Climate Change Superfund Act Signed by Governor Hochul with Cap and Invest Delayed (corrected story)
The Superfund Act has a start date of 2028, with some details yet to be determined. Michael Helme, of Warwick, also cheers on NYCI but fears delays from political conflict.
Expressing enthusiasm for the planned New York State Cap and Invest style program on a recent day was Michael Helme, member of Sustainable Warwick, a group pursuing local strategies to reduce greenhouse gas (GHG) emissions and encourage sustainable practices. However, while pressure for Cap and Invest from environmental groups and some legislators mounted, the program signed into law by Governor Kathy Hochul on Dec. 26 was the Climate Change Superfund Act (CCSA). The law focuses on fining fossil fuel companies for past emissions to pay for climate change damages and preparation for future ones in public and private infrastructure and public health issues. The state Cap and Invest law, which would fine fossil fuel companies per ton of future GHG emissions and gradually lower the amount allowed, is still in process, according to a New York State Department of Conservation (DEC) spokesperson.
The CCSA reasoning is explained in the law: “Recent science has determined that the largest one hundred fossil fuel producing companies are responsible for more than 70% of global greenhouse gas emissions since 1988, and therefore bear a much higher share of responsibility for climate damage to New York State than is represented by the $75 billion being assessed them.”
The law requires fossil fuel companies to pay $3 billion per year for 25 years. The law designates 2028 as the year charging companies will begin. Meanwhile, specifics are still being determined, and stakeholder comments are being collected, according to a DEC spokesperson.
The law is based on the same principles as the state Superfund program that requires those who damage and pollute a site to pay for remediation. The new law targets greenhouse gas producers, as science has found that those gases are primary sources of climate change, resulting in floods, storms, droughts and other weather crises and damage that necessitate infrastructure repairs, rebuilding and preparations that have and will cost hundreds of billions. According to the law, companies will pay toward the $75 billion over the 25 years in amounts proportional to their GHG emissions.
The law also requires that 35-40% of money paid by high emissions producing companies go toward improving public and private infrastructure in “disadvantaged communities.”
The law cites these targets for fund use:
Payments by historical polluters into the climate change adaptation cost recovery program would be used for new or upgraded infrastructure needs such as coastal wetlands restoration, storm water drainage system upgrades, energy efficient cooling systems in public and private buildings, including schools and public housing, support for programs addressing climate-driven public health challenges, and responses to extreme weather events, all of which are necessary to protect the public safety and welfare in the face of the growing impacts of climate change.
"By ensuring those responsible for historic climate-altering emissions bear the costs of the significant health, environmental, and economic impacts already being passed on to New Yorkers, this law will complement the State’s efforts to reduce greenhouse gas emissions, help communities adapt to the climate-driven impacts experienced today, and leverage the significant investments the Governor is making in climate resilience,” said DEC Interim Commissioner Sean Mahar about CCSA.
The Cap and Invest law, still being framed, is aimed at meeting NYS Climate Leadership and Community Protection Act (CLCPA) goals set in 2019. The program complements CCSA as it lowers future emission limits as well as attaching costs to them.
One CLCPA goal was to have regulations designed to lower GHG emissions by 40% from 1990 levels by 2030. By January 1, 2024, regulations to meet emissions goals should have been in place, according to CLCPA, but were not, and the state has not been on track to meet those goals, nor the 70% renewable energy goal, according to NY Focus.
Helme notes, “It’s fair to charge more for fossil fuel and industries with high GHG emissions because we and people around the world get our share of related disasters.”
Recent research backed up that idea. A study published in Science in August provided results of research evaluating 1500 climate policies implemented in 41 countries on six continents between 1998 and 2022 to determine which produced large emissions reductions. Of the 63 policies identified as successful, Cap and Invest was found to be a key component.
“Our insights on effective but rarely studied policy combinations highlight the important role of price-based instruments in well-designed policy mixes and the policy efforts necessary for closing the emissions gap,” write the authors.
According to the Cap and Invest plan specified by the DEC and New York State Energy Research and Development Authority (NYSERDA):
“All GHG emissions would be accounted for under the program and the cap must reduce at a rate to achieve the statewide GHG emission limits set in law.
Obligated sources (e.g., large-scale GHG emitters and distributors of heating and transportation fuels) would be required to report emissions and obtain allowances equal to the GHG emissions associated with their activities. All obligated sources will have a reporting requirement.
Non-obligated sources would not be required to obtain allowances, but their GHG emissions would be accounted for in setting the allowance budget.”
