New York’s Clean Energy Programs: The High Cost of Symbolic Environmentalism 

Abstract: In 2016, the New York Public Service Commission enacted the Clean Energy Standard (CES), under which 50% of all electricity sold by the state’s utilities must come from renewable generating resources by 2030, and emissions of greenhouse gases (GHG) must be reduced by 40%. The CES also incorporates New York’s previous emissions reduction mandate, which requires that the state’s GHG emissions be reduced 80% below 1990 levels by 2050 (the “80 by 50” mandate).

Key Findings:

• Given existing technology, the Clean Energy Standard’s 80 by 50 mandate is unrealistic, unobtainable, and unaffordable. Attempting to meet the mandate could easily cost New York consumers and businesses more than $1 trillion by 2050, while providing scant, if any, measurable benefits.

• Meeting the CES mandate will require substituting electric-powered equipment for most existing equipment that burns fossil fuels (vehicles, furnaces, etc.), adding many billions of dollars in costs in both the private and public sectors. It will, in short, mean electrification of the New York economy, including most of the transportation, commercial, and industrial sectors.

• Even with enormous gains in energy efficiency, the mandate would require installing at least 100,000 megawatts (MW) of offshore wind generation, or 150,000 MW of onshore wind generation, or 300,000 MW of solar photovoltaic (PV) capacity by 2050. By comparison, in 2015, about 11,300 MW of new solar PV capacity was installed in the entire United States. Moreover, meeting the CES mandate likely would require installing at least 200,000 MW of battery storage to compensate for wind and solar’s inherent intermittency.

• Just meeting the interim goals of the CES of building 2,400 MW of offshore wind capacity and 7,300 MW of solar PV capacity by 2030 could result in New Yorkers paying more than $18 billion in above-market costs for their electricity between now and then. By 2050, the above-market costs associated with meeting those interim goals could increase to $93 billion. It will also require building at least 1,000 miles of new high-voltage transmission facilities to move electricity from upstate wind and solar projects to downstate consumers.

  But none of the state agencies – NYDPS, the New York State Department of Environmental Conservation (NYDEC), and the New York State Energy Research and Development Authority (NYSERDA) – has estimated the environmental and economic costs of this new infrastructure. Such a large buildout of renewable infrastructure will surely have significant effects on agriculture, offshore fisheries, property values, human health, and biodiversity.

• As noted, the Clean Energy Fund’s 2030 energy-efficiency mandate calls for 600 TBTUs of savings in buildings. This mandate lacks economic justification and appears to be technically unreachable: the savings mandate is double the most optimistic projection of energy-efficiency potential in the state.

• NYDPS and NYSERDA have both claimed that renewable energy and the CES will provide billions of dollars of benefits associated with CO₂ reductions. Not so. Regardless of one’s views on the accuracy of climate models and social-cost-of-carbon estimates, the CES will have no measurable impact on world climate. Therefore, the value of the proposed CO₂ reductions required under the CES will be effectively zero. Moreover, even if there were benefits, virtually none of those benefits would accrue to New Yorkers themselves.

• Lower-income New Yorkers will bear relatively more of the above-market costs necessary to achieve even the interim CES goal. For example, absent significant changes to how retail electric rates are developed, affluent consumers who install solar PV will be able to “free-ride” on their local electric utilities, relying on those utilities to provide backup power when their solar systems are not providing electricity, while forcing other customers to pay for that electricity.

Jonathan A. Lesser, president of Continental Economics, has more than 30 years of experience working for regulated utilities, for government, and as an economic consultant. He has addressed numerous economic and regulatory issues affecting the energy industry in the U.S., Canada, and Latin America. His areas of expertise include cost-benefit analysis applied to both energy and environmental policy, rate regulation, market structure, and antitrust. Lesser has provided expert testimony on energy-related matters before utility commissions in numerous states; before the Federal Energy Regulatory Commission; before international regulators; and in state and federal courts. He has also testified before Congress and many state legislative committees on energy policy and regulatory issues. Lesser is the author of numerous academic and trade-press articles and is an editorial board member of Natural Gas & Electricity. He earned a B.S. in mathematics and economics from the University of New Mexico and an M.A. and a Ph.D. in economics from the University of Washington.

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