by Mark Dunlea, Green Education and Legal Fund
author, Putting Out the Planetary Fire
Governor Hochul called into question the state’s commitment to climate action when a few days before the April 1 budget deadline she suddenly proposed weakening the state’s carbon emission reduction goals. While a firestorm of protest forced her to remove it from the budget negotiations, she may raise it later in the legislative session.
While the explanations offered by the Governor for her retreat changed on a daily basis, her current stated concern is price increases from carbon pricing. The idea that she would not have understood such a core issue is beyond belief. She is not acting as if she understands that New York and the planet is facing a climate emergency.
Raising the price of fossil fuels through carbon pricing, as the Governor’s budget proposes, makes it more expensive to purchase them. Higher prices will make more consumers take advantage of the cheaper prices they can get by switching to renewable energy. The real issue is how to protect consumers from such price increases.
The Governor’s reversal raises the question of how seriously her administration takes the climate plan it took three long years to develop. It also largely shut down discussion and advocacy efforts about the many other critical climate proposals being debated in the budget.
Her new positions closely align with that of the fossil fuel industry, which continues to have massive support in both major political parties. The media highlighted that she has received more than half a million dollars in donations from the fossil fuel industry. And one of the main industry lobbyists pushing her new legislation is Todd Kaminsky, who until last year was the chair of the Senate Environmental Committee.
The real challenge with carbon pricing is not how to prevent the price of fossil fuels from rising – that is a positive development – but how to protect consumers, businesses, and taxpayers from such increases. The most obvious answer is to increase the amount of revenues that are rebated to New Yorkers, in some combination of direct payments as well as subsidies for various new renewable energy sources such as air heat pumps and electric vehicles.
In other jurisdictions, a major part of the debate on carbon pricing is over how much rebates will be given to consumers, who will receive them, and what subsidies will be provided to households to purchase air heat pumps and other energy efficiency devices. There has been very little debate on those questions so far in New York over rebates.
The percentage of the revenues devoted to rebates is usually substantial. Many carbon pricing advocates want a majority of the revenues to go as rebates. The largest national grassroots group promoting a carbon tax, Citizens Climate Lobby, has long advocated for a 100% rebate. The carbon tax bill I helped draft with Assemblymember Cahill back in 2015 provided direct rebates of 60%, targeted to low- and moderate-income New Yorkers. Hochul has indicated that only a third of the revenues would be rebated, though she has not provided details as to how, the division between rebates and subsidies, and whether there would be income targeting.
Another, more difficult, approach to mitigating price increases is to make polluters pay in ways that prevent them from passing on the costs to customers. The State Senate supports the Climate Superfund Act to raise $3 billion from the largest polluters in a way that restricts their ability to raise prices. Other legislation is pending to tax the massive excess profits fossil fuel companies have received due to COVID and the war in Ukraine.
By the state’s own estimates, it needs to raise $10 billion a year in new climate funding for the transition to net zero emissions by 2050. My own assessment, partially based on the need for a much faster timeline, is that considerably more funding is needed. The state in the four years after passing the CLCPA climate law has failed to raise such funds. Many climate groups have been willing to support the Governor’s carbon pricing proposals, despite their misgivings, because it is the first realistic step by lawmakers to address the climate revenue needs. Hochul’s so-called cap-and-invest appears to fall far short however of the needed $10 billion.
As the United Nations has repeatedly warned, New York needs to adopt emission reduction goals far stronger than what the state’s new climate law lays out. The CLCPA calls for a 40% reduction by 2030. President Biden two years ago set a national goal of a 52% reduction by 2030. To keep global warming below the agreed upon 1.5 degree C target, the actual goal should be more in the 70 to 85% range by 2030, with zero emissions soon afterward.
Failing to keep global warming below the 1.5-degree target poses existential threats, with increasing extreme weather events causing ever more havoc. Tens of millions (if not hundreds) will be forced to flee their homes due to rising tides, heat waves, drought, floods. Climate refugees will lead to conflict among people and nations desperately seeking access to as food, water, land, and shelter.
