Economywide Cap-And-Invest Program Will Fund a Sustainable Future While Protecting Consumers
Governor Advances Recent Climate Action Council Recommendation; Directs DEC and NYSERDA to Design an Emission Reductions Program with Robust Stakeholder Input
Executive Budget Will Include Legislative Proposal to Create New Climate Action Rebate to Deliver an Expected $1 Billion in Future Program Proceeds to New Yorkers Every Year
Governor Kathy Hochul today announced a Cap-and-Invest Program to fund a sustainable and affordable future for all New Yorkers as part of the 2023 State of the State. Governor Hochul directed the Department of Environmental Conservation and the New York State Energy Research and Development Authority to advance an economywide Cap-and-Invest Program that establishes a declining cap on greenhouse gas emissions, invests in programs that drive emissions reductions in an equitable manner prioritizing disadvantaged communities, limits costs to economically vulnerable households, and maintains the competitiveness of New York industries. In addition, Governor Hochul will propose legislation to create a universal Climate Action Rebate that is expected to drive more than $1 billion in future cap-and-invest proceeds to New Yorkers every year.
“As we work to drive down polluting emissions across the board, we must make sure that those who have already suffered from environmental injustice no longer bear an unfair share of the burden,” Governor Hochul said. “Our ambitious Cap-and-Invest Program sets a cap on greenhouse gas emissions and shares the revenues with New Yorkers from disadvantaged communities to help cover utility bills, transportation costs and decarbonization efforts. Through our innovative efforts, we will create a cleaner, greener future while helping New Yorkers with the costs of the transition.”
New York is undertaking one of the most ambitious and comprehensive efforts in the United States to address the threat of climate change. This new Cap-and-Invest Program will allow New York to continue making critical investments in our clean energy future while supporting vulnerable and disadvantaged communities in the face of rising global energy prices.
Beginning immediately, DEC and NYSERDA will design a program that sets an annual cap on the amount of pollution that is permitted to be emitted in New York, as recommended in the recently finalized Climate Action Council Scoping Plan. Every year, the emissions cap will be reduced, setting the State on a trajectory to meet our Climate Act requirements of 40 percent in emissions by 2030, and at least 85 percent reduction from 1990 levels by 2050. At Governor Hochul’s direction, the program design will prioritize five core principles:
- Affordability: A Cap-and-Invest Program must put the wellbeing of New York families first. In her upcoming Executive Budget, Governor Hochul will propose legislation to create a universal Climate Action Rebate that is expected to drive more than $1 billion in future cap-and-invest proceeds to New Yorkers every year. The Climate Action Rebate will be designed to mitigate consumer costs, while preserving crucial funding for consumer-led decarbonization efforts, including energy efficiency measures that reduce energy costs, clean mobility solutions that reduce transportation costs, and other investments that improve air quality and create new job opportunities. Furthermore, Governor Hochul will seek program design features that can help ensure potential Cap-and-Invest costs are predictable and manageable for all consumers and businesses.
- Climate Leadership: New York’s Cap-and-Invest Program will not only help achieve New York’s climate goals, but also further catalyze a nationwide movement towards carbon pricing. To that end, Governor Hochul is specifically directing DEC and NYSERDA to design a program with the capacity to join other current or future programs, which can lower the price of the transition to a greener economy, overall.
- Creating Jobs and Preserving Competitiveness: New York’s Cap-and-Invest Program will be designed to launch new investment in industries intended to create tens of thousands of good paying, family-sustaining jobs of the future that can lift entire communities. From home retrofits to electric vehicle charging installations and green manufacturing, cap-and-invest proceeds can stimulate the entire clean energy economy. Governor Hochul is directing DEC and NYSERDA to design a cost-mitigation program to ensure New York industries are not put at a competitive disadvantage. Furthermore, cap-and-invest proceeds can go towards just transition initiatives that will ensure no worker is left behind.
