New York’s Cap-and-Invest Policy Begins to Take Shape

By Lucy Mastrianni, ACE NY Intern

In its final Climate Scoping Plan meeting, the Climate Action Council recommended an economy-wide cap-and-invest program for New York. The Department of Environmental Conservation (DEC) and NYSERDA are now developing this program together. The purpose of cap-and-invest is to set the state on the path toward a carbon-neutral economy, achieve greenhouse gas emission reductions, and generate revenue to be re-invested in programs to ensure affordability and reduce emissions. The cap-and-invest program must all be designed to reach equity requirements.

To begin the development of this program, DEC and NYSERDA co-hosted a series of seven stakeholder outreach webinars. During these webinars, experts discussed key design decisions and answered questions from stakeholders. ACE NY’s summaries of the individual webinars can be found here.

The New York Cap-and-Invest Program, often referred to as NYCI is being designed to mandate significant upstream greenhouse gas emitters, such as fuel wholesalers, to purchase allowances for their emissions. Smaller scale emitters will be non-obligated sources, such as individual homes, and thus will not be required under the program to purchase allowances. However, their emissions will be accounted for in the overall cap.

This policy aims to incentivize the transition towards low-carbon alternatives by putting upward pressure on the costs of fossil fuels with the revenue generated from the sale of these allowances reinvested. Investments will be roughly divided so that one-third will directly enhance affordability for New Yorkers, while the remaining two-thirds will be dedicated to funding projects that aim to decrease emissions.

A limit will be established on the quantity of greenhouse gas emissions allowed, which will gradually decrease over time. This strategy ensures that New York remains on a trajectory to achieve a minimum of a 40% reduction in greenhouse gas emissions by 2030 and at least an 85% reduction from the 1990 levels by 2050, in line with the requirements set forth by the Climate Act. The exact initial benchmarks and the rate of reduction will be determined after comprehensive research and engagement with stakeholders.

During the webinars this summer, the DEC said that the program will be guided by five main principles: (1) affordability, (2) climate leadership, (3). job creation and competitiveness preservation,(4). investment in disadvantaged communities, and 5. funding for a sustainable future. These principals, the process through which NYCI is developing, and an extensive list of questions for stakeholders, were all laid out in the series of webinars co-hosted with the purpose of outreach to stakeholders. This first round of outreach concluded at the end of July and was followed by many organizations submitting comments. Full recordings of the webinars can be found here and summaries of the webinars can be found here.

Like many other groups, the Alliance for Clean Energy New York submitted comments on the proposed NYCI. ACE NY advocated for the inclusion of the electric sector in the cap-and-invest policy and assurance that the design and implementation of the program address equity concerns and ensure that CLCPA mandates will be met. The full comments can be read here.

After the webinar series, DEC and NYSERDA co-hosted their first virtual round table spotlighting topics involved in the development of the policy, focused on environmental and climate justice. Experts from the field got together to voice their concerns, most notably in opposition to including trading in the program. DEC and NYSERDA do anticipate some trading will be included in the program. A full recording of the climate justice round table can be found here with more plans.

To stay updated on Cap-and-Invest, visit https://capandinvest.ny.gov and follow along with ACE NY’S updates at https://www.aceny.org/climate-action.