree that resiliency measures should prioritize the safety and health of disadvantaged communities. I submit however, that the concept that reducing greenhouse gas emissions can be used to control potential regressive impacts of future climate change mitigation on these communities is not in the best interest of those communities. The fact is that mitigation of greenhouse gases invariably increases the cost of energy and the disadvantaged communities are disproportionately impacted more by energy costs. Any money spent on mitigation is not going to affect impacts so there cannot be any paybacks so increased costs to those least able to afford those increases is not in the best interests of the disadvantaged communities.
6. Disadvantaged communities in New York state experience greater exposure to air pollution and subsequent negative health impacts, in large part due to legacies of racial, ethnic, and socio-economic discrimination. New York’s communities of color are more likely to:
(a) live near sites of high pollution, including power plants, highly trafficked automotive routes, waste transfer stations, landfills, hazardous waste sites and toxic industrial facilities;
(b) breathe in a greater volume of pollution, including both ozone and particulate matter;
(c) experience asthma and other pollution-related illnesses including increased hospitalization rates for childhood asthma;
(d) have higher rates of cancer due to disproportionate exposure to air pollution, including lung cancer and other pollution-affiliated cancers; and
(e) experience other negative health impacts, including but not limited to reduced fertility rates, adverse pregnancy outcomes and increased vulnerability to the consequences of co-morbidities like diabetes and high blood pressure.
I do not dispute that disadvantaged communities experience greater exposure to air pollution and subsequent health impacts but there are some caveats that should be kept in mind. Many environmental justice organizations are taking the position that because of the legacies of the past that the only acceptable future scenario is no environmental impacts. For example, it is not acceptable for a facility to add controls that significantly reduce emissions and impacts. Instead, the facility has to be replaced with something with no local impacts.
There are technical issues with the demand for no local impacts from power plants. The over-riding problem is that the primary air quality health concerns are from ozone and inhalable particulates. Because those are both secondary pollutants that form by chemical reactions from the pollutants emitted by power plants, they don’t impact the neighborhoods around the power plants simply because by the time those reactions take place the emissions have been transported away from the plant. Another problem is that the projections of reduced health impact outcomes rely on analyses that are contradicted by other work. Finally, the projections of health impacts rely on the linear-no threshold model that is impossible to verify at the low pollutant levels associated with neighborhood power plants.
Ultimately the discussion of how best to address the air pollution problems of disadvantaged communities involves trade-offs and value judgements that are beyond the scope of this post.
7. In the spring of 2020, New York experienced the devastating impacts of the Covid-19 pandemic. Tens of thousands of New Yorkers died, and many hundreds of thousands more became ill. Air pollution played a significant role in this pandemic, as residents of communities of color who live in highly polluted areas died disproportionately from Covid-19 when compared to patients from less polluted neighborhoods. Throughout the pandemic, New Yorkers of color continue to disproportionately contract, fall ill, and die from Covid-19, in part because of disproportionate exposure to toxic air pollution.
The basis of this claim is a study by Harvard that claimed that a small increase in PM2.5 in outdoor air increased the risk of death from COVID-19 by 15 percent. However, that study is flatly contradicted by astudy by University of Washington and Stanford researchers that found that nations with the highest smoking rates had the lowest COVID-19 death rates. Because the inhalable particulates from cigarette smoke are many times greater than the inhalable particulates in New York air the disproportionate COVID impacts on New York are due to another cause.
8. The Covid-19 pandemic has also caused a national economic crisis which has also severely impacted New York State. Many New Yorkers lost their jobs during the Covid-19 pandemic, with unemployment rates reaching levels not seen since the Great Depression. Such mass job loss increased precarity for thousands of New Yorkers and left many less able to weather current or future emergencies. Child and dependent care shortages are and continue to be a barrier to work in New York, especially for women, who disproportionately take on unpaid caregiving responsibilities when their family cannot find or afford child and dependent care. Low and middle-income families and families of color disproportionately lack access to quality child and dependent care.
No comment
9. New York state has an interest in reducing air pollution that increases risk for Covid-19 and ensuring that all populations are equally able to breathe clean air and live healthful lives. Actions undertaken by New York to reduce air pollution should prioritize the health and safety of disadvantaged communities, prioritize the allocation of public investments in these areas, and control potential regressive impacts of climate policies on these communities. Further, it is in the interest of the state to invest in creating stable and safe employment opportunities for individuals who have lost their jobs as part of the Covid-19 recession. This includes protecting and promoting the ability for all workers to equitably participate in a just clean energy transition by increasing equitable and comprehensive access to child and dependent care.
EPA and DEC have regulations in place to improve air quality. I am not sure whether incorporating the other goals described will help or hinder the efforts to improve air quality
10. Racial justice and environmental justice are inextricably linked to achieving a just clean energy transition in New York. The murder of George Floyd on May 25, 2020 was followed by mass protests for Black lives in New York state and throughout the nation. These movements have forced a national reckoning with the fact that racial injustice has resulted in over-policing and mass incarceration of communities of color. It is in the interest of the state of New York that no funds from programs for pricing greenhouse gas emissions are invested in police, prisons or related infrastructure.
