New York’s proposed Cap-and-Invest program is an economy-wide carbon pricing initiative designed to reduce greenhouse gas emissions by auctioning emission allowances to businesses. This page covers CBC’s work on program design, economic and fiscal impact assessments, revenue management, emissions reduction targets, and regulatory alignment with the Climate Leadership and Community Protection Act.
This page was created with AICBC Insights uses AI to group, analyze and present data and recommendations from CBC's publications. Always reference the cited sources to verify important details..
New York State’s leaders should recalibrate the CLCPA’s emission reduction goals and adopt the emissions accounting used by other states.
The Legislature should adopt the approach of recalibrating emission reduction goals and modifying the CLCPA.
The State should reset its goals to be ambitious but attainable enough to underpin policies and investments, including a well-designed cap-and-invest program.
The State should clearly identify the full cost and impact of every proposal and program to all residents, businesses, and the State budget.
The State should conduct and publicly release a more robust assessment of NYCI’s potential fiscal and economic impacts before or with the draft rules.
New York should recalibrate the 2030 emissions reduction goal to be ambitious but feasible to leverage market-driven, cost-effective emissions reductions.
The State should present a detailed plan to use the program’s revenue to support the transition away from carbon-emitting energy sources.
The State should permit banking of allowances from the start instead of after the first compliance period.
The Department of Environmental Conservation should consider regulating co-pollutants separately from NYCI to avoid unintended effects on program compliance costs.
The State should allow limited use of rigorously verified offsets within the program design.
The State should modify design elements to facilitate linkage with other systems and broaden coverage.
The State should consider switching to the conventional emissions accounting methodology.
The State should proceed with rulemaking only when comprehensive assessments are public and based on recalibrated targets.
The State should periodically evaluate and adjust the program based on experience.
Key Data
In October 2024, the CBC reported that New York's proposed Cap-and-Invest program would levy a massive new charge potentially reaching $12 billion annually by 2030.
A November 2023 report noted that from 2009 to 2020, no firms in New York with a compliance obligation submitted offset credits under the Regional Greenhouse Gas Initiative.
The fiscal year 2027 budget, which totals $268 billion, includes a commitment to balance greenhouse gas emissions reductions with economic affordability, signaling a shift toward recalibrating emissions goals. Policymakers are encouraged to develop a market-driven cap-and-invest program with feasible targets to ensure emissions are reduced in a cost-effective manner.
Recommendations related to Cap-and-Invest Program
The State should build feasible targets into a market-driven cap-and-invest program to cost effectively reduce emissions.
The state's fiscal agreement includes positive policy changes but risks long-term stability by increasing spending without sustainable funding. While the agreement addresses greenhouse gas emissions and housing production, it should also prioritize a well-designed cap-and-invest program to ensure environmental goals are balanced with affordability.
Recommendations related to Cap-and-Invest Program
The State should commit to a well-designed cap-and-invest program.
New York State must recalibrate its climate goals to be more attainable, as current targets are projected to be missed by 2030 and threaten to increase household costs while hindering economic growth. Policymakers should adopt a reality-based approach that includes a well-designed cap-and-invest program and clearly identifies the full financial impact of all climate proposals on residents and businesses.
Recommendations related to Cap-and-Invest Program
New York State’s leaders should recalibrate the CLCPA’s emission reduction goals and adopt the emissions accounting used by other states.
The Legislature should adopt the approach of recalibrating emission reduction goals and modifying the CLCPA.
The State should reset its goals to be ambitious but attainable enough to underpin policies and investments, including a well-designed cap-and-invest program.
The State should clearly identify the full cost and impact of every proposal and program to all residents, businesses, and the State budget.
New York's proposed Cap-and-Invest program could impose costs reaching $12 billion annually by 2030, yet the state has not provided sufficient analysis on the economic impacts or how revenue, potentially exceeding $30 billion over five years, will be utilized. To ensure the program balances environmental goals with economic vitality, the state must recalibrate its 2030 emissions targets and conduct a more comprehensive assessment of the fiscal consequences for residents and businesses.
Recommendations related to Cap-and-Invest Program
The State should conduct and publicly release a more robust assessment of NYCI’s potential fiscal and economic impacts before or with the draft rules.
New York should recalibrate the 2030 emissions reduction goal to be ambitious but feasible to leverage market-driven, cost-effective emissions reductions.
The State should present a detailed plan to use the program’s revenue to support the transition away from carbon-emitting energy sources.
The State should permit banking of allowances from the start instead of after the first compliance period.
The Department of Environmental Conservation should consider regulating co-pollutants separately from NYCI to avoid unintended effects on program compliance costs.
The State should allow limited use of rigorously verified offsets within the program design.
The State should modify design elements to facilitate linkage with other systems and broaden coverage.
The State should consider switching to the conventional emissions accounting methodology.
