Energy & Environment

Climate bill would tax carbon in New York

New legislation aims to raise billions of dollars to fund a “just transition” away from fossil fuels.

Pollution in New York City

Pollution in New York City Dragos Ness/Shutterstock

While the federal government and many states have been sluggish in taking definitive action against climate change, New York has offered a range of examples of what a state can do by itself. The Climate Leadership and Community Protection Act, a landmark 2019 law, mandated that the state reduce greenhouse gas emissions by 85% by 2050 compared to 1990 levels. The Climate Action Council of experts established by the legislation is expected to work out all the details in a plan due by the end of 2022. And offshore wind and solar energy projects got a boost in the recently passed state budget.

None of these efforts, however, definitively answer a multibillion-dollar question: How is the state going to pay for all of that? With just two months to go until legislators adjourn for the summer, a political alliance of left-leaning environmentalists and community organizers called New York Renews is pushing the idea of a carbon tax to raise billions of dollars each year via legislation called the Climate and Community Investment Act. Unless this gets done, other efforts might be in vain, supporters say. “The CLCPA will be the emperor with no clothes unless we pass the CCIA,” said state Sen. Kevin Parker, a Democrat representing Brooklyn who chairs the Committee on Energy and Telecommunications and is sponsoring the bill. “Revenue pricing will be key.”

The idea hinges on a proposed $55 surcharge on every short ton of carbon dioxide emissions, or about every 100 gallons of gasoline burned across the state. That would add up to $15 billion per year. Thirty percent of future revenues from the Climate and Community Investment Act would go toward a fund that would offer grants to community groups to help them better withstand climate change. Another 30% would directly fund renewable energy projects and 33% would fund energy rebates to low- and moderate-income New Yorkers, nonprofits and small businesses. The remaining 7% of revenues under the legislation would help workers and communities cope with the loss of fossil fuel-related jobs and revenues in what Parker and activists call a “just transition” away from fossil fuels while reducing emissions. 

“It’s not only about charging polluters, but also how do we actually invest these funds in the solutions that we have envisioned.” – Maritza Silva-Farrell, Align executive director

Supporters say the Climate and Community Investment Act offers the state a big opportunity to address climate change and historical wrongs. “Whether it’s in the United States or the Global South, the communities that have contributed the least to climate change are disproportionately vulnerable to its worse impacts,” said Eddie Bautista, a member of the New York Renews steering committee. State leaders have considered the wisdom of a carbon tax for years. What is new is how the updated Climate and Community Investment Act aims to spend the money, investing billions of dollars into the communities damaged most by pollution, including with job training and child care programs that supporters say are necessary to allow everyone to share in the benefits of the ascendant green economy. The challenge is convincing enough lawmakers that the proposed tax will not needlessly damage the economy in the process. Headlines are already warning of a 55-cent hike in the price of a gallon of gasoline. 

“The proponents of the CCIA describe this legislation as a way to ‘make corporate polluters pay,’ which is a catchy slogan, but that’s hardly what this bill does,” Ken Pokalsky, vice president of the Business Council of New York State, told lawmakers in his testimony at an April 13 hearing on the bill. “The bill implicitly recognizes that its provisions, and other state carbon reduction measures, will have adverse economic impacts, leading to facility closures and lost jobs, and resultant community impacts including the loss of local tax revenues.” 

A deadly pandemic, civil unrest and the alarming costs of a warming planet have added new urgency to addressing climate change, but activists and lawmakers have to jump through several legislative hoops to get the three-year-old Climate and Community Investment Act passed this year. The current bill has limited support from senators outside New York City, and Parker will need to get at least a dozen more colleagues to sign on to the legislation as co-sponsors to give it a chance of passing the 63-seat state Senate. Assembly Member Kevin Cahill, a Democratic legislator from the Hudson Valley, just got the bill reintroduced in his chamber in mid-April. With the 2021 legislative session set to wrap up in mid-June, it leaves little time to address outstanding questions about the legislation. Yet, lawmakers held an April 13 state Senate hearing on the new proposal, a signal that state Senate Majority Leader Andrea Stewart-Cousins, who has the ultimate say on such matters, and her chamber are taking the bill seriously. “We want to give due consideration and input for everything we’re doing,” she told City & State when asked about the legislation at an April 20 virtual press conference. The Assembly has also scheduled a hearing for May 13 on the implementation of the 2019 Climate Leadership and Community Protection Act, another sign the Legislature is prioritizing the climate.

