FROM: Ostroff Associates

DATE: September 29, 2022

RE: Climate Action Council Meeting

Co-Chairs
• Doreen Harris, President and CEO, New York State Energy Research and Development
Authority
• Basil Seggos, Commissioner, New York State Department of Environmental Conservation

State Agencies & Authorities

• Richard Ball, Commissioner, New York State Department of Agriculture and Markets
• Marie Therese Dominguez, Commissioner, New York State Department of Transportation
• Thomas Falcone, CEO, Long Island Power Authority
• Hope Knight, President and CEO Designate, Empire State Development
• Justin Driscoll, Interim President and Chief Executive Officer, New York Power Authority
• Roberta Reardon, Commissioner, New York State Department of Labor
• Rory Christian, Chair, New York State Public Service Commission
• Robert Rodriguez, Secretary of State, New York State Department of State
• RuthAnne Visnauskas, Commissioner and CEO, New York State Homes and Community
Renewal
• Mary T. Bassett, Commissioner, New York State Department of Health

Council Appointees
• Donna L. DeCarolis, President, National Fuel Gas Distribution Corporation
• Gavin Donohue, President and CEO, Independent Power Producers of New York
• Dennis Elsenbeck, Head of Energy and Sustainability, Phillips Lytle LLP
• Rose Harvey, Senior Fellow for Parks and Open Space, Regional Plan Association
• Bob Howarth, Professor, Ecology and Environmental Biology at Cornell
• Peter Iwanowicz, Executive Director, Environmental Advocates NY
• Anne Reynolds, Executive Director, Alliance for Clean Energy New York
• Raya Salter, Lead Policy Organizer, NY Renews
• Paul Shepson, Dean, School of Marine and Atmospheric Sciences at Stony Brook University
• Mario Cilento, President of the New York State AFL-CIO

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Doreen Harris – The presentation will discuss three modeling sensitivities run on the integration
analysis which could potentially impact the draft scenarios. This includes the recently passed
Inflation Reduction Act (IRA), and the potential benefits that the State may see from these tax
incentives. Also, modeling sensitives were run on higher costs associated with natural gas and fossil
fuel prices as well as a model to reflect increased cost pressures on clean energy technology due to
supply chain constraints.

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Peter Iwanowicz – The announcements from the State were positive and highlight the good work
that the State is doing to advance electric vehicle (EV) adoption. However, can anyone from the
State give an update on what is happening with EV chargers on the Thruway? As an EV driver, it is
extremely frustrating to see brand new Thruway rest stops being built and opened, but no EV
charging infrastructure. Maybe there are plans to add chargers, but the fact that that stations are
open and no charging infrastructure is available is a missed opportunity and will only hinder EV
adoption.
• Jared Snyder – There can be a follow up on this at a later meeting. No one from the Thruway
Authority is here and it wouldn’t be right to speculate on their progress and future plans.

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The link to this chart from the New York Times can be found here.

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Note that in the above chart, the incentives for alternative fuels are included in the red “other”
category.

Anne Reynolds – Does the second bullet mean that there will be an increased demand for solar vs.
wind with the IRA?
• Carl Mas – That bullet reflects that with the IRA, the model is showing that there will be an
increased demand for in-state wind compared to out-of-state wind imports without the IRA.
The initial modeling previously showed that without the IRA, the state would be importing
wind from other areas such as Canada. Since New York will have these incentives, it could
potentially drive an increase for more in-state wind development and create less reliance
on out-of-state areas which will not have the benefits of those tax incentives. That does put
more pressure on some of the siting and planning aspects of wind development, but from an
economic point of view, it should tip the scale toward more in-state development. Also, it
further shows that there could specifically be more offshore wind within the wind sector
itself.

Reynolds – It looks like the analysis did not factor-in any money for transmission, there was a small
amount in the IRA for transmission.
• Mas – The state may benefit from those incentives, but it will be a very small percentage of
the need. For example, the federal government has a new initiative to put $2.5 billion
toward public-private transmission development partnerships, but that funding will be
spread out over the whole country where there is a need of hundreds of billions of dollars.
Therefore, the modeling determined that if there is money it will be small compared to
some of the larger incentives presented above.

Donna DeCarolis – Is the Clean Fuel Production Credit included?

• Mas – That is included in the “other” category.

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Dennis Elsenbeck – While these are positive, the supply side has the lowest impact on greenhouse
gases (GHGs). As the state moves toward more electric buildings and transportation, the state does
not have the infrastructure in place to support that buildout. The Council needs to focus on
supporting distribution system upgrades in order to actually ensure there will be adequate
infrastructure to support electrification.
• Mas – The Scoping Plan chapter on electricity focuses on the needed infrastructure which
reflects distribution system upgrades.

