New York governor Kathy Hochul (D) is asking state lawmakers for more time to reduce emissions. Potentially more important is how the state actually measures them.
The state's leaders, at loggerheads over climate policy and other issues, have already blown past a deadline to agree to a new budget. Hochul frustrated progressives by pushing for changes to the state's 2019 climate law, which not only mandates deep emissions reductions but also includes a bespoke system for tracking climate impacts that discourages natural gas and some biofuels.
New York requires a 40pc reduction in economy-wide greenhouse gas (GHG) emissions by 2030 from 1990 levels and an 85pc drop by 2050. But the state's unique emissions-accounting method effectively requires deeper cuts to emissions than targets suggest.
Environmentalists say this system will speed New York's transition to renewables and leave the state less exposed to future oil supply shocks. But it also threatens higher near-term energy costs in a state that burns more oil for home heating than any other, where natural gas is the largest source of electricity and where driving predominates outside public transit-connected New York City.
Hochul backed off prior efforts to change the GHG accounting rules. Now campaigning for re-election on a platform of making the high-cost state more affordable, she insists changes are necessary.
Methane pain
State law requires New York to track the warming of GHGs on a 20-year timeline, instead of the 100-year timeline used by nearly all other states. That difference means New York treats a tonne of methane, which packs a bigger punch than CO2 but dissipates in the atmosphere more quickly, as having around three times more climate impact than other states do.
Under typical emissions accounting, New York's emissions in 2023 were 24pc below 1990 levels. But according to the state's unique system, they only fell by 14pc over that period. The difference reflects the state's reliance on natural gas for heat and power.
New York's system then leaves fewer options to bridge that gap. While incentives in California have helped make renewable diesel more common there than its petroleum-based counterpart, New York treats many biofuels — even if made from waste — as akin to fossil fuels by factoring in tailpipe emissions but not some upstream benefits.
Renewable diesel brought into New York would not just count as only slightly better than oil, but it would also count the same whether made from recycled cooking grease or from crops, according to detailed estimates in an energy plan released by state officials last year. New York would consider more production emissions in-state, effectively treating renewable diesel made locally as worse for the climate than imports.
The reverse is true for renewable natural gas, which counts as producing negative emissions if made in-state — since turning rotting dairy manure into energy avoids methane emissions — but similar to fossil-fuel natural gas if made elsewhere.
While the California system has its critics, the New York energy plan says explicitly that the GHG accounting required by law "creates an incomplete picture" of biofuels' climate impacts.
But the system is by design reflecting the wishes of progressive lawmakers who helped pass these requirements into law before Hochul took office, as well as those of environmental justice groups that hold sway in the Democratic-controlled state. Advocates want to stop burning any fuels that worsen air quality and think states like California have overstated the climate benefits of natural gas and biofuels at the expense of efforts to electrify cars and homes.
Hochul, backed by business groups, disagrees. A recent memo prepared for her by a state energy agency estimated that polluters will have to pay far more for their emissions than they do in other states — as much as $180/tonne by 2030 — because of "differing accounting standards" and "inflexible" targets, and that fuel prices would spike.
Carbon market cop out
That memo gets at the core of the debate: rising energy costs are taking precedence in Hochul's policy calculus, putting the future of a carbon market in question.
A task force of policy advisors in 2022 recommended a carbon market as the best option to achieve state climate targets. The program, similar to systems in California and Washington, would require fuel suppliers, industrial facilities and others to buy a dwindling pool of carbon allowances from the state.
But the Hochul administration missed a 2024 legal deadline to have that plan in place and has been vague on when it will release even draft rules.
After environmental groups sued, a state court directed the Hochul administration to release carbon market regulations. Hochul has since been more direct about her concerns and called for punting the rollout of the market to 2030.
Environmentalists resent Hochul's argument that New York's targets are infeasible when her administration is slow-walking the rollout of a plan to achieve them. But they recognize the power governors wield in New York's mostly closed-door budget process. One potential compromise that has been discussed among advocates is implementing a carbon market with more typical emissions-accounting rules, while preserving the 20-year warming timeline for other state programs.
This could address cost concerns while containing the backlash from climate advocates. It could also leave the door open for linkage with other carbon markets, which would be exceedingly difficult without aligning rules across different programs. Without changes, biofuel supporters also fear that a state "clean transportation standard" that regulators are studying could cut out many of the fuels rewarded by California.
Lawmakers likewise have expressed resistance to sweeping changes. Senator Environmental Conservation Committee chair Pete Harckham (D), an influential voice on climate, has signaled some openness, however, to "modest adjustments".
"We're committed to working with the governor to find reasonable solutions here, but in my humble opinion, a complete rollback of the state's climate law is untenable," Harckham said last week.
