New York: New legislation shines a light on $1.5B tax subsidies on fossil fuel industry

Gov. Andrew Cuomo’s Reforming the Energy Vision (REV) is an initiative that seeks “to rebuild, strengthen, and modernize New York’s energy system while bringing economic growth to New York.” REV’s goals for the year 2030 include a 40 percent reduction in greenhouse gas emissions from 1990 levels, the generation of 50 percent of electricity from renewable sources, and a 23 percent reduction in energy consumption of buildings from 2012 levels.

The effort is bearing fruit. An early September article characterized New York as the “new US climate leader.”

In July 2017, the U.S. Energy Information Administration published a profile overview of New York’s energy usage and consumption. It offers the following list of quick facts highlighting some of the Empire State’s results:

• In 2016, for the first time, New York obtained more than 1 million megawatt hours of electricity from solar generation, and 84 percent of that power came from distributed sources such as rooftop solar panels.
• New York obtained 24 percent of its electricity from renewable sources in 2016; the state's Reforming the Energy Vision plan aims to raise the renewable contribution to 50 percent by 2030.
• The 2.4-gigawatt Robert Moses Niagara hydroelectric power plant is the fourth-largest hydroelectric power plant in the United States. In 2016, New York produced more hydroelectric power than any other state east of the Rocky Mountains.
• Nearly half of New York's electricity-generating units can burn either fuel oil or natural gas, and state regulators require them to be ready to switch to fuel oil if the natural gas supply is constrained.
• In 2012, New York became the first northeastern state to require that all heating oil be ultra-low sulfur diesel, to curb air pollution.

The September article conceded that the Empire State still has its challenges. For example, “[p]ermits are more expensive and time-consuming to come by than in many other states,” and there is a dearth of power lines to connect the wind energy resource-rich upstate region with the more densely populated downstate areas.

Recognizing that there is still more work to be done, two New York lawmakers, Senator Liz Krueger and Assembly member Kevin Cahill, have introduced A 8675 to address clean energy from a different angle, by “tackl[ing] counterproductive state fossil fuel subsidies, shining a light on and potentially halting tax breaks, credits and refunds for the use of dirty fossil fuels.”

Their joint press release claims that their effort is the first of its kind in the nation, and calls for New York’s “annual Tax Expenditure Report to include an enumeration and evaluation of all fossil fuel related tax expenditures, as well as a recommendation by the Governor regarding the continuation, modification or repeal of such expenditures.” The measure also “implements a 3-year sunset provision for all current and future fossil fuel related tax expenditures,” which would force an evaluation process “through which outdated fossil fuel subsidies can be allowed to expire, while those that provide a real benefit to New Yorkers can be retained.”

Pointing to the recent havoc that Hurricanes Harvey and Irma caused, Krueger and Cahill asserted that we live in an “era of climate change” that has had a “devastating impact” locally and globally. As a result,

New York should be doing everything we can to mitigate the effects of climate change, but there are still areas where we are on the wrong track. We spend $1.5 billion every year on tax subsidies that support the use of dirty fossil fuels, with barely any information about the effects of this spending. We need a process in place to regularly analyze and review these subsidies, so that we can strengthen those that actually benefit hard-working New Yorkers, and get rid of those that waste taxpayer dollars and make our climate crisis worse.

The fiscal year 2018 annual report on tax expenditures provides a forecast of fiscal year 2017 sales tax exemptions in a number of categories, including energy. It projects the following expenditures, among others, though it should be noted that the estimates have a low reliability grade based on the data source:

• Residential energy: $803 million
• Fuel, gas, electricity, refrigeration, and steam used in research and development and production: $123 million
• Reduced rate on gas and electric delivery: $119 million
• Commercial fuel cell electricity generating systems equipment: $3 million
• Residential solar energy systems: $2 million
• Commercial solar energy systems: $1 million
• Solar power purchase agreements: less than $1 million
• Alternative fuels: less than $1 million
• B20 bio-diesel fuel: less than $1 million

The senate version of the bill is S6881.