However, the program has been delayed. To explain why, Denis Slattery, of the DEC, provided this “joint response from NYSDEC and NYSERDA”:
“DEC and NYSERDA remain committed to ensuring affordable energy for all New Yorkers while advancing the development of the New York Cap and Invest (NYCI) program. The regulations are being informed by comprehensive stakeholder input and engagement, including a NYCI pre-proposal released in December of 2023.”
Concerns to be addressed by “stakeholder input” were elaborated upon by the Citizens Business Commission, which describes itself as “a nonpartisan, nonprofit civic think tank and watchdog whose mission is to achieve constructive change in the finances, services, and policies of New York City and New York State government.”
Among their concerns, enumerated online, were projected costs to New Yorkers of up to $12 billion a year by 2030. They caution that this could result in high emission businesses moving out of state, among economic challenges affecting costs and jobs.
The CBC recommends examining those potential impacts and “recalibrating the 2030 emissions cap to be ambitious yet achievable, so NYCI can fully leverage market-based, cost-effective emissions reductions.”
While the CBC recommends reducing emissions reduction goals, several other states, including Washington State, have already implemented Cap and Invest types of programs. In Washington State, with the Climate Commitment Act, the first emissions credit auction in March of 2023, raised $300 million, and by November 2024, the program had raised $2.3 billion, according to Grist.
Brian Heywood, a Washington hedge fund manager, contended that the program was raising gas prices, although the state has a history of high gas prices, sometimes higher before the program began. Others argued that price gouging might be a culprit that remained to be examined, and oil prices are set in world markets.
Heywood funded a petition to repeal the program, with a clause that would also prevent capping carbon emissions in the future, Grist noted. The petition was voted down in November.
Meanwhile, the funds were used for public benefits; they incentivized emissions reductions and drew matching federal money from the IRA, $5 for every dollar Washington invested, according to Grist. Reducing emissions from transportation and building was a program goal, so $400 million went to public transportation projects, including free transportation for youth. Electrifying garbage trucks, school buses and other large vehicles was supported with $120 million.
Federal and state funding that resulted from the program brought a number of industrial improvements. For instance, a mining company used $20 million to build a hydrogen plant to replace fossil fuels. BP spent $270 million to upgrade an oil refinery to reduce emissions by 7%.
As 35% of funds were allocated to “overburdened communities,” money went to, among other projects, reducing air pollution in those neighborhoods and rebates for energy-efficient equipment, such as heat pumps, for homes and small businesses.
New York’s Cap and Invest draft plans for allocation of income from the program have similarities to the Washington State plan:
The Consumer Climate Action Account will deliver 30 percent of proceeds directly to New Yorkers each year to mitigate any consumer cost increases that could result from the NYCI program. NYSERDA and DEC developed the Climate Affordability Study [PDF] in collaboration with the NYS Division of Budget, Department of Taxation and Finance, and Department of Public Service to consider how best to deliver proceeds to New Yorkers.
The Industrial Small Business Climate Action Account will deliver up to 3 percent of proceeds to support energy affordability for industrial small businesses.
The Climate Investment Account will invest 67 percent of proceeds to support actions that advance New York’s transition to a less carbon-intensive economy. These measures will be guided by New York’s Scoping Plan and the Disadvantaged Communities Barriers and Opportunities Report, both of which can be found on the Climate Act webpage (opens in new window).
In an email, Michael Helme mused about how Orange County residents will respond to the Cap and Invest plan:
“The majority of voters in Orange County chose Donald Trump. He is clearly opposed to policies that would raise fossil fuel prices. With a Cap and Invest program in New York, prices for gasoline and heating fuels will likely increase. Will residents respond by getting more efficient cars and home insulation? Will they take advantage of programs helping them get solar panels, energy efficient appliances, heat pumps and electric vehicles? Will low- and middle-income residents find that benefits the program offers cover cost increases? How will people respond?”
He points out the years of delay in implementing congestion pricing in Manhattan, resulting in millions of hours of congestion. The Climate Protection Act has quantified in billions of dollars the cost of health care for diseases of the heart and lungs, cancer and other diseases escalated by emissions.
Sources of high emissions continue to threaten public health unconstrained, some unlawfully. The CPV gas power plant in Wawayanda has been operating for six years without an EPA air permit after state government corruption allowed its construction. A 2018 judicial decision allowed its continued unapproved operation without a deadline for compliance.
Senator James Skoufis, who investigated the plant, writes, "Our investigative report lays bare the numerous regulatory and statutory deficiencies that allowed a project like CPV to advance through the permitting process. When dealing with air and water quality, the state’s environmental permitting process must be far better shielded from undue influence and operate with the highest level of integrity to ensure the public’s trust.”
He identified the DEC as responsible for rectifying the problem.
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