By James E. Hanley

Fellow, Empire Center for Public Policy

Within the next 10 years, New York will confront an increasingly serious energy supply problem of its own making. A series of policy initiatives culminating in 2019’s Climate Leadership and Community Protection Act (CLCPA) have committed the state to an unrealistic goal of 70 percent renewable electricity by 2030 and zero-emissions electricity generation by 2040. Reliable sources of fossil-fuel powered electricity are scheduled to be taken off-line faster than new reliable sources are brought on-line, pointing towards a tipping point where demand for electricity outstrips supply. This creates an added risk of blackouts that will be costly in both economic and human terms.

More than any other state aside from California, New York’s energy sector is driven by the goal of transitioning to 100 percent greenhouse gas emissions-free electricity. The movement toward clean energy began under Governor George Pataki when the Public Service Commission (PSC) created Renewable Portfolio Standards, a utility bill surcharge used to fund renewable energy projects. Then, under Governor David Paterson the state became a founding member of the Regional Greenhouse Gas Initiative, a CO2 emissions reduction and trading consortium of 13 northeastern and mid-Atlantic states.

Governor Andrew Cuomo expanded the state’s efforts to promote renewable energy via the NY-Sun program, which subsidizes residential, commercial, and industrial solar installations. This was later incorporated into a policy called “Reforming the Energy Vision,” which sought to reduce greenhouse gas emissions by 80 percent by 2050. To achieve this goal Cuomo crafted the “50 by 30” concept, which was to have 50 percent of the state’s electricity come from renewable sources by 2030. Cuomo also directed the PSC to craft a Clean Energy Standard that combined 50 by 30 with subsidies for unprofitable nuclear power plants via required utility purchases of Zero-Emission Credits. However, Cuomo also forced the premature shut-down of the Indian Point nuclear power plant, making it more difficult to reach the state’s zero-emissions electricity goals.

In 2019 Cuomo signed into law the CLCPA, which requires 70 percent renewable electricity generation by 2030 and 100 percent emissions-free electricity by 2040. It also requires 6,000 megawatts of solar energy, 3,000 megawatts of battery storage, and 9,000 megawatts of offshore wind. In 2022 Governor Hochul expanded the solar energy goal to 10,000 megawatts and the battery storage goal to 6,000 megawatts.

Also in 2019, the Department of Environmental Conservation finalized its “Peaker Plant” rule, which imposes increasingly strict air-pollution standards on fossil-fuel plants currently needed to provide extra generating capacity on days when usage peaks at above-normal levels.

THE STATUS QUO

New York’s energy supply is governed and managed by multiple entities, including the Public Service Commission (PSC), the Department of Environmental Conservation (DEC), the New York State Energy Research and Development Authority (NYSERDA), the New York Independent System Operator (NYISO) and the New York State Reliability Council.

The primary agency governing New York power producers and distributors is the PSC, whose seven members are appointed by the governor and confirmed by the Senate to six-year terms.1By law, no more than four members of the seven-member PSC can belong to the same political party. The PSC can create policies, approve or deny utility rate increases, and approve or deny cost recovery for capital projects such as new power plant or transmission line construction.

The DEC has authority over air quality permits, which all pollutant-emitting entities are required to obtain. The DEC is headed by a commissioner appointed by and serving at the pleasure of the governor. 

NYSERDA primarily offers technical expertise and funding to increase energy efficiency and shift to renewable energy. NYSERDA has a 13-member board, including four ex officio members from other agencies and nine appointed by the governor and confirmed by the Senate. There are statutory requirements for representation of specified interests and areas of expertise.2New York Public Authorities Law. Title 9, Sec. 1852. https://newyork.public.law/laws/n.y._public_authorities_law_section_1852. The President and Chief Executive Officer of NYSERDA is appointed by and serves at the pleasure of the governor.

NYISO is not a state agency but a not-for-profit corporation which began operating in 1999 when New York shifted to a competitive electricity generation market. It operates the state’s bulk electricity grid, administers the wholesale electricity markets, and conducts long-term planning for the state’s electrical infrastructure. NYISO is subject to regulation by the state Legislature, the Federal Energy Regulatory Commission, and the New York State Reliability Council.

The New York State Reliability Council is also a not-for-profit corporation. To ensure the reliability of electrical service in New York it develops rules that must be complied with by NYISO, including reserve capacity requirements that ensure there is sufficient installed electricity generation capacity to meet peak demand. The 13-member executive committee is composed of representatives of the state’s six transmission owners, the wholesale electricity production sector, various sets of power purchasers, and four unaffiliated members. The governor and legislature have no role in selecting members of this commission.

