Legislative Memo

Ken Pokalsky


A.10049 (DiNapoli)



Powerplant CO2 Emissions



March 22, 2004


The Business Council opposes A.10049, which would impose restrictions on carbon dioxide emissions from electric generating facilities located in New York State.

Our reason for imposing this state-only CO2 program is simple. It will result in significant cost increases for New York businesses, residents and institutions, and have adverse impacts on the reliability of our power generating sector, while having no material impact on global CO2 emissions.

Since there are no "end of pipe" controls for CO2 emissions, generators will have limited compliance alternatives – fuel switching or major upgrades to their combustion units. These compliance requirements will undoubtedly make continued operation of some in-state units financially infeasible (one utility has already announced the scheduled closing of a 250 MW facility due to the costs imposed by New York's 2003 acid rain rules), further accelerating our looming deficiency in peak load generating capacity. A CO2 reduction program will hit coal-fired units especially hard, thereby further reducing the fuel diversity of the state's generating capacity, already heavily dependent on natural gas. And even though the bill authorizes an emission credit trading program, a program limited to the utility sector in one state is unlikely to produce sufficient tradable credits to make a significant difference in system-wide compliance costs.

The impact will higher costs for power generated within the state. This will encourage in-state consumers, especially large industrial and commercial consumers, to purchase additional power from out-of state generators (thereby shifting fixed costs of in-state utilities to their remaining customers.) To the extent that the bill merely shifts generation from in-state to out-of-state units, the impact of this bill on actual CO2 emissions will be greatly diminished. The state of Connecticut recently did environmental and economic modeling of the impact that a state-only cap and trade program for utilities would have in that state, and found that nearly 50 percent of all in-state CO2 reductions would come from "leakage," i.e., shifting of power purchases to out of state generation.

New York State is currently involved in a multi-state process to develop a regional greenhouse gas cap and trade program. While The Business Council would clearly prefer a national program to a regional one, there is no doubt that a regional cap-and-trade program would impose less significant adverse economic impacts than would the state-only program proposed in A.10049. For these reasons, The Business Council strongly opposes adoption of A.10049.