- Investing in Disadvantaged Communities: Cap-and-Invest will prioritize the front-line, disadvantaged communities in our State that for far too long have suffered from pollution and environmental injustice. The program will not allow the use of offsets that could allow high-emitting sources to continue to pollute, and will instead be designed to ensure pollution burdens are reduced. Under Governor Hochul’s leadership, a minimum of 35 percent, with a goal of 40 percent, of the benefits of cap-and-invest resources will directly benefit disadvantaged communities, and the program will be designed to ensure pollution burdens are reduced in frontline communities. These investments will fund crucial programs to improve air quality, reduce reliance on polluting power plants, retrofit homes and schools, and decarbonize our transportation systems, among other vital efforts to reduce pollution hotspots.
- Funding a Sustainable Future: Cap-and-Invest will provide funding needed to support achievement of New York’s climate goals. From helping business owners electrify operations to funding electric vehicle (EV) chargers and energy efficiency investments that will reduce energy bills, cap-and-invest proceeds will filter across our state – enhancing livability, cutting transition costs for consumers, and creating a better New York.
Large-scale greenhouse gas emitters and distributors of heating and transportation fuels will be required to purchase allowances for the emissions associated with their activities. By applying to each metric ton of carbon emissions, the Cap-and-Invest Program will incentivize consumers, businesses, and other entities to transition to lower-carbon alternatives. Proceeds will support the State’s critical investments in climate mitigation, energy efficiency, clean transportation, and other projects, in addition to funding an annual Climate Action Rebate that will be distributed to all New Yorkers to help mitigate any potential consumer costs associated with the program.
Achieving these principles requires both a rigorous and transparent regulatory process led by DEC and NYSERDA and crucial reforms made together with legislative partners to ensure New York’s Cap-and-Invest Program benefits all consumers, keeps our economy’s competitive advantage while maximizing economic returns, and allows for linkages with other jurisdictions.
Rory M. Christian, Chair of the New York State Public Service Commission, said, “Governor Hochul exemplifies leadership and determination in her drive to develop a clean energy economy that will help spur economic growth and opportunity while also directly benefiting consumers. Her nation-leading Cap-and-Invest Program is designed to do just that.”
New York State Energy Research and Development Authority President and CEO and Climate Action Council Co-Chair Doreen M. Harris said, “Governor Hochul’s proposal furthers New York’s leadership by bringing forward an innovative solution to meet the profound challenges presented by the destructive nature of climate change. The economywide Cap-and-Invest Program underscores the critical balancing act we are undertaking to ensure all New Yorkers benefit from this program that will reduce harmful emissions, especially in those communities that have too long borne the brunt of climate change both financially and health-wise, while remaining focused on keeping our businesses competitive and at the forefront of producing technological change. With this Cap and Invest Program, we are sending a signal to other states that this transition can be advanced in a thoughtful and collaborative way to move the needle in addressing one of the generational challenges of our time.”
New York State Department of Environmental Conservation Commissioner and Climate Action Council Co-Chair Basil Seggos said, “Governor Hochul is showing the world that climate action can be ambitious, affordable, and achievable, and I’m proud to work with her and our state’s foremost climate experts to advance this comprehensive Cap-and-Invest Program. Through Governor Hochul’s leadership, the State is poised to enact a strong and effective tool to combat climate change, improve air quality, spur innovation, protect jobs, and provide the funding needed for our green economy to succeed. DEC looks forward to working with NYSERDA, the Legislature, and New Yorkers across the state to build this essential program which will also prioritize addressing pollution hotspots impacting the health and well-being of the state’s disadvantaged communities.”
New York’s Cap-and-Invest Program will draw from the experience of similar and successful programs across the country and around the world that have yielded sizable emissions reductions while catalyzing the clean energy economy. New York’s electricity system is already part of a regional cap-and-invest style program, the Regional Greenhouse Gas Initiative (RGGI). Since RGGI was established in 2005, the program has helped reduce greenhouse gases from power plants by more than half and raised nearly $6 billion to support cleaner energy solutions amongst its12 participating states.
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