Markets, Participants, Prices, and Major Public Authorities

In the 1990s New York largely shifted from traditional utilities—regulated monopolies which combined both electricity generation and transmission—to a competitive market in which transmitting utilities bid competitively for electricity from independent power producers. This led to the creation of NYISO as the entity administering the electricity sales, both in day-ahead and real-time markets. These utilities sell electricity to their customers at cost, making their profits on PSC-approved delivery fees.

The actual transmission providers include 18 investor-owned utilities, 48 public power agencies and 5 cooperatives. Of these, cooperatives average the lowest cost of electricity on a kilowatt-hour basis, followed by investor-owned utilities, then public power agencies, with only cooperatives on average providing electricity below the national average price (Figure 1). Dozens of independent power producers sell electricity on the wholesale market to these entities, and in some cases directly to large industrial energy users.

The two largest municipal power producers in the state are the Long Island Power Authority (LIPA) and the New York Power Authority (NYPA).

LIPA serves most of Long Island and a portion of Queens. It was created in response to dissatisfaction with the private utility Long Island Lighting Company’s high prices and ill-fated decision to construct the never-opened Shoreham nuclear power plant, which left the company with billions in debt. LIPA issued over $7.5 billion in bonds to take on that debt3New York Assembly. 1997. “Shedding Light on the Financial Structure of the LIPA/LILCO Proposal.” https://nyassembly.gov/Reports/Energy/199709/. and took over ownership of the company’s transmission lines in 1998.4“Long Island Power Authority. n.d. “About LIPA.” lipower.org/about-us/.

Almost a quarter-century later, LIPA’s debt has increased to over 9 billion,5Harrington, Mark. 2022. “As interest on LIPA’s debt climbs to $348M, it looks to refinance.” Newsday. June 19. https://www.newsday.com/long-island/politics/lipa-debt-borrowing-refinancing-sfee2dyj. or over $8,000 per customer.

LIPA’s nine-member Board of Trustees has five members appointed by the governor, two by the Senate Majority Leader and two by the Assembly Speaker. It is unique in the country in being a utility that owns transmission lines but does not operate and maintain them itself, contracting that out to the private firm PSEG. Currently there is a legislative commission tasked with providing the legislature with “the specific actions, legislation, and timeline necessary to restructure LIPA into a true publicly owned power authority.”6

New York Senate. “Consolidated Laws of New York, Chapter 32, Section 83-N. Legislative Commission on the Future of the Long Island Power Authority.” https://www.nysenate.gov/legislation/laws/LEG/83-N.

This commission is required to produce a final report by April 2030.

The largest public power authority in the United States is the New York Power Authority, a public-benefit corporation established in 1931. NYPA’s seven trustees are appointed by the governor with the approval of the Senate to five-year terms.

NYPA generates around one-quarter of New York’s electricity.7New York Power Authority. n.d. “New York’s Own Resources Generate Nearly 25% of the State’s Power.” https://www.nypa.gov/power/generation/generation-overview#:~:text=Thanks%20largely%20to%20NYPA’s%20three,fuels%20and%20their%20related%20emissions. In addition to selling into the wholesale electricity markets, NYPA sells power to businesses, not-for-profit organizations, public power systems and government agencies. This includes selling power to the subways, airports, public schools, and public housing in New York City. Over 80 percent of its electricity generation comes from its seven upstate hydropower plants,8Ibid. with the remainder coming from natural gas or dual-fuel power plants.9New York Power Authority. n.d. “NYPA Generating Facilities.” https://www.nypa.gov/power/generation/all-generating-facilities.

Currently proposed legislation, the “Build Public Renewables Act,” would require NYPA to divest itself of its non-renewable energy portfolio and build only renewable power in the future.10Assembly Bill A1466D/Senate Bill S6453C. While NYPA has invested in nuclear power in the past (but since divested from it), this proposed legislation would not allow investment in or purchases from that emissions-free source. NYPA itself has opposed this bill, preferring the flexibility to ensure it can meet customer’s needs reliably. However, under the CLCPA, NYPA, along with all other utilities, will ultimately be forced to divest itself of any emission-producing generating facilities and use only clean energy.

