New York RGGI Operating Plan Amendment 2024
The Regional Greenhouse Gas Initiative (RGGI) is a market-based program to reduce emissions from electric generating units. This post describes my comments on the New York State Energy Research & Development Authority (NYSERDA) Regional Greenhouse Gas Initiative (RGGI) Operating Plan Amendment(“Amendment”) for 2024.
The Amendment describes the plans to use the RGGI proceeds in the next several years. Although supporters of RGGI claim that it is a successful model to emulate, my comments explain the implications of the actual results not only to the RGGI program but also for the Climate Leadership and Community Protection Act (Climate Act). There are no substantive changes in this regard since I submitted comments on last year’s operating plan. What has changed is my tolerance for the perfunctory responsiveness of NYSERDA to stakeholder comments.
I have been involved in the RGGI program process since its inception. I blog about the details of the RGGI program because very few seem to want to provide any criticisms of the program. I submitted comments on the Climate Act implementation plan and have written over 370 articles about New York’s net-zero transition because I believe the ambitions for a zero-emissions economy embodied in the Climate Act outstrip available renewable technology such that the net-zero transition will do more harm than good. The opinions expressed in this post do not reflect the position of any of my previous employers or any other company I have been associated with, these comments are mine alone.
Background
RGGI is a market-based program to reduce greenhouse gas emissions (Factsheet). It has been a cooperative effort among the states of Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont to cap and reduce CO2 emissions from the power sector since 2008. New Jersey was in at the beginning, dropped out for years, and re-joined in 2020. Virginia joined in 2021 but has since withdrawn and Pennsylvania has joined but is not actively participating in auctions due to on-going litigation. According to a RGGI website: “The RGGI states issue CO2 allowances which are distributed almost entirely through regional auctions, resulting in proceeds for reinvestment in strategic energy and consumer programs. Programs funded with RGGI investments have spanned a wide range of consumers, providing benefits and improvements to private homes, local businesses, multi-family housing, industrial facilities, community buildings, retail customers, and more.”
NYSERDA Operating Plan Amendment
NYSERDA designed and implemented a process to develop and annually update an Operating Plan which summarizes and describes the initiatives to be supported by RGGI auction proceeds. On an annual basis, the Authority “engages stakeholders representing the environmental community, the electric generation community, consumer benefit organizations and interested members of the general public to assist with the development of an annual amendment to the Operating Plan.”
The draft Amendment explains that New York State invests RGGI proceeds to support comprehensive strategies that best achieve the RGGI greenhouse gas emissions reduction goals pursuant to 21 NYCRR Part 507. The programs in the portfolio of initiatives are designed to support the pursuit of the State’s greenhouse gas emissions reduction goals by:
Deploying commercially available energy efficiency and renewable energy technologies;
Building the State’s capacity for long-term carbon reduction;
Empowering New York communities to reduce carbon pollution, and transition to cleaner energy;
Stimulating entrepreneurship and growth of clean energy and carbon abatement companies in New York; and
Creating innovative financing to increase adoption of clean energy and carbon abatement in the State.
The draft Amendment notes that the initiatives described represent program activity proposed for the 2024 Operating Plan. The funding levels for each program include previously approved and the amounts proposed for FY24-25 through FY26-27.
This post summarizes the comments I submitted on the proposed Operating Plan Amendment. Given the obvious disdain that NYSERDA has for public stakeholder input I did not expend the level of effort I did last year. My comments rely heavily on last year’s analyses and are separated into two main parts. The first repeats my 2023 evaluation that described the observed New York State (NYS) emission reductions from the electric sector since 2000. The Plan needs to focus its efforts and put more emphasis on programs that directly, indirectly, or potentially reduce carbon dioxide (CO2) from the electric generating units affected by RGGI. Failure to do so will cause problems achieving the Climate Act 2030 mandates to produce 70% of electricity from renewable sources and increasing energy efficiency from 2012 levels by 23%. The second section offers my comments on the specific programs in the 2024 Amendment. Finally, I document the poor public stakeholder engagement process. To address that I copied the Board in my submittal so that I could be sure that they at least had the opportunity to see my comments.
Comment Summary
I think the ultimate problem in the Amendment is that RGGI proceeds are used to support too many Climate Act programs outside of the electric sector. RGGI is an electric sector emissions reduction program, so it is inappropriate to use the auction proceeds for any program that will not materially decrease emissions directly or indirectly through energy efficiency reductions. There are multiple programs in the amendment that do not meet those criteria. Those mis-allocated funds should be transferred to programs that do affect emissions.
RGGI supporters claim that the RGGI funds have played a meaningful role in the observed emission reductions at RGGI sources, but that claim is exaggerated. The historical emission trends of NYS electric generating units (EGU) provide valuable insight for future emission strategies. I found that between 2000 and 2021 New York EGU emissions have dropped from 57,114,438 tons to 28,546,529 tons, a decrease of 50%. NYS EGU CO2emissions were 35% lower in 2022 than the three-year baseline emissions before RGGI started. However, I showed that emissions have dropped primarily because coal and oil fueled generation has essentially gone to zero. Natural gas has increased to cover the generation from those fuels but because it has lower CO2 emission rates New York emissions have gone down.