After the state enacted its new climate law (CLCPA), it spent more than 3 years drafting a so-called climate scoping plan. The document is not really a plan, as it avoids detailed timelines, activities, and financing. While it addresses many of the key steps the state must eventually take to move to a clean energy future, it largely defers answering the tough questions on when and how to do so.
One of the few issues the Climate Action Council did resolve in the plan after much discussion was that the state’s goals to reduce greenhouse gas emissions should reflect that methane emissions (e.g., from natural gas) are 80 times more potent during its first 20 years in the atmosphere than carbon. This is what Hochul wants to change (as well as promoting the false climate solution of biomass).
Virtually no support was expressed during the three years of public comment for doing carbon pricing through a cap-and-trade (invest) program rather than say a carbon tax. Yet in the closing days of the three-year process the Governor announced that she would enact a “cap-and-invest” carbon pricing program.
Under a carbon tax, the government sets a firm price for each ton of greenhouse gas emissions. Cap-and-trade – an approach opposed by many climate groups, the environmental justice community, and even Pope Francis – instead allows the marketplace to set the price through an auction. It also often allows polluters to seek to lower their costs by paying for emission reduction schemes elsewhere.
Cap-and-trade usually fails to reach their emission targets because politicians set the “cap” on emission levels too high to appease the fossil fuel industry. This was what Congress found when it examined NY’s existing cap-and-trade program (RGGI or Regional Greenhouse Gas Inventory) for electric producers. Hochul is now seeking to raise the cap.
Congress did find that the investment of revenues from RGGI in renewable energy was beneficial, Hochul now wants to reduce revenues.
Cap-and-trade programs also often fail to reduce emissions in environmental justice communities and in fact many increase them (as has happened in California). The Senate did include in its one-house budget provisions proposed by NY Renews and others to protect environmental justice communities.
The Governor wants lawmakers to grant her the power to make most decisions administratively on cap-and-invest. While a carbon tax remains a more effective approach, at a minimum state lawmakers should determine many of the carbon pricing details, such as the size and form of the rebates, the level of subsidies, and the price of the permits (a least a high floor, if not a set price).
The State of Washington, which has cap-and-invest, recently held its first auction, with a price of $49 a ton (it has a floor of $22.50 a ton). Washington’s emission reduction goal of 45% by 2030 is slightly faster than NY’s. This price apparently shocked Hochul, though it is less than half of what the European program costs. RGGI charges about $12 a ton, though the state estimates that the actual social cost of carbon is $121 a ton.
Another issue that needs to be debated is how much money will the polluters pay for the damages they inflict on society from their pollution. This starts with the price per ton to emit carbon. Failing to set a price that is equal to the $121 per ton that the state has determined is the social cost of carbon is in effect providing a major subsidy to polluters. The International Monetary Fund estimates that 70% of the $6 trillion annual subsidy to fossil fuels comes from governments failing to make polluters pay for the damages their emissions caused, such as the estimated $30 billion-plus in higher health care costs in New York.
In addition to rejecting the Governor’s effort to gut the state’s climate law, lawmakers need to radically strengthen climate measures in the budget. They need to commit to raising at least $10 billion (plus) annually in new funds for climate change. They need to double the state’s goal to invest 35% of climate funding in disadvantaged communities now that the state has determined that half the state’s population falls into that category.
They also need to enact the overall agenda advanced by the climate movement such as the Climate, Jobs, and Justice package that NY Renews coordinates; public power (BPRA); All Electric Buildings (2024 timeline); and Renewable Heat Now. The need to put teeth into enforcement of the CLCPA’s provisions, including ending the promotion of natural gas. They should set a goal of decarbonizing all state buildings by 2030 (not 2040 as proposed), starting with a 3-year timeline to convert the State Capitol and Plaza to 100% renewable energy. The latter would end more than a century of pollution suffered by a nearby low-income community of color to power the state buildings.
Time is running out for governments to take the action needed to give future generations a chance at a decent life.