Climate plan sticker shock

Climate plan sticker shock

Good morning and welcome to the Monday edition of the New York & New Jersey Energy newsletter. We’ll take a look at the week ahead and look back on what you may have missed last week.

HOCHUL PUSHES CHANGE TO CLIMATE LAW — POLITICO’s Marie J. French: Changing New York’s unique accounting method for greenhouse gas emissions has become an unexpected issue in state budget talks — sparking concern among environmental groups. The proposal has support from the fossil fuel industry and would likely enable more combustion of natural gas and other fuels for longer than currently envisioned under New York’s climate law in a plan approved in December.

Gov. Kathy Hochul is supportive of the change, which was also proposed in a bill sponsored by Energy Committee Chair Sen. Kevin Parker on Monday, and it has come up in budget negotiations. Some other Senate Democrats are not supportive of the proposal. “The 20-year methane accounting reflects the reality of the climate impact of burning natural gas,” said Sen. Liz Krueger (D-Manhattan), who chairs the powerful Senate Finance Committee, in a statement. “It is one of the strongest parts of the [state’s climate law]. Giving in to the polluter lobby by weakening our methane accounting will kneecap all our efforts going forward.”

New York is the one of only two jurisdictions to use a 20-year time horizon to account for the damaging effects of planet-warming gasses instead of 100 years. Maryland’s 2022 climate law also uses the 20-year metric. This important distinction was a key provision pushed by supporters of the state’s Climate Leadership and Community Protection Act passed in 2019. It makes methane, the main component of natural gas, more potent than under the longer accounting timeline. Backers say this more accurately reflects the short-term warming impact of greenhouse gasses and the urgency around reducing emissions.

STICKER SHOCK: Gov. Kathy Hochul’s top energy and environmental officials have spent months defending the state’s climate plan finalized in December, rebutting concerns about costs. “We have concluded that there are far more benefits than there are costs in executing this program,” NYSERDA president and CEO Doreen Harris told lawmakers during a February budget hearing.

Harris cited an analysis in the state’s climate plan, which was developed over more than two and a half years and involved hundreds of hours of public and private meetings with input from experts from nearly every state agency and sector of the economy. That cost-benefit analysis concluded that the societal benefits to New York, including health improvements due to reduced co-pollutant emissions and global benefits of lower greenhouse gas emissions, were at least $115 billion more than the costs.

Harris and DEC Commissioner Basil Seggos downplayed concerns from industry groups, Republican lawmakers and others about the lack of analysis of the individual impacts of the policies underpinning the state’s climate plan, saying they’d be evaluated as regulations are implemented.

It looks like the results are in: the climate plan costs too much as it’s currently structured, Hochul’s administration is warning. They’ve proposed in budget negotiations what environmental groups and many Democratic lawmakers see as a drastic concession to the fossil fuel industry: rewriting the state’s climate law so it requires less aggressive reductions of methane emissions in the near term due to an accounting change.

The governor’s office is focused on affordability and cost impacts to consumers. Under the state’s current method — enshrined in the 2019 climate law in a hard-fought provision — potential cost impacts of the mandated reductions are higher than if the international 100-year accounting timeframe is used. The cost differences are stark, according to figures the governor’s office pointed to. Hochul has backed a cap-and-trade system that the state’s climate plan identified as the most efficient way to achieve the reductions.

For a gallon of gasoline, using the price for emissions allowances in Washington’s recent cap-and-trade auction and state and federal emissions intensities, under New York’s climate law the cost increase would be 61 percent higher. So the price for a gallon of gasoline could go up 63 cents using New York’s climate accounting versus 39 cents per gallon under the internationally used standard. The added cost for natural gas bills would be an additional $595 annually under the state’s law compared to $330 under the international method — nearly an 80 percent premium. Heating oil costs would be 48 percent higher under an emissions cap-and-trade system using New York’s method and Washington’s allowance price: a $605 annual impact versus $410 under the international standard, figures the governor’s office pointed to indicate.

A Democratic governor’s team raising these concerns about cost impacts of a carbon pricing mechanism is not unheard of in New York. Gov. Andrew Cuomo’s administration never backed a carbon price in the electric market amid such concerns. And it isn’t the first time Washington’s experience on climate policy has influenced policymakers here — some pointed to the failed 2018 carbon tax ballot initiative in Washington as negotiations on what became New York’s climate law in 2019 ramped up.

