Flanked by former veep and climate-crusader Al Gore, Gov. Andrew Cuomo last week signed a wide-ranging “climate-action” bill. He also announced that New Yorkers would subsidize construction of more than 200 wind turbines off New York City and Long Island – one of the biggest efforts of its kind in the United States – all in the name of reducing the state’s carbon emissions to “net zero” in about 30 years.
Amid what he described as the “chaos of political pandering and hyperbole” surrounding the issue of climate change, Cuomo portrayed his plan as grounded in “facts, data and evidence.”
Speaking of pandering and hyperbole: Offshore wind happens to be the single most expensive form of carbon-free electricity generation. And Cuomo has joined the growing ranks of American pols who fetishize it without regard to economic facts, data or evidence. Only, he’s shown great solicitude for labor unions.
Besides being more expensive, offshore wind requires more backup than downstate New York’s existing energy mix, which comes mainly from nuclear and fossil fuel plants, since a wind turbine can’t be counted on to be operating at a particular time.
That means rate-payers would also be tapped to either fund the development of considerable amounts of energy storage capacity – or remain more dependent than ever on the fossil fuel plants Cuomo wants to shutter.
Experience in New York and other states suggests the subsidies Cuomo has promised to fund all this will be considerable.
Let’s assume New York paid the same subsidy as Maryland officials plan for their offshore-wind project. That would mean guaranteeing a payment of $131.93 per megawatt-hour. Based on last year’s average wholesale costs of electricity in New York City ($41.16) and Long Island ($45.05), that means the projects will need, and get, an annual subsidy of about $528 million.
But there’s reason to believe the subsidy will have to be considerably higher: Cuomo also announced the projects “will have a union project labor agreement before they commence.”
Translation: The Empire State will force contractors to hire union construction workers, who make up a shrinking minority of the state’s construction workforce, and to comply with union contracts. This will significantly – and needlessly – increase costs. It also undermines the governor’s claim that “the environment and climate change are the most critically important policy priorities we face.”
The state government will generate the required cash (as opposed to electricity) by forcing utilities and large electric customers to pay into a credit system.
More than half of the needed funds will come from rate-payers north of New York City, including economically struggling upstate areas. Conveniently enough, Cuomo’s energy regulators have ordered electric utilities not to itemize these sorts of costs on rate-payer bills.
Cuomo’s offshore wind push – and his related efforts to block added natural gas pipeline capacity and upstate gas production via fracking – comes when the state has been failing to hit its own renewable energy targets. After almost 15 years of subsidies, New York’s electric grid managed to deliver less energy from renewable sources in 2018 than it did the year before.
Defying logic, the Cuomo administration in 2016 deliberately excluded hydroelectric power from competing for the newest batch of renewable subsidies, ostensibly because underground methane is released from areas flooded behind new dams.
Meanwhile, neighboring Massachusetts is using Canadian hydroelectric power to hit its own renewable targets at a considerably smaller cost. Even Mayor Bill de Blasio has embraced a plan to run a transmission line down the Hudson River corridor, providing New York City with 1,000 megawatts of carbon-free electricity from dams in Quebec.
To be sure, a super-long extension cord from Canada is less exciting than 3-D videos of magnificent offshore wind turbines (just like the ones in Scandinavia!). All the same, it would make more sense for the state to immediately let hydroelectric generators qualify for subsidies, to look at ways to facilitate more transmission from renewables in Canada and upstate and to roll back portions of the climate law that dictate the means as well as the ends.
New York’s pursuit of a net-zero carbon emissions goal on an impossibly ambitious schedule will be massively expensive and economically disruptive. In classic New York fashion – including something extra for politically wired construction unions – Cuomo seems bent on making the whole thing cost even more than it needs to.
Ken Girardin is an analyst at the Empire Center for Public Policy. Adapted from the Empire Center’s NY Torch blog. Twitter: @PolicyEngineer
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