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Rory Christian – Are these the forecasted prices as of today, or does the model forecast even higher
prices over the next few years?

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 • Mas – Two slides above which shows high fuel price sensitivity is displayed in annual
averaging. The model shows consistently high natural gas prices on an annual average, but
slightly below the prices shown this year. There are structural issues globally such as LNG
exports that will keep pricing high. This is based on Annual Energy Outlook’s (AEO’s)
forecasts.

Christian – Is there a way to show the chart with more instability and variation. For example,
periodic changes that are not leveled out over annual averages?
• Mas – Yes. The average would still be the same, but that would depict how citizens would be
impacted differently over time. This also leads to the topic of what a just transition looks
like. Some customers may be left in the fossil fuel system for a longer period of time and
exposed to these higher prices, so the Council will need to look at how protection can be
provided to these customers.

Raya Salter – The way that the IRA is structured may tend to support more rooftop solar and
geothermal which will benefit those with higher incomes. The Council needs to consider how these
benefits will leave low-income people behind and what should be done to make up for that gap.
• Mas – The IRA does have some provisions to help lower income communities. Part of the
modeling suggests that New York will be able to capitalize on this and drive benefits into
those communities.

Mario Cilento – Is there any information on any potential funding that can be provided to impacted
workers? For example, someone may have a good paying job now making $100,000 and use their
skills to transfer to a job making $70,000, but that is still a $30,000 loss. Is there any analysis on
how funds could be used to make up that difference for workers?
• Mas – Staff is not aware of any provisions in the IRA, but it is a complex bill and staff can
look into this.
• Harris – There are provisions that focus on the facilities that are being shutdown which
provide support for the communities impacted and the possible repurposing of those
facilities.

Elsenbeck – If demand for fuel and natural gas decreases over time, why doesn’t pricing decrease as
well?
• Mas – The AEO price models show that there will be persistent global use of fossil fuels in a
way that will drive demand up in the coming decades and keep prices high.

Elsenbeck – Part of the conversation needs to be about where the State is purchasing these clean
energy products, so that the State is not supporting countries where pollution remains high.

Reynolds – With regard to Raya’s earlier point, would the benefit of the tax credits for grid scale
renewables benefit everyone in the state, including disadvantaged communities (DACs) based on
the way the State does grid scale renewable development? It could be more building upgrades,
small-scale solar and transportation which may not be as equitably distributed unless New York
adjusts its programs.

Bob Howarth – The natural gas that comes into New York is entirely fracked shale gas and it is
expensive to produce. Some reports show that the break-even prices for producers put the price at
$3.5 to $4 per MMBtu. This is before issues with LNG exports and increased interest rates. The high-
end projection on the chart above may even be the low end.

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Gavin Donohue – Under this sensitivity, what happens if New York identifies zero-emissions
dispatchable technology that complies with the Climate Leadership and Community Protection Act
(CLCPA)? What happens with costs in that scenario? There is a fundamental disagreement with
how to deal with this issue. There needs to be more options on the table, not less.
• Mas – At the end of last year this was considered. When the model more narrowly defines a
zero-emissions technology, for example hydrogen fuel cells, then it does add costs to the
overall scenario.

Elsenbeck – Gavin’s point was also brought up by the New York State Independent System Operator
(NYISO).

DeCarolis – Will distribution system uncertainties be looked at next time? For example, looking at
portal maps and identifying areas where there will need to be upgrades.
• Mas – Staff did explore some uncertainty around distribution system costs. This is one of the
main areas that will need more work in the future. This will happen next year probably.
That process will identify scenarios where there are different peaks in demand, how will
that impact the needed distribution system upgrades. Right now, staff is able to look at
marginal costs of service, but these are averages over large service areas which have
significant internal variation.

Rick Shansky (LIPA) – Has the staff coordinated with the utilities to see more granular data or
assumptions within each service territory?
• Mas – Staff received input over the last 1.5 years from the utility consultation group.
However, this is an area that does need more research in order to identify the range of
uncertainty related to system cost variation.

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Rick Shansky (LIPA) – When speaking about grid reliability, it needs to be clear that there are two
paths to achieve this. One is through the NYISO for the bulk power system and another through the
distribution utilities for the local power system. They need to be looked at together. Also, when
coordinating electric and gas system planning, pipeline gas needs to remain available to power
plants to the extent that they are being relied on for generation.
• Jessica Waldorf – Maintaining reliability will include all the off-takers on the system and in
gas system planning there will be consideration for impacts on the electric system. Also,
some of the power generators are on the interstate pipeline system and this will be
considered in the planning process as well.

