Email	kcourtin@edf.org
Please share your full name. If you'd like to remain anonymous, please enter "N/A".	Kate Courtin
Letter ID	249036
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Does your comment provide feedback on any of the following themes?	• Allowance Allocation: How allowances are made available. • Auction Rules: The structure and mechanics of allowance auctions • Market Rules: The rules for market participation, and the trading of allowances • Ambition: The economywide emissions cap, and allowance budget. • Program Stability: The automatic and planned program adjustments to moderate costs and sustain program ambition if emissions are higher or lower than anticipated. • Compliance, Enforcement and Penalties: Compliance periods and types of enforcement mechanisms.
Comment	Please see attached comments on behalf of the Environmental Defense Fund, Natural Resources Defense Council, New York League of Conservation Voters, New Yorkers for Clean Power, and Regional Plan Association. ---- below is text extracted from attachment NYCI Pre-Proposal Joint Climate & Environmental NGO Comment_030124.pdf ---- 1 Joint Comments of Climate and Environmental Organizations Regarding the Development of New York's Cap-and-Invest Regulations in Response to Second Phase of Pre-Proposal Outreach March 1, 2024 I. Introduction The above climate and environmental organizations - collectively representing thousands of members across New York State - appreciate the opportunity to submit the following comments to the New York Department of Environmental Conservation (DEC) and the New York State Energy Research and Development Authority (NYSERDA) ("the Agencies") in response to the Pre-Proposal Outline: New York State Cap-and-Invest and Mandatory Greenhouse Gas Reporting Programs and information shared in DEC and NYSERDA's pre-proposal stakeholder outreach webinars held January 23 to 26, 2024. These comments primarily focus on the development of DEC's Cap-and-Invest Rule (forthcoming 6 NYCRR Part 252). A strong and well-designed New York Cap-and-Invest ("NYCI") program would significantly advance New York's ability to achieve the Climate Leadership and Community Protection Act's ("Climate Act") emissions targets and support a just and equitable transition to a clean energy economy. Our organizations support a program that is consistent with the following principles: 1. Achieving ambition in emissions reductions aligned with the Climate Act's statutory targets: as recommended by the Climate Action Council's Scoping Plan and Governor Hochul's FY24 executive budget, the cap-and-invest program should serve as a backstop to emissions reductions in line with the Climate Act's 2030 and 2050 targets, and should do so via persistent emissions reductions between targets to limit cumulative emissions. 2. Delivering benefits for disadvantaged communities aligned with the Climate Act's statutory requirements: the Climate Act requires that implementing regulations such as the cap-and-invest program: 1) drive significant investment in disadvantaged communities (DACs); 2) not increase net co-pollutant emissions or otherwise disproportionately burden DACs; and 3) prioritize net reductions in GHGs and co-pollutants in DACs. 3. Prioritizing affordability: affordability must also be prioritized in the design of the NYCI program, particularly for low- and middle-income New Yorkers who bear disproportionate energy burden. There are a number of levers that can facilitate lower costs and affordability including through the distribution and investment of program revenues. Affordability should not and need not comprise the integrity of the emissions cap. 2 A program aligned with these principles would be transformative for New Yorkers - cutting costly greenhouse gas emissions and toxic air pollutants and driving billions of dollars of investment in our communities, thereby accelerating the transition to a safer, healthier future for New Yorkers. Such a program would also elevate New York's role as a climate leader and serve as an invaluable model for climate policymakers in states looking to meet ambitious climate targets in ways that prioritize environmental justice and affordability. As the Agencies consider the program design details and feedback from stakeholders, our organizations underscore the urgency and costs of the worsening climate crisis. Catastrophic flooding, storms, extreme heat, and health impacts exacerbated by fossil fuel pollution are costing New York. For example, extreme weather events cost New Yorkers an estimated $20 billion in the last three years alone.1 Inaction on climate is far more costly than addressing this challenge. The Scoping Plan Integration Analysis strongly supports this, finding that the cost of inaction exceeds the cost of action aligned with the Climate Act targets by $115 to $130 billion.2 Furthermore, an economy-wide cap-and- invest program, complementing essential sector-specific policies, offers the most cost-effective approach to securing statewide emissions reductions in line with the Climate Act targets. II. Summary of Recommendations We underscore the following recommendations as those areas most essential for DEC and NYSERDA to consider in developing the proposed rule: 1. The proposed rule must not establish price ceiling levels that undermine the integrity of the emissions cap and the role of the cap in driving emissions reductions for obligated sectors consistent with the Climate Act targets. At a minimum, a price ceiling must exceed modeled allowance prices for a Climate Act-aligned cap and therefore allow the market adequate flexibility to set allowance prices that would incentivize necessary levels of emissions abatement. 