For cleaner air, lower bills, and a healthier New York
What is Cap and Invest?
New York’s proposed cap-and-trade program, dubbed New York Cap and Invest (NYCI), is an economy-wide program intended to help the state achieve its targets of a 40% emission reduction by 2030 and an 85% emission reduction by 2050. This program would set an annually declining limit on the amount of greenhouse gas emissions emitted in New York and require corporations to purchase allowances equal to their approved amount of greenhouse gas emissions. The revenue generated would be directed to the state’s Climate Action Fund to lower middle- and working-class households’ energy bills and fund climate and environmental actions, with at least 35-50% of the program revenue going to Disadvantaged Communities (DACs).
What does this mean for New Yorkers?
Done right, a cap system could be a key tool in securing climate justice in New York: money for frontline communities, paid for by polluters. Done wrong, a cap system would only widen the gap between the haves and have-nots in our state. It could mean increased environmental harm for Black, brown, Indigenous, Asian, and working New Yorkers. New York’s Department of Environmental Conservation has stated that under their proposed program, corporate polluters will be permitted to trade allowances, which means the program would be a cap-and-trade program rather than a true cap-and-invest program. NY Renews is calling for the adoption of a true, powerful cap-and-invest program — without allowance trading — to secure clean air, lower energy bills, and tens of thousands of jobs for New York communities. We need the right policy design features and guardrails to add backstops to this market-based mechanism to ensure we meet the state’s emission reduction mandates and do not disproportionately burden frontline communities.
What are the guardrails we need in a cap-and-invest program?
An emissions cap program will only benefit New Yorkers if it is implemented in a just way. Here’s what we must see in an equitable, effective program:
Statewide pollution limits must decline every year in every sector, including the electric sector, and these limits must be strongly enforced. The limits must hit key benchmarks to ensure we reduce pollution to 50% of current levels by 2040 and at least 85% by 2050.
It must include facility-specific caps on greenhouse gas and co-pollutant emissions in addition to a statewide pollution cap and sectoral caps.
Greenhouse gas and co-pollutant emissions permits must be non-tradable and must have aggressive penalties for exceeding cap levels. Permits must avoid loopholes that have weakened or undermined other efforts, including exemptions for any emissions and double allowances for facilities that utilize the same fossil fuel unit for multiple purposes, and avoid offsets and excessive banking. Polluters should not be permitted to play games with the system with any emissions offset regimes. Unused permits should not be banked year-on-year, and regulators must adjust the cap-trade-and-invest program design as needed to minimize any banking.
No giveaways to polluters. The program must not exempt the worst corporate actors from paying for their emissions or give them a free pass to dump toxic pollution.
Expenditures must not harm vulnerable New Yorkers. The cost burden for New Yorkers who can least afford it must not be made worse. The cap program must include rebates and targeted relief for low- and moderate-income households to ensure energy bills go down.
Permits should have a clear and escalating price, and there should be a policy to ensure both a price floor to ensure adequate revenue and a price ceiling to limit consumer impacts. There should be a higher price in Disadvantaged Communities and environmental justice areas. The price and regulations must be based on the CLCPA’s current 20-year cost accounting for methane.
Any cap system must be part of a broader regulatory approach to reducing pollution and must ensure that New York can achieve the greenhouse gas reduction mandates in the CLCPA. The cap system must be complemented by other strong regulatory and enforcement tools.
The system must include enforceable pollution reduction mandates for overburdened communities by agencies, including the NYS Department of Environmental Conservation and the Attorney General’s office.
What is the Cap and Invest Guardrails Bill, A8469/S9228, and how does it address the potential shortcomings of a cap-and-trade system?
The bill establishes an economy-wide cap-and-invest program to support greenhouse gas emissions reductions by setting a maximum allowable amount of emissions and regulating the sale or auction of allowances
Prohibits the trading of allowances, making it a true cap-and-invest system
Setsa lower cap for emissions on facilities within DACs and within a 5-mile radius of such communities to prioritize emissions reductions in DACs. It requires that such emission limits are sufficient to ensure that DACs experience pollution reduction at rates exceeding other communities and aren’t negatively impacted by pollution
Sets sector-specific benchmarks and goals for the reduction of GHG emissions in each compliance period to measure progress in achieving the statewide GHG limits
Barsfalse solution technologies and mitigation techniques, such as the use of alternate fuel combustion or carbon capture and sequestration, from being considered as eligible reduction measures
Develops stringent criteria on how to define and treat emissions-intensive trade-exposed industries (EITEs)
Requires the program to be subject to public notice and comment, including at least 5 public hearings, and shall include substantial consultation with the Climate Justice Working Group and members of DACs
