Last minute clause in city emissions bill sparks hydropower debate
By Danielle Muoio
05/09/2019 05:01 AM EDT
A City Council bill aimed at slashing emissions 40 percent by 2030 has sparked a fight over Canadian hydropower and whether it should play a role in New York’s clean energy landscape.
The controversy involves an amendment that was added to the bill just days before it went up for a final vote in front of City Council.
The bill — which mandates building owners cut their emissions output or face fines — contains a provision that allows owners to offset their emission requirements by purchasing Renewable Energy Credits, or RECs, from a renewable energy source that is either located in or deliverable to New York City. But that provision takes the unusual step of allowing electricity generated from hydropower sources that don’t currently trade in the New York market to also qualify for the credits.
That has raised the hackles of both industry and environmental advocates.
The amendment provides a direct boost to the Champlain Hudson Power Express, a transmission line that would deliver hydropower from Quebec into New York City. Mayor Bill de Blasio has said he supports building the line to power city government operations. By allowing the $3 billion project to qualify for RECs, the City Council bill creates another revenue stream for the long-stalled hydropower project to move forward, after prior attempts to do so on the state level failed.
Power generators say the move could depress wholesale market prices while limiting the demand to develop traditional renewables like wind and solar. Some environmental advocates are also raising concerns with the provision, saying the city should be channeling its resources toward building a clean energy economy within state lines.
“It feels like a lazy way to reach a ‘renewable standard’ as opposed to what we’ve been pushing government to do — to really significantly expand solar, significantly expand wind,” said Eddie Bautista, executive director of the NYC Environmental Justice Alliance. “It feels like a slippery slope.”
Under the Clean Energy Standard, New York must derive 50 percent of its energy from renewable resources by 2030. To accomplish that, utilities are required to purchase a certain amount of renewable credits — proving that they are buying energy generated from qualifying new clean resources.
Hydro-Québec, the public utility that manages transmission in Quebec, petitioned the Public Service Commission several years ago to allow large-scale and incremental new hydropower to get the same subsidies as new solar or wind projects. TDI, the developer of the line, also filed a similar petition. Both were ultimately rejected.
A trade group representing in-state power generators — long-standing opponents of the hydropower line — have raised concerns over the bill conflicting with state-level regulations on how to treat new, large-scale hydropower projects. The group said the city’s approach could hurt efforts to comply with the state mandate and decrease demand for wind and solar development.
“Not only is the [city bill] contrary to the [Renewable Energy Standard] policy, it will impair the achievement of the RES goals because the direct delivery of energy from Canadian large-scale impoundment hydro to New York City does not include any attributes that are eligible to meet the RES mandate,” Gavin Donohue, president and CEO of the Independent Power Producers of New York, said in an April 29 letter to the Public Service Commission. “It will depress wholesale market prices thereby requiring greater Tier 1 REC payments to induce the development of Tier 1 renewable resources, such as off-shore wind.”
Environmental advocates who otherwise support the city legislation have also raised concern with it including language to support hydropower.
“It is concerning that they do allow purchasing of hydropower to offset that because hydropower is not included in the clean energy standard,” said Shay O’Reilly, an advocate with the New York Sierra Club, who opposes the hydropower line.”I don’t think anything good comes from the city undermining the state [Renewable Portfolio Standard].”
The state and city policies don’t operate the same way. Ratepayers — including building owners — must subsidize state RECs on their electric bill to promote new renewables across the state. Under the city bill, building owners have the option of buying RECs tied to electricity delivered into the city that will go toward their mandated emissions reduction requirements.
The city will launch a rulemaking process to establish a mechanism for how much to reduce a building owner’s energy efficiency requirements based on their purchase of RECs, said Phil Ortiz, a spokesperson for the Mayor’s Office of Sustainability.
Proponents of the REC language said it creates much-needed market demand to green the city’s grid, and that hydropower can and should be a part of that incentive structure.
Urban Green Council, a buildings sustainability group, played a role in writing the REC language into the city bill, which wasn’t included in the original bill introduced by Council Member Costa Constantinides in late November. Specifically, the group advocated for the credits to apply to projects either located in or flowing into New York City, said John Mandyck, CEO of Urban Green Council.
“Our grid in New York City is 70 percent dependent on fossil fuels today — so we need some big disruption there to green the grid and this bill is that disruptive mechanism to do that,” Mandyck said. “Because we’re a metropolitan area with high density population, we don’t have the power to put that green power necessarily within the five boroughs of the city, so we have to rely on green power we can deliver into the city.”