No comment.
11. The adverse impacts of climate change are having a detrimental effect on some of New York’s largest industries, including agriculture, commercial shipping, forestry, tourism, and recreational and commercial fishing. These impacts also place additional strain on the physical infrastructure that delivers critical services to the citizens of New York, including the state’s energy, transportation, stormwater, and wastewater infrastructure.
No evidence is presented that there are detrimental effects on these industries. The tendency to blame any negative effect on climate change distracts resolution of the real cause of the problem. Even if there is some tenuous connection between an alleged climate change impact and strains on infrastructure the question should be what is the most cost-effective approach to address those problems. Should we try to indirectly invest to reduce climate impacts by reducing emissions or invest directly in the infrastructure to adapt to extreme weather?
12. Creating good jobs and a thriving economy is a core concern of New York state. Shaping the ongoing transition in our energy sector to ensure that it creates good jobs and protects workers and communities that may lose employment in the current transition must be key concerns of our climate policy. Setting clear standards for job quality and training standards encourages not only high-quality work but positive economic impacts.
Everybody wants good jobs. The tradeoff between jobs that are depend on government subsidies and those that don’t should be addressed in this conversation.
13. Ensuring career opportunities are created and shared geographically and demographically is necessary to ensure increased access to good jobs for marginalized communities while making the same neighborhoods more resilient. Climate change has a disproportionate impact on low-income people, communities of color, women, youth, children and workers. This includes formerly incarcerated individuals. Disadvantaged communities and workers must have access to all aspects of the state’s clean energy economy, including as investors and developers of clean energy projects. It is in the interest of the state of New York to protect and promote the interests of these groups against the impacts of climate change and severe weather events and to advance our equity goals by ensuring quality employment opportunities in safe working environments.
No comment
14. Addressing climate change challenges through the expansion and growth of clean and renewable energy sources requires New York to make substantial proprietary and financial investments in this sector and to become an investor and partner in the development of renewable energy programs and projects. New York has long provided forms of state assistance, including grants, energy credits, or tax incentives to developers, project owners and other entities proposing clean and renewable energy projects. Key findings relating to state assistance in the clean and renewable energy sector are as follows:
(a) providing forms of state assistance in renewable energy projects results in New York becoming a co-investor in this sector with strong financial, proprietary interests in the projects it supports. Such assistance is essential since the expansion and development of this market, would not occur at the scale and pace needed without substantial financial investment by the state. New York has already invested billions of dollars in promoting its renewable energy programs and will continue to invest substantial sums over the next several years to assist the growth and development of the sector. Such investments are critical not only for the development of individual renewable energy projects, but also to ensure that projects are effectively planned and executed and produce adequate amounts of clean energy needed to meet the state’s future needs for safe, affordable reliable power;
(b) it is vital that the state’s investments in clean and renewable energy be protected and monitored through all stages of development to make certain that they are effective in producing the intended results. The need for this protection has grown greater due to the enormous economic burden imposed on the state by the Covid-19 pandemic;
(c) one of the areas in need of most protection is the actual construction and operation of renewable energy projects, especially large-scale projects. Because the construction industry is inherently complex and challenging, the delivery of projects, especially large capital construction projects, is fraught with numerous high-level risks that stem from various sources. These include but are not limited to project funding, financial resources and stability of project partners, project designs and specifications. Risks also include site conditions, equipment and material supply chains, and the experience, capacity and technical qualifications of developers, contractors and craft labor personnel used for a given project;
(d) ensuring the sufficient supply of properly trained and qualified craft labor personnel is vital to the protection of state interests and investments in the renewable energy sector. Large-scale construction projects are both labor intensive and inherently dangerous operations. The timely, successful delivery of these projects is critical to the delivery of safe and reliable power to consumers. Thus, the safe and successful completion of these projects necessitates a highly skilled workforce. It is critical that the state support the development of this workforce, as the construction industry generally is facing the most acute, widespread skill shortage in craft labor personnel in modern times. This shortage can cause various types of project failures, including major schedule delays, cost-overruns, increased safety incidents, or other serious problems;
(e) while many aspects of construction project planning cannot be controlled, ensuring the adequate supply of properly trained craft personnel can be effectively managed through the use of labor performance tools and policies. Key labor performance provisions include prevailing wage requirements, project labor agreements and responsible contractor provisions. These policies, in use in New York and throughout the country, are shown to be effective at protecting capital investments and the proprietary interests of investors. These tools also help ensure that adequate numbers of skilled craft personnel are deployed to projects in a timely manner and that the most highly qualified contractors will be attracted to such projects. These tools also protect the wage rates of local communities, promote adherence to required licensing and technical certifications, and maintain labor peace on projects to avoid disruptions and protect project delivery;
(f) project labor agreements promote the planning and timely completion of construction projects, especially larger scale projects, by establishing pre-determined and uniform employment terms. This ensures an adequate supply of properly trained craft personnel, creates stability for project planning and prevents labor disruptions. Responsible contractor policies help ensure that contractors and subcontractors used for projects are reputable, qualified firms that have sufficient resources and capabilities needed to perform the work successfully. Prevailing wage requirements protect local area wage rates from being undermined; and
(g) project labor agreements, responsible contracting and prevailing wage requirements also produce valuable socio-economic benefits by creating quality middle class jobs and skill training opportunities in New York’s construction industry. Utilizing these policies will develop a new generation of craft labor personnel, create jobs in the state and foster economic development in communities where projects are located.
