New York State Cooks the Books to Reach Net Zero

Originally published for customers March 10, 2023

What’s the issue?

New York has laid out actions the state must take to reach statewide goals of 70% renewable electricity by 2030, 100% zero-emission electricity by 2040, a 40% reduction in statewide GHG emissions from 1990 levels by 2030, an 85% reduction in statewide GHG emissions from 1990 levels by 2050, and net-zero emissions statewide by 2050.

Why does it matter?

The plan, if implemented, will have far-reaching impacts not only on the energy sector, but also on the whole economy of the state.

What’s our view?

While the plan claims to be data driven, in actuality it relies on faulty accounting methods designed to favor certain solutions over others, drive most business and agriculture from the state and then falsely claim success.

 


 

New York has laid out actions the state must take to reach statewide goals of 70% renewable electricity by 2030, 100% zero-emission electricity by 2040, a 40% reduction in statewide GHG emissions from 1990 levels by 2030, an 85% reduction in statewide GHG emissions from 1990 levels by 2050, and net-zero emissions statewide by 2050. The plan, if implemented, will have far-reaching impacts not only on the energy sector, but also on the whole economy of the state.

While the plan claims to be data driven, in actuality it relies on faulty accounting methods designed to favor certain solutions over others, drive most business and agriculture from the state and then falsely claim success.

 

New York’s Climate Action Plan

A 2019 New York statute, the Climate Leadership and Community Protection Act (Climate Act), required a council to prepare a scoping plan (Plan) by January 1, 2023. Released at the end of last year, the Plan was a culmination of more than two years of work, including issuance of a draft plan followed by a six-month public comment period and eleven public hearings across the state. Issuing the Plan is just the first step in a very long process to ensure the state meets the Climate Act’s goals. The state’s Department of Environmental Conservation (DEC) has until January 1, 2024 to draft and promulgate enforceable regulations to ensure that the state meets the Climate Act’s statewide GHG emission limits (i.e., a 40% reduction in statewide GHG emissions by 2030 and an 85% reduction by 2050, both from 1990 levels). By July 1, 2024, and every two years thereafter, the state’s Public Service Commission (PSC) will issue a comprehensive review of the renewable energy programs, including progress towards meeting the targets for 70% renewable electricity by 2030 and 100% zero-emission electricity by 2040. These reviews will also include updates on programs the PSC has established requiring procurement of nine gigawatts of offshore wind by 2035, six gigawatts of solar photovoltaic by 2025, and three gigawatts of energy storage by 2030.

The Plan calls for dramatic changes that will impact all aspects of life in the state. At the personal level, it calls for the full electrification of two million homes by 2030 and the conversion of 250,000 housing units each year thereafter representing “greater than a tenfold increase from current market activity.” It also would require the replacement of three million cars with zero emission vehicles, mainly battery-electric vehicles, by 2030, which represents about 75% of all passenger vehicles currently in the state.

With respect to the energy sector, the Plan anticipates a doubling of the state’s electric demand by 2050. The required growth in specific generation assets, wind, solar and batteries, will require new and upgraded electric transmission and distribution systems statewide that will be necessary “to deliver energy from where the generation is located (both upstate and offshore), to where the load demand exists.” With respect to local gas distribution companies, the Plan “will require a substantial reduction of fossil natural gas use and a strategic downsizing of the gas system.”

For the industrial sector, such as manufacturing, mining and quarrying, and other energy- and emission-intensive industries, the Plan calls for incentives in lieu of enforcement. The fear expressed in the Plan is that a more prescriptive approach would lead to substantial “leakage, where businesses leave or avoid the State and locate in other jurisdictions where they can emit higher levels of GHG emissions than they would have, had they remained in the State.”

With respect to agriculture, the Plan simply states that mandatory “livestock management strategies will contribute the deepest reductions in agricultural emissions by mitigating methane through manure management practices and precision animal feeding.” No mention is made as to how farmers are expected to pay for the costs incurred to implement such plans, and in this area the Plan seems to ignore the leakage that will likely occur in this sector. But as with industrial processes, if the cost of doing business is higher than in neighboring states without such requirements, there will also likely be leakage in this sector as well.

