A Belated Reckoning as Climate Act Costs Become Apparent

Four years after passage of the Climate Leadership and Community Protection Act, state officials have finally begun to take a close look at the law’s consumer costs, and they don’t like what they see.

According to DEC Commissioner Basil Seggos, these costs could be “extraordinary,” such as a 62-cent increase per gallon of gasoline and an 80 percent increase in the price of natural gas, a devastating blow to the 60 percent of New York households that heat with gas.

Governor Hochul and state Senator Kevin Parker are scrambling to reduce those costs by changing how methane is accounted for under the Climate Act. The Act requires the use of a 20-year timeframe, while Hochul and Parker want to switch to the 100-year standard used by the federal government and 48 other states.

Under the 20-year time frame, each ton of methane emitted is calculated as equivalent to around 80 tons of carbon dioxide (CO2), while on a 100-year basis, each ton of methane is equivalent to only about 25 tons of CO2. Understood this way, it’s easy to see that eliminating the equivalent of 80 tons of CO2 is more costly than eliminating only 20 tons worth.

And barring some other creative policymaking, these costs are likely to be passed onto consumers.

This belated recognition of the Climate Act’s consumer costs reflects the state’s failure from the beginning to seriously address how the law might affect New Yorkers’ wallets.

The Act was enacted in such a rush that neither the legislature nor then-Governor Andrew Cuomo bothered to produce any estimate of its fiscal and economic impacts, as the Empire Center pointed out during that process.

But they seem to have suspected the impacts would be substantial, because while the original draft of the bill required a scoping plan to be released by July 2022—just ahead of the legislative and gubernatorial elections—the final draft moved that deadline to the politically safer date of January 1, 2023.

A cost study may have been completed by the New York State Energy Research and Development Authority (NYSERDA) and Department of Environmental Conservation (DEC) under a promise by Cuomo to identify “the most rapid, cost-effective, and responsible pathway to reach 100 percent renewable energy statewide.” But when the Empire Center filed a Freedom of Information Law (FOIL) request for this study, the agencies declined to provide it.

And when the Empire Center won an initial court order requiring the agencies to share the study, the agencies won on appeal by claiming that the study was not complete.

It’s uncertain whether this study ever was completed. And in March of this year NYSERDA again refused an Empire Center FOIL request for any internal cost-benefit analyses, despite an implicit admission that such a document exists.

An overall cost-benefit analysis was prepared by an outside consultant for the Climate Action Council as it worked on the Act’s Scoping Plan, but that study has many problems. Not least of those problems is that it was based on assumptions that were neither required by the Climate Act nor adopted by the Climate Action Council. That is to say, the policies assumed for that study are not necessarily those New York is actually implementing.

And when some members of the Council asked for a consumer cost analysis of the Act, co-chairs Seggos and Doreen Harris, President and CEO of NYSERDA, refused their request.

Now, at last, Seggos admits, “There hasn’t been a deep dive into costs . . . That’s what we are beginning to look at now.” But rather than acknowledge that they failed to do due diligence up front, the proposed change in accounting methods is argued as simply bringing the state into compliance with “internationally accepted best practices.”

However, Climate Action Council member and Cornell University climate expert Robert Howarth scoffs at the claim that a 100-year time frame is best practice. He argues that it is a scientifically archaic approach adopted when we had less understanding of methane’s heat-trapping potential. “The science since then,” he says, “has demonstrated that it severely under accounts for the climatic risk from methane emissions,” which have a much greater global warming potential than CO2.

Howarth has the better argument on which time frame is state of the art, but while countering climate change is one important value, the costs—both economic and political—of doing so are another. Even if the economic benefits ultimately outweigh the costs—a big if—people will feel the costs first and most immediately, which could create substantial political costs for the Hochul administration.

The administration, then, is finally coming to grips with the reality that while most New Yorkers support the Climate Act in the abstract, they also express a very limited willingness to pay for it. They have run headlong into the Iron Law of Climate Policy, which says that “when policies focused on economic growth confront policies focused on emissions reductions, it is economic growth that will win out every time.”

Or as an op-ed penned by Seggos and Harris succinctly puts it, “Fighting climate change won’t work if people and businesses can’t afford it.”

But if the state had done its homework ahead of time—if it had analyzed the potential consumer costs before passing the law, or if the Climate Action Council had acted on its members’ request to do so—we could have had a more serious discussion about how to affordably reduce greenhouse gas emissions much earlier in this multi-year process.

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