ALBANY – A bill in the state Senate that would impose a carbon tax to help the state meet its green energy goals could cost New York motorists an extra 55 cents per gallon at the pump, according to testimony Tuesday on the proposed measure.
“The idea of an industry wide carbon fee is still an open issue,” said Ken Pokalsky, vice president at the state Business Council, who said the gas hike would generate an estimated $2.3 billion in revenue but would come at a cost for consumers and industry.
Lawmakers, including several Democrats from suburban Long Island, said a 55-cent-per-gallon gasoline price hike would be a hard sell for constituents.
“What do we say to those people who are just trying to get by?” asked Long Island Democrat Todd Kaminsky, who chairs the Senate environmental committee. “That would seem to be a very scary number,” he later added.
Others, though, including a number of climate activists, said they believe the increase could be offset by energy efficiency in other areas and that the exigencies of climate change justify the increase.
“It’s not just about the short term cost impacts but the long term impacts,” said Annel Hernandez, of the New York City Environmental Justice Alliance. Higher gas prices could spur more electric vehicle sales and mass transit which, she said, would reduce greenhouses gases.
The back-and-forth over a potential gas hike was emblematic of the hard choices that decision-makers and New Yorkers will need to make in coming years if the state is to meet the greenhouse gas reduction goals set out in the landmark 2019 bill, the Climate Leadership and Community Protection Act (CLCPA).
That law calls for cutting carbon, or greenhouse gas emissions by 85% from 1990 levels by 2050. It also calls for the state to have 70 percent renewable electricity by 2030 and zero emission electricity by 2040.
But it doesn’t explain how to pay for that goal, which most agree will require large upfront investments to shift from fossil fuels such as diesel, gasoline and natural gas to renewables like wind and solar.
To help meet the goal, Brooklyn Democratic Sen. Kevin S. Parker, who chairs the energy and telecommunications committee, has proposed a wide ranging carbon tax on manufacturers as well as providers of fossil fuels such as motor oil. The Climate and Community Investment Act, or CCIA, would in 2022 levy a charge of $55 per ton of fossil fuel emissions from all sources, which would include factories, schools, and on the use of gasoline.
Pokalsky said the 55-cent-per-gallon was extrapolated from the amount of motor fuel consumed in the state, with the tax passed along to consumers. He added that he believes the actual cost could be higher.
No one during Tuesday’s hearing disputed the potential for higher prices at the pump but they noted that the CCIA also calls for a rebate that could help low and moderate-income consumers offset the cost. The rebate, along with collection of the carbon tax, would be administered by a newly created special authority.
“We recognize there is going to be funding necessary to reach the CLCPA goals,” Pokalsky added, but noted that the tax would apply only in New York State, which could also make it less competitive to business as well as more expensive to drive in.
John Bartow, executive director of Empire State Forest Products Association, added that it would cost his industry, which includes paper mills, an additional $1 billion.
Others, though, said the carbon tax would spur more renewable energy solutions such as cleaner electric vehicles.
“The transition to electric vehicles is going to enable new Yorkers to buy in to cheaper energy,” said Robert Pollin, an economics professor at the University of Massachusetts Amherst.
Still, lawmakers were worried about the impact at the pump, saying that relatively few of their constituents were able to afford electric vehicles at this time.
Part of the gas tax discussion revealed the perennial split in New York politics between New York City and suburban and upstate voters. Many city residents don’t own cars and don’t buy gasoline, while suburbanites and upstaters view their cars as a necessity.
Either way, all of those who spoke on Tuesday agreed that the state will need to find a way to fund the shift to green energy.
The state’s Independent System Operator, or NYISO, is looking at a wholesale carbon fee for power generation, which could be offset with credits to consumers for the lower emissions. And the state Department of Environmental Conservation can set emission standards or limits which could also push industries toward greener alternatives.
Anne Reynolds, executive director of the Alliance for Clean Energy, a green energy trade group, said she hopes the state can work out an overall policy rather than a bureaucratic patchwork. “Simple is better,” she said.
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