New York’s Green New Deal: Good and Bad for Business?
New York Governor Andrew Cuomo recently announced a “Green New Deal” for New York State – an ambitious set of initiatives to put “New York State on a path to economy-wide carbon neutrality” by 2040. While much has been written about several of the initiatives proposed in the Green New Deal, far less has been written about their potential impacts – good and bad – on businesses in the State. New York has a diverse economy, so there are few “black and white” initiatives in the Green New Deal; some may be positive for certain businesses and not helpful for others. There are, however, some initiatives that may have a broader impact than others. Additionally, some of the proposed initiatives, based on past experience, may be more “real” or attainable than others.
A cornerstone component of the Green New Deal is an aspirational goal to statutorily mandate that 100% of New York’s power be carbon-free by 2040. According to the Governor, this is “the most aggressive goal in the United States and five years ahead of a target recently adopted by California.” The path toward attaining this mandate has several key components, including massive increases and investments in offshore wind, solar and energy storage.
For businesses in the renewable energy sector, this would be good news. Continued (and expanding) economic support/subsidies for renewable resources suggest a robust market for years to come, even if true carbon neutrality is not attainable.
The potential flip side is that a build-out at this scale will require billions of dollars over the coming decades. Where might these funds come from, and who might be the most impacted? Based on past practices and existing programs, there will likely be several funding sources. Requiring utilities and others to purchase energy from renewable sources (often at above-market cost) is one way to fund such a program. Businesses that require large quantities of energy could be impacted by higher energy costs that could result from mandated purchases of renewable energy.
Another source of funding could be expanding State incentives, which are often administered in New York by the New York State Energy Research and Development Authority (NYSERDA). Today, most purchasers of electric power pay a fee on their electric bill, tied to the amount of energy consumed, in order to fund NYSERDA incentive programs for wind, solar and energy storage. An increase in this fee to support the goals set out in the Green New Deal might modestly impact a residential customer by $5-$10 per month depending upon how much energy they consume. However, the economic impact to some commercial and industrial customers, who consume far more energy than a residential customer, could be very substantial, and they could see their cost of energy increase by thousands of dollars each month.
The Green New Deal also seeks to engage New York more directly in other initiatives in the drive to carbon neutrality. Among the initiatives is a proposed statutory Climate Action Council which would look to, among other things, improve the energy efficiency of buildings (existing and new) and look for opportunities to reduce the significant carbon footprint of the transportation sector. As with other initiatives, one of the key questions will be who pays and who gets paid? Building owners and tenants may pay more to cover the increased costs of improving building energy efficiency, while those who provide energyefficient building materials and systems may see a very active market for their goods and services. Similarly, increased pressure to reduce carbon emissions from the transportation sector could lead to higher transportation costs for businesses in New York.
As New York State moves through the budget process and the remainder of the 2019 legislative session, it will be interesting to see which components of the Green New Deal become law, and which do not. Clearly, this is a long-term process which will have significant impacts across New York’s economy and beyond.