Editor's Note: This edition of New York Energy is published weekdays at 10 a.m. POLITICO Pro New York subscribers hold exclusive early access to the newsletter each morning at 6 a.m. To learn more about POLITICO Pro New York's comprehensive policy intelligence coverage, policy tools and services, click here.
— Under a regional cap-and-trade plan that a dozen states still are developing, drivers would pay more at the pump through higher prices for gas and diesel. New York’s Department of Environmental Conservation holds a public meeting on the proposal at 6 p.m. on Long Island, Suffolk County Water Authority, 260 Motor Parkway, Hauppauge.
— Hoosick Falls residents hear from the DEC about options for a new water source and DOH on results from the latest round of blood testing, at 6 p.m. at the Hoosick Falls Central School auditorium.
— Exxon Mobil went to court to face charges that the company lied to shareholders and to the public about the costs and consequences of climate change.
GOOD WEDNESDAY MORNING: Let us know if you have tips, story ideas or life advice. We're always here at firstname.lastname@example.org and email@example.com. And if you like this letter, please tell a friend and/or loved one they can sign up.
STATES MULL TRANSPORTATION FUELS CAP-AND-TRADE PLAN — POLITICO’s Marie J. French: Governors from several northeastern and mid-Atlantic states may have found a way to reduce pollution from cars and trucks and buck the Trump administration, which is trying to weaken auto emissions standards and gut efforts to curb climate change. Under a regional cap-and-trade plan that a dozen states still are developing, drivers would pay more at the pump through higher prices for gas and diesel. The revenue would be invested in mass transit, electric vehicle charging and other transportation infrastructure. Republican and Democratic governors and state lawmakers will have to decide whether to back the plan to address the largest source of carbon emissions — and pass on the costs to consumers in what opponents of the proposal are already calling a gas tax. The coalition of a dozen states and the District of Columbia is hammering out a draft agreement to cap carbon emissions from gasoline and diesel, charging for the emissions and gradually lowering the limit over roughly a decade. The program is modeled on the Regional Greenhouse Gas Initiative, which has reduced emissions in the power sector for several of the states mulling the similar program for vehicles. The states engaged in the plan, called the Transportation and Climate Initiative effort, are Connecticut, Delaware, Maryland, Massachusetts, New Jersey, Pennsylvania, Rhode Island, Vermont, Virginia, New York, Maine and New Hampshire.
… As hopes for federal action on climate change remain dim, state officials see the regional approach as a way to have a significant impact in reducing emissions from the transportation sector. “In the face of continued inaction and all out climate denial from the Trump Administration, regional, cooperative efforts… are critically important to reduce the pollution that causes climate change and build a robust clean energy economy,” said New York Department of Environmental Conservation Commissioner Basil Seggos in a statement, citing the regional transportation effort, RGGI and the U.S. Climate Alliance. Support for the idea is not universal. In Maine, a nonprofit group linked to former Republican Gov. Paul LePage issued an alert about the proposal, warning it would raise gas and diesel prices.
CARBON PRICING CIRCLES: Electric market participants continued to talk in circles about a proposal by the New York Independent System Operator to price carbon in the wholesale market on Tuesday. Little clarity about the fate of the plan has been achieved over more than a year of discussions, despite analyses by three consultants, as the state policy landscape has continued to shift and the Cuomo administration stays mum on whether it will support the effort. Consumer groups also appear unpersuaded about the benefits over the potential costs of carbon pricing and the suite of other state policies likely needed to achieve the ambitious goals in the state’s new climate law. “We like markets, we like market efficiencies and all the rest of it but the concern we have is we’re going to pay for the price of carbon and the price of the [Renewable Portfolio Standard] and the former is not going to reduce the cost of the latter,” said Aaron Breidenbaugh with Consumer Power Advocates, which represents large hospitals and universities in New York City, during a NYISO committee meeting at the Hilton Garden Inn in Troy. “The studies we’ve seen so far… have suggested minimal benefits.” Marc Montalvo, representing the New York Department of State's Utility Intervention Unit, raised concerns about unintended consequences of combining
… Uncertainty in the energy markets over the state’s support for carbon pricing is having real impacts and has lowered forward prices over the last eight months, said Jordan Grimes with Morgan Stanley. Renewable energy credit “prices should — I don’t want to say increase — but should be higher now because of that uncertainty in the forward market,” he said. With more certainty “the psychology of the market itself would drive down market prices.”
… The Analysis Group’s Sue Tierney, the latest consultant brought in by the NYISO to analyze the carbon pricing proposal, argued that not having a carbon price in the market would make New York’s ambitious electric sector goals of 70 percent renewable by 2030 and 100 percent carbon free by 2040 much harder to achieve. “Given the law has been passed, then to me it would be third or fourth best solution to not include a carbon price,” Tierney told market participants. She continued to refuse to share the group’s estimate of the cost of achieving the Climate Leadership and Community Protection Act without carbon pricing, because she doesn’t want to be the first to put out a price tag.
… The benefits of carbon pricing discussed by market participants at the meeting included the impact on encouraging more transmission of renewable power from upstate to downstate and the locational signal of carbon pricing in the market versus the state subsidies that ignore where renewables are sited. “The way I see it, there is a no harm way of doing this to see if the market is going to give the state a leg up in getting this done,” said Doreen Saia, chair of Greenberg Traurig’s Albany energy and natural resources practice whose clients include Entergy.
… The next steps for the NYISO process depend largely on the Cuomo administration. NYISO’s Rana Mukerji, the senior vice president for market structure, said the grid operator had little interest in more study. “Our appetite for further study is not huge,” he said. “We have to engage with the state and with you all and your voices to see what’s best for New York.” It would take 18 months from a Business Issues Committee vote for NYISO to develop the software necessary to implement carbon pricing, he said. — Marie J. French
NEW YORK TAKES EXXON TO COURT — New York Times’ John Schwartz: "After four years of legal sparring and finger-pointing, oil-industry giant Exxon Mobil went to court on Tuesday to face charges that the company lied to shareholders and to the public about the costs and consequences of climate change. The case turns on the claim that Exxon kept a secret set of financial books that seriously underestimated the costs of potential climate change regulation while claiming publicly that it was taking such factors into account. … The case is only the second climate change lawsuit to reach trial in the United States, but it could be a bellwether for the long line of other suits awaiting trial that are intended to hold fossil fuel companies responsible for the costs of climate change."
— The state’s highest court has upheld the DEC’s plan to build a road near the Hudson River in the Adirondacks that will eventually be part of a new snowmobile route in the vast forest preserve.
— The founders of Revolution Rail, which offers a trip through forests on rail bikes, hope that business in the Adirondacks can continue even as local officials push to abandon the rail line the company uses.
— The forest surrounding Albany’s Alcove Reservoir will now generate cash, not through timber sales or real estate development, but as carbon credits for simply remaining undisturbed.
— The CEO of Williams Co. says the Northeast Supply Enhancement would help Cuomo achieve his environmental goals. (Environmentalists disagree.)
— State lawmakers recently introduced a bill that would bar the release of 25 or more balloons into the sky over a 24-hour period, saying the balloons are a blight on the environment.
— The EPA removed a site in Ellenville from the Superfund list.
— Clover naturally adds nitrogen — the active ingredient in lawn fertilizers — to soil.
— A DEP survey shows the latest storm to hit the east coast took major chunks out of eight Jersey Shore beaches as 10-foot high high waves eroded parts of the state’s shoreline.