New York’s Electricity Grid

New York relies heavily on hydropower and nuclear power and has replaced all coal-fired plants and most petroleum-fired plants with cleaner burning natural gas (see Figure 2, below).11Prohaska, Thomas J. 2020. “New York’s Last Coal-Burning Power Plant Closes on Lake Ontario Shore.” The Buffalo News. March 30. https://buffalonews.com/business/local/new-yorks-last-coal-burning-power-plant-closes-on-lake-ontario-shore/article_969bcd79-b3d3-52cd-adb3-f55ef10f98e5.html. This significantly reduced the state’s greenhouse gas emissions (see Figure 3 on next page) and gives New York one of the cleanest electricity sectors in the country even before current clean air policies begin to take effect.

Overall, the state is frequently described as “a tale of two grids,” an upstate grid that is over 90 percent emissions-free electricity and a downstate grid that is almost 90 percent fossil-fuel electricity.12New York Independent System Operator. 2022. Power Trends 2022: The Path to a Reliable Greener Grid for New York. In addition, the two grids are constrained by limited high-voltage transmission connections between them, but progress is being made on several major transmission projects, both East-West and North-South, that will help connect upstate generation with downstate demand.

The state’s clean air improvements were partially reversed by the 2021 shutdown of the Indian Point nuclear plant in Westchester County and its replacement with dual-fuel power generation downstate. However, the emissions-free component of generating capacity serving the New York City area is supposed to increase with the projected 2025 completion of Champlain Hudson Power Express, bringing Quebec hydropower via underground and underwater cable from Canada to Queens, and the projected 2027 completion of the Clean Path NY project, a 175-mile underground transmission line linking upstate wind and solar generators to the city’s grid. Additionally, offshore wind power—when eventually built—is supposed to replace fossil-fuel generation in the downstate region.

Clean Energy Policy

New York’s greenhouse gas emissions have dropped substantially due to the replacement of coal with natural gas, which produces roughly half the carbon dioxide of coal. However, this improvement has not been enough to satisfy clean energy advocates. New York State officials have embraced policies fueling the push toward an idealized zero-emission electricity future:

  • The Regional Greenhouse Gas Initiative (RGGI) —New York is one of 11 states to have opted into the Initiative, which dates to 2005. Member states commit to a regionwide cap on carbon dioxide emissions, declining by 3 percent a year through 2027, with each state assigned its own CO2 quota. As part of this process, NYSERDA administers New York in-state auctions of CO2 permits, directing proceeds toward energy efficiency and renewable energy programs. The effects of RGGI in New York are hard to assess because, independently of the carbon dioxide cap, cheaper natural gas replaced coal since the Initiative was launched.
  • Renewable and Nuclear Energy Subsidies—Under Governor Andrew Cuomo, New York established subsidies for renewable energy through the mandated ratepayer-subsidized purchase of renewable energy credits, as well as subsidies for nuclear power plants via zero-emission credits. Utilities must purchase these credits from either NYSERDA, the renewable or nuclear electricity generators, or third-party intermediaries13Girardin, Ken, and Annette Brocks. 2016. “Green Overload: New York’s Ratepayer-Zapping Renewable Energy Mandates.” The Empire Center for Public Policy. https://www.empirecenter.org/publications/green-overload/. with costs passed onto utility’s ratepayers. The state, however, forbids line itemization of these renewable energy credits and zero-emission credits, so ratepayers cannot know just how much they are paying for them. Solar energy is now alleged to be cheaper than fossil fuels, and onshore wind nearly equal to fossil fuels in price.14International Renewable Energy Agency. 2021. “Majority of New Renewables Undercut Cheapest Fossil Fuel on Cost.” June 22.  https://www.irena.org/newsroom/pressreleases/2021/Jun/Majority-of-New-Renewables-Undercut-Cheapest-Fossil-Fuel-on-Cost. If so, the renewable energy credits are no longer needed.
  • Opposition to natural gas pipeline projects—The Cuomo administration also established a de facto moratorium on natural gas pipeline construction, with the DEC denying permits for multiple pipelines15Moran, Greta. 2021.”How Activists Successfully Shut Down Key Pipeline Projects in New York.” Grist. January 4. https://grist.org/fix/advocacy/how-activists-shut-down-key-pipeline-projects-new-york/. that would have expanded natural gas delivery capacity. The DEC was overruled by the Federal Energy Regulatory Commission (FERC) and in federal court on its denial of a permit for the Northern Access pipeline,16Marcellus Drilling News. 2019. “Federal Court Slaps Down NY DEC Rejection of Northern Access Pipe.” February 6. https://marcellusdrilling.com/2019/02/federal-court-slaps-down-ny-dec-rejection-of-northern-access-pipe/.