But environmental advocates and some Democratic lawmakers are raising the alarm about Hochul’s push to redo the state’s climate law — a battle they’d thought was won. Using New York’s 20-year accounting more realistically reflects the urgency of reducing emissions, particularly methane, in the near term to tackle climate change, they say. Proposals from NY Renews with backing from a range of groups call for rebates to consumers to defray the costs of reaching the state’s goals. Hochul has also backed a consumer rebate in her cap-and-trade plan. — Marie J. French

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Here’s what we’re watching:


— New York’s budget is late. Climate advocates will be in Albany to oppose Gov. Kathy Hochul’s push to rewrite New York’s landmark 2019 climate law and decrease the amount of emissions that would be required to be reduced through an accounting change, 11:30 a.m., outside the Senate chambers, Albany.

— Bill McKibben moderates an event on the challenge to New York’s climate law, 7 p.m.

— Buffalo is highlighted in this story about cities moving away from free parking.

— A proposed change to renewable energy tax assessment rules gets some much-needed coverage.

— A few Albany area stores are seeing a higher level of purchases of gas stoves and fireplaces, the Times Union reports. Some lawmakers in the Glens Falls area are worried about a phaseout of gas appliances and other elements of the state’s climate plan, the Post-Star reports. “Scientists have concluded that sweeping changes are needed to avoid environmental disaster in the near future,” the Buffalo News lead on a story about the state’s climate plan and reliability concerns in western New York states.

— The state’s definition of disadvantaged communities has not satisfied everyone.

— A disagreement over Native American fishing rights is set to reignite at Oneida Lake.

— New Jersey is investing more in electric trucks and buses in communities facing higher levels of pollution.

ADVOCATES PLEAD CASE ON WASTE MEASURE: Supporters of a measure to reshape how disposing of packaging and paper waste is funded are pushing for the inclusion of the issue in this year’s budget. Thus far, the Assembly has declined to engage, spelling trouble for reaching a deal as many other environmental issues also remain outstanding and high-level focus is riveted on bail changes sought by Gov. Kathy Hochul. Assembly Environmental Conservation Chair Deborah Glick (D-Manhattan) has said she doesn’t want it in the budget.

A letter dated March 27 urges Hochul and legislative leaders to include extended producer responsibility legislation, specifically the Senate version dubbed the “Packaging Reduction and Recycling Infrastructure” in the state budget. The letter was signed by Citizens Campaign for the Environment, the New York League of Conservation Voters, local government groups and others. It cites a Department of Environmental Conservation estimate that the proposal would require 16 staff to implement. — Marie J. French

BPU RELEASES SOLAR PROPOSALS — The New Jersey Board of Public Utilities released a long-awaited community solar proposal. Current community solar projects have been done under pilot programs, but this proposal would make the program permanent. One of the key recommendations is that the annual capacity be “set at no less than 150 MW and the cumulative capacity for energy years 2022 to 2026 be no less than 750 MW, with flexibility to increase this capacity allocation depending on market conditions and the Board’s policy priorities.” Community solar developers were expected to take time digesting the proposal before making detailed comments.

The BPU also released a “straw proposal” for the siting of community solar projects. In New Jersey, as in other states, there is tension between solar developers and communities about where projects can go. In New Jersey, there is particular tension over solar farms gobbling up farmland, which the state — the most densely populated in the country — has fiercely sought to protect. The proposal includes the board’s “policy preference of promoting solar on the impervious surfaces and the built environment by providing an expedited path to demonstrate that such projects meet the solar siting criteria. … Generally, Staff views these projects as highly desirable siting locations, since they do not involve use of open space or farmland, due to their each being situated on previously existing impervious surfaces.” — Ry Rivard

ALL RHODES LEAD TO NEW YORK: In a prime example of the truism that no one leaves New York energy policy, former Public Service Commission Chair and NYSERDA president and CEO John Rhodes is returning to the fold. He’s being brought on in a staff position at the PSC with a focus on policy issues, according to two people informed of the move and not authorized to speak publicly. Current chair Rory Christian has been beefing up the commission’s policy-focused staff to grapple with the myriad challenges the staid utility regulator faces in aligning with New York’s ambitious emissions reductions mandates.