New York does have a long history supporting clean and renewable energy. However, the results of those investments do not bode well. The investments from the proceeds of the Regional Greenhouse Gas Initiative are often cited as an example of the value of New York’s support of clean and renewable energy. The latest New York State Energy Research and Development Authority (NYSERDA) report New York’s RGGI-Funded Programs Status Report – Semiannual Report through June 30, 2020 describes the programs New York has set up to invest the proceeds from the Regional Greenhouse Gas Initiatives. Upon closer examination though, I found that NYSERDA supports 20 programs with associated CO2 reduction benefits and another 18 programs with no claimed CO2 reductions. I compared the cost per ton reduced for those programs against the 2021 $127 New York Value of Carbon metric for cost effective investments. Seventeen programs and the 18 programs with no claimed reductions do not meet this cost effectiveness standard. I found that only 1.1% of the NYSERDA RGGI funds cost-effectively reduce CO2 emissions. I imagine that the limitations in this proposed legislation can only add costs to renewable developments and further reduce their effectiveness.
15. It is in the interest of the state to strengthen, monitor and enforce prevailing wages, project labor agreements and responsible contracting. While prevailing wage requirements are already required for some renewable energy projects, these requirements should be strengthened and used in coordination with the additional labor and performance standards established in this act.
No comment
16. The severity of current climate change and the threat of additional and more severe change will be affected by the actions undertaken by New York and other jurisdictions to reduce greenhouse gas emissions. According to the U.S. Global Change Research Program and the Intergovernmental Panel on Climate Change substantial reductions in greenhouse gas emissions will be required by mid-century in order to limit global warming to no more than 2°C and ideally 1.5°C, and thus minimize the risk of severe impacts from climate change. Specifically, industrialized countries must reduce their greenhouse gas emissions by at least 80 percent below 1990 levels by 2050 in order to stabilize carbon dioxide equivalent concentrations at 450 parts per million–the level required to stay within the 2°C target.
The Paris Climate Agreement will reduce temperatures just 0.05°C. It is not clear how much the alleged risks of severe impacts can be ameliorated by that small a change in temperature.
17. In 2019, New York state demonstrated national and international leadership on climate by enacting the Climate Leadership and Community Protection Act (“CLCPA”), the nation’s most aggressive climate law and the nation’s only climate law that provides for a just transition. The CLCPA created a comprehensive regulatory program to reduce greenhouse gas emissions from all anthropogenic sources 100% over 1990 levels by the year 2050, with an incremental target of at least a 40 percent reduction in climate pollution by the year 2030, and requires investment in and protection of disadvantaged communities. To meet the goals of the CLCPA, the state will need to transform its energy infrastructure, including the rapid and significant deployment of clean and renewable energy. It is in the interest of the state to promote and provide resources towards the development and maintenance of clean energy infrastructure.
In the absence of any New York estimate of the effect of greenhouse gas emissions reductions on global warming I did my own estimate. I found that for the CLCPA emission inventories there would be a reduction, or a “savings,” of between approximately 0.0097°C and 0.0081°C by the year 2100. To give an idea of how small these temperature changes are consider changes with elevation and latitude. Generally, temperature decreases three (3) degrees Fahrenheit for every 1,000-foot increase in elevation above sea level. The projected temperature difference for eliminating all greenhouse gases is a 39-inch change in elevation or 32 inches if only the CO2 emissions are considered. The general rule is that temperature changes three (3) degrees Fahrenheit for every 300-mile change in latitude at an elevation of sea level. The projected temperature change is the same as a change in latitude of less than a mile.
New York should also be considered relative to the rest of the world. According to the China Electricity Council[1], about 29.9 gigawatts of new coal power capacity was added in 2019 and a further 46 GW of coal-fired power plants are under construction. If you assume that the new coal plants are super-critical units with an efficiency of 44% and have a capacity factor of 80%, the reductions provided by the CLCPA greenhouse gas inventory will be replaced by the added 2019 Chinese capacity in less than two years or four and a half years if the 2019 capacity and the units under construction are combined.
18. By exercising a global leadership role on greenhouse gas mitigation and climate change adaptation, New York will continue to position its economy, technology centers, financial institutions, and businesses to benefit from national and international efforts to address climate change. Action undertaken by New York to reduce greenhouse emissions will have an impact on global greenhouse gas emissions and the rate of climate change. In addition, such action will encourage other jurisdictions to implement complementary greenhouse gas reduction strategies and provide an example of how such strategies can be implemented. It will also advance the development of green technologies and sustainable practices within the private sector, which can have far-reaching impacts such as a reduction in the cost of renewable energy components, and the creation of jobs and tax revenues in New York.
