On Tuesday January 10, New York State Governor Kathy Hochul delivered her first State of the State address as the elected governor of New York. Hochul addressed many issues throughout the speech including public safety, housing, and health care, but made several bold proposals in regards to climate change, including an innovative cap and invest program. Here are five key clean energy components she announced in her State of the State address:
A bold claim: Fossil fuels are the cause of high energy prices
Hochul argued that “weaning ourselves from fossil fuels” is the “the key to long-term sustainability – for our wallets and our planet.” We have already seen this connection between fossil fuels and high energy prices in winter electricity rates. In explaining its increase in rates, Con Edison, stated for example that “Disruptions in the global supply chain have driven up the already-high cost of natural gas.” Since New York State has phased out coal and nuclear energy, the State now relies on natural gas for 60% of its generating capacity.
While we have known since the 1970s that dependence on fossil fuels can lead to skyrocketing prices, it is an important step for New York’s governor to frame renewable energy as an issue of affordability rather than simply an issue of the environment. Underscoring the link between fossil fuels and high prices opens the door to other policy solutions.
2. An interesting solution: New money for building retrofits
To address rising energy costs for low-income households, Governor Hochul proposed creating “EmPower Plus,” an expansion of the current EmPower New York Program that assesses and installs free energy efficiency solutions for 14,000 low-income New Yorkers per year. For households that electrify their homes through the program, Hochul proposed capping their electricity bills at 6% of their income.
Such a cap would be the first in the nation and would ensure that low-income households benefit directly from home improvements. This could lead to New York’s aging building infrastructure to be upgraded at a faster rate, essential to meeting the State’s climate goals as buildings are its largest source of carbon emissions.
3. An unprecedented ban: No more gas in new construction
To tackle these building emissions, Hochul proposes banning on-site fossil fuel combustion for all new construction by 2025 for smaller buildings and 2028 for larger buildings. This ban would be the first of its kind in the East Coast and would build off of similar efforts to ban gas hookups in New York City starting in 2027. Currently, New York relies heavily on gas for its heating needs, making decarbonization efforts more complicated for the State than for its warmer Western counterparts such as California that has a similar ban.
Nevertheless the proposed ban, if enacted, would have huge implications for new construction in New York, including the 800,000 houses the Governor is proposing to construct over the next decade.
4. A massive new program: Cap and Invest
While the proposed ban on fossil fuels in new construction would address future emissions, the Governor also announced a Cap and Invest Program that would tackle current emissions. The Program, recommended by the New York State Climate Action Council’s Scoping Plan, would require companies to purchase pollution permits. The number of permits available would reduce each year in accordance with the State’s climate goals to reduce emissions by 40 percent by 2030.
Revenue from the sale of permits would be invested in four main areas: payments to everyday New Yorkers, investment in green job creation programs, investment in disadvantaged communities, and support for transition costs for businesses and consumers.
As the cost of pollution continues to increase from the reduction of permits, businesses and consumers would increasingly be inclined to transition to greener alternatives such as renewable energy and electric heat pumps. Since much of New York’s climate pollution comes from its reliance on fossil fuels for energy, however, the program could lead to a rise in energy prices.
5. Money for all New Yorkers? : The Climate Action Rebate
To address the potential rise in energy prices from the Cap and Invest Program, Hochul proposes creating a universal Climate Action Rebate. This rebate would be distributed to all New Yorkers. Canada has already implemented a similar carbon pricing scheme that distributes the revenues of the carbon tax to Canadians in the form of quarterly payments of a few hundred dollars. Such a distribution plan would be beneficial in building support for the program as New Yorkers would see the direct benefits of the law on their bank statements.
New York Leading the Way on Climate
All of these programs put significant resources into achieving New York’s climate ambitions. The retrofits from the EmPower Plus Program is funded by an additional $200 million in State Support. The Cap and Invest Program is set to be the most rigorous in the country, reducing the State’s emissions by 40% by 2030. The Climate Action Rebate Program will put more than $1 billion in the pockets of everyday New Yorkers. For the first time, climate action will have a concrete impact in the lives of every day New Yorkers in the energy they use, the buildings they live in, and the money they receive each month.