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It is unequivocally clear that the future risks from climate change will be impacted by decisions made today. The world has neither the luxury of time nor resources to get this wrong. We need to accept that climate change occurs on a global scale and that if measures proposed in New York result in increased emissions elsewhere in the world, we have done nothing to solve the problem.
The “Climate Leadership Act” would amend the energy law, public service law and the environmental conservation law to adopt measures to establish a Climate Action Council; the Environmental Justice and Justice Transition Workgroup; mandate 70% of electrical demand be meet by renewable resources in 2030 and 100% by 2040; require the Department of Environmental Conservation (DEC) to promulgate a statewide greenhouse gas emissions limit equal to a 40% reduction of 1990 level; and provide the DEC the expressed authority to limit emissions from all sources.
Primary Concern
The Business Council has some significant concerns with the legislation. A major concern is that the legislation does not ensure that businesses, investor owned utilities or experts in natural climate solutions are included in the development of the climate roadmap.
The Business Council’s primary concerns is that without input from businesses, the proposed legislation will increase energy costs and operational costs, and compromise the global competitiveness of energy-intensive, trade-exposed (EITE) industries (including but not limited to glass, steel, metal casting, pulp and paper, aluminum, and chemicals).
If rising compliance costs cause New York manufacturers to relocate operations to countries with less stringent standards, or if imports are less expensive because of weaker standards in their country of manufacture, it could serve to increase global greenhouse gas emissions in the long term. The proposed legislation includes the adoption of “mechanisms to limit emission leakage”, which is good, but there needs to be more.
Guiding Principles
Public policy intended to address climate change must be effective, affordable, predictable, inclusive and repeatable, because New York State is already one of the least carbon-intense economies in the nation.
- Effective – measures that will result in verifiable net emission reductions
- Affordable – all consumers cannot tolerate wasted resources. They should adopt the least expensive mitigation strategy
- Predictable – the regulated and investment community must understand that decisions regarding climate will be rational, consistent and grounded in science
- Inclusive – the development of climate policy must include all voices in society and the economy
- Repeatable – New York needs to advance technologies and policies that can be organically duplicated
The “Climate Leadership Act” fails on these guiding principles and, if enacted, will result in a loss of jobs, wealth and population. It is also very likely, if not certain, that due to carbon leakage the world would be no better off.
As an organization, we are committed to working on the development of rational climate change policy that embraces guiding principles.
We suggest that the legislation be amended to provide effective, affordable, predictable, inclusive and repeatable climate solutions. The following are a few examples where the “Climate Leadership Act” fails to deliver on these principles.
The Climate Action Council
The proposed Climate Action Council (Council) would include the commissioners of DEC, Labor, DOT, Ag & Markets, the president of NYSERDA, the chair of the PSC; one representative of clean energy associations; one member of an organization dedicated to environmental justice issues; one representative of labor organizations; and any others as may be necessary.
The Council has significant responsibility but is not the least bit inclusive. The membership of the Council fails to include agency representatives that are included in the Climate Action Council created by Governor Paterson’s Executive Order No. 24 (2009). Specifically, the new Climate Action Council fails to include the Commissioners of Economic Development, Housing and Community Renewal, the Chair of the Metropolitan Transportation Authority; the Presidents of Long Island Power Authority, New York Power Authority and Dormitory Authority of the State of New York; and the Secretary of State.
The proposed Council does not guarantee that the voices of business, affordable housing, transportation, manufacturing, the economically disadvantaged, agriculture, the bulk energy system operator and utilities. The Council would be charged with developing a roadmap outlining recommendations to put the State on a path to carbon neutrality economy-wide, but includes few voices with expertise in the economy.
Renewable Mandate
The Act amends the public service law to require Load Serving Entities (LSE) to meet 70% of demand with “renewable energy sources” by 2030. This mandate will prove to be very costly and ineffective.
In 2017, 28% (36,739 GWh) of electric energy production was renewable. In 2040, the NYISO projects total electric load will equal 154,253 GWh. To meet 70% of the load would require 107,977 GWh of electric production from renewables. The State has contracted with an additional 10,884 GWh of renewables. If all the pipeline projects happened, New York would still need to add 54,010 GWh or more than twice current global offshore wind production.