2. A non-linear (concave) rate of cap decline should generally be avoided. If the state adopts a non- linear cap trajectory that declines at a slower pace in the early years of the program, it is essential that it revert to a linear decline post-2030 in order to effectively limit cumulative GHG emissions year-over-year - the essential metric determining the extent of long-term climate impacts and warming. 3. EITE allowance allocations should not cover 100% of production values, and EITE designation should exist in tiers, rather than as a binary, to reflect the varying levels of energy intensity and trade exposure. Fossil fuel production, storage, transmission, and distribution infrastructure should not be eligible for EITE designation. 4. Facility-specific caps should be implemented either within NYCI or alongside NYCI in a companion regulation (as proposed by the Agencies) to ensure emissions reductions in DACs are at least proportionate to total emissions reductions. The following comments elaborate on these and other recommendations. 1 National Oceanic and Atmospheric Administration, "Billion-Dollar Weather and Climate Disasters", https://www.ncei.noaa.gov/access/billions/summary-stats/NY/2020-2023. 2 New York State Climate Action Council, New York State Climate Action Council Scoping Plan, (2022), p. 129. 3 III. Demonstrating Compliance The Pre-Proposal recommends a first compliance period of 2025-2026 and a second compliance period beginning in 2027 with two or three-year periods thereafter. We strongly support the proposal that compliance with the program begin in 2025 and urge that the Agencies maintain this timeline. While the Agencies have been actively working to move forward with cap-and-invest outreach and program design following the finalization of the Scoping Plan, the Climate Law required that rules be promulgated to achieve New York's climate targets by the end of 2023, a deadline that has passed. We cannot delay the start of critical regulations to achieve these targets, like NYCI and associated rules, any further. We also support three-year compliance periods beginning in 2027 (after the preliminary two-year compliance period for 2025-2026). IV. Establishing a GHG Emissions Cap and Allowance Budget Setting the 2025 GHG Emissions Cap The Agencies identify two possible options for establishing the 2025 starting cap including the historical method and the projection method. We recommend the starting cap be set based on the projection method, which would take into account both historical trends and the likely impact of existing regulations and programs. Given the depth of analysis already conducted as part of the Integration Analysis reference case updates, this approach would be straightforward and could be supported with transparent analysis. This method is likely to amount to a more accurate estimate of actual emissions at the time of the program start given the lag in historical emissions data and accelerating impact of existing policies. In addition, the projection method is consistent with the best practices that have been successfully utilized for over a decade to establish and update the starting caps for various iterations of the Regional Greenhouse Gas Initiative. GHG Emissions Cap Trajectory The Pre-Proposal anticipates a nonlinear cap decline rate from 2025-2030 and 2030-2050 with a more gradual rate of emissions reductions from 2026-2027 and 2031-2040 (and conversely steeper rates of reductions between 2028-2030 and 2040-2050 accelerating towards the 2030 and 2050 targets). In general, a concave non-linear rate of cap decline should be avoided in order to drive both near-term reductions and control cumulative GHG pollution, or total emissions year-over-year. While it may be appropriate to phase in the program with a more gradual cap decline rate in the 2026-2027 period, by 2030, the regulated community and the state's economy will have had time to adapt to the NYCI policy framework. After 2030, the cap budget should decline at least linearly. Limiting cumulative emissions is critical both to curb the near-term warming impacts of short-lived GHGs and to limit damages from long-lived GHGs that accumulate in the atmosphere and continue to warm the climate for hundreds of years. Point-in-time annual emissions targets like those in the Climate Act do not sufficiently account for the reality that cumulative climate pollution will determine the extent of climate impacts. It is critical that the Agencies recognize these dynamics and ensure the program is as effective as possible in limiting cumulative pollution. 