Dive Brief:

• The earliest that New York ISO could implement a carbon pricing proposal is the second quarter of 2021, the grid operator said in a statement this week.
• The ISO also said it will consider steps to ensure resources eligible for renewable energy credits (RECs) are not compensated twice, following concerns about double-charging from a group of large customers.
• The ISO is considering a straw proposal that calls for subjecting all suppliers inside the market to carbon charges, while rules would be developed to ensure imports and exports compete fairly as well. 

Dive Insight:

With federal inaction on climate change, cities and states have increasingly become the drivers for reducing carbon emissions. One approach being considered in places like Washington state and New York is to put a price on carbon emissions.

New York's grid operator on Monday sought to clarify matters and quell any concerns regarding such a price, in part, by offering some certainty around timing. If New York State ultimately supports a carbon pricing proposal and it is approved by stakeholders, the ISO board and federal regulators, April 2021 is the earliest the plan could be implemented.

"This 'earliest possible' date is intended to provide certainty to energy trading markets that are currently pricing power prior to Q2 2021," the ISO said.

NYISO addressed other concerns.

To address the possibility that customers could wind up paying twice for the same clean energy attributes, the ISO proposed that wholesale market suppliers whose carbon dioxide emissions reductions are already captured by Renewable Energy Certificate (REC) contracts that predate a carbon pricing scheme. "would not be eligible to receive the carbon pricing portion of the wholesale market [locational based marginal price] as part of their payment from the NYISO for supplying energy."

A group of approximately 60 large industrial, commercial and institutional electric customers in New York had warned the grid operator about the potential issue with double payment. In addition to harming consumers financially, such double payments would further impair the competitiveness of the state’s wholesale electricity markets"  the group told the Public Service Commission.

While large energy consumers have raised some concerns about a carbon price, a 2017 Brattle report found a $40/ton carbon charge would have a "relatively small" impact on New York customer costs. 

New York's carbon reduction goals include a 40% reduction in greenhouse gas emissions by 2030, and 80% by 2050, compared to 1990 levels. The state's Department of Environmental Conservation has also proposed limiting existing power plants emissions rates, to help phase out coal-fired plants entirely by 2020.