Failure of Build Back Better Casts Uncertainty over New York’s Climate Plans

Vehicle traffic is another huge driver of emissions in New York—with transportation accounting for nearly half of all emissions statewide as of 2018—and another place where the loss of Build Back Better will be keenly felt. The federal bill included up to $12,500 in tax credits for the purchase of an electric vehicle, up from the current $7,500 credit, and would have given a consumer-side boost to EV adoption that would meet up with $7.5 billion from the bipartisan infrastructure bill to roll out nationwide EV charging networks.

“The money for electric cars [in Build Back Better] was large enough to move the needle. And that’s important because the state can’t directly regulate tailpipe emissions,” says Pete Sikora, climate and inequality campaigns director at New York Communities for Change.

Cornell scientist Robert Howarth, a CAC member, summed up New York’s decarbonization problem in an October meeting. “The technologies are there,” he said. “The funding mechanisms are not so clear.” Howarth and other members have pressed for the CAC and its analysts to put clearer recommendations for funding in the draft scoping plan that will now go to the public for comment. But despite the urgency of the problem, the plan as it stands includes only a general discussion of different funding strategies the state could take.

What Are New York’s Options?

The CAC’s draft scoping plan lays out three potential paths for an economy-wide approach to reducing greenhouse gas emissions. Only two of them, carbon pricing and cap-and-invest, would actually raise revenue for state climate action. The third—adopting a clean energy supply standard for fuel, which would progressively tighten until the allowed amount of emissions is zero—would make tradable emissions credits valuable among energy market players, but would not deliver any state funding.

Both carbon pricing and cap-and-invest would require energy providers to pay for producing emissions. For carbon pricing (also known as a carbon tax or carbon fee), the price per ton is set by the state, which aims to get the price right to deliver the targeted emission reductions. For a cap-and-invest program, the amount of allowed annual emissions is set by the state, and the price is determined by supply and demand in the emissions allowances market the program would create. New York State currently has a cap-and-invest program for power producers—the multistate Regional Greenhouse Gas Initiative—but it doesn’t cover the entire economy, and isn’t tough enough to achieve the state’s ambitious climate goals.

The Department of Environmental Conservation does have the authority to make an economy-wide cap-and-invest program happen, although it would be a huge regulatory flex. But enacting a carbon price will probably require an act of the state legislature—and without a real analysis of how a carbon price would affect the economy and consumer energy prices, which the CAC has yet to produce, legislators are missing a crucial piece of information.

The carbon pricing bill that’s farthest along, the Climate and Community Investment Act (CCIA), would raise $15 billion a year and set aside a third of that to write checks to low- and middle-income New Yorkers to offset any rise in fossil fuel prices created by carbon pricing. But despite a concerted push by climate advocates over the past couple of years, the CCIA is still mired in committee in both houses of the legislature.

Another revenue-raising option not discussed in the scoping plan: Taxing the rich to fund the clean-energy transition, a tactic favored by proponents of the Green New Deal. Sikora thinks that might actually be a more achievable goal.

“A carbon tax is an economist’s wet dream, but in political reality, it’s like pushing a giant boulder up a cliff,” he said. “We think that taxing the rich for a Green New Deal is both substantively better and politically achievable.”

NY Renews—a large coalition of environment, community, and labor groups that has been a driving force behind the passage of New York’s 2019 climate law and the effort to pass the CCIA to fund it—said that while getting a carbon price passed is important, it’s a “slow process,” and the governor and the legislature need to act on climate in the upcoming budget.

“With the escalating climate emergency and economic/public health crises, we need the state to jump start the spending in the budget as we continue to build towards the long-term framework and funding source,” NY Renews coalition coordinator Stephan Edel wrote in a statement.

One Climate Crisis, Two Problems

Climate solutions tend to fall into one of two buckets: resilience, which deals with the impacts of a destabilizing climate, and decarbonization, which drives emissions down so the climate won’t destabilize as much in the first place. The problem isn’t so much that the federal government can’t act on climate overall. It’s that it struggles to act on decarbonization.

The federal bipartisan infrastructure bill passed in November contains about $50 billion in climate-related funding, and about $27 billion to New York State overall. That bill is already speeding up the building of renewables in New York: U.S. Senate Majority Leader Chuck Schumer recently announced that $30 million will go toward building a plant at the Port of Albany that will manufacture the poles used to build wind turbines.

But the climate problems tackled by the infrastructure bill mostly fall into the resilience bucket. The heavy lifting on decarbonization, much of it through new investment in zero-emissions alternatives to old dirty tech, was all in Build Back Better. On that front, at least for now, it seems New York is on its own.

Krueger said the infrastructure funding will help, if New York can use it wisely. “There was a significant amount of funding available to be used for climate solutions in the bipartisan infrastructure bill, and I’m hopeful that we will see Governor Hochul putting that to good use in her budget proposal,” she said.

Sparing Consumer Pain

It might be technically possible for New York State to decarbonize without raising revenue, by regulating fossil fuels more or less to death over the next few decades. But it wouldn’t be pretty. If the cost of producing dirty power and fuel goes up, fuel and energy producers are likely to pass that cost straight on to consumers. This is one reason why many experts say it’s important to ensure that money spent by polluters on carbon credits flows to the government. Without state programs to get that money back into the hands of ordinary New Yorkers and help them get their homes and cars off fossil fuels, an economy-wide cap on carbon could act like a flat tax, imposing the same pollution markup rate on a private helicopter flight to the Hamptons as it would on a struggling household’s heating bill.

That’s a future Liz Moran, New York State policy advocate for Earthjustice, doesn’t want to see.

“It will be important for the governor and the legislature to look closely at protecting consumers,” Moran said. “It isn’t the fault of the average consumer that we’re facing the climate crisis we’re in. It’s the fault of the polluters, and that’s the intent behind policies like the CCIA—to make polluters pay up for the mess that they put us in.”

For the Climate Action Council, the issue of consumer and ratepayer impacts has forged some common ground between industry and community groups—two factions often at odds. “Customer cost impacts are still missing,” said Donna DeCarolis, president of the National Fuel Gas Distribution Corporation and a CAC member, in a statement on her “yes” vote to release the draft scoping plan. “The plan really needs to include a detailed analysis of costs. It should be part of the discussion in the coming year.”

The release of the draft scoping plan on January 1 will kick off a process that will last well into 2022. The CAC will hold at least six public hearings and open a comment period of at least 120 days to gather public input on the plan from around the state. The plan lays out three possible pathways for meeting climate goals over the next few decades, with varying degrees of aggressiveness on electrifying and decarbonizing pieces of the state economy that now rely on fossil fuels.

“It is our intention to lay them out for the public for the next six months of dialogue for New Yorkers, so they can equally see pros and cons across these forks in the road,” said NYSERDA analyst Carl Mas at the CAC’s Monday meeting.

The lack of any real plan for revenue, among other large unsettled questions in the draft scoping plan, means there’s a lot of work ahead—both for the CAC and for state legislators. The clock is ticking.

“Toughest part is ahead, but this is an achievement,” DEC Commissioner and CAC co-chair Basil Seggos said in a tweet about the CAC’s vote to move forward with the draft scoping plan.

Mark Dunlea of the Green Education and Legal Fund took a dimmer view, writing in an analysis of the draft plan: “There is no one on the Council really willing to push the state to act like we are facing a Code Red on a climate emergency.”