New York State’s climate leadership act: the role and treatment of agriculture

Introduction

On July 18, 2019, Governor Anthony Cuomo signed New York State’s ambitious Climate Leadership and Community Protection Act (the Act) into law. The Act calls for a dramatic decrease in greenhouse gas emissions to combat the grave threats posed by climate change identified by the law. During New York Energy Week in June 2019, the New York office of Norton Rose Fulbright hosted and moderated a discussion by a panel of renewable energy experts on the challenges and likely impacts of the Act and some of the measures required to meet the aggressive timeline and formidable challenge of complying with the most far-reaching U.S. climate change legislation to date.

New York’s Climate Leadership Act establishes mandatory and aggressive targets to reduce greenhouse gas emissions and sets out procedures and a consultation process to transform New York to achieve those targets. New York intends to take a leadership role (at least in the United States) in developing a way to achieve net zero greenhouse gas emissions.

While agriculture is not New York State’s primary industry or business sector, farm production reportedly contributed nearly US $2.4 billion to New York State’s gross domestic product in 2017, and agricultural production, support services, and manufacturing contributed more than 145,300 jobs to New York State’s economy in 2014, according to a Cornell University research study cited by the New York State Department of Labor. New York State’s top agricultural commodities by sales are, in descending order: milk; corn; hay; apples; and cattle and calves. In 2017, New York State was among the top three U.S. states with respect to milk production and was the top ranking producer among U.S. states for cottage cheese production (accounting for nearly 27 per cent of the U.S. total). Given the importance to the state of agriculture (by which we mean the raising of plants, animals and byproducts), New York’s treatment of agriculture in the process of implementing the new Climate Leadership Act may be a relevant precedent for other jurisdictions.

The Climate Leadership Act: targets, timeline & process framework

The Act sets certain goals

• Renewable energy systems (defined broadly as “systems that generate electricity or thermal energy through use of solar thermal, photovoltaics, on land or offshore wind, hydroelectric, geothermal electric, geothermal ground source heat, tidal energy, wave energy, ocean thermal, and fuel cells which do not utilize a fossil fuel resource in the process of generating electricity”)

• Should generate 70 per cent of statewide electricity by 2030
• Should generate 100 per cent by 2040.

• Reduce statewide greenhouse gas emissions (carbon dioxide, methane, nitrous oxide and other substances emitted into the air) that may contribute to anthropogenic climate change (caused by human activity). The maximum allowable level of statewide greenhouse gas emissions in a given year from human activity

• should be reduced to 60 per cent of 1990 levels (the baseline measurement levels) by 2030
• should be reduced to gross greenhouse gas emissions of no more than 15 per cent of 1990 levels by 2050 and net zero greenhouse gas emissions by 2050. The 2050 target requires that the up to 15 per cent of permitted emissions in approved activities will be fully offset by approved carbon capture, carbon sequestration, reforestation and other designated carbon removal projects, discussed further below (collectively, the Targets).

The Climate Leadership Act calls for an initial two-year consultation and study process during which the State must generally consider

• impact of the changes on communities
• protection of lower income parts of the population
• protection of disadvantaged communities generally against the costs of the efforts to meet the new emission requirements, looking at many possible ways to view “disadvantaged”
• prioritizing disadvantaged communities to receive public investments required to achieve the new goals
• creation of new or replacement jobs, jobs that deemed to be quality opportunities
• standards and a floor for compensation, safe working conditions and labor conditions generally
• training needed for the workforce, including retraining for displaced workers
• impact on the competitiveness of New York businesses and the New York economy
• treatment of businesses that will no longer be relevant or economical
• support for businesses facing massive conversion costs
• impact on tax revenues and who will bear or receive tax incentives or tax surcharges
• consumers, as far as costs and availability of energy and other goods and services
• subsidies or incentives to attract needed investment, in what amounts, for whom and where located
• improving the state’s resiliency in dealing with unavoidable climate change risks (such as severe storms)
• and other social issues.

The Act establishes a New York State climate action council (the “Council”) which is ultimately tasked with developing a plan to meet the Targets. The Council, co-chaired by the commissioner of the New York Department of Environmental Conservation (“DEC”) and the president of the New York State Energy Research and Development Authority, will consist of 22 members including New York State agency commissioners, the chairperson of the Public Service Commission, the presidents of the New York Power Authority and the Long Island Power Authority, the New York Secretary of State, two non-agency expert members appointed by the governor and eight members appointed by leaders of New York’s legislature (the State senate and the state assembly). The Council will have advisory panels and will be aided by a “just transition working group” that will help the Council deal with some of the considerations discussed above regarding the impact of the transition on jobs, workers, businesses and communities.

