Memo on NYS climate law costs spurs Albany talks on rolling back some goals

ALBANY — A memo projecting the potential costs of the state’s landmark climate law is accelerating discussions on whether key environmental goals should be rolled backed.

The memo from the New York State Energy Research and Development Agency to Gov. Kathy Hochul’s office is the first time the state has provided an estimate of what the 2019 Climate Leadership and Community Protection Act would cost individual households.

The NYSERDA analysis concluded that by 2031, a New York City area home using natural gas would see costs rise by $2,300 a year and gasoline prices would rise by more than $2.20 a gallon.

The memo projects the potential costs to state residents over the next five years under a cap-and-invest system that would meet the emission standards laid out in the climate law. Under  the system, polluters who exceed set limits would pay a set amount. That money could then be used as rebates, investments in clean energy projects and other cost offsets.

For upstate residents, the annual cost increase could reach more than $4,000, the memo projected. Upstate and downstate were the only categories for the projections.

The memo comes as Hochul negotiates a $260 billion budget and Hochul and all 213 legislative seats are up for election. It also comes as state residents face skyrocketing utility bills and politicians on both sides of the aisle are talking about the importance of affordability in the state.

"That’s why I’m raising the alarm and letting people know what is in store," Hochul said Monday. "If people understood the effects of this, I think the legislature would be very willing to have these conversations about how to make adjustments."

Hochul said the state’s climate benchmarks were worthy goals, but the world had changed dramatically since the climate law passed.

At this point the state’s goals aren’t reasonable, given the projected costs, she said. Hochul pointed to the COVID-19 pandemic, a sharp increase in inflation, supply chain issues and President Donald Trump’s opposition to renewable energy projects as some of the reasons why the state has not been able to meet its goals under the law.

For months, Hochul’s administration had hinted they wanted to see changes to the law and last Wednesday, her budget director Blake Washington told a panel in New York City that the administration would seek changes from the State Legislature on the law. Hochul has not publicly said what specific changes she wants to see.

It would not be the first time Hochul tried to make last-minute changes to a major state policy in budget negotiations. She used a similar negotiating tactic in 2022 to propose changes to the state’s bail laws.

The NYSERDA memo drew condemnation from environmental groups while Republicans and business groups said it confirmed their initial criticisms of the law.

"The state’s future energy policies must first prioritize what New Yorkers can afford, rather than what environmental extremists want," Assembly Minority Leader Ed Ra (R- Garden City South) said in a statement.

Republicans have called for the state to fund $400 rebates for utility customers using tax revenue and surcharges for future energy projects.

The state’s climate plan, which was hailed as the most aggressive in the nation when the State Legislature passed it in 2019, codifies into law the state’s goal of getting all of its electricity from emission-free sources by 2040 and reducing economywide emissions by 85% from 1990 levels by 2050.

It includes multiple interim targets to help meet the ultimate goals, including 70% electricity from renewable energy and a 40% reduction in greenhouse gases from 1990 levels by 2030.

Ken Pokalsky, the vice president of government affairs for the Business Council of New York State, said it has been evident for some time the state would not reach its climate goals. The memo from NYSERDA shows the cap-and-invest system is not a workable path, he said.

"It would be massive, massively expensive, and we think massively damaging to the state's economy," he said.

Hochul previously tried to get the State Legislature to make changes to the law, including tweaking the formula the state uses to measure greenhouse gas emissions to be in   line with how almost every other state in the nation measures those emissions.

Environmental groups and some legislators are rejecting Hochul’s arguments that any rollback is necessary.

Sen.  Pete Harckham (D-South Salem), chair of the Senate Environmental Conservation Committee, said it was a matter of having political courage to make tough decisions.

"Yes, we can address climate change, reduce costs for ratepayers, increase energy generation and resilience and create tens of thousands of good paying jobs in the process," he said in a statement last week.

Blair Horner, a senior policy adviser at the New York Public Interest Group, said the timing of the memo, which came on the day after comments on the law’s cost by the state budget director, makes it clear Hochul is trying to shove the changes in the state budget negotiations. There was no mention of changing the law in Hochul’s State of the State or in her budget proposal.

"She wants this to be a secret discussion," Horner said.

Liz Moran, the New York policy advocate for Earth Justice, criticized NYSERDA’s memo as misleading.

Moran said the law requires the state to create regulations to achieve its goals.

Moran said the memo assumed a cap-and-invest system was the only path forward for the state, but the state has other options, including sector-by-sector regulations and other policies to reduce emissions.

Moran said the blame for increased utility bills in much of the state was because of the increased price of natural gas.

The state faces other issues, including an aging power grid, a lack of investment in maintaining power plants or building new ones, and a sharp increase in the demand for electricity.

Ken Girardin, a fellow with the Manhattan Institute, said the problem the state faces is not about reaching the climate goals. Instead, it is that lack of investment in areas such the electrical grid that could lead to potential brownouts.

"If I were Gov. Hochul, my single biggest concern on the energy front would be the electric grid," he said.