The Hochul Carbon Costs and Benefits Cover-Up Exposed
Kathy Hochul's Administration is playing games with the numbers and not telling New Yorkers the truth about the state's Climate Act costs and benefits. It's a classic cover-up.
Guest Post by Roger Caiazza of Pragmatic Environmentalist of New York.
I recently published an article that summarizes comments I submitted to the New York Department of Environmental Conservation (DEC) in response to a request for feedback. After I published the article, I received an answer to a question I asked EPA about the calculation methodology used by DEC and that inspired me to reiterate my contention that New York’s application of the societal benefits of greenhouse gas emission reductions results in misinformation.
I have followed the Climate Leadership & Community Protection Act (Climate Act) since it was first proposed, submitted comments on the Climate Act implementation plan, and have written extensively about New York’s net-zero transition. The opinions expressed in this article do not reflect the position of any of my previous employers or any other company I have been associated with; these comments are mine alone.
Overview
The Climate Act established a New York “Net Zero” target (85% reduction in GHG emissions and 15% offset of emissions) by 2050. It includes an interim 2030 reduction target of a 40% reduction by 2030 and a requirement that all electricity generated be “zero-emissions” by 2040. The Climate Action Council (CAC) was responsible for preparing the Scoping Plan that outlined how to “achieve the State’s bold clean energy and climate agenda.”
In brief, that plan is to electrify everything possible using zero-emissions electricity. The Integration Analysis prepared by the New York State Energy Research and Development Authority (NYSERDA) and its consultants quantifies the impact of the electrification strategies. That material was used to develop the Draft Scoping Plan outline of strategies. After a year-long review, the Scoping Plan was finalized at the end of 2022. Since then, there have been regulatory and legislative initiatives to implement the recommendations, but progress has been slow.
My recent post included extensive documentation for the New York Value of Carbon so I will not repeat it here. For this article the key point is that the DEC Climate Change Guidance Documents webpage notes that it was established for use by State entities to “aid decision-making and for the State to demonstrate the global societal value of actions to reduce greenhouse gas emissions in line with the requirements of the Climate Leadership and Community Protection Act.”
Methodology Comment
Yesterday’s article described my submitted comment on the Value of Carbon methodology. In short, I am convinced that the State calculation methodology is incorrect. I believe that the guidance methodology is wrong because it applies the social cost multiple times for each ton reduced.
Last weekend I reviewed the EPA webpage description of the ““Report on the Social Cost of Greenhouse Gases: Estimates Incorporating Recent Scientific Advances”. That page includes links to the following information:
Public Comments on the “Report on the Social Cost of Greenhouse Gases”
EPA Responses to Public Comments on the “Report on the Social Cost of Greenhouse Gases”
External Peer Review of the “Report on the Social Cost of Greenhouse Gases”
I reviewed the Final Report and thought their description of the proper benefit calculation methodology supported my arguments. That webpage also includes a “Contact Us” form for questions. To confirm my interpretation, I submitted the following to EPA.
I have a question about the first two sentences in the first paragraph in Section 4.2 of the Final Report.
The sentences say: “The Social Cost of Greenhouse Gases (SC-GHG) reflects the future stream of damages associated with an additional ton of emissions discounted back to the year of the emissions. Several steps are necessary when using the SC-GHG estimates in an analysis that includes GHG emissions changes in multiple future years in addition to other benefits and costs.”
I interpret that to mean that the SC-GHG benefit value is applied for an additional ton of emission reductions once. If you are looking at changes over multiple years, the first-year reductions are not applied cumulatively in multiple future years.
Is that the correct interpretation?
I received the following response from Elizabeth Kopits, PhD, Economist, National Center for Environmental Economics, Office of Policy, U.S. EPA:
Thank you for reaching out to our office with your question regarding EPA’s SC-GHG estimates.
The sentences you refer to are just intending to say that if you are analyzing a policy that is expected to result in emission reductions (or increases) in multiple years, then there are several steps to estimating the present value of the full stream of climate benefits (or disbenefits) that are expected from the emissions changes.
If I’m understanding your question correctly then I think the answer is yes.
For example, suppose it has been estimated that a policy will reduce CO2 emissions by 100 tons in 2025, 105 tons in 2026, and 110 tons in 2027, and the analyst is interested in calculating the total climate benefits from these emission reductions and comparing it to the estimated costs and other benefits of the policy. First, one would calculate the climate benefits in each year.
That is, the climate benefits in 2025 from the emission reductions expected in 2025 = 100 tons multiplied by the SC-CO2 for 2025 ($/t). (Recall this SC-CO2 value reflects the present value of the future stream of avoided damages from a one-ton reduction in 2025, so there is nothing more to calculate in 2026 and later related to the emission reductions that occurred in 2025.) Similarly, the climate benefits in 2026 from the emission reductions expected in 2026 = 105 x SC-CO2 in 2026, and the climate benefits in 2027 from the emission reductions expected in 2027 = 110 x SC-CO2 in 2027.
