The following is a contributed article by Arnold R. Wallenstein, a Boston-based attorney who represents independent power producers in New York and other states and is the principal member of The Energy Law Group.
New York's policy-makers are rolling out ambitious and far-reaching energy and climate change policies. These policies have resulted in a veto on the expansion of gas pipelines into New York and on the construction of new state-of-the-art natural gas-fired power plants. A law has been passed effectively mandating that by 2040 all electricity consumed in the state be generated by solar, wind or hydro facilities, along with battery storage, and that all gas and oil-fired generation plants be shut down. Legislation has been proposed that would put an even further squeeze on the use of natural gas in New York.
These policies, while well-intentioned, are having a chilling effect and are harming those whom the state most wants to protect.
Increased gas and electricity costs
Why is this happening? The New York Department of Environmental Conservation (NYDEC) blocked the construction of the Constitution gas pipeline which would have brought secure, lower-cost gas to customers in New York. Furthermore, applications to secure regulatory approvals to upgrade and expand the existing Iroquois pipeline into New York have been thwarted by bureaucratic slowdowns and outright rejections.
Even the Chairman of the NY Public Service Commission has recently admitted: "Our reliance on natural gas for winter electric generation has only grown, and it has grown to the point that it has outpaced the available pipeline capacity which was built mainly for heating needs. These pipeline constraints that we have in the system contribute to the price volatility that exists.”
By vetoing the expansion of gas pipelines into New York, the state is starving modern, efficient natural gas-fired power plants and other commercial and residential natural gas customers of economically priced natural gas. New York's ratepayers already pay some of the highest gas and electricity costs in the U.S. and the state's anti-natural gas policy will only make this situation worse.
The Albany based Empire Center for Public Policy estimates that the ambitious 2019 climate change law adopted by the legislature could cost as much as $510 billion while yielding benefits worth several hundred billion less, according to a recent report that assesses a cost-benefit analysis recently released by the NY Climate Action Council — the entity charged with implementing New York's Climate Leadership and Community Protection Act.
Consumer utility bills may go up 9.9% and potentially twice as much in the case of large commercial customers. These policies act as a regressive tax on lower-income groups and thus it goes without saying that New York's lower-income and Environmental Justice (EJ) communities will be the hardest hit.
Increased pollution adversely impacts EJ communities
New York's climate change policies, far from reducing pollution, are in fact increasing it, at least in the short term. Some of New York's most highly efficient, state-of-the-art natural gas power plants are unable to run part of the year because of reduced access to economically priced natural gas. Consequently, power plants that are 50+ years old, using far less efficient technology and which in normal circumstances would not operate, are being operated more, resulting in higher levels of air pollutants such as nitrogen and sulfur oxides, volatile organic compounds and carbon dioxide (CO2) being emitted.
This finding is supported by an examination of NYISO generation plant dispatch data, as well as a recent report by ISO-NE, the New England grid operator. The report starkly points out that CO2 emissions in New England are spiking because plants burning dirtier fuels are being run as replacements for cleaner natural gas-fired plants that cannot get enough gas because of local opposition to new pipelines and New York's failure to approve more pipelines into New England. When fuel oil is used for generation, CO2 emissions are approximately 50% to as much as 4.5x higher than CO2 emitted from a state-of-the-art gas-fired facility.
To make matters worse, many older power plants in New York are located in or near congested high-density urban areas and therefore have a disproportionately and significantly greater negative impact on low-income and EJ communities, the very communities the politicians claim they want to help. It is ironic that policies that deprive gas to clean-burning natural gas plants result in increased air pollution, particularly in EJ communities, by necessitating the increased operation of less efficient and more highly polluting plants than the newer, cleaner gas-fired plants that New York state has decreed must go out of business.
New York ratepayers and customers, and particularly low-income and EJ communities, are being hit with a double whammy – not only are they now paying significantly more for gas and electricity, but they are being exposed to higher rates of harmful air pollution and emissions. This cannot be what New York policy-makers intended.
New York's energy and climate change policies, although well-intentioned, are unrealistic at best and devastating at worst. They will lead to high gas and electricity prices, increased air pollution and the possibility of brown-outs and black-outs during the winter when there are no gas-fired plants to turn on during periods of no or low solar and wind generation, harming the people that the state most wants to protect. Policy-makers will achieve precisely the opposite of what they intend.
Fixing the problem
How can New York achieve its climate change goals while protecting low-income and EJ communities from the negative impacts of the state's polices?
First, New York has to permit expansion of its natural gas pipeline infrastructure to allow more natural gas supply to both homes and modern, efficient gas-fired power generators.
Next, New York has to acknowledge that it is going to need at least 30,000 MW of clean-burning, dispatchable, natural gas generation plants after 2040 to generate electricity when solar and wind plants cannot operate-to cover about a 10% electricity generation gap predicted by NYISO. Gas-fired plants can be turned on to prevent black-outs and brown-outs when needed; solar and wind plants cannot.
The bottom line: natural gas-fired plants are needed both as the back-up for intermittent renewable generation and as a bridge to the state's renewable energy economy.
Sometimes well-intentioned state policies can backfire and hurt the very people the state wants to protect. New York's radical changes in energy policy must be accomplished with an eye to protecting the low-income and EJ communities from high electricity and gas costs, higher pollution and potential black-outs during cold winter nights.