Read time: 5 minutes
The process of transitioning western economies from fossil fuel-based resources to renewable ones is happening unevenly. Most transition activities have been driven largely by private project developers, corporate environmental, social and governance (ESG) policies, or aspirational national and state-level “goals,” often with little teeth to them. Such actions are also largely focused solely on electricity generation, without addressing other sectors of the economy that use fossil fuels for energy, such as transportation and manufacturing.
Some places, however, are undertaking comprehensive actions to fully decarbonize their economies, backed by statutory mandates that will force the action to occur. The State of New York is one of those places. As described below, New York has passed comprehensive legislation requiring a true energy transition to occur in the state over the next 20 to 30 years. As New York now labors through the process of drafting regulations to make that vision a reality, it offers a window into how other jurisdictions can make similar changes, and how business and industry will need to adapt to a radically different economy in the not-too-distant future.
In 2019, New York passed the Climate Leadership and Community Protection Act (CLCPA), which establishes aggressive limitations on carbon emissions from all sectors of the economy. While it does predictably call for 100 percent of the state’s electricity generation to come from zero-emission sources by 2040, it also requires an 85 percent reduction in all greenhouse gas emissions statewide, from whatever source, by 2050. Importantly, the CLCPA defines statewide greenhouse gas emissions to include not just sources within the state, but also greenhouse gases produced outside the state for imported electricity or the extraction and transmission of fossil fuels imported into the state.
Clearly, those are remarkably ambitious requirements to be achieved in a very short period of time, which, of course, begs the question of how the state will actually do it. While it would be easy to assume that the requirements could be satisfied primarily through a shift to 100 percent renewable energy production, this is not true ‒ electricity production actually accounts for a relatively small percentage of statewide greenhouse gas emissions. The state Department of Environmental Conservation (DEC) has determined that the state’s greenhouse gas emissions are currently generated from buildings (32 percent), transportation (28 percent), electricity (13 percent), waste (12 percent), industry (9 percent), and agriculture (6 percent). Those numbers demonstrate that a truly comprehensive energy transition will require far more than just the installation of solar panels and wind farms.
- New York has already begun implementing comprehensive measures to decarbonize its entire economy
- Everyone doing business in New York should understand how that transition will affect their industry
- Those who understand the new regulatory environment can enjoy competitive advantages and avoid making bad investment decisions