New York Grid Looks to Carbon Pricing to Support Zero-Emission Target

The New York Independent System Operator (NYISO) is looking to carbon pricing as an option to reduce the otherwise “astounding” cost of bringing the state’s electricity system to zero emissions by 2040, though it says it won’t take action without a go-ahead from Governor Andrew Cuomo and state stakeholders.

Based on an outside consultant’s study, the system operator stated last week that “introducing carbon pricing into competitive wholesale power markets could provide billions of dollars in net economic benefits,” Utility Dive reports. The approach would “help New York’s electric sector reach zero emissions by 2040 up to US$850 million more cheaply than a business-as-usual case, through market efficiencies and investments in clean energy technologies.”

A carbon price could only be introduced into New York’s energy markets in mid-2021, the industry newsletter notes. But it’s emerging as a possible antidote to a cost figure for decarbonization “that was so high that it was left it out of the final analysis, for fear it would be a distraction”.

“If New York doesn’t put a price on carbon, it is missing out [on] an opportunity to have its markets really harnessed and pushing for the goal,” said study co-author Sue Tierney, a senior advisor at the Analysis Group. While Tierney acknowledged that it’s hard to calculate an exact number for those cost savings, “we observe that previous studies indicate that a carbon price will lead to billions of dollars of positive economic benefits,” the report said.A previous analysis by Potomac Economics concluded that consumers stood to see savings of $1.72 to $3.25 billion between 2022 and 2036. Tierney’s calculation suggested $280 to $850 million in savings between 2022 and 2040. But “this estimate is likely conservative, based on the unrealistically low assumption—given the decarbonization and electrification aspirations under (the state’s Climate Leadership and Community Protection Act)—of a business-as-usual outlook for electricity demand.”