Dive Brief:
- The New York ISO's efforts to introduce a carbon price into wholesale energy markets is in a "holding pattern," according to the grid operator's president and CEO Rich Dewey.
- The ISO has several studies and assessments planned for 2020 in an effort to inform the policymaking process, including a Congestion Assessment and Resource Integration Study (CARIS) which will include the impacts of moving to 70% renewable energy by 2030.
- Dewey said a final decision to implement a price on carbon could be made through New York's new Climate Action Council, which was authorized by the Climate Leadership and Community Protection Act (CLCPA) passed by lawmakers in June 2019.
Dive Insight:
New York has one of the most aggressive carbon reduction goals in the nation, and ISO officials say carbon pricing is one path to achieve them. But it is unclear how a final decision on implementing the proposal will be made.
The ISO continues to "advocate and promote the carbon pricing proposal we laid out and developed in conjunction with New York state and stakeholders, to incorporate the social cost of carbon into energy markets," Dewey told reporters in a conference call following a "State of the Grid" address to stakeholders.
A price on carbon would be "the most effective and efficient way to achieve the state's goals," Dewey said.
The CLCPA calls for the state's electric sector to reach zero emissions by 2040 and for the state to be carbon neutral by 2050. ISO officials previously estimated the earliest a carbon price could be implemented would be mid-2021, in part due to the approval process and technical challenges.
The new climate law also raises New York's Clean Energy Standard to 70% renewable electricity by 2030.
CLCPA established the state's Climate Action Council, a 22-member entity that will examine how the law's goals can be achieved. The state will likely need to make a firm go/no-go decision on a carbon price in order to get approval from the Federal Energy Regulatory Commission, Dewey said, and the newly-formed council is one body where the issue could be decided.
"I think we're in a holding pattern," Dewey told reporters. "In order to be successful at FERC, we need to know New York state is on board. ... I don't think there is a very clear avenue by which this decision will be formalized."
There is no statutory timeframe for implementing a carbon price, Dewey said, but the state's goals are looming closer, "and carbon pricing is a very valuable tool. The sooner we are able to move forward, we can be that much closer to the goal."
A spokesperson for the New York Department of Public Service (DPS) said the state is watching the ISO's work, and changes to the carbon pricing plan are possible.
"We are closely following the NYISO process to ensure that potential outcomes benefit and meet the energy needs of all New Yorkers and align with our overall strategy to reduce emissions cost-effectively," DPS spokesperson James Denn said in an email. "The NYISO proposal is undergoing stakeholder review that may lead to further modifications."
2020 will be a year for more analysis, according to Dewey.
"We've identified a series of studies necessary and valuable for policy makers, state government and stakeholders ... to help plan for what this innovative change to power grid looks like," he said.
Along with the CARIS study, the ISO is executing a Reliability Needs Assessment which will include analysis of planned facility additions, modifications and retirements through 2030. There is also a climate change study, which Dewey said would consider load growth resulting from projected electrification of the transportation and heating sectors.