It’s unusual for such a high-level New York energy official to return in a staff capacity. Rhodes was most recently a special assistant to President Joe Biden on climate policy, departing in August 2022. Rhodes was tapped by former Gov. Andrew Cuomo in 2017 to head up the Public Service Commission, leaving in February 2021. He first joined the New York energy team as head of NYSERDA, starting in 2013.

Rhodes did not respond to a request for comment. The department had recently posted a “chief program officer” role with applications due at the beginning of this month. Final approval of Rhodes’ role is likely up to the state’s Division of Budget. “John Rhodes is not at the Department at this time,” Department of Public Service spokesman Jim Denn said in response to questions about Rhodes’ new role. — Marie J. French

GAS FIGHT — POLITICO’s Marie J. French: New York’s largest utility is throwing its support behind a proposal to end a policy subsidizing new gas hookups, a key point of debate in ongoing budget negotiations. Con Edison, which serves 1.1 million gas and 3.3 million electric customers in New York City and Westchester County, issued a policy memo to the governor, lawmakers and key staff on Tuesday. The memo marks the first time a New York utility has explicitly backed the end of what’s known as the “100 foot rule” that requires other gas ratepayers to subsidize a portion of the pipeline when new customers request service.

Gov. Hochul and both chambers of the Legislature included proposals that would largely end natural gas use in most new buildings in their budget proposal. But environmental advocates are warning that the budget also needs to align the state’s utility law with its climate law, including ending support for new gas hookups and requirements for gas utilities to provide service when it is requested. Con Edison’s memo also supports the electrification of new buildings, which the company has previously endorsed.

SCHUMER’S HIGHWAY — POLITICO’s Danielle Muoio Dunn: Thousands of New Yorkers escape the sweltering heat of the concrete jungle each summer by fleeing their Brooklyn brownstones and Upper West Side co-ops and driving west on Route 17, the winding highway leading to the cooler air of the Catskill Mountains.

The revival of the old Borscht Belt in recent years has come with increased traffic down the two-lane state highway — an issue that’s irked Senate Majority Leader Chuck Schumer, who began a push over a decade ago to expand a nearly 50-mile stretch of Route 17.

CAP AND NO TRADE — POLITICO’s Marie J. French: Environmental justice groups who spearheaded the push for a landmark climate law mandating emissions reductions in New York are at another pivotal moment as they fight to shape the funding program to achieve those ambitious targets.

NY Renews, the coalition of environmental, community and labor groups that backed the climate law passed in 2019, is fighting to influence a cap-and-trade program proposed by Gov. Kathy Hochul. If they’re successful, outside observers are hopeful that a more equitable framework could be exported to other states including California, which has had a cap-and-trade program since 2013.

“The stuff in California is a little bit milquetoast-y. We were a leader at some point … It’s now a little bit old and it needs to be refreshed,” said Parin Shah, who previously led environmental justice efforts at the Asian Pacific Environmental Network and currently consults for the group. “New York really has that ability to be able to set the standard the way y’all have been doing lately and pull us, because it would be really cool to have y’all telling us what we need to do in California.”

Re-branded by policymakers as “cap and invest” to avoid some of the negative connotations a market-based trading scheme has in some progressive and environmental justice circles, Hochul’s proposal would allow third parties and polluters to trade allowances purchased through a state-run auction. That’s seen as a critical element of the proposal to create a functioning market: A polluter has an incentive to reduce emissions below what they purchased for if they can re-sell unused allowances, for example.

The cap-and-trade system would set an annual, declining limit on the amount of those allowances to achieve New York’s statutory emissions reduction targets, including an 85 percent reduction from 1990 levels by 2050. NYSERDA would run the auction of the allowances, which fuel wholesalers and other large polluters would be required to purchase.

DISADVANTAGED DEFINITION FINALIZED — POLITICO’s Marie J. French: New York has finalized a list of disadvantaged communities that are mandated to receive at least 35 percent of the benefits of state spending on clean energy and energy efficiency investments. The state’s Climate Justice Working Group, primarily composed of representatives from environmental justice advocates, on Monday voted to finalize the criteria to define these communities.

The inclusion of a funding minimum and a focus on limiting pollution in these communities was a key priority for advocates in passing New York’s sweeping climate law in 2019. The formula selected by the working group incorporates factors such as income levels, proportion of minority households, exposure to pollution, health outcomes and climate risks such as extreme temperatures and flooding. All told, 35 percent of census tracts with the highest scores based on those factors are set to be designated as disadvantaged communities.

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