Within two years of the Climate Leadership Act’s enactment, the Council must develop and approve a scoping plan (the “Scoping Plan”) outlining the Council’s recommendations and providing a path for New York to meet the Targets. Within three years, the Council must submit the final Scoping Plan to the governor and the state legislature and make it available to the public via the Council’s website. Within four years, the DEC must promulgate rules and regulations to ensure compliance with the Climate Leadership Act and assist state agencies in promulgating additional rules and regulations as necessary.

In addition to setting out actions to achieve the Targets, the Scoping Plan must, among other things

• identify measures to achieve specified levels of distributed solar capacity by specified target dates
• identify land-use and transportation measures designed to minimize emissions from motor vehicles
• identify measures to limit the use of certain chemicals, support the growth of forests and achieve high air quality
• take into account the adverse effects on disadvantaged communities and small businesses, including establishing a de minimis greenhouse gas threshold exempting those below such level from the related emission reduction requirements.

The Council’s recommendations will not be based solely on the industry experts and government officials that make up the Council and its advisory panels. The Act requires that in preparing the Scoping Plan, the Council must solicit public comments and hold at least six regional public comment hearings on the draft Scoping Plan. These meetings are to be split geographically between upstate (which are more rural areas) and downstate (which includes New York City).

While the Council will not itself promulgate rules or regulations, the New York State Energy Planning Board is required to incorporate the Council’s recommendations into its annual state energy plan beginning with the first energy plan issued following the Council’s approval of the Scoping Plan. Once adopted and made effective by state rules and regulations, the plan to achieve the Targets must be continually reviewed and must be updated at least every five years.

The Act provides for periodic reassessment of interim goals, the methods to achieve those goals and consideration of relevant developments (including best practices and new technologies) from around the world.

This new law could have had a lot of different names – calling it the “Climate Leadership [Act]” shows it is trying to take a bold step forward, but the second part of the title – “and Community Protection Act” – should be paid attention to as well. The word “community” as used here has a broad meaning covering how and where people live and work, so there is certainly room for people to forcefully argue to protect not just local physical surroundings but also jobs, industry, wages and communities of all sizes, and New York State recognizes that its agriculture business is something that is important to its economy and many of its residents for many reasons.

Meeting the Climate Leadership Act’s targets & New York’s energy needs

The text of the Act provides few specifics when it comes to meeting its aggressive specified Targets, although the Scoping Plan does require the Council to establish measures to achieve Targets of

• 9 GW of offshore wind by 2035
• 6 gigawatts (GW) of solar energy capacity by 2025 and
• 3 GW of energy storage capacity by 2030
• a specified reduction of 185 trillion BTUs of electric energy consumption by 2025 below the existing 2025 forecast.

In support of the efforts that will be required to satisfy the Targets, New York announced the approval of two offshore wind projects simultaneously with Governor Cuomo’s signing of the Climate Leadership Act into law. The 880 mega-watt (MW) Sunrise Project, developed by Bay State Wind (a joint venture between Danish firm Orsted and Eversource Energy), and the 816 MW Empire Wind project, developed by Danish firm Equinor, will both begin construction off the coast of Long Island in 2022, with both wind farms scheduled to begin commercial operations by May 2024.

The Act is clearly relying to some extent on wind and solar energy, but also recognizes the need for other sources, in particular hydroelectric, which can provide a substantial baseload source of electricity. Hydropower, largely from the Canadian province of Quebec, already supplies a substantial amount of renewable energy to upstate New York, and the Mayor of the City of New York has announced plans to bring available hydropower from Quebec to satisfy a substantial portion of the future clean energy needs of New York City, thereby substantially helping New York State meet its future clean power needs.

The Climate Leadership Act and New York agriculture

The impact on New York’s agriculture industry is difficult to gauge and will depend greatly on the details of the Scoping Plan, the rules promulgated by the DEC thereunder, and on any potential amendments that might be made to the existing text of the Act. The Act addresses agriculture expressly in several of its provisions

• The Act requires that greenhouse gas emissions from all human activity be specifically restricted (or prohibited) by type of source, with one exception. Agricultural emissions from livestock will not be directly restricted.
• The types of carbon offsets that can be designated to offset future greenhouse gas emissions include, among other things, forests, grasslands and wetlands that can be carbon sinks, as well as methods of carbon sequestration plus anaerobic digesters (used on farms to allow organisms to digest livestock manure, particularly for dairy and beef livestock, with the biogas produced able to be used as a local energy source).
• The Act also requires the Council to gather information on negative impacts of anaerobic digesters, garbage incinerators and biomass combustion.
• The Council, which will develop the Scoping Plan to carry out the Climate Leadership Act, is required to establish advisory boards to address specific industries, one of which is agriculture and forestry.
• In looking at the New York economy in developing the implementation plan for the new law, the New York economy is divided into five sectors, one of which is agriculture.
• One of the many objectives to be observed in developing the plan and actions to carry out the Climate Leadership Act is to foster long-term carbon capture and best practices in land use, agriculture and forestry and in the use of chemicals that may contribute to climate change.

