Putting a price on carbon will help New York state achieve a clean energy future

new york_

(Robert Bye, Unsplash)

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Richard Dewey, President and CEO, NYISO


New York State, the 11th-largest economy in the world, recently enacted the US’ most aggressive climate change legislation. By 2040, according to the new law, the state must get all of its electricity from zero-emission sources.

How does a state of 19.8 million citizens, which in 2018 generated more than 40% of its energy from fossil fuels, reach zero emissions in only two decades? A carbon-pricing proposal from the New York Independent System Operator (NYISO) can play a significant role – as new research by the Analysis Group has concluded.

We at the NYISO have independently managed New York’s electric grid and its competitive wholesale electric marketplace for 20 years. In the past two decades, price signals in the NYISO’s competitive markets have helped to drive down power sector emissions dramatically, according to the US Environmental Protection Agency’s Air Markets Programme data and US Energy Information Administration data on power generation. Specifically, we have reduced the emissions rates of carbon dioxide by 52%, nitrogen oxide by 88% and sulfur dioxide by 99%. Today, we seek to bring those numbers down even further, and have been working with our stakeholders since 2017 on a carbon-pricing initiative.

 

What is carbon pricing?

Carbon pricing would embed a cost-per-ton of CO2 emissions in the sale of wholesale electricity, creating a price signal for investment in new clean-energy resources, as well as for existing generators to minimize their CO2 emissions through upgrades and efficiency improvements. It would also better align NYISO’s wholesale energy markets with New York State’s environmental objectives.

Simply stated, pricing CO2 emissions makes cleaner energy more profitable and carbon-emitting energy less economic. It also appropriately places the financial risk for developing cleaner, greener technology on investors rather than consumers. Carbon pricing would make use of the power of New York’s competitive electricity markets to promote more clean energy on the grid.

Why markets?

Competitive markets reward the most responsible and efficient ideas, and have provided incentives for generators to replace older, more polluting generators with more efficient generation, reducing greenhouse gas emissions.

Our markets provide the price signals to attract innovation and investment to the grid, where and when needed, and have already made it easier to attract, for instance, wind and solar resources.

How it works

Here’s how carbon pricing encourages investment in clean energy and further reduces emissions:

1. New York State sets a social cost of carbon as a price-per-ton of emitted CO2 based on the environmental impact

2. Power plants pay for the CO2 they release into the atmosphere

3. Generation owners receive an economic incentive to invest in low-carbon or carbon-free resources like wind, solar and hydro

4. Consumers benefit from payments made by polluting power producers.

Price signals create a strong economic incentive that values cleaner energy production and drives investment in new technologies like carbon capture and fuel cells. Carbon pricing promotes innovation, helping to grow clean energy businesses in New York State. And it encourages existing fossil-fuel plants to invest in repowering or in emission-reducing technologies.

Recognized by economists

The World Bank believes that carbon pricing is an essential tool to keep global warming to below 2°C and get to zero net emissions before the end of this century. In addition, a carbon price would “encourage technological innovation and large-scale infrastructure development” while accelerating the diffusion of carbon-efficient goods and services, according to a “Statement on Carbon Dividends” by the Climate Leadership Council, 3,554 U.S. economists, 27 Nobel Laureate recipients and other experts .

The report by the Analysis Group, commissioned by NYISO and co-authored by energy policy and economics expert Susan Tierney, concluded that our carbon-pricing proposal can help New York State meet its clean energy goals faster and more cost-effectively while reducing emissions and maintaining grid reliability.

The report also found that carbon pricing can:

· Reduce the consumer cost of reaching 100% carbon-free emissions

· Help grow investment and innovation in clean energy generation

· Promote innovation and energy efficiency in fossil fuel-burning technology

· Improve public health by encouraging the retirement of the highest-emitting generators

· Affirm New York’s position as a national leader on climate change

What’s next?

We are currently working with our stakeholders and with the state to finalize our carbon-pricing proposal. If the state and NYISO stakeholders support moving forward with carbon pricing, stakeholders vote whether to approve carbon-pricing wholesale market rules; the NYISO board of directors will then vote on whether to integrate carbon pricing into New York’s wholesale energy markets. The proposal would eventually need to be reviewed and accepted by the Federal Energy Regulatory Commission.