The State should proceed with rulemaking only when comprehensive assessments are public and based on recalibrated targets.
The State should periodically evaluate and adjust the program based on experience.
Key Data
$12 billion
— Potential annual cost of the program by 2030.
$30 billion
— Potential revenue generated by the program over the next 5 years.
85% is the amount New York State must reduce greenhouse gas emissions by 2050. The State’s Cap-and-Invest program is a key strategy to cap and reduce emissions, auction emission rights, and invest proceeds in energy transition. Doreen Harris, President and CEO of NYS Energy Research and Development Authority, and Basil…
New York's proposed Cap-and-Invest program aims to reduce greenhouse gas emissions by 85 percent by 2050 through an economy-wide carbon pricing initiative that generates funds for climate investments. To ensure the program is cost-effective and avoids unintended economic consequences, it must be designed with broad sectoral coverage, compliance flexibility, and transparent revenue management.
Recommendations related to Cap-and-Invest Program
The State should allow and pursue linkage with other cap-and-invest programs to enhance cost-effectiveness by providing a larger pool of emissions reduction opportunities.
New York should keep sectoral coverage as broad as possible, limiting exemptions to sectors that are exceedingly difficult or expensive to regulate.
The program must maintain flexibility in compliance through trading, banking, and verifiable offsets to ensure the program behaves as a true market.
The State should allocate revenue on-budget, segregating it for uses that promote cost-effective emissions reduction to ensure transparent and efficient use of funds.
Regulators should regularly monitor, publicly report, and evaluate program data and modify the program based on evidence to improve accountability and inform necessary programmatic modifications.
The State should align the program with other CLCPA-related regulations to minimize overlapping regulatory costs and improve overall policy effectiveness.
The State should finalize clear and comprehensive rules with adequate time for businesses to prepare to provide the predictability necessary for compliance strategies.
Key Data
$112,790 Million
— Cumulative auction revenue for the European Union's emissions trading system.
$38,934 Million
— Cumulative auction revenue for California's cap-and-trade program.
$63.03
— Most recent allowance price at auction for Washington's cap-and-invest program.
85%
— New York's goal to reduce greenhouse gas emissions by 2050.
40%
— New York's goal to reduce greenhouse gas emissions by 2030.
3%
— Estimated increase in the price of allowances if facility-specific caps are implemented in disadvantaged communities.
While New York's climate plan includes a market-based cap-and-invest program to help meet ambitious greenhouse gas reduction targets of 40 percent by 2030 and 85 percent by 2050, many crucial design details remain unknown. To prevent businesses from leaving the state and to ensure cost-effective emissions reductions, policymakers must carefully evaluate the program's economic impacts and consider regional carbon pricing approaches.
Recommendations related to Cap-and-Invest Program
The State should consider regional approaches to carbon pricing policies, which are most effective when applied at a greater geographic scale.
New York State's plan to reduce greenhouse gas emissions by 85 percent by 2050 requires significant investment, yet the current draft lacks the detailed cost-benefit analysis necessary to guide effective policy. To ensure economic viability and equity, the state must prioritize cost-effective strategies, utilize market-based incentives like cap-and-trade, and provide transparent data on the financial impacts for different stakeholders.
Recommendations related to Cap-and-Invest Program
The State should utilize market incentives as much as possible, such as a fee system or a cap-and-trade system, to incentivize businesses and residents to choose low energy intensive goods and technologies.
The Final Scoping Plan should calculate and identify the cost effectiveness of each mitigation strategy to provide the necessary basis for prioritization.
Policymakers should disaggregate the financial impacts of each strategy on businesses and households to help prioritize strategies that maximize equity and minimize negative economic impacts on jobs.
The State should identify and assess the economic impacts of mitigation strategies on various industries’ or geographies’ productivity and competitiveness to prevent businesses from seeking out localities with lower decarbonization costs.
The State should determine the probabilities associated with different mitigation strategies because cost-effectiveness alone is not sufficient for prioritization.
Key Data
85 percent
— The goal for reducing statewide greenhouse gas emissions from 1990 levels by 2050.
$300 billion
— The estimated total costs through 2050 on a discounted present value basis for the proposed climate scenarios.
The Regional Greenhouse Gas Initiative, a market-based cap-and-trade system, has generated $912 million in auction proceeds for participating states while providing a net present benefit of $1.6 billion across the region. This initiative has successfully reduced emissions and energy costs, saving residents $1.3 billion in utility bills and creating 16,000 job-years during its first three years.
Key Data
$912 million
— Total amount raised by participating states through the auction of emission allowances from 2008 to June 2011.
136,893,163
— Number of allowances sold by New York State.
$321.6 million
— Auction proceeds generated by New York State.
$322.6 million
— Total proceeds for New York State including interest.
152,501
— Annual MMBtu in net energy savings estimated from funding.
15,553
— Annual tons of carbon dioxide equivalent emissions avoided.
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