4 III. Price Stability Measures & Cost Containment Price Ceiling The Scoping Plan recommended a cap-and-invest program as a means of setting an enforceable, declining limit on emissions across New York's economy to ensure that "aggregate emissions do not exceed the statewide emission limits".3 Governor Hochul's FY24 budget similarly directed DEC and NYSERDA to "design a program [...] that ensures compliance with New York's statewide emissions reductions goals".4 A program with any of the three price ceiling scenarios presented as part of the Pre-Proposal Analysis webinar on January 26, 2024 is inconsistent with this recommendation, and would mean the cap cannot act as a critical emissions backstop. In general, when allowance prices reach a predetermined price ceiling, unlimited price ceiling units may be sold above the cap, thereby undermining the role of the cap to limit emissions. Analysis presented by NYSERDA suggests that any of the price ceilings presented in the pre-proposal would lead to release of additional price ceiling units and undermine the program's ability to drive emissions reductions in line with New York's targets. According to NYSERDA's analysis, inclusion of the proposed price ceilings would lead to emissions in excess of the Climate Act-aligned 2030 target for obligated sources by 24-28 MMT CO2e, or 14-17% above the 2030 target, across the three price ceiling scenarios. This represents excess emissions in 2030 alone. Over the first 10 years of the program under the proposed price ceiling scenarios, cumulative emissions are estimated to exceed the cap budget for obligated sectors by 120-163 MMT CO2e. It is essential that the Agencies prioritize setting a cap level capable of ensuring emissions reductions for obligated sectors consistent with the Climate Act's targets, and reject inclusion of anything - like the proposed price ceilings - that would undermine this cap. While we recognize the importance of mitigating the impacts of market volatility on New Yorkers, any price ceiling must be set sufficiently high to allow the market adequate flexibility to set the appropriate allowance price that would incentivize necessary and economically efficient levels of emissions abatement. At a minimum, a price ceiling must exceed modeled allowance prices for a Climate Act-aligned cap and should also exceed cost containment reserve (CCR) price tiers, which serve as a soft price ceiling without undermining cap integrity. The price ceiling should be determined by additional NYSERDA analysis that models a Climate-Act aligned cap for the obligated sectors and identifies the market equilibrium allowance price consistent with that cap. The price ceiling should at a minimum be set above the estimated equilibrium allowance price, escalating each year. It is critical that NYSERDA's modeling - which is well calibrated to the Integration Analysis and the specifics of the NYCI program - ultimately inform this decision. Further, the program should include requirements to ensure that if a price ceiling is met and price ceiling units are sold above the cap, resulting revenues are used to secure greenhouse gas reductions on at least a ton-for-ton basis. This approach, which applies in Washington and California's programs, is an essential guardrail for the environmental integrity of the program in the event that allowance prices reach the price ceiling. 3 New York State Climate Action Council, New York State Climate Action Council Scoping Plan, (2022), p. 340 4 FY2024 New York State Executive Budget Briefing Book, https://www.budget.ny.gov/pubs/archive/fy24/ex/book/briefingbook.pdf, p. 67 5 Any cap-and-invest program will require essential complementary policies to help drive emissions reductions and achieve other state climate priorities and affordability objectives, and we fully expect New York to continue to pursue additional such policies to advance its climate goals in future years. However, a greater reliance on those complementary policies to achieve Climate Act targets would be needed under any of the proposed price ceiling scenarios. On the other hand, reliance on complementary policies could be minimized with an ambitious and effective cap-and-invest program - specifically one with a sufficiently high price ceiling that allows for a high-integrity cap. Cap-and-invest has fundamental advantages that should be taken into account when considering the relative role of various policies to achieve climate targets: it establishes a firm backstop to maximize emissions certainty, while driving the economy to select least-cost emission reductions. A cap-and-invest approach can therefore support the most cost-effective path to meeting economywide targets while offering tools - via the program design and use of revenues - to ensure that the burden of those costs are not borne by those most vulnerable to cost impacts. Cost Containment Reserve We support the Agencies' proposal to source allowances for the cost containment reserve (CCR) from under the Allowance budget, which retains the integrity of the declining cap on emissions. The proposed special schedule