    but has not yet granted permits,17Reuters. 2022. “U.S. Gives NFG More Time to Build Northern Access Natgas Pipeline.” June 30. https://www.reuters.com/business/energy/us-gives-nfg-more-time-to-build-northern-access-natgas-pipeline-2022-07-01. FERC also overruled a permit for the Constitution Pipeline,18Arnold, Chad. 2019. “Feds Clear Way for Constitution Pipeline in New York Over State’s Objection.” Press Connects. 2019. https://www.pressconnects.com/story/news/local/new-york/2019/08/29/feds-clear-way-constitution-pipeline-new-york/2150884001/. which has since been canceled by the developer.19Blanchard, Scott. 2020. “Constitution Pipeline Project Ends as Builder Cites ‘Diminished’ Return on Investment. National Public Radio, State Impact Pennsylvania. https://stateimpact.npr.org/pennsylvania/2020/02/25/constitution-pipeline-project-ends-as-builder-cites-diminished-return-on-investment/. The Northeast Supply Enhancement pipeline was also canceled after DEC denied permits.20Reuters. 2020. “Williams Discontinues New York Pipeline Project After Key Permit Denial.” Pipeline and Gas Journal. May 18. https://pgjonline.com/news/2020/05-may/williams-discontinues-new-york-pipeline-project-after-key-permit-denial. Constraints on the amount of gas that can be delivered create shortages that are one of the causes of higher winter heating prices in the state. In some cases, natural gas is intended to replace the use of fuel oil for electricity production, which would substantially reduce greenhouse gas emissions from current levels while maintaining high levels of grid reliability.

Fracking Ban

Nearly two dozen upstate New York counties, including the entire Southern Tier region, sit atop rich natural gas deposits in the Marcellus and Utica Shales. The six-state Marcellus Shale formation is one of the largest in the world, containing trillions of dollars worth of recoverable natural gas, which is already being extracted by extensive fracking operations in neighboring Pennsylvania, as well as Ohio and West Virginia.21King, Hobart M. n.d. “Marcellus Shale – Appalachian Basin Natural Gas Play: A Resource that Moved from ‘Marginal’ to ‘Spectacular’ as a Result of New Drilling Technology.” Geology.com. https://geology.com/articles/marcellus-shale.shtml.

Opponents of fracking have expressed concern about greenhouse gas emissions and groundwater contamination. However, fracking occurs thousands of feet below aquifers and properly encased well shafts minimize the risk of impacting groundwater. Nonetheless, in December 2014, Governor Andrew Cuomo cited “significant public health risks” as grounds for imposing a regulatory ban on the process of injecting specially treated water under high pressure into deep-underground sedimentary rock formations as a means of accessing natural gas deposits. The ban was codified in April 2020 in legislation packaged with the state’s FY 2021 budget.22Chapter 58 of the Laws of 2020, Part WW.

Fracking’s potential to ignite broad economic development in New York is more limited than many industry advocates often imply,23Cosgrove, Brendan M., Daniel R. LaFave, Sahan T. M. Dissanayake, and Michael R. Donihue.” 2015. “The Economic Impact of Shale Gas Development: A Natural Experiment Along the New York/Pennsylvania Border.” Agricultural and Resource Economics Review 44(2): 20-39. because many jobs are captured by experienced industry workers from other states and because the gas industry has experienced pronounced boom-bust cycles. However, the potential wealth effect for leasing landowners is undeniably significant, with inevitable local spinoff effects.24Shale Directories. n.d. “Natural Gas Royalties Paid in PA Reach Nearly $10B.” https://www.shaledirectories.com/blog-1/natural-gas-royalties-paid-in-pa-reach-nearly-10b/. In addition, fracking-related fees and income taxes accruing to local and state governments could run into the hundreds of millions of dollars a year.25Pennsylvania Public Utility Commission. n.d. “Disbursements and Impact Fees.” https://www.act13-reporting.puc.pa.gov/Modules/PublicReporting/Overview.aspx.

The CLCPA

New York’s flagship energy policy is the Climate Leadership and Community Protection Act (CLCPA), enacted in 2019.26Op cit endnote 16 citation The CLCPA is a “whole of economy” policy, targeting energy production, transportation, buildings, industrial processes, agriculture and forestry, and waste management.