In the meantime, we have a huge opportunity to make a difference, and we see carbon pricing as one of the best solutions to help New York State reach its clean-energy goals while reducing the cost to consumers, driving innovation on the grid and improving public health by encouraging the retirement of the highest-emitting generators.

the sting Milestones

Featured Stings

Can we feed everyone without unleashing disaster? Read on

These campaigners want to give a quarter of the UK back to nature

How to build a more resilient and inclusive global system

Stopping antimicrobial resistance would cost just USD 2 per person a year

Governments should renew efforts to reform support to agriculture

UN gender agency hails record-breaking number of women in new US Congress as ‘historic victory’

UN chief welcomes Taliban’s temporary truce announcement, encourages all parties to embrace ‘Afghan-owned peace’

World Summit Awards 2016: Sustainable impact through digital innovation

GSMA Mobile 360 – Latin America at Mexico City: Intelligently Connecting to a Better Future, in association with The European Sting

A European young student shares his thoughts on Quality Education

Algorithms are being used to convict criminals and decide jail time. We need to make sure they are fair

How regenerative agroforestry could solve the climate crisis

UN chief laments ending of Cold War-era disarmament treaty

Russia and the West use the same tactics to dismember Ukraine

Brexit: MEPs concerned about citizens’ rights

EU-Japan relations: Foreign Affairs MEPs back Strategic Partnership Agreement

How can you or your organization support the Hour of Pride initiative?

From Russia with love: Brussels and Moscow close to an agreement on Ukraine’s gas supplies

It’s time to build a responsible media supply chain

Amazon on fire: the interference in global health

Statement by OECD Secretary-General Angel Gurría on the outcome of COP 25

COVID-19 lockdown hits working mothers harder than fathers

Can privatisation be the panacea for the lack of growth in Europe?

Beyond 2020: How the world might recover and rebuild, according to experts

“The Arctic climate matters: to what degree?”, a Sting Exclusive co-authored by UN Environment’s Jan Dusik and Slava Fetisov

5G security: Member States report on progress on implementing the EU toolbox and strengthening safety measures

IMF: The global economy keeps growing except Eurozone

‘No steps taken’ so far to end Israel’s illegal settlement activity on Palestinian land – UN envoy

These are the countries best prepared for the fight against cancer

Guinea-Bissau needs ‘genuinely free and fair elections’ to break cycle of instability

A Sting Exclusive: “Delivering on the Environmental Dimension of the new Sustainable Development Agenda”, Ulf Björnholm underscores from UNEP Brussels

COVID-19: A new drug is tested, and other top science stories of the week

OECD tells Eurozone to prepare its banks for a tsunami coming from developing countries

Tax evasion and fraud threaten the European project

To all far-right partisans who exploit Charlie Hebdo atrocity: a peaceful reply given by a peaceful student

UN General Assembly President upholds value of multilateralism in speech closing annual debate

Australia wildfires: communities must stay vigilant, urges UN weather agency

The power of partnership: joining forces to fight financial crime

Climate change and health: an everyday solution

Russia: MEPs deplore military build-up, attack in Czechia and jailing of Navalny

The financial sector cripples Eurozone growth prospects

Trump’s trade wars: Aiming at long term gains for America

As children freeze to death in Syria, aid officials call for major cross-border delivery boost

3 steps to making multistakeholder partnerships a powerful force

Returning to free movement across borders is of utmost importance

Commission launches debate on responding to the impact of an ageing population

China joins list of nations banning the sale of old-style fossil-fuelled vehicles

“As German Chancellor I want to be able to cope with the merger of the real and digital economy”, Angela Merkel from Switzerland; the Sting reports live from World Economic Forum 2015 in Davos

Telecommunications and Internet: A Jungle with no principles?

Are we at risk of a financial crisis? Our new report takes a look

UN political chief calls for dialogue to ease tensions in Venezuela; Security Council divided over path to end crisis

COP21 Breaking News_09 December: The Draft Agreement Updated

An expert explains: How to turn industrial carbon emissions into building materials

Q&A on extraordinary remote participation procedure

COP22 addresses a strong global pledge to effectively implement the Paris Agreement

The ECB will do whatever it takes to set the Eurozone economy again in motion

ECB embarks on the risky trip to Eurozone banking universe

The US may be “open” to reviving TTIP, while the EU designs the future of trade with China

Businesses succeed internationally

Commission celebrates the 30th anniversary of the Jean Monnet Activities promoting European studies worldwide

Women vital for ‘new paradigm’ in Africa’s Sahel region, Security Council hears

Amazon fires: Health Effects, Near and Far

Journey of my life

Eurozone: Economic sentiment-business climate to collapse without support from exports

More Stings?

Speak your Mind Here

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s