The CLCPA does not include a requirement for a feasibility study with clear affordability, reliability, and environmental impact tests to determine whether it is appropriate for New York to proceed with a complete overhaul of the energy system. I showed that action undertaken by New York to eliminate greenhouse emissions will have an immeasurable effect on the rate of climate change. If the proposed transition of the New York energy system results in unacceptable affordability, reliability and environmental impacts the state’s actions will discourage other jurisdictions.
19. It is in the interest of New York to take rapid action to reduce greenhouse gas emissions and transition to a just clean energy economy. Such actions include:
a) raising new, dedicated revenue specifically for climate programs;
(b) investing in clean and renewable energy infrastructure such as solar energy, offshore wind, grid storage technologies and energy efficiency;
(c) rapidly transitioning to zero-emission transportation, especially zero-emission school and transit buses, to reduce adverse health impacts for children, workers, and communities, and improve grid resilience and renewable energy reliance;
(d) prioritizing funding for locally driven projects to reduce emissions and increase resiliency, especially in disadvantaged communities that are most impacted by climate change and air pollution;
(e) creating quality employment opportunities for all New Yorkers in the transition to a just clean economy and ensuring the full participation and prioritization of disadvantaged communities; and
(f) ensuring workers and communities currently reliant on the fossil fuel industry are given resources to avoid adverse economic impacts.
I don’t think that the legislative finds presented a case that supports the notion that is in the interests of the state to implement these actions.
20. There is currently no state entity that is wholly dedicated to achieving the outcomes of the CLCPA. Without adequately devoting state resources and personnel, the outlined emissions reductions and electrification goals will not be realized in the target timeframe. Pursuant to the CLCPA, the state has less than 30 years to fully transition the 10th largest economy in the world to one that is fossil fuel free, and intentionally prioritize overburdened populations. Reaching these goals will improve the health and well-being of the residents of the state and advance the state’s economic interests. It is also critical that best value procurement requirements are established within the authority to optimize the solicitation, evaluation and award of renewable energy projects assisted by the state.
While there is no dedicated state entity dedicated to achieving the outcomes, NYSERDA has taken over that role because they have staff with the appropriate background and knowledge. Unfortunately, their record with the proceeds from the RGGI auction are not good. If New York has to rely on NYSERDA investment record to date to reduce fuel combustion CO2 emissions to zero for the CLCPA, then the cost would be $91.948 billion. Note that in my opinion the primary reason for this abysmal record is political interference because many of the programs included appear more to cater to specific interests and the agenda of the Cuomo Administration than trying to efficiently and effectively reduce greenhouse emissions.
21. It is in the interest of the state to establish a dedicated authority to ensure that New York’s climate goals are accomplished. Such an authority would be able to nimbly manage the proceeds from a polluter fee which will amass significant revenue and require ongoing management. This authority would also disburse funds for clean energy community scale projects in a timely and efficient manner while employing best value procurement practices. In addition, a new authority would have the capacity to ensure prioritization of projects and funds for impacted communities, coordinate statewide emissions reduction strategies and assist impacted workers in a transition away from fossil fuels through specialized assistance programs.
The last thing that this state needs is a dedicated authority for New York’s climate goals. The idea that any Albany bureaucracy controlled by political appointees could nimbly manage proceeds is laughable. As the NYSERDA RGGI investment results show, the more political interference the less efficient the process.
22. This legislation will build upon the developments outlined above by creating a comprehensive program for pricing greenhouse gas emissions and investing in a just transition to a low-carbon New York state economy, in accordance with the targets established in the CLCPA.
The theory of carbon pricing is that adding a price to greenhouse gas emissions will incentivize the market to develop the least cost alternatives to using fossil fuels. Note, however, that the theory also suggests that the way to prevent this from simply becoming a regressive tax is to offset the proceeds with comparable reductions in taxes elsewhere. This is not an aspect of the proposed pricing program in this legislation.
Conclusion
The findings note that Superstorm Sandy in 2012 “caused at least 53 deaths and $32 billion in damage in New York state”. It is notable that the February 2021 blackout in Texas caused similar impacts. One disaster was caused by nature and the other by a failure in the planning for the electric energy system. With all due respect to the electric energy planners, trying to anticipate all scenarios associated with a complete transition of the electric grid to renewables is probably impossible. If that process is dictated by political considerations without adequate time for planning and testing, then I believe blackouts in New York with similar impacts to those observed in Texas are inevitable. These legislative findings do not provide sufficient support to take that risk.
