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Amicus Briefs on New York’s Zero Emissions Credits

In 2016, the New York Public Service Commission adopted the Clean Energy Standard, an ambitious plan to increase renewable generation to 50% of the market by 2030 and ensure that emissions reductions that the state has already achieved are not lost during the time it takes to meet that renewables goal. In order to protect against backsliding, the Commission established Zero Emissions Credits (ZECs) to compensate zero-emission nuclear generation for the value of avoided carbon emissions.

Policy Integrity was an active participant in the Clean Energy Standard proceeding, advocating for ZECs that compensate nuclear generators based on the actual value of avoiding carbon emissions. The Commission adopted our position in its ZEC formula.

In a case before the U.S. Court of Appeals for the Second Circuit, plaintiffs have argued that ZEC payments are preempted under the Federal Power Act, because those payments disregard Federal Energy Regulatory Commission-approved wholesale energy and capacity market rates. In our amicus brief, we counter this argument by providing a detailed analysis of the Clean Energy Standard and the ZEC payment formula. That detailed examination demonstrates that ZEC payments are designed to compensate nuclear generators for avoiding carbon emissions—not to displace, replace, or disregard wholesale energy and capacity payments.

Our Energy Policy Director, Burcin Unel, was also one of several expert economists who submitted another amicus brief in this case. Unel and the independent economists make the case that states have had good reason for pursuing environmental policies since, absent intervention, electric power markets do not yield economically efficient outcomes. The economists argue that New York has good reason to put a value on carbon-free electricity because according to a fundamental principle of economics, markets do not operate efficiently when there are externalities. The ZEC program addresses that problem by compensating qualifying generators for the value of their carbon-free electricity. The brief also counters the argument that ZECs are improper because of the impact they have on the wholesale markets, explaining that state environmental policies all have at least some economic impact on wholesale markets, and that those policies have been enacted for years without objection from FERC.