Carbon Free New York's Response to the Draft Framework for the Use of New York Cap-and-Invest (NYCI) Proceeds from the Climate Investment Account

September 30, 2024

To the New York State Energy Research and Development Authority (NYSERDA) and Department of Environmental Conservation (DEC):

Carbon Free New York (CFNY) appreciates the opportunity to provide feedback on the framework for the use of New York Cap-and-Invest (NYCI) proceeds from the Climate Investment Account shared during the August 15, 2024 webinar hosted by NYSERDA and DEC. We acknowledge the importance of this process in supporting New York’s transition to a carbon-free economy. We commend NYSERDA and the DEC for the comprehensive framework presented during the webinar and for inviting public input to refine this critical program. 

CFNY strongly supports the inclusion of the power sector in the Cap-and-Invest Program as part of an economy-wide effort to reduce carbon emissions. This program represents a critical step towards aligning carbon emission reductions with economic growth and environmental stewardship. By capping total emissions and allowing the trading of emission allowances, this program not only ensures that New York stays on track to meet its climate targets but also encourages cost-effective solutions, technological innovation, and continued clean energy development.

​​Further, inclusion of the power sector in the broader economy-wide program creates an inherent investment signal for clean energy solutions to speed deployment in support of the State’s laudable climate objectives set forth in the CLCPA. 

Urgency and Commitment

CFNY is committed to driving transformative change within New York's power sector. The urgency to act cannot be overstated; however, the tools and mechanisms proposed, such as the Cap-and-Invest Program, provide a robust framework for achieving our clean energy and emissions reduction goals. As highlighted in the CES review, New York’s electricity system has undergone significant changes, and with the right strategies, we can navigate the current challenges posed by global interest rates, inflation, and supply chain pressures. 

Modernizing and expanding New York’s electric grid infrastructure is essential to support the full potential of all clean energy resources, including wind, solar, energy storage, existing nuclear, and emerging Dispatchable Emissions-Free Resources (DEFRs). By enhancing grid flexibility, reliability, and capacity, we can better integrate intermittent renewable resources while ensuring the continuous delivery of clean energy across the state. 

These upgrades will facilitate a safe, reliable, and efficient flow of carbon-free energy from where it’s generated to where it’s needed most, helping to balance supply and demand. Investments in grid modernization—such as smart grids, transmission expansion, and energy storage—will also provide a foundation for DEFRs, including small modular reactors (SMRs) and other innovations, to thrive. The New York Independent System Operator (NYISO) has indicated the state may need as much as 45 gigawatts of DEFRs by 2040.[1]

DEFRs are critical in ensuring the reliable delivery of clean energy during periods of low renewable generation, as they offer firm, on-demand power. The Department of Environmental Conservation (DEC) and the New York State Energy Research Development Authority (NYSERDA) recently held a webinar suggesting Cap-and-Invest Program monies allocated to the Climate Investment Account could potentially be used for “Electric Grid Modernization Innovation for flexible resources and emerging zero emission, dispatchable technologies to maintain grid reliability and resiliency.”[2] This comprehensive approach supports the growth of all clean energy sectors and ensures a resilient, reliable energy system for all New Yorkers, while continuing to align with our shared climate goals.

The Role of Cap-and-Invest

A Cap-and-Invest Program is designed to set a firm limit on carbon emissions while providing economic incentives for reducing pollution. This market-based approach will play a pivotal role in:

• Accelerating Clean Energy Deployment: By capping carbon emissions, the program will drive investments in clean energy resources, enhancing revenue certainty and accelerating the deployment of carbon-free projects.

• Economic Growth and Job Creation: The program will stimulate economic growth by creating high-quality green jobs in carbon-free infrastructure, energy efficiency, and clean technology sectors.

• Improving Public Health and Environmental Justice: Reducing emissions, particularly from fossil fuel plants in disadvantaged communities, will significantly improve air quality and public health outcomes.

• Ensuring Efficient Infrastructure Investments: Incentivizing cost-effective investments in grid-support infrastructure will enhance system-wide reliability and ensure the efficient delivery of clean energy.

• Fostering Innovation and Technological Advancement: The Cap-and-Invest program will foster innovation, encouraging the development of new technologies, products, and services.

Collaborative Efforts and Stakeholder Engagement

We commend the ongoing efforts of the New York State Department of Environmental Conservation (DEC) and the New York State Energy Research and Development Authority (NYSERDA) in developing the Cap-and-Invest regulatory proposal. CFNY strongly supports their endeavors and champions the inclusion of the power sector in the final proposal.

Furthermore, we advocate for robust stakeholder engagement to ensure that the program’s implementation is inclusive and equitable. Policies must focus on improving air quality and health outcomes for all New Yorkers, ensuring that the benefits of a clean energy future are shared widely, especially with disadvantaged communities.

Path Forward

Despite the challenges outlined in the biennial review, we remain optimistic and committed to New York’s clean energy future. It is imperative that we leverage every available tool and continue to innovate and adapt our strategies, as well as drive further development of carbon-free energy. The implementation of the Cap-and-Invest Program will be a decisive move towards achieving the CLCPA’s objectives.

We believe that with sustained commitment, strategic investment, and inclusive policies, New York can still meet its ambitious climate goals. The path to a carbon-free New York is challenging, but it is achievable, and together, we can propel New York to the forefront of clean energy leadership.

Sincerely,

Carbon Free New York

• ACE NY

• AES

• APEX Clean Energy

• American Wind Energy Association (AWEA)

• Citizens' Climate Lobby New York

• ConnectGEN

• Constellation

• CS Energy

• Cypress Creek Renewables

• EDF Renewables

• EDP Renewables

• East Light Partners

• Egg Geo

• Healthy Planet

• International Union of Operating Engineers Local 30

• Invenergy

• Key Capture Energy

• New York State Building & Construction Trades Council

• New York State Pipe Trades Association

• UBC Millwrights

• United Brotherhood of Carpenters

• U.S. Green Building Council - Long Island Chapter

• National Hydropower Association (NHA)

• Northland Power

• Nuclear New York

• New York Energy and Climate Advocates

• New York League of Conservation Voters (NYLCV)

• New York State Laborers Organizing Fund (LiUNA)

• ReEnergy

• RWE

• Solar Energy Industries Association (SEIA)

• Shell Energy

• Upstate Energy Jobs

[1] See NYISO Outlook Report at 13 (discussing DEFR requirements under two scenarios, with NYISO determining that such scenarios would require 45 GW and 27 GW of DEFRs to meet the CLCPA targets).

[2] DEC and NYSERDA. (Producer). (2024). NYCI Climate Investment Account Webinar [Video]. https://youtu.be/mfoWMFaS_HQ