New York agency memo presents unrealistic cap-and-invest scenario not under consideration

On February 26, a memo from New York State Energy Research and Development Authority (NYSERDA) to the Governor’s office was shared with City & State NY, outlining unrealistic projected cost impacts from a modeled version of a cap-and-invest program that has never been on the table and likely omits the most effective program features to control household costs.

Cap-and-invest is a proven and flexible policy that leaders in other states have successfully designed to secure net savings for consumers, while slashing pollution. New York could be doing the same. Based on the proposals DEC and NYSERDA actually developed for consideration in the regulatory process, delay of this program in the first year alone has already cost New York ratepayers $3 billion in investments that should today be expanding access to cleaner, cheaper energy, including over $1 billion that could have directly lowered energy bills.

How does cap-and-invest cut costs and pollution

As a quick refresher, cap-and-invest works by simultaneously putting a limit on the tons of pollution companies can emit — “cap” — while making them pay for each ton, funding projects that create health and cost-saving benefits for communities — “invest.”

By putting a price on pollution, the policy raises billions in revenue that flows directly back into New York communities through direct credits on energy bills and into programs that help consumers quickly and cheaply access clean energy and efficiency upgrades that will cut their energy costs year over year.

Why this modeling is unrealistic

The NYSERDA memo is not accompanied by publicly available analysis, but it appears to be based on an unrealistic version of a cap-and-invest program that has never been in serious consideration in the range of prior proposals studied by the administration. A body of external research (outlined below) has confirmed that these proposals would deliver substantial benefits to New Yorkers. In short, this analysis reflects a design that is not and has never been on the table.

Further, this version does not include essential policy options that other states utilize to ensure their programs are both affordable and delivering meaningful reductions in climate pollution.  The memo does not quantify the cost-savings from clean energy and efficiency programs that would be funded by the billions in investments raised from polluters — a major omission. Nor does it account for the extensive costs of inaction to reduce climate and air pollution that New Yorkers are already paying.  

This skewed analysis is misleading for both policymakers and the public.

What our experts are saying

“This NYSERDA memo presents a skewed and misleading picture of a policy approach that is simply not on the table. It fails to include proven design options that deliver savings benefits for consumers that have been included in all other existing cap-and-invest programs nationwide. After years of stalling, New York policymakers should be focused on how to swiftly implement the climate law and scale up clean energy to protect consumers from the most significant drivers of growing energy costs for New Yorkers — rising fossil fuel prices.” — Kate Courtin, Senior Manager for State Climate Policy & Strategy at EDF.

What we know: Cap-and-invest is a proven way to curb pollution & generate savings

Time and again, cap-and-invest is a proven and flexible policy that can be designed to yield cost-savings, economic growth and public health benefits. Several independent analyses demonstrate that previously proposed policy options in New York would deliver all of these benefits:

• Cost savings: Modeling from Greenline Insights shows that, over the first decade of the cap-and-invest program — known as the Clean Air Initiative — households earning $200,000 or less are projected to realize $6.9 billion in net savings statewide — equivalent to roughly $1,060 per household. Nearly 85% of New York households fall within this range. The findings of this analysis are consistent with prior research by Resources for the Future and Switchbox.
• New jobs: The same analysis projects that over the program’s first decade, the Clean Air Initiative would generate more than 300,000 new jobs, with average wages 21% above the state median.
• Public health benefits: Previous analysis from NYSERDA finds that, by slashing health-harming pollution, the Clean Air Initiative would deliver up to $13 billion in annual health benefits by 2035 and prevent over 1,000 deaths and 137,000 emergency room visits from asthma.  

The cost of inaction

New Yorkers continue to pay the price for delayed action on climate, from volatile fossil-fuel prices, dangerous extreme weather, dirty air, worsening storms and ever-rising insurance costs. Previous analysis by New York state determined that the cost of inaction exceeds the cost of CLCPA implementation by a whopping $115 billion.

Demonstrated benefits around the country

As a result of the Regional Greenhouse Gas Initiative — a successful regional cap-and-invest program covering power plants in the northeast and mid-Atlantic — New York ratepayer savings are expected to reach nearly $12 billion over the lifetime of these investments, representing a six-to-one return on approximately $2 billion invested to date.

California’s Cap-and-Invest program has generated over $30 billion in climate and community investments since 2013 and directed $16 billion to reduce household energy costs through utility bill credits.