Iwanowicz – The Alternative Fuels Subgroup had a strong recommendation in their report that
capturing waste methane and using it on-site and for non-combustion purposes. In this
presentation, there was a lot of information about pilot projects and using the fuel in the gas
distribution system to decarbonize. Isn’t this an inconsistency?
• Waldorf – There was a discussion of prioritizing on-site use which is why the Group said
that any alternative fuel use in gas system planning would be subject to a number of
reviews before it would be considered. Members expressed interest in prioritizing on-site
use, but also concluded that any consideration of alternative fuels in the gas system would
be subject to a public process and independent review.

Bob Howarth - As a member of both groups, the discussions did lead to the prioritization of on-site
use for a number of reasons. Primarily, it is because the conversion to renewable natural gas is an
energy intensive process which makes it less efficient in terms of energy use and overall emissions.

Christian – The majority of concerns with using alternative fuels in the gas system were taken into
consideration by providing specific guardrails such as the lifecycle emissions of the alternative fuel.
This would be true for both on-site and off-site use.

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Iwanowicz – While people want to keep all options on the table, there are also limitations from the
CLCPA itself. The law clearly says that State entities must prioritize the reduction of emissions and
co-pollutants. Hypothetically, if someone wanted to construct a new building, how would using
fossil fuels or alternative fuels be in-line with the law when electrification is a viable option.
• Waldorf – One of the recommendations of the Group was to examine other statutory
requirements that may conflict with the CLCPA. With any discussion of customer choice and
what fuel they use in their building comes the conversation of other regulations that pertain
to the obligation to serve in the Public Service Law and Transportation and Corporation
Law. Therefore, there will be a need to examine these conflicting laws.

Iwanowicz – Has there been any discussion of alternative fuel availability? The integration analysis
stated that up to 8% of natural gas can be displaced by renewable natural gas (RNG). This seems to
be high according to Bob Howarth’s estimates.
• Waldorf – There was discussion about this and some disagreement. However, included in
the independent analysis would be a feasibility and availability study.

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Donohue – One problematic area is electric generators who also buy Regional Greenhouse Gas
Initiative (RGGI) credits. The words on the slide say that this “could provide credit to generators”
whereas it should say “should provide credit to generators”. Generators should not have to pay
twice for these programs. While this is a small change in terminology, it is extremely important.

Shepson – In both proposals, are the waste and agricultural sectors not covered under the
allowance cap? Is this because of the difficulty in knowing what the emissions are in each sector?
• (NYSERDA Staff) – That is the case for the tax. Those would be under the cap based on
estimates in the cap mechanism, but the sector wouldn’t be purchasing allowances.
However, they would be considered for the overall number of allowances determined
across the economy.

Rick Shansky (LIPA)- Regarding terminology, if the investment options are the same in both
proposals the only main difference is how it is enforced.

Reynolds – In addition to exploring these options, the Council needs to include a strong
recommendation in the Plan that there should be economy-wide pricing. It is worth doing and a
good insurance policy that the state makes progress on the Plan. Both proposals would work, the
cap-and-invest model would be better, but both have an opportunity to be designed in a way to
meet other goals. Both could be used to generate revenue to pay for the Plan and drive funding into
DACs, but ultimately the cap provides an enforceable limit on emissions. After the Plan is published,
the law says that the Department has a year to promulgate regulations to implement the whole
Plan. This a significant undertaking and there would many regulations that DEC would have to
develop in a very short period of time.

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Iwanowicz – Doesn’t the CLCPA already include a cap on emissions? There are already statutory
requirements that the State must reach. Can’t DEC just promulgate regulations to meet the
requirements in the law?
• Snyder – The law itself establishes what the cap is, but it doesn’t establish the mechanism
for achieving the cap. That is part of the work that the Council is doing. By looking at the
individual policy levers that can be used to reach those overarching goals. The regulations
do not provide the certainty that it will add up to the emissions limits.

Iwanowicz – Its important to note that the transportation sector can’t just create a clean fuel
standard (CFS) which doesn’t align with the other goals in the law. It still would need to reduce hot
spots, spend 40% of funding in DACs and ensure there are no other regressive impacts.
• Snyder – At the last meeting, Anne Reynolds had suggested that a proposal be put forward
to achieve those climate justice goals. The transportation group is rethinking that and will
come back to Council with some ideas.

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