De Blasio voiced support for the hydropower project just four days after the Council passed the building mandates bill. He said at an April press conference that the city was aiming to strike a deal in 2020 to use the hydropower line for city government operations.
“We’re going to take the actions working with our partners to make sure that our City government doesn’t need to get its electricity from fossil fuels,” de Blasio said. “Those fossil fuels can be left in the ground where they belong.”
De Blasio’s announcement was significant, showing the city was committing to contract the majority of the power that would be generated by the line — creating market demand for the project to move forward.
The city government’s overall electricity consumption averages 600 megawatts on a given day and the hydropower line would generate roughly 1,000 megawatts, Ortiz said.
There have been discussions with other parties that could contract some of the remaining power produced by the hydropower line so that, combined with the city’s commitment, there would be enough contracted for construction to begin, said a person familiar with the project.
Environmental advocates said there are other concerns with the amendment.
The bill has been kicked around for years and was originally conceived of as a way to force building owners the difficult work of making energy efficiency improvements to large buildings that can be costly and disruptive in the short term.
Bautista, of the Environmental Justice Alliance, said he was concerned the ability to purchase unlimited RECs could allow owners to avoid making energy efficiency improvements, which was the original intent of the bill.
“It does create loopholes,” Bautista said. “Offsets in general is something the environmental justice movement has long been suspicious of because of times offsets have been abused in cap-and-trade systems — so we’re nervous about it.”
Bautista’s group, along with many others, was also hopeful the retrofits would create new “green job” opportunities — an espoused goal of the so-called Green New Deal. By simply buying hydropower from the Canadians, those city jobs will be left on the table.
Julie Tighe, president of the New York League of Conservation Voters, said she supports the REC provision “providing building owners with flexibility to use hydropower and other forms of renewable energy to protect our climate.” But she said she too would have preferred a limit on how many RECs could be purchased by building owners to ensure they still invest in energy efficiency improvements.
The Real Estate Board of New York, a powerful lobbying group that had fought energy efficiency mandates, supports the provision.
“Building owners’ ability to purchase renewable energy credits provides flexibility to comply with the bill,” said Jamie McShane, a spokesperson for REBNY.
When asked to respond to criticism over the hydropower provision, Ortiz said the city doesn’t expect the bill will raise costs for utility customers or hurt the renewables market.
“We worked closely with Council to craft tough but achievable standards that will dramatically cut emissions from buildings,” Ortiz said in an email. “This bill provides building owners with flexibility to meet their targets using whichever solutions work best for their unique circumstances, including direct purchase of clean energy.”
Constantinides, the primary sponsor of the bill, said the REC provision aligns with the intent of the bill to reduce emissions.
“Generating clean, affordable renewable energy within New York City was a major objective of the Climate Mobilization Act,” Constantinides said in an statement.
Some have also questioned why the city verbally committed to the hydropower project without first launching a competitive solicitation for clean energy projects known as a Request for Proposals. That process would allow the city to determine whether or not the hydropower project is the most cost-effective option to meet its clean energy needs.
“There’s no confidence that they got the best deal for New York City taxpayers or for the environment,” said Anne Reynolds, executive director for the Alliance for Clean Energy. “There also hasn’t been public analysis comparing the options.”
When asked why the city didn’t do a competitive solicitation, Ortiz said the city did do a Request for Information in 2015 for renewable energy for city operations.
“Submissions included solar, biomass (including waste to energy), other pilot-scale demonstration projects, off-shore wind, land-based wind, and hydropower,” Ortiz said of the 2015 RFI.
But RFIs typically proceed RFPs as a way to gather initial information, rather than competitively analyze bids before moving forward with an award.
Hydropower is expected to increase the city’s electricity costs, de Blasio said. The rate hike would ultimately be paid for by city taxpayers.
“We recognize this will be a budget commitment,” de Blasio said in April. “Our job is to make that cost as low as possible and we won’t know until we get there and we will have a limit on what we’re willing to pay as per usual. But if it costs somewhat more it’s worth it, is my view.”
The city and its agencies are big electricity users and their supplier is the New York Power Authority. A spokesperson for NYPA didn’t directly answer whether it’s working with the city to contract with CHPE.
De Blasio has not yet signed the bill but it automatically becomes law on May 17.
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ENVIRONMENTAL JUSTICE INITIATIVE - New York Environmental Law & Justice Project - 