for CCR allowance availability - whereby CCR allowances for 2025-2026 would be available at the trigger prices starting in 2025 and 2027-2030 allowances would be available at the trigger prices starting in 2027 - is a reasonable approach to cost containment if the CCR and price ceiling trigger prices are set sufficiently high. While in general borrowing from future program allowances should be avoided, under this approach, the cumulative emissions budget would not be impacted and frontloaded CCR allowances would only be available if necessary for cost-containment at the CCR trigger price. The CCR serves as a soft price ceiling and the cost-containment strategy to pull forward CCR allowances does not sacrifice the environmental integrity of the program, as would be the case with a low price ceiling. Emissions Containment Reserve We strongly support the Agencies' proposal to include an emissions containment reserve (ECR). An ECR acts to reduce price volatility in the long-term and creates environmental benefits by ensuring that the supply of allowances is reduced-and therefore the environmental ambition of the program is increased- in a scenario where allowance prices become unexpectedly low. III. EITEs Below we provide a series of recommendations concerning the treatment of energy-intensive and trade- exposed (EITE) industries. In addition to providing detail on the requested program components, energy intensity and trade exposure thresholds, and true-up mechanisms, we outline additional considerations and criteria that the Agencies should use to identify and prioritize facilities at risk for emissions leakage (via shuttered or reduced operation), while preserving the overall program integrity and emissions reductions. We are most concerned with the ambition of the program's price ceiling. Implementing protections against emissions leakage shall only be effective if there are real, unmitigated risks posed by the 6 program's implementation. Absent a price ceiling that is sufficiently high to allow the market to set an allowance price that drives abatement consistent with the Climate Act, we would expect business risk for EITEs to be low and question the need for special provisions for EITEs. a. EITE Identification & Eligibility The Climate Act obligates DEC (§75-0109(3)(e)) to assess and implement leakage mitigation strategies. New York has already done substantive work on identifying many of the issues surrounding emissions leakage and appropriate mitigation strategies, and we commend their efforts. This includes Appendix C of the 2022 Scoping Plan, which details the leakage mitigation recommendations of the Just Transition Working Group. Existing cap-and-trade programs have included many of the following programmatic design elements: • Define economic sectors that may be inherently at risk of emissions leakage and designate them as energy- (or emissions-) intensive and trade exposed; • Choose metrics by which said sectors/facilities/firms are assessed on measures of energy intensiveness, and of trade exposure; • Create thresholds to further identify corresponding magnitudes of resource intensity and trade exposure; • Convert said thresholds into categories of leakage risk; • Apply treatments, subsidies, or remedies to EITEs according to their leakage risk; and, • Create mechanisms to adjust to changing conditions, and to allow for new entrants. New York, in its Pre-Proposal Outline, has done a commendable job in its preparation for regulating EITEs under a cap-and-invest program. In continuing to develop methods for determining EITE eligibility the Agencies should do so based primarily on the combined levels of trade-exposure and emissions-intensity. In addition, the Agencies should require compliance with air quality and other public health standards as a precursor for EITE eligibility. Doing so would be consistent with the state's obligation to achieve co-pollution reductions under the Climate Act. This may look like declining to designate a facility as eligible for assistance if they have multiple or longstanding violations of air permits, or similar infractions. The State should not be allocating allowances to facilities persistently violating air quality standards and subjecting communities to pollution. New York should focus on providing assistance to manufacturing sectors with North American Industry Classification System (NAICS) codes beginning in 31**** through 33****. Fossil fuel production, storage, transmission, and distribution infrastructure should not be eligible for EITE designation. New York should specifically exclude those in subsector 211*** for oil and gas extraction and coal mining activities (industry group NAICS code 2121**) from any protections afforded EITEs. This exclusion should also extend to any peripheral activities related to production, storage, transmission, distribution, or other use of fossil fuels. Providing direct subsidies to fossil fuel infrastructure is counterproductive and counter to the goals of the Climate Act. In addition to identifying eligible sectors via state calculations according to the methods discussed below, New York