July 12, 2016
New York’s Proposed Clean Energy Standard is a Win-Win for Green Jobs and Climate
Statement by Environmental Progress's Cesar Penafiel & Michael Shellenberger
Due to state and federal laws that discriminate against our largest source of clean energy, New York is at risk of going backwards on climate change. We thus applaud the proposal by the New York State’s Department of Public Service (NYSDPS) for a Clean Energy Standard (CES) that includes a Zero-Emissions Credit (ZEC) for nuclear power plants.
Thanks to nuclear, per-capita greenhouse emissions from New York’s power sector are just one fourth of the U. S. average. Nuclear produced 32 percent of the state’s total electricity generation and 57 percent of its zero-emissions generation last year.
If New York loses its nuclear power plants they will be replaced by fossil fuels, and greenhouse emissions from the state’s power sector would skyrocket roughly 50 percent.
The proposed Clean Energy Standard’s Zero-Emissions Credits are a low-cost way to protect clean energy. ZECs would have a price cap of $17.48 per megawatt-hour (MWh), rising to $29.15 per MWh in 2029, when the ZEC provision expires.
Those costs compare very favorably with renewable energy subsidies. Recent procurements by the New York State Energy Research and Development Authority have given renewable projects state subsidies averaging $22 per MWh for 20 years, on top of federal subsidies like the $23 per MWh Production Tax Credit.
Nuclear subsidies will likely be lower than the ZEC caps because when plant revenues are projected to exceed a baseline of $39 per MWh the ZEC subsidy is reduced by the amount of the excess.
These constraints limit the impact on rate-payers. At the initial ZEC maximum of $17.48 per MWh, the subsidy for upstate plants would raise electricity rates by about 0.32 cents per kilowatt-hour state-wide, an increase of just 1.8 percent for residential rate-payers and 5.4 percent for large industrial customers.
An increase of that size added to current wholesale rates would still leave them lower than they have been for all but two of the last ten years.
In addition to the avoided social cost of carbon—at $23 per MWh, higher than the ZEC subsidy cap — the CES offers significant economic benefits.
Losing nuclear capacity would likely drive up electricity prices by reducing supply. As such, the price benefit of keeping plants would likely compensate for the cost of the subsidy.
And the benefits of preserving thousands of green jobs and tax revenues are very substantial. NYSDPS estimates the economic benefits of the ZEC subsidy are in total about four times larger than the maximum cost.
The closure of New York’s nuclear plants would undo all the progress the state has made on climate, and would harm New York’s economy.
In recognizing the value of zero-emissions power, the proposed CES and ZEC will ensure New York retains its leadership on climate change and clean energy.