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Sweeping New Electricity Legislation—Will New York Become a Net-Zero State?

By Phyllis J. Kessler and Patrick L. Morand
October 2019
Pratt's Energy Law Report

Sweeping New Electricity Legislation—Will New York Become a Net-Zero State?

By Phyllis J. Kessler and Patrick L. Morand
October 2019
Pratt's Energy Law Report

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Photo of Attorney Phyllis J. Kessler

Phyllis J. Kessler

Photo of Attorney Patrick L. Morand

Patrick J. Morand

Governor Andrew Cuomo recently signed into law a bill which promises to provide New York State with a substantial amount of carbon-free electricity by 2030 and a net-zero carbon economy by 2050. The authors of this article explain the legislation, which will significantly impact the way New Yorkers live and work.

Sweeping new energy legislation that recently was signed into law by Governor Andrew Cuomo promises to provide New York State with a substantial amount of carbon-free electricity by 2030 and a net-zero carbon economy by 2050.

New York State Enacts Sweeping Climate Change Legislation

The New York State Senate passed [1] the Climate Leadership and Community Protection Act, S. 6599, which then passed in the New York State Assembly. Prior to passage of the bill, Governor Andrew Cuomo struck a deal with state Democratic legislators promising to sign it into law. After its passage, the governor deemed the bill “the most aggressive climate-change program in the United States of America, period.” New York now joins California, Colorado, Maine, New Jersey, New Mexico, Oregon, and Washington in enacting legislation to combat climate change through clean energy policies and by amending environmental conservation laws.

The Climate Leadership and Community Protection Act (“CLCPA”) requires New York’s Department of Environmental Conservation to establish statewide greenhouse emissions limits reducing planet-warming emissions and pollutants to 30 percent below 1990 levels by 2020, 50 percent below 1990 levels by 2030 and 85 percent below by 2050. In 2050, the remaining 15 percent would be removed through climate offsets, such as agriculture or forestry, that would eliminate carbon dioxide from the atmosphere or by carbon sequestration, such a burying carbon. The act is being touted as New York’s Green New Deal. CLPCA also guarantees that at least 35 percent of clean energy and energy efficiency funds will be allocated to low-income communities.

The bill requires the New York Public Service Commission, the New York State Climate Action Council and other state agencies to work collaboratively to mitigate adverse impacts of climate change in New York. The Public Service Commission will, along with other agencies, issue regulations to implement the CLPCA. The commission wants to ensure that new regulations work for all sectors of the energy economy―e.g., residential and industrial end users, providers of competitive energy services, financiers, and others―and it has publicly announced that it is open to comments on whether its regulatory initiatives are working for participants. Furthermore, large projects, including renewable energy and conservation projects built pursuant to this act that receive financial incentives, will be required to pay workers prevailing wages.

Challenges Faced by New Legislation

Past New York state efforts to reducing emissions have not been very fruitful. Only eight percent of emissions were reduced between 1990 and 2015. Many question how the state will be able to reach the goals of the CLPCA over the relatively short period established by the legislation.

However, although the bill is expected to improve the economic, social, and environmental well-being of New York, there are many challenges that hamper its potential. Since meeting the requirements of the bill is quite costly, electricity bills may ultimately increase. The bill also requires efforts and contributions from industries that go beyond the environmental and electrical sectors.

One goal of the legislation is to transition New York to primarily electricpowered equipment, including motor vehicles. To the extent that the use of electricity is not feasible, industrial facilities, state traffic and transportation systems, real estate, business communities, construction sites, commercial buildings, homes and other pollution-inducing sites would have to drastically clean their mechanisms of manufacturing and operations, and adapt to run on carbon-free electricity or renewable gas by 2050.

Currently, New York uses hydroelectric dams, nuclear power plants as well as wind and solar power to produce 60 percent of its carbon-free electricity. The bill intends to increase that 60 percent to 70 percent with the introduction of more renewable sources that will reduce emissions 20 percent below the 1990 levels by 2030. By 2050, the 70 percent is anticipated to be increased to 100 percent. To meet the goal of a net-zero carbon economy in New York, the agencies implementing the legislation will need to support investment in large-scale offshore wind farms and rooftop solar projects. In that regard, Governor Cuomo announced that the New York State Energy Research and Development Authority had selected two offshore wind companies to provide 1,700 megawatts of wind generation in the state. According to New York state officials, there will be a need for new geothermal and microgrid systems, electrification of vehicles and better ways to address process emissions, agricultural waste and forestry management, as well as carbon caps and carbon pricing. Not only will this redefine New York’s sources of energy but also create thousands of job opportunities, invite new investments and bring the state closer to its objective of reducing greenhouse emissions and the rate of climate change.

For New York City, this bill needs to be viewed together with an ordinance passed by the New York City Council in May, which has the potential to increase energy costs for building owners in New York City. The ordinance, known as Local Law 97, [2] sets carbon emissions standards by setting two compliance periods, 2024–2029 and 2030–2034, and requires the city to clarify the requirements for future periods through 2050. Buildings over 25,000 gross square feet must meet annual whole-building carbon intensity limits during each compliance period based on building type or prorated for mixed-use buildings. Carbon emissions much be reduced by 40 percent below 2005 levels by 2030 and by 80 percent by 2050. The combination of the two pieces of legislation has the potential for cleaning up emissions, but at a significant cost to building owners and ratepayers.

The ability to limit greenhouse emissions from certain sectors that are dependent on natural gas or fuel oil, such as aviation, cement manufacturing, or even automobiles, is not as well-developed. In fact, many of the initiatives and policies encompassed by the bill are in their infancy. These projects are not only costly but time consuming as well.

The legislation allows the Department of Environmental Conservation three years―first for public discussion, and then promulgation of regulations to achieve statewide greenhouse gas emissions reductions. The New York Public Service Commission is, among other things, tasked with implementing renewable energy targets, which require that 50 percent of energy generation in the state be derived from renewable energy.

The new legislation calls for a dramatic redefinition of energy sourcing, technology, and operations and will significantly impact the way New Yorkers live and work. The changes required by the legislation will require substantial modifications in housing and office buildings and will impact the delivered cost of energy to end users. The transition may be costly, but it is intended to lead to a sustainable environment and economy, and that will not happen overnight.

Notes

*Phyllis J. Kessler is of counsel at Duane Morris LLP practicing in the area of energy law, with a focus on the provision of electricity and gas through alternative sources, representing both providers and customers for energy services, and energy efficiency. Patrick L. Morand is an associate at the firm practicing in the area of energy regulatory law and renewable energy development.The authorsmay be reached at pjkessler@duanemorris.comand plmorand@duanemorris.com, respectively.

[1]  https://www.nysenate.gov/legislation/bills/2019/s6599.

[2]  https://www1.nyc.gov/assets/buildings/local_laws/ll97of2019.pdf.

Reprinted with permission from LexisNexis.