According to Table 2 in Semi-Annual Status Report through December 31, 2022, the cumulative annual net greenhouse gas emission committed savings are 1,725,544 tons through the end of 2022. That is 9.5% of the observed reduction of 16,196,531 tons since the three-year baseline before the start of RGGI. I conclude that the primary reason for the observed electric sector emission reductions in New York was due to fuel switching.
These observations are relevant for the future of EGU emission reductions required for RGGI and the Climate Act. Fuel switching is no longer an option in New York. Coal is no longer used and oil emissions from the RGGI affected sources are as low as they are going to get without retirement of oil-fired sources. The average CO2 emissions reduction per year from RGGI investments has been 95,716 tons since 2013. New York Part 242 CO2 Budget Trading Program specifies an annual reduction of RGGI allowances of 880,493 per year starting in 2022 and continuing to 2030. That reduction is nearly ten times more than the reductions from RGGI auction proceed investments. The Climate Act is going to require even more emission reductions. Electric generating unit owners and operators have no options available for additional emission reductions other than reducing their operating times. It is incumbent upon NYSERDA to invest RGGI funds to incentivize and subsidize carbon-free generation and reduce energy use so that the RGGI sources can reduce operations and not jeopardize system reliability. If the sources are unable to reduce operations safely, then the Climate Act targets will be jeopardized.
In the second section of the comments, I evaluated the Amendment programs. The comments describe program investments for six categories. The first three categories cover programs that directly, indirectly or could potentially decrease RGGI-affected source emissions. Those programs total 33% of the investments. I also included a category for programs that will add load that could potentially increase RGGI source emissions which totals 24% of the investments. Programs that do not affect emissions are funded with 35% of the proceeds and administrative costs total another 8%. Because there is inadequate documentation, my categorizations are estimates. Even if those estimates were refined, I believe this represents an improper allocation of resources.
In order to address the need for strategies that can displace RGGI-affected source generation the RGGI Operating Plan Amendment needs to reevaluate priorities. NYSERDA must verify that other investments will provide the necessary reduction in RGGI-affected source emissions in order to justify spending more than half the RGGI proceeds on programs unrelated to RGGI emissions. My comments on specific amendments recommended that most of the unrelated programs not be funded.
I only had specific comments on one proposed program. The Climate Act is pushing the envelope of zero-emissions technology, so the Scoping Plan Implementation Research program is certainly appropriate. I recommend that this program fund projects for dispatchable emissions-free resourceDEFR) requirements and the question of wind and solar resource availability during winter doldrums.
Stakeholder Process
I have been involved with stakeholder comments for regulatory proceedings in New York since 1981 and the NYSERDA engagement process is the least responsive. Before the turn of the century, New York agencies asked questions early in the process, were receptive to comments received, and valued input from subject matter experts no matter their affiliation. After 2000, that dynamic started to shift – agencies did not seek input from subject matter experts as much and there was less and less response to comments. Recently the comments I submit ,and comments from industry in general, are submitted knowing that a substantive response is unlikely.
I think there are two reasons for this attitude change. The first is simply the political emphasis on all decisions. Over the years I have become friends with people in the regulatory agencies and privately they admit that all decisions are ultimately made based more on politics than technical feasibility. The political appointees only hear what they want to hear from the agency technical staff. The second reason is a shift away from pragmatic science-based approaches. I recently posted an article about Righteous Risks and the Climate Act that describes the introduction to a series of articles by David Zaruk that characterizes the new approach. He defines righteous risks as the “threat of harm to societal well-being arising from a value-based approach that filters facts and data with an ethical perspective.” The problem with this approach is that “decisions are influenced by what is perceived as ethical rather than what is rational or scientific.”
There is another dynamic with respect to stakeholder comments for NYSERDA programs. New York has always had a strong commitment to research and development. Before de-regulation of the electric and gas industry utilities were required to fund R&D programs themselves with oversight from state agencies. After de-regulation the funding commitment for R&D remained but state agencies, primarily NYSERDA, gained complete control. It did not take long for the politicians to glom onto this pot of money for their own ends. The stakeholder process has become a perfunctory obligation rather than an opportunity for improvement. Without the threat of independent research by the utilities NYSERDA arrogantly assumes that they are the only subject matter experts that matter and don’t need input from anyone other than those chosen by politicians to further their aims.
The final stakeholder process dynamic is that the State uses RGGI proceeds as a slush fund. In the most egregious example, Governor Patterson diverted $90 million of the RGGI revneues for budget deficit reduction in 2009. In 2018, Environmental Advocates of New York released a report that found that the Cuomo Administration was more circumspect, they simply supplanted costs associated with existing programs that pursued the State’s greenhouse gas emissions reduction goals. Not to be outdone by the Administration, the Legislature passed the Electric Generation Facility Cessation Mitigation Program and diverted $69 million from RGGI proceeds to provide property tax relief for local governments and school districts facing a loss of revenue attributed to the closure, temporary or otherwise, of a power plant. I have no doubts whatsoever that many of the RGGI-funded programs under the Hochul Administration continue this sorry tradition in one way or another. I submitted these comments knowing that money talks and that the chance of reallocating money in the state bureaucracy has a vanishingly small chance of happening no matter how rational or scientific the arguments for change.