Two books and a recent essay suggest a different approach is more appropriate. Bjorn Lomborg’s book “False Alarm: How Climate Change Panic Costs Us Trillions, Hurts the Poor, and Fails to Fix the Planet” shows that the media, politicians and activists that hype climate catastrophe are picking and choosing results that support that narrative but do not reflect the whole story. He demonstrates that “in almost every way we can measure, life on earth is better now than at any time in history” and explains that “analysis by experts shows that we are likely to become much, much better off in the future”. He shows that we are committing to try to solve climate change with policies that he demonstrates will not make much of a difference but will cost a lot and not do much to change global warming. Michael Shellenberger “Apocalypse Never – Why Environmental Alarmism Hurts Us All” evaluates the current war on nuclear and natural gas fracking by the environmental alarmists. He includes several examples of the hypocrisy of the loudest voices when it comes to the most obvious solutions. His evaluation of concentrated power provided by nuclear and natural gas compared to the dilute energy provided by wind and solar shows that they are obvious choices while we develop better fossil-free alternatives. The essay Undue Climate Haste explains that the Nobel Prize (2018) winning climate economist William Nordhaus showed in his Nobel lecture in Stockholm that the ‘economic optimum’ for climate policy is to allow 3.5 degrees Celsius of warming in 2100. Economically, it is better to accept a certain amount of climate damage and to limit the cost of mitigation than the other way round: ambitious goals such as staying below 2 degrees or even 1.5 degrees are extremely costly. Unfortunately, the CLCPA and CCIA are going down the exact path that these authors show will cost enormous sums of money, hurt more of the world’s poor than help, and will have no effect on global warming itself.
In the spring of 2021, the New York state Senate introduced the Climate and Community Investment Act (CCIA). Coming on the heels of the Texas energy debacle one might think that politicians would not propose any changes to energy and environmental laws until the causes of that disaster were understood or would at least make implementation contingent upon feasibility studies to determine if the ambitious goals of this legislation don’t risk a similar outcome in New York. Such is not the case, however as I will show in this post
I have written extensively about implementation of the Climate Leadership and Community Protection Act (CLCPA) because I believe it will adversely affect affordability and reliability as well as create more environmental harm than good. The CCIA will make those impacts worse. 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 sponsor memo for this proposed regulation lists specific provisions in the proposed legislation. I prepared an annotated version of the draft bill that includes internal links to the sections of the bill corresponding to those provisions. The summary of Senate Bill S4264A states:
Enacts the climate and community investment act; prioritizes the allocation of public investments in disadvantaged communities; addresses climate change challenges through the expansion and growth of clean and renewable energy sources; adopts best value requirements for the solicitation, evaluation and award of renewable energy projects; establishes a community just transition program; establishes a climate pollution fee and a household and small business energy rebate; and creates the climate and community investment authority.
This article discusses the climate pollution fee which is another name for carbon pricing. In theory, this supposedly measures the cost of the accumulated damage for centuries to come from emitting a ton of carbon dioxide today. According to Resources for the Future (RFF), carbon pricing is a climate policy approach that works by charging industrial sources for the tons of emissions of carbon dioxide (CO2) they emit. The problem is that there is a large gap between the elegant theory of carbon pricing described by RFF and real world carbon pricing. In theory applying a carbon price across the globe on all sectors could incentivize the market to find the most efficient solution to provide energy at the lowest cost and not unduly affect the public by using the revenues to replace existing taxes. The reality of the CCIA climate pollution fee proposed is that it is in one limited area with the funding going to special interests. As a result, tt is a regressive tax and a prescription for potential leakage and misapplied price signals.
The CLCPA mandated that the Department of Environmental Conservation (DEC) stablish a value of carbon. At the end of 2020 DEC published this guidance document. The Value of Carbon Guidance provides values for carbon dioxide, methane, and nitrous oxide for use by State agencies along with recommended guidelines for the use of these and other values by State entities. The guidance Value of Carbon Guidance document summarizes the methodology and rationale. The recommended values are provided in the Appendix: Social Cost Values. The CCIA legislation shows no sign that the months long CLCPA process to develop an appropriate system for valuing carbon was considered, much less incorporated.
Discussion
In order to address the recognized problems of a climate or carbon pollution fee in just New York, the proposed regulation includes a border carbon adjustment fee. The fee applies to any carbon-based fuel sold, used or brought in the state by an applicable entity. Consequently, the logistical requirements to calculate border adjustments is a big effort.
The premise of a climate pollution fee is that it will incorporate the future cost to society of CO2 emissions today. The DEC Value of Carbon guidance bases its recommendations upon the work of the Federal Integrated Working Group (IWG) social costs of carbon. Dr. David Kreutzer explains that:
Estimating the social cost of carbon is susceptible to political pressure and model-gaming. The assumptions in play—about unsupportable time horizons, exaggerated emissions projections, overly high estimates of carbon dioxide’s impact on warming, and others—are all too easily corrupted, resulting in wildly varying estimations.
In fact, reasonable assumptions can push the social cost of carbon negative (which implies that a policy of subsidies for carbon dioxide emissions is the answer). However, the single input that has the most potential to overstate the social cost of carbon is understating the discount rate. The constant pressure to justify ever lower discount rates for social cost of carbon calculations is almost comical when it mistakes wealth for poverty.
It is worth noting that the DEC Value of Carbon guidance did not follow the IWG recommendation for the discount rate recommended choosing instead to pick a lower value. The CCIA fee appears to use the IWG recommended discount rate of 3%.
