As energy costs rise, some states back off ambitious climate goals

The Ravenswood Generating Station, which uses natural gas to support the city's electricity needs, is seen in the Queens borough of New York. (AP Photo/Ted Shaffrey, File)

ALBANY, N.Y. — Seven years ago, New York lawmakers set ambitious goals for slashing greenhouse gas emissions with clarion calls about saving the future. Now, with slow progress made and political realities shifting, Gov. Kathy Hochul is seeking a delay, saying she wants to save consumers money.

Times have “ radically changed,” Hochul said, since 2019, when the state set a target of reducing greenhouse gas emissions 40 per cent by 2030.

She’s proposed giving the state years more to comply, saying pursuing that goal now by imposing planned fees on polluters would lead to crushing energy prices.

• Latest updates on investing here

“I cannot in good conscience — knowing the moms and dads and the seniors and the families that are struggling, paying their bills now — I cannot do something I know at this very moment that’s going to raise those prices,” Hochul said at a recent rally.

Hochul, who is running for reelection this year, is among several Democratic leaders trying to balance the party’s traditional support for clean energy policies with the current political imperative to deliver “affordability” agendas.

Several states — particularly in the Northeast — are reassessing clean energy targets. Others are looking at shaving extra charges on utility bills that help fund efficiency programs.

The shifts have alarmed environmentalists, who call them shortsighted. They note that other states, including California, have remained committed to similar policies designed to lessen dependence on fossil fuels.

“She’s looking to, ultimately, keep New Yorkers on gas longer when it’s the very fuel that’s causing their bills to rise,” Liz Moran of the environmental group Earthjustice said of Hochul’s proposals.

Hochul insists she isn’t abandoning efforts to fight climate change. But she and other Democrats complain that cuts to clean energy grants under President Donald Trump’s administration raised the cost of meeting state climate goals. The Republican president has been hostile to some clean energy sources, particularly offshore wind farms, which his administration has sought to block.

Affordability concerns edge out climate worries

Meanwhile, U.S. residential electricity prices rose 27 per cent on average from 2019 to 2024, with some of the most pronounced increases in California and Northeast states, according to a study from the Lawrence Berkeley National Laboratory. Analysts cite multiple reasons for higher prices, among them increased demand from data centers and the price of natural gas, which often is used to generate electricity.

Power bills were a key issue in the governors’ races won by Democrats last year in New Jersey and Virginia. And that was before the Iran war sent gasoline prices soaring.

Rhode Island Gov. Dan McKee has proposed pushing a 2033 deadline to reach 100 per cent renewable energy sources to 2050, part of his plan to lower energy costs by US$1 billion over five years.

Last year, Connecticut lowered its 40 per cent renewable energy goal for 2030 to 29 per cent. Democratic Gov. Ned Lamont said at the time that “electric bills are too damn high.”

Massachusetts and New Jersey are among the states looking at lowering charges on utility bills that help fund efficiency programs.

“It is hard to talk about climate at times, because everyone is very laser-focused on affordability and customer bills,” said Kyle Murray, Massachusetts program director for the Acadia Center. “So climate, while still important, is getting kind of pushed aside, unfortunately.”

Cap and invest in practice

One of New York’s key mechanisms for reducing emissions was supposed to be a “cap-and-invest” system, in which polluters buy allowances for their emissions and the revenue is invested in things like clean technology and renewable energy.

In California, cap-and-invest is crucial to achieving goals that include reducing greenhouse gas emissions to 40 per cent below 1990 levels by 2030. The state has used proceeds from cap-and-invest to direct billions of dollars to things like public transit and clean-vehicle incentives.

California regulators on Tuesday proposed cap-and-invest changes in response to concerns from lawmakers about electricity prices and economic worries from industry. Business incentives and electric bill relief would be increased under the proposals.

The program costs Californians an extra 24 cents a gallon at the pump and slightly more on their utility bills, though the state provides a regular “climate credit” on their bills, said Kyle Meng, associate professor of economics at UC Santa Barbara.

• Latest economic news on BNNBloomberg.ca

“When you make things more expensive, people conserve. It’s like Econ 101 and that’s the basic idea behind a cap-and-trade program,” Meng said.

New York officials, however, missed a 2024 deadline to create regulations detailing how such a system would work in their state. Without those rules in place, the system never launched. Environmentalists successfully sued the state over its failure to meet the deadline, which Hochul has mentioned in seeking a delay.

The governor’s new proposal, currently under consideration by legislative leaders, would give the state until 2030 to come up with regulations. And the state would set new targets for 2040 emissions levels.

Environmentalists dispute cost claims

If those deadlines are not moved, consumers will pay a cost, Hochul has said. Her administration estimates that implementing a cap-and-invest system now would pass along costs of more than $4,000 a year for some households.

Environmental advocates say the governor is estimating what an “extreme” version would cost, and that the analysis ignores the benefits of incentivizing polluters to move away from fossil fuels.

They also point to Washington, where voters in 2024 decided to keep that state’s cap-and-invest program by a wide margin.

“The sky has not fallen,” said Caitlin Krenn of Washington Conservation Action, “and the program is working as intended.”

Bruce Blakeman, a Republican county executive running for governor against Hochul, said he’d get rid of the state’s plan altogether if he wins this fall.

“Delaying the pain won’t make it disappear — it just leaves bigger bills down the road,” Blakeman said in a statement.

Michael Hill, The Associated Press