POLITICO: Environmental advocates worry Hochul may pause another major policy
June 14th, 2024
Hochul has touted a cap-and-trade program, dubbed “cap and invest,” to limit emissions and achieve the state’s climate goals.
Read the article by Marie French here.
ALBANY, New York — Environmental advocates are worried about the future of one of Gov. Kathy Hochul’s signature policies, following her suspension of congestion pricing.
Hochul has touted a cap-and-trade program, dubbed “cap and invest,” to limit emissions and achieve the state’s climate goals. But she’s previously raised concerns about the program’s costs, fueling environmental advocates’ wariness about her commitment to a policy she could unilaterally delay.
“This sends a signal that the governor won’t support measures that cost people money, and ‘cap and invest’ will inevitably cost a lot of people a fair amount of money,” said Michael Gerrard, the director of the Sabin Center for Climate Change Law at Columbia University in New York.
And Justin Wilcox of Upstate United, a business group, noted Hochul’s fiscal worries with congestion pricing could extend to this policy.
“If the governor is concerned about the cost of congestion pricing, I would imagine that she must be having second thoughts on ‘cap and invest,’ which could cost up to $12 billion a year,” Wilcox said.
Katy Zielinski, a spokesperson for the governor, said state agencies continue working on the program. She pointed to Hochul’s reference to “cap and invest” when the governor announced the “indefinite pause” of congestion pricing on June 5.
“I’ll continue working with our legislature to make urgently needed investments, including a nation-leading ‘cap-and-invest’ program that’ll hold major polluters responsible for their carbon emissions and drive billions of dollars for clean energy,” Hochul said at the time.
The program would limit emissions to align with the state’s goal of a 40 percent reduction in greenhouse gasses by 2040. Allowances to pollute would be auctioned off to fossil fuel sellers and large polluters for the carbon they spew into the atmosphere.
The current proposal would also set ceilings on the prices of emissions, meaning absent significant other policy actions, it won’t ensure the state reaches its targets.
California has had a similar cap-and-trade-style program in place for years. Washington’s new program has faced backlash, and voters there will have an opportunity to repeal it through a proposition on the November ballot.
The cap-and-trade program has been a political headache for Hochul since she endorsed it in 2023.
The governor dispatched her top officials that same year to say using the program to achieve the state’s legally mandated emissions reductions would raise gas prices and home heating bills for consumers unless changes were made.
Lawmakers and environmental groups roundly rejected that proposal. The Department of Environmental Conservation and NYSERDA, the state’s energy authority, have since been working on draft regulations and a spending plan.
NYSERDA President and CEO Doreen Harris said last month the formal draft regulations for a cap-and-trade program were still expected this summer. In a statement, NYSERDA and DEC indicated they are expected “this year.”
If draft regulations — which will be subject to public comment — are significantly delayed, it’s possible the expected start date of 2025 gets pushed back, as well.
“We are going on good faith that the governor’s office has been and remains deeply committed to it,” said Stephan Edel, coalition coordinator for NY Renews. “It’s concerning that she seemed deeply committed to implementing congestion pricing up to about five days … before she announced that she was going to put an indefinite hold on it.”
A Hochul official told state Sen. Liz Krueger the governor plans to pause “cap and invest,” which concerned Krueger, she told POLITICO.
“We need the money,” Krueger said. “Companies that are polluting should be paying towards that, and it will discourage them from wanting to pollute and be motivated to change their model of doing business so that they are decreasing their carbon footprint.”
Hochul agreed to divvy up money raised from the program through the budget process, giving lawmakers a significant role in how to spend funds expected to help households and businesses transition to cleaner energy sources. One-third will provide rebates to consumers.
But the potential added cost for a gallon of gas under the program, for example, would range between 18 cents on the low end and 30 cents on the high end in 2025, according to an analysis by POLITICO. In 2027, that could rise to between 33 cents and 70 cents.
Costs from cap and trade would be largely offset for households with annual income below $35,000.
Rebates would go to low- and moderate-income consumers, although details haven’t been finalized. NYSERDA’s analysis showed the net cost after the rebate for an upstate household with an income below $75,000 — the state median income — with two gas cars and gas heating would be about $180 in 2025 and $473 in 2027.
That’s a significant potential cost for consumers.
Rolling out those draft regulations this summer seems unlikely, said Edel of NY Renews, since that would require detailing the potential costs of the program before the November election, when Democrats are already worried about backlash to proposals perceived as raising costs.
“We need to get an economy-wide program up and started, full stop,” said Julie Tighe, president of the New York League of Conservation Voters. Tighe said it’s important to get it right and that she believes the governor is still committed to “cap and invest.”
The time being taken to develop the regulations reflects the governor’s concerns, she said.
“The governor has expressed concern about affordability, and so I think that’s one reason why they’re being very thoughtful about what they’re doing,” Tighe added.
Hochul’s late-in-the-game reversal of congestion pricing threatens a landmark policy to reduce traffic emissions and bolster mass transit — major parts of achieving the state’s climate targets.
“One of the big picture concerns about congestion pricing delays is the degree to which this governor or any governor has capacities to reverse course on democratically, legally implemented policy — and that has ramifications for New York’s landmark climate law,” said Vanessa Fajans-Turner, executive director of Environmental Advocates NY.
In a speech in Ireland, where Hochul nixed a mention of congestion pricing in her planned remarks, she kept a reference to the emissions cap program — and ad-libbed a line about costs.
“State and local governments must also compel others to do their part. We’re setting climate goals — ‘cap and invest’ — dealing with climate pollution, making polluters pay for emitting greenhouse emissions, Hochul said at the Global Economic Summit in Ireland on May 20.
“What are we doing with the money?” she asked. “We’re reinvesting in clean energy projects and giving money back to the ratepayers because the rates will go up. We cannot make it difficult for those who are having trouble making their bills now by this transition. Affordability within this green energy revolution must be part of it.”