Finally, one can calculate the present value of the benefits resulting from the full stream of emission changes from the perspective of the base year of analysis (e.g., 2024) by discounting the 3 numbers back to 2024 and summing.
I hope this helps to clarify a bit. The SC-GHG workbook available on our webpage (https://www.epa.gov/environmental-economics/scghg) contains detailed instructions and example tabs that may be more helpful than my simple example above. If you continue to have questions, please feel free to reach out any time.
The key is the “SC-CO2 value reflects the present value of the future stream of avoided damages from a one-ton reduction in 2025, so there is nothing more to calculate in 2026 and later related to the emission reductions that occurred in 2025” statement. If the intent is to determine the present value of the full stream of climate benefits (or dis-benefits) that are expected from the emissions changes, then lifetime calculations are inappropriate. I want to know the value of the climate benefits for New York to reach an 85% reduction of GHG emissions by 2050.
Discussion
The New York Value of Carbon regulatory policy enables the State to “demonstrate the global societal value of actions to reduce greenhouse gas emissions”. New York’s climate policy making is nearly all political theater. To justify the costs of the Climate Act, the political slogan is “the costs of inaction are more than the costs of action.” To make that claim NYSERDA twisted the interpretation of the analyses to minimize the overall costs, biased costs low and benefits high, and, I have no doubt, influenced the Value of Carbon methodology to maximize benefits.
My earlier post also included related correspondence with DEC staff responding to my interpretation. It stated that “We ultimately decided to stay with the recommendation of applying the Value of Carbon as described in the guidance as that is consistent with how it is applied in benefit-cost analyses at the state and federal level.”
Dr Kopits response letter flatly contradicts the claim relative to the Federal level. To give the benefit of doubt to DEC staff I will concede the interpretation of what is appropriate for this benefit-cost analysis may be different. However, I think New Yorkers deserve clarification and ultimately get the total costs for the Climate Act mandated reductions.
The DEC response went on to say that “When applying the Value of Carbon, we are not looking at the lifetime benefits rather, we are looking at it in the context of the time frame for a proposed policy in comparison to a baseline.”
Finally, it noted that “The integration analysis will apply the Value of Carbon in a similar manner as it compares the policies under consideration in comparison with a baseline of no-action.” This is where the interpretation of the policies under consideration were twisted.
In brief, the Hochul narrative that the costs of inaction are more than the costs of action only applies to Climate Act policies and not the total costs to achieve the Climate Act mandates. The baseline of “no-action” described in the Scoping Plan as “Business as usual plus implemented policies” includes the following programs:
Growth in housing units, population, commercial square footage, and GDP
Federal appliance standards
Economic fuel switching
New York State bioheat mandate
Estimate of New Efficiency, New York Energy Efficiency achieved by funded programs: HCR+NYPA, DPS (IOUs), LIPA, NYSERDA CEF (assumes market transformation maintains level of efficiency and electrification post-2025)
Funded building electrification (4% HP stock share by 2030)
Corporate Average Fuel Economy (CAFE) standards
Zero-emission vehicle mandate (8% LDV ZEV stock share by 2030)
Clean Energy Standard (70×30), including technology carveouts: (6 GW of behind-the-meter solar by 2025, 3 GW of battery storage by 2030, 9 GW of offshore wind by 2035, 1.25 GW of Tier 4 renewables by 2030)
That means the costs of all these programs required to meet the Climate Act mandate of an 85% reduction in emissions by 2050 are not included in the evaluation. Due to the lack of transparent cost and benefit estimates, I cannot determine if the NYSERDA Integration Analysis excluded the benefits associated with those programs. However, it would be another way to achieve the goal of a sound bite justification of benefits and costs.
Conclusion
New York’s climate policy making is nearly all political theater.
The shenanigans the Scoping Plan authors used to make sure they could claim benefits were greater than costs and hiding their methodology and results is a long, disappointing story.
The Value of Carbon methodology is dictated by the desire to prove a point rather than provide any rigor in establishing its definition and level. Given the necessity to maximize benefits to “prove” the costs of inaction are more than the cost of action and the lack of accountability to meaningfully respond to all stakeholders, ignoring my comments is a simply expedient.
I believe the ultimate question is “What are the benefits of New York’s 85% emission reductions mandated by the Climate Act?” To answer that the value of carbon or social cost of carbon benefits should use the EPA methodology. I believe that benefit is what all New Yorkers want to know and the Hochul Administration is deliberate covering up those numbers because it runs contrary to their narrative.
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