The fee calculation methodology is complicated. The price is adjusted by year and a newly defined environmental integrity metric. That metric adjusts the price based on the state’s reductions relative to a defined trajectory. For example, the 2021 statewide GHG emission target is set at 85% of the 2018 GHG emissions. DEC has not released its draft emission inventory for years since 1990 but my money is on an increase since 2018 simply because the State closed down 1,070 MW of nuclear capacity in 2020 and is closing another 1,080 MW of nuclear capacity this year. I estimate that the power needed to replace those facilities will generate over 8,000,000 tons of CO2. The CLCPA Climate Action Council process is underway and I believe is charged with determining the appropriate reduction schedule. It is very likely that the schedule in the proposed law will not be consistent with the CLCPA recommendation.
I have given up trying to figure out how the environmental integrity metric will affect the price because of its complexity. Without a lot more work I cannot determine how the five-year metric using cumulative actual and target emission reductions could affect the differing adjustments to the carbon pollution fee. My impression is that the methodology and values chosen will ensure that the maximum increase (10%) of the climate pollution fee is inevitable.
The last statewide GHG emissions inventory developed by the New York State Energy Research & Development Authority estimated that the total emissions in 2016 were 377 million metric tons of CO2e. Assuming that emissions will be the same in 2022 when the proposed legislation starts applying the fee the annual fee will be over $16 billion. The annual adjustments keep the fees about the same for five years or so but then the reductions in emissions reduce the fees collected. Obviously when all the GHG emissions have been eliminated the fee will also be eliminated.
My biggest problem with this proposed legislation is mandates for specific information that is already available elsewhere. In order to determine the tax levy, the emissions must be known. The regulation includes a section for the calculation of emission factors which when combined with electricity production data can be used to estimate emissions. This is a flawed approach for those facilities that actually monitor and report their emissions. Direct measurements are a more accurate methodology than this approach. Moreover, the DEC and NYSERDA already have a process in place to calculate emissions. Importantly, the New York Independent System Operator has proposed a carbon pricing scheme that includes a methodology to estimate emissions for its fees. Both systems are incompatible with this law.
There is a section for exemptions and deductions. In order to prevent double payments a source affected by 6 NYCRR Part 242 (the Regional Greenhouse Gas Initiative) can deduct “the amount it paid to purchase CO2 emission allowances”. Exemptions for de minimis quantities of emissions are also allowed.
Emissions leakage refers to a situation where a policy in one jurisdiction moves the emissions out of that jurisdiction to a less restrictive one such that the total emissions are not actually reduced. The CCIA law includes a mitigation policy that calls for studies of ways to reduce this effect. Leakage has been a concern in the CLCPA implementation process so the scoping plan recommending policy measures to prevent emissions leakage is redundant except for the fact that the CLCPA evaluation has not included an explicit cost like the $16 billion annual CCIA fee.
The legislation creates funds within the authority including 33% for the “community just transition fund”, 30% for the “climate jobs and infrastructure fund”, 30% for the “low-income and small business and household energy rebate fund”, and 7% for the “worker community assurance fund”.
Finally, the climate pollution fee includes a requirement for report on the implementation of the fund. The report is supposed to include the total revenues, the effectiveness of the fee to reduce GHG emissions, the amount of leakage, and overviews of the benefits and costs.
Conclusion
Dr. Steven McKitrick evaluated carbon pricing policies in Canada and explained that “there may be many reasons to recommend carbon pricing as climate policy, but if it is implemented without diligently abiding by the principles that make it work, it will not work as planned, and the harm to the Canadian economy could well outweigh the benefits created by reducing our country’s already negligible level of global CO2 emissions”. This is entirely analogous to New York and the CCIA. Importantly he notes:
However, a beneficial outcome is not guaranteed: certain rules must be observed in order for carbon pricing to have its intended effect of achieving the optimal balance between emission reduction and economic growth. First and foremost, carbon pricing only works in the absence of any other emission regulations. If pricing is layered on top of an emission-regulating regime already in place (such as emission caps or feed-in-tariff programs), it will not only fail to produce the desired effects in terms of emission rationing, it will have distortionary effects that cause disproportionate damage in the economy. Carbon taxes are meant to replace all other climate-related regulation, while the revenue from the taxes should not be funnelled into substitute goods, like renewable power (pricing lets the market decide which of those substitutes are worth funding) but returned directly to taxpayers.
The CCIA violates all these rules. New York has emissions regulations for Part 242 and the CLCPA that both mandate specific reductions. The revenue from the climate pollution fees won’t even be used to support renewable energy development and only a small fraction will be returned to ratepayers. This is simply a regressive tax that will dis-proportionally adversely affect those it purports to want to help.
This spring the New York state Senate has introduced the Climate and Community Investment Act (CCIA). This first post provides an overview of the proposed legislation. Subsequent posts will address the many problems of this proposal.
I have written extensively about implementation of the Climate Leadership and Community Protection Act (CLCPA) because I believe it will adversely affect affordability and reliability as well as create more environmental harm than good. The CCIA will make those impacts worse. 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.