The CLCPA’s overarching goal is an 85 percent reduction in greenhouse gas emissions and a net-zero state economy by 2050. Intermediate steps on the way include 6,000 megawatts of installed solar and 185 trillion BTU savings in energy efficiency by 2025, 70 percent renewable energy production and 3,000 megawatts of battery storage by 2030, 9,000 megawatts of offshore wind production by 2035 and 100 percent zero-emissions electricity production by 2040.

The CLCPA created a “Climate Action Council” to create a “Scoping Plan” to help guide legislative and regulatory activity in each of these areas.” This Council is required to produce a Scoping Plan to guide legislation and rulemaking by the end of 2022.

The Fundamental Challenge

To say the CLCPA’s goals are ambitious is an understatement, and yet they will not be adequate to provide the state with sufficient clean energy to ensure the continuing reliability of the electrical grid.

The pace of building renewables will have to increase dramatically, as can be seen in Figure 4, below. NYISO estimates that the state needs an additional 20 gigawatts of renewable generation to meet the 70 percent renewables by 2030 goal. But just under 13 gigawatts of new generating capacity has been developed in the past 20 years, and over the past five years just 2.6 gigawatts of renewable and fossil-fuel generation have come one line, while 4.6 gigawatts have been deactivated, for a net loss of 2 gigawatts.27New York Independent System Operator. 2022. “2021-2040 System and Resource Outlook.” In short, the state is currently regressing from, rather than moving toward, meeting its clean and reliable energy goals.

In addition, the challenge of having enough generating capacity is going to be badly exacerbated by the DEC’s Peaker Plant Rule. Peaker plants are normally natural gas or dual-fuel plants that provide dispatchable electricity (on demand). Some operate daily for a few hours in the afternoon and evening to meet peak daily demand, while others operate only a few hours per year, during periods of abnormally high demand generally caused by extremely hot or cold weather.

The express purpose of the rule is to tighten air quality standards over time to protect the low-income communities where many peaker plants are located. However, the effect will be to force many plants, particularly older ones, to be shut down completely as they will not be able to meet the standards. Ultimately, the goal of 100 percent emissions-free energy will force the shutdown of all peaker plants—but the risk is that reliable alternative sources won’t be available to fill the gap. The NYISO predicts that approximately 950 megawatts of capacity will become unavailable beginning in 2023, with 1,600 megawatts unavailable by summer 20025.28New York Independent System Operator. 2022. “Power Trend 2022: The Path to a Reliable Cleaner Grid for New York.” Due to future increases in electrical demand from electric vehicle charging and a transition to electric heating, “the New York grid may cross a ‘tipping point’ in future years such that the transmission system and resources may not fully serve the demand,” the NYISO warned.29Ibid.

The Climate Action Council’s own consultants anticipate that the amount of offshore wind power needed by 2050 will be between 16,000 and 19,000 megawatts, double what is called for in the CLCPA. The first offshore wind turbines are currently scheduled to come online in 2024, leaving 26 years for complete buildout. At least 1,500 turbines will be required, necessitating the construction of more than one offshore turbine per week between 2024 and 2050.30Hanley, James E. 2021. “Green Scheme: The Climate Action Council’s Transition Cost Analysis.” Empire Center for Public Policy. https://www.empirecenter.org/publications/greenscheme/. And by 2050 the earliest ones will need to be replaced.

The risk is exacerbated by the potential shutdown of three of the state’s remaining nuclear reactors—the Fitzpatrick and Nine Mile Point plants near Oswego, and the Ginna plant northeast of Rochester—scheduled for relicensing between 2029 and 2035. Many clean energy advocates oppose nuclear power, although it is an emissions-free electricity source.31Nuclear Information and Resource Service. 2020. “Nuclear Doesn’t Help with Climate or Play Well with Renewables.” Oct. 8. https://www.nirs.org/nuclear-doesnt-help-with-climate-or-play-well-with-renewables/. But if these three reactors are not relicensed, another 2,000 megawatts of electricity generation must be found to replace them.

Finally, and most importantly, except for hydropower, renewable energy sources pose a fundamental problem for grid reliability. Natural gas can be turned on and off as needed, and nuclear reactors provide a nearly uninterrupted baseload power supply, but the same is not true of solar and wind power. Daily demand generally peaks from mid-afternoon to late evening—precisely when solar power becomes less available, particularly during the winter. Excessively cloudy and stormy weather radically diminishes the generating capacity of solar panels even during daytime.