“In the era of COVID-19 and climate change, Black, brown and Indigenous communities have been the most adversely impacted by the public health and economic crisis,” Elizabeth Yeampierre, executive director of the Brooklyn-based organization Uprose, told lawmakers at the hearing. About two dozen people testified in support of the bill, including representatives of New York Renews, Environmental Advocates NY, United University Professions, and a litany of community advocacy groups from cities across the state. “It is these same communities who suffer first and worst from recurrent extreme weather disasters,” Yeampierre said. Passing the bill means at least 150,000 more jobs could be created over the next decade to benefit such people, according to the Communications Workers of America District 1.

“The proponents describe this legislation as a way to ‘make corporate polluters pay,’ which is a catchy slogan, but that’s hardly what this bill does.” – Ken Pokalsky, The Business Council of New York State vice president

But the more than 100-page bill is complicated, and some of the most prominent outstanding questions about it are less about the provisions to help historically disadvantaged communities and more about how the proposed carbon tax would hit the bottom line for everyday New Yorkers in a struggling economy. State Senate Environmental Conservation Committee Chair Todd Kaminsky of Long Island sponsored the Climate Leadership and Community Protection Act two years ago, but has yet to sign on to the Climate and Community Investment Act. “I’m telling everybody that lives on my block: ‘That boiler you have in your house? That’s not going to be there,’” Kaminsky said at the hearing he co-chaired with Parker. “There’s going to be something else to power your home and the car you’re driving. … A fair question is, well, how are we going to pay for all that?” Kaminsky declined a request for comment.

Starting out at $55 per short ton of carbon dioxide is a few dollars higher than other proposed carbon taxes, like one backed by the nonprofit New York Independent System Operator that oversees state’s wholesale electricity markets. Energy companies would have little choice but to pay up or risk losing out on powering the third largest economy in the country after California and Texas, according to supporters of the Climate and Community Investment Act. This includes the leadership at one prominent group backing the bill called Align, whose board members include the leaders of powerful labor groups like the Retail, Wholesale and Department Store Union and District Council 37 as well as advocacy groups like Make the Road New York, Community Voices Heard and New York Communities for Change. “It’s not only about charging polluters, but also how do we actually invest these funds in the solutions that we have envisioned,” said Maritza Silva-Farrell, executive director of Align.

“Climate, jobs, racial and social justice: You combine the three together it’s a powerful unstoppable force.” – U.S. Senate Majority Leader Chuck Schumer

A lot of specifics of implementing the carbon tax would be determined by the Climate and Communities Investment Authority, whose board members would be appointed by the governor, the Assembly speaker and the state Senate majority leader. The president of the Climate and Communities Investment Authority, along with the commissioner of the state Department of Environmental Conservation, would determine future increases in the carbon tax as well as the specifics of who it would apply to. The legislative language explicitly says that companies that buy and sell petroleum, natural gas, coal, biomass and solid waste would have to pay, though the authority could exempt certain polluters whose emissions are minimal. A provision of the bill also aims to establish a rebate system for households and small businesses that face higher energy costs. In size, the Climate and Communities Investment Authority would rival other quasi-public agencies like the Metropolitan Transportation Authority, which operates much like a private business even though its board is appointed by elected leaders like Cuomo.