On April 13 the New York Senate’s Standing Committee on Environmental Conservation and Standing Committee on Energy and Telecommunicationshost a public hearing to discuss and receive input from stakeholders on the Climate and Community Investment Act. The summary of Senate Bill S4264A states:
Enacts the climate and community investment act; prioritizes the allocation of public investments in disadvantaged communities; addresses climate change challenges through the expansion and growth of clean and renewable energy sources; adopts best value requirements for the solicitation, evaluation and award of renewable energy projects; establishes a community just transition program; establishes a climate pollution fee and a household and small business energy rebate; and creates the climate and community investment authority
The sponsor memo for this proposed regulation lists the following specific provisions. I will address these provisions briefly here (indented and italicized) and in more detail in subsequent articles. I prepared an annotated version of the draft bill that includes internal links to the sections of the bill that are described below.
Section 1 of the bill establishes that the bill shall be cited as the Climate and Community Investment Act.
No comment
Section 2 of the bill establishes legislative findings that climate change is adversely affecting economic well-being, public health, natural resources, and the environment of New York; and actions undertaken by New York to reduce greenhouse gas emissions will have an impact on the global greenhouse gas emission and the rate of climate change.
The findings list the New York alleged impacts of climate change on the state that are common to all laws and regulations in recent years. One aspect that is different is an emphasis on arguments that those impacts “heighten vulnerability” of disadvantaged communities. Also included is an argument that disadvantaged communities experience “greater exposure to air pollution and subsequent negative health impacts”. There are several arguments that that COVID-19 makes the air quality, disadvantaged community and economic problems worse. They even managed to get a reference to George Floyd in these findings. The final arguments claim that climate change is having a detrimental effect on the New York economy so community investment will be a good thing.
The findings then go on to claim that addressing these effects has value. They argue that “it is vital that the state’s investments in clean and renewable energy be protected and monitored through all stages of development to make certain that they are effective in producing the intended results”. They suggest that “properly trained craft personnel” and “project labor agreements, responsible contracting and prevailing wage requirements” are needed.
The findings then claim that New York actions will be affected by the actions undertaken by New York to reduce GHG emissions and that global warming must be limited to no more than 2o C “by reducing emissions at least 80 percent below 1990 levels by 2050” from industrialized nations. They note that in order to meet the Climate Leadership and Community Protection Act that it is in the interest of the state to promote and provide resources for the infrastructure transformation.
Finding 18 states
“By exercising a global leadership role on greenhouse gas mitigation and climate change adaptation, New York will continue to position its economy, technology centers, financial institutions, and businesses to benefit from national and international efforts to address climate change. Action undertaken by New York to reduce greenhouse emissions will have an impact on global greenhouse gas emissions and the rate of climate change. In addition, such action will encourage other jurisdictions to implement complementary greenhouse gas reduction strategies and provide an example of how such strategies can be implemented. It will also advance the development of green technologies and sustainable practices within the private sector, which can have far-reaching impacts such as a reduction in the cost of renewable energy components, and the creation of jobs and tax revenues in New York.”
The findings wind up concluding that it is in the interest of New York to take rapid action to reduce GHG emissions and “transition to a just clean energy economy”. The recommend that the way to do this is to establish a dedicated authority to “nimbly” manage the proceeds from polluter fees, disburse funds and prioritize projects and funds for impacted communities, reduction strategies, and assist workers impacted by the transition.
Section 3 of the bill amends article 19 of the environmental conservation law to add a new title 13 addressing air pollution pricing regarding methodology, and air pollutant price index, implementation of fees, allocation of revenues, inventory, transportation pollution and reporting.
This section establishes “Methodology and valuation of pollution price index” that mandates a social cost of pollution for all regulated air contaminants. Not surprisingly once they are established then “all covered sources shall be required to pay the fee”. There will be a “value of pollution and mitigation program fund” trust fund established and the funds will be allocated as follows:
40% to the environmental justice office
20% to “expanding, operating, and maintaining” the Title V emissions inventory
20% to “expanding, operating, and maintaining” air quality and point source monitoring within DEC
20% to be allocated at the discretion of the authority
“No funds shall be allocated to fund police, prisons or related infrastructure”
The regulation specified that the “authority shall update and publish the inventory of emissions from Title V sources to:
assess the extent to which given regulated air contaminants, especially air contaminants that have highly adverse health impacts, are co-emitted with greenhouse gas emissions;
assess the extent to which regulated air contaminants that have especially adverse health impacts are likely to be reduced over time as a result of:
the fee established in section three thousand forty of the tax law; and
the investment programs established in title nine-C of article eight of the public authorities law;
identify and analyze emissions hotspots and cumulative burdens, pertaining to regulated air contaminants in order to prioritize emissions reductions in these areas;
assess emissions and pollution-related health impacts associated with the transportation sector; and
make the Title V emissions inventory more accessible to the public including, but not limited to, taking action to release the related data, analysis and assumptions of agency websites.
This regulation also mandates development of a plan to accelerate the reduction of regulated air contaminants from mobile sources. The plan is required to consider specific mechanisms such as electrification of freight transportation and market-based mechanisms.
Section 4 of the bill amends the executive law to add a new section 184 to limit diversion of funds dedicate to the climate and community investment.