At a minimum, this means wind and solar resources must be substantially overbuilt. If a solar array has a potential capacity of 1,000 megawatts, but due to weather conditions is only producing half that, then it will take 2,000 megawatts of installed capacity to produce 1,000 megawatts of power. The same is true for wind; as wind speed drops, it takes more wind turbines to produce the same amount of electricity that fewer wind turbines would produce at ideal wind speed.

Because of this need to overbuild, renewable energy costs are not as cheap as advertised. In California, which is New York’s primary competitor in the race to achieve 100 percent emissions-free electricity, retail electricity prices have increased faster than the average increase across the U.S., and by 2016 had become 50 percent higher than the U.S. average.32Makovich, Lawrence, and James Richards. 2017. ”Ensuring Resilient and Efficient Electricity Generation.” IHS Markit. https://www.globalenergyinstitute.org/ensuring-resilient-and-efficient-electricity-generation. And states—such as New York—that passed renewable portfolio standards to promote renewable energy production had energy prices that on average were 11 percent higher after seven years and 17 percent higher after 12 years.33Greenstone, Michael, and Ishan Nath. 2019. Do Renewable Portfolio Standards Deliver?” https://epic.uchicago.edu/wp-content/uploads/2019/07/Do-Renewable-Portfolio-Standards-Deliver.pdf.

But even overbuilding isn’t sufficient—because the sun doesn’t always shine, and the wind doesn’t always blow. It doesn’t matter how many gigawatts of installed solar panels the state has if none of them are receiving sunshine, and it doesn’t matter how many wind turbines there are if the wind isn’t blowing. At the extreme, there can be insufficient wind and sun simultaneously, a condition Germans call a dunkelflaute. While often overbuilding of wind power will enable wind to make up for low solar output, and vice versa—even if the cost of the necessary overbuilding is exorbitant—in the case of a dunkelflaute, neither resource can compensate for the other.

This problem is recognized by both the Climate Action Council and NYISO. The Climate Action Council’s Draft Scoping Plan admits that there are “many weeks in the year—especially during the winter—in which the contributions from renewables and existing clean firm resources are not sufficient to meet demand.”34New York State Energy Research and Development Authority, Climate Action Council. “Draft Scoping Plan.” https://climate.ny.gov/-/media/Project/Climate/Files/Draft-Scoping-Plan.pdf. And NYISO estimates that under the state’s current plans to shut down fossil fuel-fired power plants, 10 percent of the needed winter supply by 2040 will be missing.35New York Independent System Operator. 2022. “Power Trend 2022: The Path to a Reliable Cleaner Grid for New York.”

The Search for Dispatchable Backups

The plan to phase out natural gas and dual-fuel power plants—both highly reliable source of dispatchable power—threatens to leave New Yorkers at the mercy of highly unreliable wind and solar. But energy sources that are both dispatchable and emissions-free, or DEFRs,36New York Independent System Operator. 2022. “2021-2040 System and Resource Outlook.” are not yet cost-effective or available at utility scale. In any case, they likely would serve as forms of energy storage rather than primary sources. This means public and private utilities will need to build out even more of the unreliable renewable sources to produce the extra energy that will be stored for when the renewables are unavailable.

Storage can include batteries, as required by the CLCPA, but current battery technology cannot provide electricity for more than a few hours. Even batteries storing 100 hours or roughly three days’ worth of energy (the current holy grail of zero-emissions advocates), may be insufficient during extended periods of low wind and sun. Chemical battery costs will have to decline from current level by more than 90 percent before they become cost-competitive with existing forms of electricity production. Because of limited mining for the required elements, and the extensive control by China over the refining process of these elements, future supply-chain issues are expected, which may significantly delay the otherwise-expected price decreases that come with maturing technologies.37Kuttner, Robert. 2022. “China Epicenter of the Supply Chain Crisis.” The American Prospect. February 1. https://prospect.org/economy/china-epicenter-of-the-supply-chain-crisis/.

Two other prospective dispatchable options are natural gas and hydrogen produced from renewable sources, although both depend on immature technologies that currently have very high costs. Renewable natural gas, produced from methane originating primarily in animal waste, would have the advantage of being a “drop-in” fuel that can directly replace conventionally produced natural gas using the existing natural gas pipeline system. However, opponents of fossil-fuel based natural gas also tend to oppose renewable natural gas, preferring to eliminate or sequester agricultural methane.