While the Climate and Community Investment Act has support from a growing list of environmental groups, some prominent organizations have yet to get behind the legislation after backing the Climate Leadership and Community Protection Act two years ago. State budget funding for environmental programs as well as a $3 billion bond act that will go before voters next year were top priorities in the first half of the this year’s legislative session, according to Jessica Ottney Mahar, New York policy and strategy director at The Nature Conservancy, which she said supports a carbon tax at the federal level. “We are interested in the policy at the state level,” she said in a statement, adding that she hadn’t fully reviewed the newest version. Creating a massive new agency to oversee the state’s response to climate change is an idea that other prominent environmentalists say they could support.

Parker said he believes there will be enough votes to pass the bill in the state Senate in the upcoming weeks, but even assuming he is correct, that will only get it so far. Cahill declined to respond to a request for comment about the bill’s prospects in the 150-seat Assembly, but the legislation would have to get through that chamber too. And even if enough Democrats got behind the bill to pass it, Gov. Andrew Cuomo, whose spokesperson did not respond to a request for comment by publication time, would have to sign the bill for it to become law. That is not guaranteed, considering his hesitancy to support tax increases in general despite his emphasis on combating climate change in recent years. Still, bill supporters have a few reasons to feel optimistic in recent weeks.

With the recent hearing behind them, supporters’ efforts in the next few weeks will focus on signing up more lawmakers in support of the bill. Parker said that once they have enough names to show it really could pass, the time will come to push Stewart-Cousins to establish a working group of Democratic senators to work out final details of a bill, such as negotiating possible changes to the $55 per short ton tax. “I can only say stay tuned,” Stewart-Cousins said at the April 20 press conference about the prospects for passing the legislation this year.

Other powerful Democrats meanwhile appear to be getting behind the Climate and Community Investment Act. “Climate, jobs, racial and social justice: You combine the three together it’s a powerful unstoppable force,” U.S. Senate Majority Leader Chuck Schumer said at an April 9 virtual town hall hosted by New York Renews and state Senate Deputy Majority Leader Michael Gianaris. Supporters of the bill are also betting that provisions like prevailing wage for green projects, preferential contracts for minority- and women-owned business enterprises and a ban on using carbon tax proceeds to benefit jails and prisons will mobilize additional support across the left side of the political spectrum. Supporters of the legislation can also find some comfort in a state budget that increases income taxes on the wealthy, which is the latest sign that Democrats are rejecting the idea that higher taxes equal unacceptable damage to businesses.

The recent legalization of recreational marijuana is another auspicious sign for supporters of the Climate and Community Investment Act. The passage of the Marijuana Regulation and Taxation Act highlights how Democratic legislators are still looking to get big things done two years after they took over the state Senate for the first time in a decade, and just a few months after winning legislative supermajorities that would allow them to override a gubernatorial veto. Even more important for environmentalists is how lawmakers made legal weed a reality. It took years of effort, but the final legislation included provisions that earmark money for communities ravaged by the war on drugs much like the Climate and Community Investment Act aims to invest money in places damaged by pollution.

The effort to pass the bill came out of the 2014 People’s Climate March in New York City, which was recognized at the time as the biggest mass demonstration about climate change in history. Bautista, the longtime executive director for the New York City Environmental Justice Alliance, and two other men – Sierra Club volunteer Marc Weiss and Matt Ryan, then executive director of Align – decided that they wanted to keep the organizing energy going by taking it on the road. By the end of 2015, they had visited Binghamton, Buffalo, Syracuse, Rochester, Albany and the North Country. The New York Renews coalition came out of those meetings and has sought to channel the combined political forces of grassroots activists, environmentalists, organized labor and Democratic legislators ever since. While they have yet to reach the finish line when it comes to passing the Climate and Community Investment Act, Bautista said that they have been hitting critical sign posts as the more people across the world began to come to terms with the dire consequences of climate change. “We went from being Chicken Little alarmists to prescient.”

Correction: An earlier version of this story described incorrectly how revenue from the Climate and Community Investment Act would be spent.