“Diversion of funds dedicated to climate and community investment to the general fund of the state for any other purpose is prohibited”. This section addresses other potential ways the funds could be diverted.
Section 5 of the bill amends the labor law by adding article 8-b which establishes responsible contracting, labor and job standards and worker protection.
This is way beyond my expertise but I believe that it is simply a mandate that all climate infrastructure funded by the state be done by union labor. Please refer to the attachment for further information.
Section 6 of this bill amends section 231 of labor law to add a new subdivision 8 to require prevailing wage for building service employees that are employed in any building or facility that has received grants or tax abatements of one million or more.
The summary covers the section. Please refer to the attachment for further information.
Section 7 of this bill amends the public authorities law by adding a new title 9-c b which establishes the climate change just transition.
For this overview the following list of the contents of the proposed amendments will suffice:
GENERAL PROVISIONS
Section 1910. Definitions.
Coordination of programs.
Transparency and accountability.
Report on community ownership.
SUBTITLE II
COMMUNITY JUST TRANSITION
Section 1914. Definitions.
Office of community just transition.
Establishment of community just transition program.
Administration by the authority.
Allocation of funds.
Selection process.
Identification of disadvantaged community needs.
Community decision-making and accountability mechanisms.
Criteria for implementing community accountability mechanisms.
Consultation with the working group.
SUBTITLE III
CLIMATE JOBS AND INFRASTRUCTURE
Section 1924. Definitions.
Establishment of climate jobs and infrastructure program.
Administration by the authority.
Allocation of funds.
Funding instruments.
Selection process and criteria.
Consultation with the advisory council.
Comprehensive approach to existing structures.
Advisory council of the climate jobs and infrastructure program.
SUBTITLE IV
JUST TRANSITION FOR IMPACTED WORKERS AND COMMUNITY ASSURANCE
Section 1933. Definitions.
Establishment of worker and community assurance board.
Establishment of worker assurance program.
Establishment of community assurance program.
Administration.
Allocation of funds.
Selection process.
1939-a. Designation of significant impact.
1939-b. Public engagement and social dialogue.
1939-c. Reporting.
Section 8 of this bill amends article 8 of the public authorities law to add a new title which establishes the climate and community investment authority.
This is another instance where I haven’t the experience to comment on the powers and duties. The annotated version of the proposed law contains a link to § 2799-yyyy Powers and Duties that includes some powers I found surprising. For our purposes the primary duty of interest is the power to fix and collect “such fees, rentals, and charges” to provide sufficient revenue to meet the obligations of the authority.
Section 9 amends the tax law to add new articles 42 and 43 which establishes climate pollution fee and the Household and Small Business Energy Rebate.
The climate fee is complicated. A border carbon adjustment fee is mandated. The fee itself is based on carbon dioxide equivalent so is it inconsistent with the Part 496 methane and nitrous oxide carve outs. It covers any carbon-based fuel sold, used or brought in the state by an applicable entity and fugitive methane emissions and sets its own price on carbon which is inconsistent with the value of carbon guidance prepared by DEC. The price is adjusted by year and a newly defined environmental integrity metric. That metric adjusts the price based on the state’s reductions relative to a defined trajectory.
Section 10-11 of this bill establishes a severability clause. Section 12 of this bill sets the effective date.
No comment
Conclusion
The February Texas blackouts should be a cautionary tale for politicians who think their political will is sufficient impetus not only for an unprecedented transition of the energy system but also to use the transition to redress “legacies of racial and ethnic discrimination”. The legislative findings and declaration roll up every possible effect of climate change on dis-advantaged communities not only as a rationale for the legislation but also to define the proposal as a moral issue unworthy of criticism.
Unfortunately, there is much to criticize in the proposal. It is not clear why a new air pollution fee program is needed to replace the existing fee program and disingenuous to not provide that explanation in the findings. It layers requirements and mandates on existing programs and processes. The carbon price scheme ignores DEC value of carbon guidance. The law establishes an emission reduction trajectory target that is a goal for the CLCPA Climate Action Council process that is underway and will not develop its trajectory for months. Carbon pricing appears to be the preferred Progressive policy approach to fund the transition but, in many cases, and in this proposal in particular, the suggested methods deviate substantially from carbon pricing theory (and not in a good way).
The foundation of this legislation and the Climate Leadership and Community Protection Act is that present renewable energy technology can be used to safely transition the energy system away from fossil fuels while maintaining affordability and reliability in the next 30 years. No jurisdiction, however small, has actually achieved the zero-emissions goal of New York’s climate ambitions. Jurisdictions that have tried to achieve less ambitious goals have had issues with affordability and reliability. I believe that unless a feasibility requirement is incorporated in this proposed regulation, that blackouts similar to the what occurred in Texas in February 2021 are inevitable in New York. Importantly the worst effects of those blackouts and higher energy costs will be on the dis-advantaged communities that this law purports to want to help.
the power to fix and collect “such fees, rentals, and charges” to provide sufficient revenue to meet the obligations of the authority.
Pragmatic Environmentalist of New York 