By Michael Kuser

ALBANY, N.Y. — The U.S. is moving toward a low-carbon economy, and it can also achieve significant carbon reductions at an acceptable cost while the power industry addresses day-to-day reliability issues.

So said most economists, consultants and environmental advocates Wednesday sitting on a panel to discuss New York’s “Green New Deal” and decarbonization of the electric sector at the 33rd annual Spring Conference of the Independent Power Producers of New York (IPPNY).

New York’s Green New Deal refers to Gov. Andrew Cuomo’s January proposal to require that the state’s electricity generation be 100% carbon-free by 2040, and to increase the state’s Clean Energy Standard mandate from 50% to 70% by 2030. (See New York Boosts Zero-carbon, Renewable Goals.)

“We can make a difference; we can get to 100% carbon neutral New York by 2040. It’s necessary, it’s inevitable and it’s urgent,” said Lisa Dix, senior New York campaign manager for the Sierra Club.

Dix said the state is down to 1 million MWh of power produced by coal annually (from about 20 million MWh 10 years ago) and noted new CO2 emission regulations — announced the following day by Cuomo — that will phase out coal generation by next year.

“We have the bones and structure of a New York transition policy. That is a glide path for communities and workers in transition away from coal,” Dix said.

Natural gas is also in decline, she said, citing Sierra Club tracking of proposed new natural gas-fired plants since 2017.

“There are so far since that time three gas plants — new gas plants, combined cycle plants — that have been terminated,” Dix said, saying there’s approximately 1.8 GW in planning.

She noted “huge opposition here in New York” to new gas infrastructure and called for phasing out existing gas-fired power plants. It’s “not like we’re going to phase out gas tomorrow, for I think the coal story tells a similar situation in which we need to think about how to phase gas out between now and 2030.”

Arne Olson, senior partner with consultancy Energy+Environmental Economics (E3), said “the day-to-day, hour-to-hour and minute-to-minute reliability issues can be addressed with the help of making renewables dispatchable and adding technologies like energy storage. We don’t think that will be a barrier to achieving deep penetration of variable renewable energy resources.”

Olson said that rather than the slogan “it takes a village,” a more suitable phrase describing the value of flexible dispatch is “it takes a portfolio.”

Some form of firm capacity will be needed to ensure reliable electric service on a year-round basis, Olson said, but achieving that last 10% of carbon reduction is tough: “You really have to be careful what that cost curve looks like.”

At What Cost?

In 2013, Olson drafted the landmark report “Investigating a Higher Renewables Portfolio Standard for California,” written for the five largest utilities in the state to outline the challenges in achieving a 50% renewable grid by 2030.

Olson said another E3 study showed that an 80% reduction of carbon emissions from 1990 levels was achievable in the Pacific Northwest at an incremental annual cost of $1 billion per year by 2050, translating into about a 6% increase in average electricity rates across the region.

“To me this is an acceptable increase in electric rates to achieve the goal of reducing carbon emissions and helping us solve this global problem,” Olson said.

Chuck DeVore, vice president of national initiatives at the conservative Texas Public Policy Foundation, said that opinion polls show people are concerned about climate change, “but when you start assigning a cost to it that they’re willing to pay, the concern very rapidly evaporates.”

“Policies that end up destroying the value of existing capital are going to be very counterproductive in the long run and will be politically unsustainable,” DeVore said.

Howard Fromer, director of market policy for PSEG Power New York and a former IPPNY chairman, asked the panel to opine on NYISO’s effort to price the social cost of carbon into electricity prices.

“There are myriad practical difficulties in implementing a carbon price in a sub-geography, in a single state that operates in a larger national economy and in a larger global economy, within a single electrical system that operates with the context of a multistate interconnection,” Olson said.

DeVore said the social cost of carbon was a “malleable number,” and that U.N. studies suggest that gasoline would have to be priced at about $50/gallon in a decade to prevent another 1.5-degree Celsius rise in global temperature by 2100.

Fromer said that after two years of New York working on carbon pricing, “I think we’ve solved the leakage issue in terms of not allowing external resources to capture the benefit of coming to New York with less expensive, but higher-emitting resources.”

“I’m kind of shocked to hear you say you believe you’ve solved the leakage problem when the U.S. Census Bureau says New York has been losing a net of tens of thousands of people every year, with Texas being one of the states they’re moving to,” DeVore said.

“When you look at Gov. Cuomo himself talking about a $2.3 billion deficit as the result of high-end wage earners leaving the state for greener pastures, you can’t keep doing that and hold on to your share of the GDP of the U.S.,” Devore said.

New York has the highest electric rates in the continental U.S. outside of California and New England, Devore said, and is now ranked fourth behind Florida in terms of population — and will likely be losing members of Congress in the upcoming census in 2020.