IER

New York’s Clean Energy Standard: Costly and Ineffective

A recent report evaluated New York State’s clean energy programs and found them costing the state’s consumers and businesses over $1 trillion with no measurable impact on world climate.[i] Thus, the carbon dioxide reductions that would cost the state’s residents heavily would have no value. This is nothing new; New York finds numerous ways to tax its people with little benefit to show for it.

New York’s Clean Energy Programs

In 2016, the New York Public Service Commission enacted the Clean Energy Standard (CES), requiring 50 percent of all electricity sold by the state’s utilities to come from renewable generating resources and greenhouse gas emissions (GHG) to be reduced by 40 percent below 1990 levels—both by 2030. The standard also incorporates New York’s previous emissions reduction mandate, requiring that the state’s greenhouse gas emissions be reduced 80 percent below 1990 levels by 2050 (the “80 by 50” mandate).

In 2016, the New York Public Service Commission established the Clean Energy Fund, which requires electric consumers to pay for programs that are designed to reduce energy use in residential, commercial, and industrial buildings by about 25 percent below current levels by 2030. That energy reduction would be about 600 trillion BTUs.

According to a report issued by New York’s Department of Public Service, the 2030 Clean Energy Standard will increase New Yorkers’ electric bills by $3.6 billion. The analysis claims that the Clean Energy Standard will provide about $8 billion in benefits from reducing carbon dioxide emissions, will increase gross state product and will create jobs.

As part of the CES, in January 2017, N.Y.’s Governor Cuomo issued an executive order requiring 2,400 megawatts of offshore wind by 2030. Then, in March 2017, also as part of the CES, he announced the Drive Green program, which will provide a rebate on electric vehicles of up to $2,000, depending on the vehicle. The goal is to have 700,000 electric vehicles, including hybrids on the road by 2025. Cuomo allocated $70 million for the program of which $55 million will cover the subsidies and $15 million will cover advertising, promotional activities and construction of charging stations.

Analysis Findings

Jonathan A. Lesser of Continental Economics, analyzed the feasibility and cost of New York’s Clean Energy programs. Mr. Lesser calculated what the reductions would entail for both 2030 and 2050. These reductions are shown in the figure below. In 2030, New York would only be able to release 141.5 million metric tons of greenhouse gases, of which 123.46 million metric tons are carbon dioxide. In 2050, New York can only release 47.17 million tons of greenhouse gases, of which 41.15 million metric tons is carbon dioxide.

That means in 2030, New York would have to reduce carbon dioxide emissions by 57.52 million metric tons from 2014 levels—50 percent more than the state’s electric generating sector and its imported electricity released in 2014. Thus, other sectors would need to reduce its carbon dioxide emissions in 2030 to reach the target.

In 2050, New York’s carbon dioxide emissions would need to be reduced by about 140 million metric tons from 2014 levels—almost twice what its transportation sector released in 2014. That probably would require massive reductions in all energy-consuming sectors, meaning that New York would need to electrify its energy consuming sectors.

Source: https://www.manhattan-institute.org/sites/default/files/R-JL-0817.pdf

The requirements would result in renewables replacing existing fossil fuel generating technologies, increasing the electrical cost to consumers. According to Mr. Lesser, constructing 2,400 megawatts of offshore wind capacity and 7,300 megawatts of solar photovoltaic capacity by 2030 could result in New Yorkers paying over $18 billion in above-market costs for their electricity. By 2050, the above-market costs could increase to $93 billion. The construction of at least 1,000 miles of new high-voltage transmission facilities to move electricity from upstate wind and solar farms to downstate consumers would also be required.

New York has yet to analyze the feasibility of its 80 by 50 mandate. But, as noted above, it would require the electrification of New York in all or most of its energy-consuming sectors. New York’s transportation sector releases about half of the carbon dioxide emissions needed for the reductions. But, since total electrification of the transportation sector is infeasible with existing technology, the mandate will require reducing residential, commercial, and industrial carbon dioxide emissions and constructing new renewable generating capacity to replace existing generation that must be retired and to meet new electrical demand coming from the other sectors.

According to the Mr. Lesser, the 80 by 50 mandate would require 400 terawatt hours of renewable electricity. That is, the construction of at least 100,000 megawatts of offshore wind, or 150,000 megawatts of onshore wind, or 300,000 megawatts of solar photovoltaic capacity by 2050. That new capacity will need to deal with issues such as fishing rights in the Atlantic off Long Island, “not in my backyard” problems in upstate New York where onshore wind and solar capacity would be located and large land mass requirements.

For example, utility scale solar PV requires about 8 acres per megawatt. Meeting the CES mandate with utility scale solar would require an area of between 2.4 million and 3.0 million acres—between 3,800 and 4,600 square miles. By comparison, Manhattan is 22 square miles. So enough solar PV to meet the CES mandate would require 172 Manhattan islands.

Due to the intermittency of wind and solar power, at least 200,000 megawatts of battery storage would be required as well. To meet the mandate, it would cost New York consumers and businesses over $1 trillion by 2050.

Because New York’s greenhouse gas emission reductions under the Clean Energy Program would be small compared to total worldwide greenhouse gas emissions, the benefits of the reductions would effectively be zero. That is, the temperature changes would be too small to measure and not able to be separated from natural climate variability.

Conclusion

The report found New York’s Clean Energy Standard to be “an exercise in symbolic environmentalism. It will provide almost no measurable benefits, while imposing huge costs, including disproportionate costs on lower-income residents.”


[i] New York’s Clean Energy Programs, August 2017, https://www.manhattan-institute.org/sites/default/files/R-JL-0817.pdf