should allow businesses to petition for EITE designation and publish objective criteria for determining such designation in the case of a petition. b. Appropriate thresholds for Emissions Intensity and Trade Exposure https://climate.ny.gov/resources/scoping-plan/-/media/project/climate/files/Appendix-C.pdf https://climate.ny.gov/resources/scoping-plan/-/media/project/climate/files/Appendix-C.pdf 7 Energy or emissions intensity (costs of energy or direct and indirect emissions, divided by value added) are both appropriate metrics for qualification. New York has selected emissions intensity, defined as the sum of direct emissions and indirect electric-associated emissions in tons of CO2e, divided by "value added" in USD. We find that this metric is consistent with other programs' implementation and is a suitable choice. Economic literature notes that trade exposure provides a good proxy of foreign (in this case, out-of-state) output response to domestic (in this case, in-state) price changes.5 Furthermore, calculating trade exposure is feasibly implementable using publicly available data. We support the use of the method for calculating trade exposure included in the pre-proposal. Converting Intensity and Exposure to Leakage Thresholds New York should develop objective criteria for how to combine emissions intensity and trade exposure into a measure of leakage risk. New York should, in accordance with available and previously analyzed data, create clear boundaries to categorize industry activities. Our organizations recommend three tiers of leakage risk, with a bias towards trade exposure. Creating multiple tiers of leakage risk will allow for better identification and allocation of appropriate and economically efficient subsidy. New York should avoid an undifferentiated categorization of leakage risk, as this will likely lead to inefficiencies in subsidy, where the "needy" are under-subsidized, and the "greedy" receive excess subsidy. Figures C-5, C-6, C-7, and C-8 in Appendix C of the Scoping Plan each provide examples of where industries fall along measures of ENERGY intensity and trade exposure. For example, based on Figure C- 8, it would be reasonable to create energy intensity cutoffs at 5% and 10%, for a low (0-5%), medium (5- 10%) and high (>10%) energy intensity regime.6 Conversions of the data to emissions intensity would likely yield similarly clear groupings. For trade exposure, above 50% might be classified as highly exposed, between 10%-50% as medium, and below 10% as low.7 Appendix C notes that emissions intensity was calculated with the New York State Value of Carbon ($125) as a multiplier for emissions. Our organizations are neutral on whether this is a necessary additional step; NYCI will maintain internal validity with or without this adder, and it likely will allow for emissions intensity to be more digestible as a percentage (cost of carbon emitted per revenue or value added). However, it may mildly complicate comparisons against and linkages to other emissions trading schemes. Consistency of metrics across programs is useful, but not administratively insurmountable. As a working example, and based on available data, New York should consider 2%, 5%, and 10% as cutoffs for divisions of low, medium, and high energy intensity; and 10%, 20%, and 40% as cutoffs for trade intensity. These cutoffs would create tiers of tailored subsidy for firms according to their relative 5 See Fowlie and Reguant (2018), Challenges in the Measurement of Leakage Risk, https://doi.org/10.1257/pandp.20181087. 6 Again, Appendix C used energy intensity in its graphics, though the data presented in Table C-6 also provides Emissions Intensity. These numbers constitute a working example, rather than a fixed directive. 7 These are estimated parameters based on observations of the data presented in Figure C-8. https://doi.org/10.1257/pandp.20181087 8 leakage risk and avoid issues, such as those experienced as part of California's program, where certain firms received inflated levels of subsidy. Data gaps and data gathering Generally speaking, it is a privilege to receive freely allocated permits. It is incumbent upon firms to demonstrate eligibility by providing transparent data on their emissions intensity and their trade exposure, both internationally and domestically. New York should work with firms to build the financial and economic documentation associated with interstate trade of goods and services such that they may have a more granular understanding of how domestic interstate trade might impact firms' trade exposure and thus leakage risk. This may require partnering with other state level departments concerned with trade, financial regulation, and economic development. c. EITE allowance volumes California's and Washington's programs both allocate allowances freely based on the proportion of their production baselines. Both states freely allocate nearly 100% of prior production, which provides insufficient incentive to reduce either air pollutants locally, or emissions intensity with a sense of urgency. Economics literature has modeled various cap-and-trade scenarios and has found