Disregarding the feasibility of the proposed expansion of renewables, the mandate will be very costly, using simple calculations this mandate will cost consumers over $7 billion by 20301. This cost will be crushing for individuals on a fixed income and energy intensive industries.
Energy costs are vital to the competitiveness of energy-intensive industries. The European experience can demonstrate that well-intentioned environmental policies have resulted in higher energy costs driving carbon leakage2 and output leakage3. The New York Times reported:
“The expansion in renewables will probably ensure that Europe will meet its target of reducing greenhouse gases 20 percent from their 1990 levels by 2020. But it has been a disappointment on other levels.For one thing, emissions continue to rise globally. In a sense, Europe is likely to have exported its emissions to places like China, where polluting economic activity continues to increase while the European economy stagnates. A striking indicator that the European effort has not achieved all that it intended to is the continued rise in the burning of coal.”4
Additionally, the 70% renewable mandate is likely to be ineffective. Historically, new renewables have been in regions of the State which contain predominantly 88% of electric energy production from zero emitting resources (hydro, nuclear, and wind). Due largely to transmission constraints and consumer demands, new renewables will not displace emitting resources, but will compete against other non-emitting sources.
Conclusion
It should be noted that New York State is one of the least carbon-intense economies in the world. In 2011, New York produced 155.7 metric tons of energy-related carbon dioxide per million dollars of GDP, which is about a third of the average carbon intensity nationwide. If New York were to eliminate all its C02 emission (211.74 MMtCO2e) it would reduce US CO2 by 3.3 percent and world emissions by .5 percent. (In 2012, U.S. greenhouse gas emissions totaled 6,235.10 MMtCO2e and World emissions were 44,815.44 MMtCO2e).
The Business Council would propose that the legislation is amended to be more effective, affordable, predictable, inclusive and repeatable.
- Effective – the road map should include the development of a marginal abatement cost (MAC) curve, which plots out the marginal costs of achieving a cumulative level of emissions abatement in order from the lowest- to highest-cost technology or measure, for different regions of the State. The State should evaluate current programs against the MAC and eliminate ratepayer subsidies for poorly performing measures.
- Affordable – prior to the development of the road map, the State should publicly disclose all the State’s numerous assessments costing customers billions. For instance, customers currently pay surcharges, higher delivery rates and/or higher commodity prices to pay for the following programs or initiatives that are not essential to the provision of reliable utility service: (a) above-market payments to large-scale renewable facilities with still-effective contracts under the Renewable Portfolio Standard; (b) above-market payments to large-scale renewable facilities under the Clean Energy Standard (“CES”); (c) above-market payments to selected nuclear facilities under the CES; (d) above-market payments to behind-the-meter renewable projects under the Value of Distributed Energy Resources initiative; (e) energy efficiency programs administered by NYSERDA under the CEF; (f) energy efficiency programs administered by utilities pursuant to their Energy Efficiency Transition Implementation Plans; (g) higher electricity market prices due to the Regional Greenhouse Gas Initiative (h) new REV-related investments and pilot programs; and (j) new incentives for certain forms of beneficial electrification.
- Predictable – the legislation should be amended to ensure the DEC will not adopt new regulations that are inconsistent with the adopted road map. New Yorkers need to know that a well-developed and sensible roadmap will guide the promulgation of regulations.
- Inclusive – as stated earlier the climate action council needs to be amended, all voices need to be included in the development of climate.
- Repeatable – the legislation should be amended to encourage businesses and researchers to develop and deploy innovative climate solutions that can be repeated across the globe.
1: Projected Cost = NYISO Projected Load * % of LSE Obligation * 2018 REC Price
2: Carbon leakage refers to the increase in emissions resulting from the relocation of production.
3: Output leakage is measured as the ratio between increases of output in less-stringently regulated regions to falls in output in the reference region, and the latter is the ratio between increases in emissions in unregulated regions and falls in emissions in the reference region.
4: http://www.nytimes.com/2012/12/27/business/energy-environment/27iht-green27.html