Report Calls for Carbon Pricing to Advance NY Clean Energy

ALBANY, N.Y. – Including the cost of carbon pollution in New York’s electricity market would help the state meet its clean energy goals, according to a new report.

Carbon pricing would add the social cost of carbon pollution, including health and climate impacts, to the wholesale price of electricity from producers that make that pollution.

Anne Reynolds, executive director of Alliance for Clean Energy New York, the group that authored the report, says that would increase the wholesale cost of electricity from those providers.

“So, they would have to bid in at a higher level, which means they would operate less,” she points out. “And revenues would go up for generators that don’t make that pollution, like wind and solar power.”

Reynolds says a Carbon Pricing Proposal from the New York Independent System Operator would allow the state to achieve its clean energy goals at the lowest cost to consumers.

Reynolds notes that carbon pricing is similar to the approach taken by the Regional Greenhouse Gas Initiative. But instead of selling pollution credits, carbon pricing factors the cost of pollution directly into the market price of power that’s generated by burning fossil fuels.

“This is a way to attract renewable energy developers, builders, investors to New York State, because they would be realizing some benefit from being ‘clean generation,'” Reynolds explains.

Reynolds adds that if New York initiates this first-in-the-nation carbon pricing plan, it also would save the state money in meeting its goal of 70% renewable energy by 2030.

Reynolds points out that the grid operator, not the state, would administer the carbon pricing plan. The state’s role would be to set the cost of carbon based on a social cost estimate created under the previous presidential administration.

“New York has used that number in other environmental programs,” she points out. “So, they would have to make the decision to set that price of carbon and then, the grid operator would go ahead and implement the program through their markets.”

The report says with state support, the plan could be implemented quickly and cost-effectively with little to no consumer impact.