some success with allocation to EITEs set at 80% of output.8 The Agencies should consider an allocation assistance factor of 80% or lower. As with California, whose Cap Adjustment Factor declines in proportion to the overall annual cap, tightening allowance allocations will provide an economic signal to firms to abate emissions, and New York should adopt a tightening cap in similar fashion. IV. Mechanisms to Prioritize Disadvantaged Communities The Climate Act specifies that DEC shall (a) "ensure that activities undertaken to comply with the regulations do not result in a net increase in co-pollutant emissions or otherwise disproportionately burden disadvantaged communities" (§75-0109(3)(c)), and (b) "prioritize measures to maximize net reductions of greenhouse gas emissions and co-pollutants in disadvantaged communities" (§75- 0109(3)(d)). In developing measures under NYCI in line with the above, we want to emphasize that participation of DAC representatives is essential to ensuring equitable and successful outcomes. We applaud the clear message in the pre-proposal outline, and the January 25 webinar, that the Agencies are indeed prioritizing DACs in NYCI design, and we support the emphasis on facility-specific caps (FSCs) as an appropriate mechanism for supporting the Climate Act mandates listed above. Applying FSCs to a specific subset of sources would help retain the flexibility benefits of carbon pricing (thus making the program more affordable) while still guaranteeing emission reductions from the point sources of air pollution that are located in a given proximity to DACs. Below, we consider a variety of design details related to FSCs. Note, the below comments on FSC implementation are preliminary, and we are continuing to research the implications of various approaches-positions outlined below are intended to further foster a 8 See Fowlie and Reguant (2020), Mitigating Emissions Leakage in Incomplete Carbon Markets, https://doi.org/10.1086/716765. https://doi.org/10.1086/716765 9 thoughtful dialogue with DEC, NYSERDA, stakeholders, and with groups directly representing DACs in particular in order to arrive at the appropriate regime. Should FSCs be on GHG emissions, specified co-pollutants, or both? The Climate Act requires that implementing regulations "do not result in a net increase in co-pollutant emissions" in DACs (§75-0109(3)(c)). Furthermore, the primary local air quality public health concern is co-pollutant emissions, not GHGs. Given this, from a practical pollution exposure perspective, FSCs should apply to co-pollutants, to improve the disproportionate pollution burden in DACs. Additionally, understanding that there are different pollution control mechanisms for different pollutants, a co-pollutant only regime would allow facilities to make targeted investments in co-pollutant control technologies and flexibly participate in NYCI-maximizing NYCI program affordability while also ensuring DACs are protected from exposure to local air pollutants. Which facilities should be covered? As stated in the Scoping Plan, FSCs could apply to facilities "in, proximate to, or impacting Disadvantaged Communities." In the pre-proposal, the Agencies emphasized facilities that "are in or near" DACs. How DEC defines proximity will determine which facilities are covered. In determining proximity, we recommend the Agencies consider the US Environmental Protection Agency's Power Plant Environmental Justice Screening Methodology (PPSM). The PPSM establishes a peer-reviewed approach for identifying the potential of pollution from electric generating units (EGUs) to affect air quality in DACs-directly relevant to the task at hand in New York with respect to FSCs. While many facilities subject to FSCs in New York may not be EGUs, we think the PPSM could be a useful input to DEC's broader process of determining relevant proximity. Additionally, the Agencies should consider cumulative risk from facilities. People are often exposed to multiple emissions from multiple sources that cause the same health problems, such as cancer, asthma, and developmental harm. Facilities releasing dangerous pollutants in New York are sometimes clustered together. In determining which facilities to cover, the Agencies will also need to decide whether FSC coverage would be subject to the same obligation thresholds for stationary sources under NYCI (25,000 MT CO2e proposed in pre-proposal). Given that FSCs are primarily targeting co-pollutants, not GHGs, there is rationale for using a different approach to obligation thresholds. Processes for establishing the appropriate level of FSCs For the purposes of setting the appropriate level of FSCs, we again refer to the Climate Act, specifically the emphasis on (a) ensuring no net increases, (b) maximizing net reductions, and (c) not disproportionately burdening DACs. Pursuant to this language, we recommend DEC consider a three-step process for determining FSC levels. First, regarding (a) above, one operative question is what FSCs should be benchmarked against. The Climate Act GHG targets benchmark against 1990 levels. This would not be an appropriate benchmark