Hydrogen can be made from either natural gas or water. Made from natural gas, it is called “grey hydrogen,” because it releases significant amounts of carbon dioxide, and is not considered environmentally friendly. The environmentally preferred method is to produce hydrogen from water, using either renewable energy (“green” hydrogen) or nuclear energy (“pink” hydrogen). When combusted to produce electricity or heat, the only waste product is water.

There are two specific difficulties with hydrogen that will be difficult to overcome. First, as a very small molecule, it is more susceptible to leaking than is natural gas. Second, it tends to make metals brittle, shortening their lifespan.38

California Public Utilities Commission. 2022. “CPUC Issues Independent Study on Injecting Hydrogen Into Natural Gas Systems.” July 21. https://www.cpuc.ca.gov/news-and-updates/all-news/cpuc-issues-independent-study-on-injecting-hydrogen-into-natural-gas-systems#:~:text=The%20Study%E2%80%99s%20findings%20include%3A%201%20Hydrogen%20blends%20of,of%20gas%20ignition%20outside%20the%20pipeline.%20More%20items.

For these reasons, the current approach to generating electricity with hydrogen is to blend it with natural gas. Blends of 5 to 10 percent have been achieved in electricity generation, with some seeing the potential for blends of up to 30 percent.39Rhodes, Joshua D., Thomas Deetjen, F. Todd Davidson, Michael Lewis, and Robert Hebner. n.d. “Hydrogen Blending in Texas Natural Gas Power Plants at Scale.” University of Texas at Austin. https://sites.utexas.edu/h2/files/2022/01/TX-H2-Power-Plant-Blending.pdf. However, some clean air advocates are opposed to all combustible gases, even clean hydrogen.

Putting aside high costs, technological hurdles, and political opposition, whether any dispatchable emission-free resources will be available on the required scale within just 18 years—meeting the CLCPA’s 2040 deadline for 100 percent emissions-free electricity—is currently unknowable.

MOVING FORWARD

Energy policy must struggle to balance three factors: reliability, affordability, and low emissions. The fundamental error in New York policy is to over-emphasize low emissions over affordability and, especially, reliability. Policy goals are repeatedly stretched even before the original goals are achieved. The ideal of perpetually being at the national and international forefront of the clean energy movement has taken the place of ensuring benefits outweigh costs.

The Climate Action Council claims the benefits of the CLCPA do outweigh the costs. But by the Council’s own accounting, most of the benefits are global, and the portion of the benefits that accrue to the state are outweighed by the costs its citizens will pay.40Hanley, James E. 2022. “Written Testimony to the Climate Action Council.” The Empire Center for Public Policy. April 14. https://www.empirecenter.org/publications/james-hanley-written-testimony-to-the-climate-action-council/. Further, if this economy-wide transition effort follows the general pattern of such state-sponsored megaprojects, the benefits are likely to be far less than predicted, and the costs multiple times what has initially been claimed.41Flyvbjerg, Bent. 2021. “The Iron Law of Megaprojects: Over Budget, Over Time, Under Benefits, Over and Over Again.” August 5. https://towardsdatascience.com/the-iron-law-of-megaprojects-18b886590f0b. In short, the costs may be many times more than the benefits.42

Hanley, James E. 2021. “Green Scheme: The Climate Action Council’s Transition Cost Analysis.” Empire Center for Public Policy. November 21. https://www.empirecenter.org/publications/greenscheme/.

New York produces less than one-half of one percent of global greenhouse gases, and most greenhouse gas emissions do not directly affect human health. Energy policy should aim to keep New York on its gradual and steadily lower-emissions path rather than rushing towards an idealized goal that cannot possibly be met on the current schedule.

The following reform priorities will protect New Yorkers from the very real risks of a costly and unreliable electricity supply:

  • Scrap the current Climate Leadership and Community Protection Act. The CLCPA does include an escape clause for fossil-fuel fired plants and related infrastructure to meet reliability needs, but the conditions are stringent and to date the DEC has been reluctant to approve such projects. At a minimum, this escape clause should be strengthened to emphasize that energy reliability and affordability are of equal importance to emissions reductions. After all, metropolitan New York City area customers already pay some of the highest utility rates in the country, and in the wake of the pandemic, more than one million New York customers statewide were collectively nearly $2 billion in arrears on their energy bills.43Office of the New York State Comptroller. 2022. “Distribution of Utility Arrears in New York State.” July 14. https://www.osc.state.ny.us/reports/distribution-utility-arrears-new-york-state-0. Reliability is even more crucial because power outages in extreme weather can kill people by the hundreds, particularly the poor and elderly.44Aldhous, Peter, Stephanie M. Lee, and Zahra Hiriji. 2021. “The Graveyard Doesn’t Lie. Buzzfeed News. May 26. https://www.buzzfeednews.com/article/peteraldhous/texas-winter-storm-power-outage-death-toll. In a related move, the DEC’s peaker plant rule should be modified to encourage progressively cleaner emissions while allowing the plants to remain online until suitable replacement power projects are developed.
  • End the de facto natural gas pipeline moratorium. As opposed to all other currently available technologies, the benefits of natural gas are obvious: gas is a more reliable, affordable and efficient energy source for electricity and heating reliability, especially as compared to fuel oil, which remains a heavily relied upon heating fuel in much of the state. The next DEC Commissioner should approve needed pipelines.
  • Repeal the fracking ban. The fracking ban prohibits the beneficial development of natural gas fields, constrains the development of property-owner wealth, and causes local governments, as well as the state, to forgo hundreds of millions in fees and income tax receipts. And as a geopolitical matter, in the wake of the Russia-Ukraine war, increased natural gas production is a major national strategic priority as well as a goal serving the best interests of New Yorkers.
  • Rethink renewable and zero-emission energy credits. Renewable energy advocates increasingly boast that solar energy is cheaper than natural gas and nuclear, and that onshore wind is nearly down to the price of those resources and expected to be equal to them soon. If that’s true, they should no longer require subsidies from ratepayers. Subsidies supporting extremely expensive offshore wind projects should be phased out as soon as possible. And with the goal of requiring all sources to meet a true market test, zero-emissions credits for nuclear power plants ideally should be phased out in the long run. In the short-term, however, as more unreliable wind and solar sources come online, the credits may be required to keep reliable nuclear power in place. In a system ultimately free of subsidies, nuclear plants may yet prove be more cost-effective than solar, wind and other low- and zero-emission renewables.
  • Repeal the post-2035 ban on selling new internal combustion engines. A troubling mandate on its own merits, the forced increase in battery-electric vehicles will increase the strain on the state’s power grid at a time when it is facing unprecedented challenges from unreliable renewable sources of electricity. The market is likely to create a sufficient growth in electric vehicles to achieve much of the goal of reducing greenhouse gas emissions from the transportation sector, but for grid reliability purposes, that growth should not be artificially increased.
  • Stop legislation likely to further increase costs and undermine reliability. Among the most potentially damaging bills to have been introduced in the last two years are the Build Public Renewables Act,45S.6453/A1466-D of 2021-22. requiring NYPA to prematurely take reliable fossil fuel-fired power plants offline and invest only in renewable energy, reducing the reliability of the electric grid; and the All-Electric Building Act,46S.6843-C/A.8431 of 2021-22. which would prohibit new buildings from having natural gas hookups for appliances or space heating.
  • Encourage investment in hydrogen, renewable natural gas, and advanced nuclear power. Recent governors have tended to view all economic development incentives largely as a matter of tax breaks and increased taxpayer subsidies for business. In the energy field, however, effective incentives can be crafted through regulatory reform. The Hochul administration effort to position New York as a federally supported hydrogen research hub should be continued—but beyond that, the state should aim to create a more welcoming regulatory environment for innovative technologies. Advanced next-generation nuclear energy, in particular, relying on small modular reactors, could potentially provide New York with plentiful safe, reliable, emissions-free electricity.47Office of Nuclear Energy. n.d. “Advanced Small Modular Reactors (SMRs).” United States Department of Energy. https://www.energy.gov/ne/advanced-small-modular-reactors-smrs.
    The first experimental reactors are expected to come online in other states by the end of the decade, and rapid buildout could come in the two decades after that to help New York meet its 2050 clean energy goals.48McCarthy, Elizabeth. 2022. “Emerging Small Reactors Projected to Provide 90 GW of Nuclear Power to US Grid by 2050: NEI Survey.” Utility Dive. August 18. https://www.utilitydive.com/news/emerging-small-reactors-projected-to-provide-90-gw-of-nuclear-power-to-the/629936/#:~:text=The%20push%20for%20carbon%2Dfree,5.

James Hanley is a fellow focusing on energy and environmental policy at the Empire Center for Public Policy.