 

Step One: Cook the Books

In addition to the Plan, the Climate Act requires the state’s DEC to issue an annual report (Report) detailing actual emissions and progress toward the Climate Act’s goals. The 2022 Report was issued earlier this year. It notes that the United Nations’s (UN) approach for national emissions is to report only on the activities that occur within a country’s borders. However, this limited scope makes less and less sense as the geographic region to which it applies diminishes because of the “leakage” problem mentioned above. As the geographic region gets smaller, it is less likely that all of the emissions generated by a population’s demand on resources will be met by production of those resources, i.e., steel, concrete, minerals, and agricultural products, from within the region.

The New York Climate Act appeared to recognize this problem in a limited way, but the solution it arrived at was clearly intended to handicap fossil fuels as compared to other sources of energy. The DEC’s 2022 Report explains that the Climate Act requires it to account for GHG emissions from only in-state sources, with three key exceptions: imported electricity, fossil fuels and exported wastes. But the Climate Act did not go any further by requiring a report that was either based on in-state consumption or lifecycle accounting for any other resources. This choice clearly stacks the deck against fossil fuels whose full lifecycle is compared to just the in-state lifecycle of competing sources.

Also, contrary to the recommendations of the UN, the Climate Act requires the DEC to measure GHG emissions in terms of carbon dioxide equivalent (CO2e) using a 20-year rather than a 100-year time interval. This results in a higher numeric value for some gasses, particularly methane. The DEC’s 2022 annual report shows that under the UN’s calculation one ton of methane would be considered the equivalent of 27.9 tons of CO2. However, under the New York methodology, that same one ton of methane is considered to be equivalent to 81.2 tons of CO2, a three-fold increase compared to the UN methodology.

 

Step Two: Drive Energy and Emission Intensive Activities From the State

The DEC’s 2022 Report notes that the industrial process segment of emissions represents just a small fraction of the state’s emissions. “In 2020, industrial process emissions were . . . approximately 0.6% of statewide emissions.” This represented a 23% decline since 1990 and was attributed primarily to a 77% reduction in the metals industry due to the “closing of multiple facilities in New York.” New York reports energy use by industrial consumers in the energy sector, but even in that sector industrial use represents only about 3% of statewide emissions. In contrast, for the entire U.S., EPA data shows the industrial sector represents 24% of the nation’s GHG emissions. Clearly, New York has driven most industry from its state and has exported the associated emissions to those other states.

The Plan acknowledges this failure when it discusses the potential leakage to other states. However, the Plan offers no alternative strategy that would be broadly applicable to prevent such leakage.

The other key area where New York has recently exported its emissions is in the area of natural gas exploration and production. In late 2014, then-Governor Cuomo announced he was banning the use of fracking as a means for developing the state’s natural gas resources.

 

NY vs PA Gas Utilization

 

Since then, New York’s use of natural gas has remained fairly consistent, but its production has fallen so much that it now produces less than 1% of the gas it consumes. Over the same time period, its neighbor Pennsylvania has increased its production of natural gas to the point where it now produces over four times as much gas as it consumes.

New York’s accounting tries to adjust for this decision by including the emissions from the development and import of out-of-state natural gas. However, because it makes this adjustment for only one input, fossil fuels, the New York Plan overstates the emissions for natural gas when compared to every other form of energy.

 

Step Three: Declare Victory

By adopting a measure of its emissions that, for the most part, does not look beyond its borders, New York is preparing to declare a victory long before its induced GHG emissions are anywhere close to net-zero. Many of the changes now being required by the state to meet its own carefully crafted goals, such as the manufacturing of wind mills, solar panels, and electric vehicles, will occur beyond the state’s borders and will not be counted. Similarly, the production of the necessary natural resources will occur outside of the state and mandatory measures on farmers will likely decrease production of agricultural products. Yet, its people will still be consuming these products, but none of the out-of-state emissions will be included in New York’s accounting for its GHG impact on the world.

 

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