however for FSCs, since it is so far in the past and therefore so far removed from people's current lived experience of air quality in their communities. Instead, the benchmark should enable a comparison of emissions levels under NYCI with the most recent lived experience of New Yorkers - in this way, FSCs will protect New York's DACs from any potential emissions increases from status quo. As such, we recommend DEC employ an FSC benchmark that uses the most recent pollution data. And, given annual https://www.epa.gov/power-sector/power-plant-environmental-justice-screening-methodology https://www.epa.gov/power-sector/power-plant-environmental-justice-screening-methodology 10 economic, climate and other idiosyncrasies, it may be best to take an average of pollution levels over the most recent 3 to 5 years. Additionally, DEC must consider whether to calculate such a benchmark as a statewide average or specifically tailored to each facility. Using a statewide average may provide administrative simplicity and ease, however, it could lead to some unintended and adverse consequences. Specifically, under a statewide average, above-average emitters would be forced to emit below their actual facility-specific historical levels, and below-average emitters would be allowed to increase their emissions. Both cases present problems, but the second case specifically violates the Climate Act, in that net increases in co- pollutants could occur at any facility that is below average. As such, we recommend DEC use individual facility-specific benchmarks. In this case, facilities would not be able to emit above their own unique historical benchmark. Second, with regard to item (b) above, in addition to setting FSCs in line with recent historical trends, the Agencies should apply an annual adjustment to the benchmark that increases FSC stringency over time commensurate with economy-wide emissions reduction pathways (in accordance with the Climate Act targets). The third component of setting the FSC level pertains to avoiding any disproportionate burden in DACs. In order to do this, we encourage DEC to establish a method for comparing emissions rates at DAC facilities (facilities identified to be in or near a DAC) and non-DAC facilities over time, to ensure that rates of emissions reduction at DAC facilities are commensurate with rates at non-DAC facilities. One approach DEC could consider in this case is to annually calculate the percentage statewide emissions reductions (either compared to the benchmark year established in the first step, or even just the preceding year in any given year) of all DAC and non-DAC facilities, and then calculate the difference of DAC to non-DAC emissions reductions rates. In any year where the rate of decline at non-DAC facilities exceeds the rate of decline at DAC facilities, the percentage point difference would be applied as an adjustment factor to the FSC for DAC facilities in the next year. To provide an illustrative example, if in 2027 non-DAC facility reductions were 35 percent and DAC facility reductions were 30 percent, in 2028 DAC facility caps would be reduced by an additional 5 percentage points (the difference between the two rates) below the rates established under the first two steps discussed above. In order to ensure reductions, DEC should continue to strengthen policies and programs for air monitoring. Fenceline and community continuous monitoring help assess community risk by determining concentrations of co-pollutants and hazardous air pollutants. Stack monitoring and process monitoring at facilities helps assess emissions rates that can provide input into Title V, CLCPA, NYCI, and other emissions-based frameworks. Both inside the fence and outside the fence monitoring at each facility are essential to ensure DAC protection mechanisms under NYCI are focused on where they can do the most good, as required under the Climate Act. Regulatory mechanisms Noting that the pre-proposal suggests any FSCs would "likely be established through DEC's existing permitting oversight process and codified in parallel regulations," we offer some comments on this approach. We encourage the state to design an FSC program that provides maximum certainty of achieving- throughout NYCI's lifetime-(a), (b), and (c) articulated in the previous section. One concern with running FSCs through a parallel regulation is that the timing of implementation may not be well harmonized with NYCI timelines. For example, Title V air quality facility permits are generally issued for a period of five years. Therefore, it could be five years after the start of NYCI before a given facility may be subject to 11 permit renewal and any related FSCs. This kind of lag in FSC coverage would be problematic, leaving DACs exposed to potential pollution burdens in the interim. If DEC does decide to run FSCs through a parallel permitting program, we strongly encourage harmonization of permitting timelines to ensure all facilities subject to FSCs are covered by an FSC on day one of NYCI implementation.
Commenter Uploaded Docs	NYCI Pre-Proposal Joint Climate & Environmental NGO Comment_030124.pdf