Agriculture presents its own special issues regarding greenhouse gases in the U.S.

• The main greenhouse gas emissions from agriculture are not carbon dioxide but instead methane and nitrous oxide. Nitrous oxide is emitted primarily by soil management practices. Methane is produced by the digestive processes of cows and sheep. Manure management practices release nitrous oxide and methane.
• Agriculture also offers substantial possibilities for carbon capture and sequestration in soils through use of carbon dioxide in photosynthesis by plants.
• Variations in land, crop and livestock management can have significant impacts on greenhouse gas emissions and on carbon capture.

Farmers throughout New York are already utilizing many techniques to control greenhouse gas emissions, in part due to existing economic incentives that could be expanded by the Council and the DEC. For example, New York recently announced an additional $2.3 million round of funding to the Climate Resilient Farming Grant program, which has provided New York farmers with grants totaling over $8 million since 2015 to implement projects to mitigate greenhouse gas emissions, promote energy savings and better cope with extreme climate change-related weather events such as flooding. These grants have supported projects such as

• silvopasture practices (combining forestry and grazing to improve water quality, mitigate soil erosion and increase carbon sequestration
• installing manure storage cover and flare systems to capture methane emissions
• installing solar-powered irrigation systems
• implementing cover cropping, intercropping, and forage and biomass planting.

One area of New York’s Climate Leadership Act has already drawn attention for the way it treats agriculture – the limitations on what can be considered an acceptable carbon offset. While the Targets mandate that 85 per cent of New York’s total energy needs must ultimately be supplied by zero-emission sources, the remaining 15 per cent can be met via approved projects which offset greenhouse gases. Many developing agricultural practices such as those outlined above might be used in this regard.

But the Climate Leadership Act: (1) excludes from offset programs waste-to-energy technologies such as biofuels and (2) requires that any offset program must generally be located near the source of emissions being offset, preventing farmers from profiting from offset programs that are not needed to offset local emissions. Biofuels are also excluded from the definition of “renewable energy systems” and therefore will not be considered an acceptable source of electricity in meeting the Targets regarding generation of electricity.

Potentially hampering the implementation of such offset mechanisms further is the exclusion of any offset program (such as increased cover crops) that would have been undertaken in any event within five years. This has already attracted negative comments and may be an issue for possible future amendments because various agriculture lobbying groups will want farmers to obtain benefits from these emissions offsets. The exclusion of biofuels is also being questioned.

Watching how New York addresses these questions should be fascinating. Over the years, as New York implements and refines its plans to achieve the Targets set by the Act, numerous choices will be confronted, some unique to agriculture and some inevitable as new technologies develop and new problems arise.

There are the relatively simple questions of

• What impact will new electric equipment and new technologies have on costs, efficiency, productivity, safety and labor in agriculture? It appears that many equipment suppliers are making good strides in developing efficient and affordable electric options.
• To what extent will New York’s moves to reduce greenhouse gas emissions and to move all electrical power to generation by renewables such as wind, hydropower and solar require new transmission lines for increased electricity demand and will those new transmission lines need to be subsidized for less populated, agrarian areas? Or will those areas be served by dispersed generation where renewables will be used to produce electricity locally near the ultimate use?
• Will New York agriculture face increased competition for attractive temperate land that receives reasonable sunlight? The Climate Leadership Act has created increased interest in renewable energy investments in New York and that is leading to conflicts between energy developers and the interests of rural communities and farms, as for example, solar developers seek to purchase existing farmland in order to convert it to locations for solar power plants.

Then there are some more difficult choices

• To what extent will agriculture as a way of life be protected in New York, whether it is on a large scale or a small scale? To what extent will farms be subsidized to allow them to survive?
• As with any industry dealing with new technologies, how will the new technologies applied to agriculture actually improve the quality of life rather than just making some workers unnecessary?

The implementation of New York's Climate Leadership Act over the coming years will produce an interesting precedent for how other parts of the U.S. and the world might deal with similar issues, impacting agriculture and all aspects of life and will provide many opportunities for new technologies and new ideas to be developed and appropriately applied.