ALBANY — A statewide wholesale carbon tax would initially cost consumers a few dollars more per month but it should lower prices over the long term, according to a report conducted for the organization that runs New York’s energy grid.

Carbon pricing, as it’s called, would enable New York to better meet the clean energy goals set out by the state’s new Climate Leadership and Community Protection Act signed last summer to reduce greenhouse gas emissions, say supporters.

By putting a price on greenhouse gas carbon dioxide emissions from power plants, there would be a built-in motivation for generators to use more renewables and/or cleaner fossil fuel energy sources.

That’s especially true given the ambitious goals of the CLCPA which calls for carbon-free power in New York by 2040.

“You can’t really leave any tools in the toolbox if we are going to achieve these goals,” said Rich Dewey, president and CEO, New York Independent System Operator, which commissioned the study on the possibility of instituting carbon pricing. Dewey and one of the study’s co-authors, Sue Tierney of the Analysis Group, discussed the report in a phone conference Thursday with the study’s release.

The New York Independent System Operator, or NYSIO, is the non-profit organization that coordinates New York’s electric grid. They manage the complex set of power lines and run ongoing auctions for electricity from the universe of generators that supply New York state.

Under the carbon tax plan, power plant operators would pay a fee based on the amount of carbon generated with their electricity. That means that operators with dirtier oil plants or older gas plants would pay a higher fee, which would reduce their profitability. Newer, more efficient gas plants, nuclear plants, or renewable plants including hydropower, wind, and solar, would pay little or nothing, meaning they could enjoy higher profits.

The plan was welcomed by those in the power-generating business since they, like Dewey, see it as a way to create an incentive for innovation in efficiency and clean energy.

“New York has 20 years to decarbonize the electric sector. That will require a herculean effort on a scale we have never seen, and the state must embrace every innovative solution available,” said Gavin Donohue, president and CEO of the Independent Power Producers of NY, a trade group of power plant operators.

“What we know about carbon pricing is clear: it achieves greenhouse gas emissions reductions faster, cheaper, and with greater benefits for consumers. New York should move to implement carbon pricing today,” he added.

Dewey and Tierney didn’t say how much a carbon price would add to consumer bills. It could vary by location and they said it should be compared to the cost of doing nothing, which would supposedly worsen climate change problems and associated costs.

But over a period of years, both said there would be vast savings, with cleaner air and the resultant drop in societal costs (such as health improvements).

And they pointed to earlier reports in the Times Union that suggested carbon pricing could add about $20 annually to the average electric bill by 2022, rising to $25.75 by 2025.

But as newer technologies come on board and emissions fall, bills could drop by $13.70 annually by 2030.

Additionally, the study indicated that overall savings, including those pertaining to social costs, could exceed $3 billion by 2036.

A carbon price could create winners and losers.

The losers would be those with the oldest, or dirtiest power plants who would pay the most.

The winners would be clean renewable energy producers including the quasi-government New York Power Authority, which operates a series of large hydroelectric plants mostly in the northern and western part of the state. Builders of wind and solar plants would also benefit through their clean carbon-free energy, as would operators of nuclear power plants, which are also emissions free.

Tierney added that the carbon price could prompt nuclear plant owners to keep their aging facilities going longer since they would be more competitive. The large amount of power generated there is important, she added, since the CLCPA also calls for more electric vehicles, which means there would be greater need for that power.

A carbon pricing plan won’t take effect immediately. Dewey said it still needs approval from stakeholders including the state government. And even if that were to happen tomorrow, setting up a price system would take an estimated 18 months.

Jim Eckstrom is executive editor of the Olean Times Herald and Bradford Publishing Co. His email is jeckstrom@oleantimesherald.com.)

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