NYSERDA Stakeholder Responsiveness
The NYSERDA Use of Auction Proceeds website states:
Similar to other programs that NYSERDA administers, stakeholder input is important to us. On an annual basis, the Authority engages stakeholders representing the environmental community, the electric generation community, consumer benefit organizations and interested members of the general public to assist with the development of an annual update to the Operating Plan. NYSERDA seeks feedback on the design and implementation of programs described in the Operating Plan to help us maximize the effectiveness of RGGI funded programs.
In reality it is apparent that NYSERDA does not take this obligation seriously. A proper stakeholder process demonstrates appreciation of the obligation by responding to the comments. There must be some indication that someone read them, considered the points made, and took the stakeholder input into account. The 2023 Operating Plan amendment process showed no sign of that.
Last year I spent a lot of time preparing detailed comments on the 2023 Operating Plan Amendment.
The NYSERDA Planning Committee approved the 2023 RGGI Operating Plan at their January 25, 2023 meeting. The proposed revisions to the Regional Greenhouse Gas Initiative Operating
Plan was presented to the Committee by John Williams, Executive Vice President for Policy and Regulatory Affairs. His opening statement reflects the perfunctory nature of the approval and includes the only acknowledgement and response to stakeholder comments:
Thank you Shere and everybody. We’ll move this one along pretty quickly. We’re here with our
annual routine RGGI approval process. So the, the Members have received both the three year
plan that we’re proposing as well as a memo of summarizing all that. Just some high points here
for awareness. You know, we did engage our annual process to come up with our proposal and
present that to stakeholders. And on December 12th we held a webinar for receipt of stakeholder input on that. So some participation there and some exchange of thoughts happening at that December 12th webinar. The proposal was also open for written public comments through January 6th, and we did receive a couple of comments there. The proposal you have was you know, does take those public feedback into account.
It is very easy to say the proposal takes public feedback into account but there is no available documentation explaining what feedback was included, what feedback recommendations were excluded, or why those decisions were made. In fact, there is no indication of how feedback was addressed. If they were serious, NYSERDA staff would prepare a report that lists all the points made in the comments with recommendations on how they should be handled for management review and approval. Williams’s response mentions a memo but there is no indication of what it included, and it is not available as part of the record. I think that it should be part of the record and that it should contain the summary of stakeholder comments and the NYSERDA responses.
This year’s stakeholder process actively discouraged public involvement. The Amendment and meeting announcement were posted on December 1. The Operating Plan Stakeholder Meeting was held on December 8, 2023. The opportunity to join the meeting by phone or webinar required the use of a password that was not provided. There is no indication in the meeting recording that any participant figured out that nobody outside of NYSERDA joined the webinar. The video of the 12/8/23 meeting was not put online until December 15, 2023. To NYSERDA’s credit a separate webinar to offer the public an opportunity to ask questions on December 20. However, they only allocated a half an hour. I submitted questions before the webinar and time ran out before they responded to all of them. The video recording of the Q&A meeting was provided on 12/27/23. Comments were due by the close of business on December 29, 2023. Expecting meaningful comments two weeks after the posting of the video with the Christmas holiday in between is not realistic. In fact, it seems to be a deliberate attempt to squelch input.
Given the lack of responsiveness to those comments and the dismissive approach taken to the stakeholder process this year I saw no value in spending as much time on this operating amendment as I did last year. I did not update all the analyses to use the most current data. In order to be sure that the NYSERDA Board members had at least had the opportunity to see my comments I copied them in my submittal.
Conclusion
The State of New York has consistently allocated RGGI auction proceeds inconsistent with the stated goals of the program. As long as emissions were going down then this impropriety had no impact on RGGI program goals. The emission reduction low-hanging fruit are gone and now cost-effective and efficient emission reductions are needed. The failure of the 2024 RGGI operating plan to recognize this need could very well mean that the Climate Act emission reduction targets will not be achieved. It gets worse because the New York Cap-and-Invest (NYCI) program that is supposed to be developed in 2024 will include compliance limits. If state investments do not produce emission reductions consistent with the NYCI limits then the only compliance option could be to stop emitting to produce electricity. In other words, the stakes have been raised and NYSERDA has not caught on.
The regulatory review stakeholder process is a game. In my retirement it has become a hobby of mine to continue my involvement with the Climate Act regulatory proceedings. Given the change in attitudes at state agencies I respond to requests for comments knowing full well that if I am lucky, I will get some indication that someone read the comments, but I expect nothing else. I persevere because I consider my submitted comments a marker. When this inevitably all blows up the record will show that they had been warned. Unfortunately, the odds are that the ideologues pushing these policies will have moved on to a new grift so they will never be held accountable.