New York’s “cap and invest” program (NYCI), a central part of the state’s efforts to reduce greenhouse gas emissions, appears designed to hold back much of the program’s sticker-shock until January 2027—after the 2026 election.
About two-thirds of emissions would be subject to NYCI (pronounced “nicky”), meaning the companies responsible would need to purchase allowances from the state. Allowances would be required for most fuel purchases (federal law exempts aviation fuel), and officials are still deciding among other things whether the rules would apply to electric generators, who already pay into a separate system.
The Department of Environmental Conservation (DEC) would determine how many allowances each company needs, establish a limit on the number of allowances sold in a year and place a ceiling on the price of those allowances. As the state approaches its 2030 emissions reduction goal (about 34 percent below 2021 levels), the number of allowances would shrink and the ceiling would rise.
Last week officials from NYSERDA, the state energy agency, presented a preliminary analysis showing how the program could look when it’s launched next year. While they emphasized the price levels were hypothetical, all three scenarios (see below) called for the price ceiling to more than double at the beginning of 2027. By comparison, price ceilings increase 5 to 6 percent in each of the other years.
Put another way:
Under the “modeling exercise,” NYCI would add at least 13 to 21 cents to the cost of a gallon of gasoline in 2026—and 22 to 48 cents in 2027. The total cost in 2025 (in the hypothetical scenarios, in 2022 dollars) would range from $3.1 billion to $5 billion, rising to $5.6 billion to $11.9 billion in 2030. At least 30 percent of NYCI proceeds would be rebated back to at least some New Yorkers (possibly as a refundable tax credit). NYSERDA has indicated a significant portion of households will break even or come out ahead.
These are preliminary numbers, but the fact that the 2026-2027 jump was the basis for all three scenarios is a strong indicator this will be a feature of the program when it’s rolled out later this year.
This wouldn’t be the first time New York climate policy was molded with Election Day in mind.
As the Climate Act was being finalized in June 2019, a costly provision—requiring the state to get 38 percent of its electricity from renewables by 2022—was dropped. To put that in perspective, New York only reached 30 percent renewables in 2022 (a target previously set for 2015), and forcing utilities to pay subsidies equivalent to 8 percent of load would have pushed electricity rates considerably higher in 2022 when Governor Andrew Cuomo expected to be seeking a fourth term.
Meanwhile, the announcement of detailed regulations (such as bans on gas stoves and oil furnaces) was moved from June 2022 in the original version to December 2022 in the final text, putting it weeks after the 2022 gubernatorial election.
It’s difficult to square the apocalyptic rhetoric from state officials about the threat posed by climate change with New York again moving climate-policy timelines to mitigate electoral blowback. As a political move, however, given that the state is deliberately aiming to make things cost too much for people to keep using them, doing it after an election makes perfect sense.