Updates on New York’s Climate Leadership and Community Protection Act (CLCPA)

Introduction

The Climate Leadership and Community Protection Act (CLCPA) of New York State, effective since January 1, 2020, stands as a landmark legislation mandating substantial reductions in greenhouse gas (GHG) emissions within the state. Envisioned to combat climate change and promote environmental justice (EJ), the CLCPA aims for a 40% reduction below 1990 emission levels by 2030, with an ambitious 85% reduction by 2050. Moreover, the law requires that at least 35% of climate change mitigation investments benefit disadvantaged communities (DACs), ensuring equitable distribution of its benefits.

Regulators in New York, led by the New York State Department of Environmental Conservation (NYSDEC) and the New York State Energy Research and Development Authority (NYSERDA), are taking proactive steps to implement the CLCPA and are now proposing a triad of regulations that will bring significant changes across various industries in the state of New York. These encompass strict regulations on hydrofluorocarbons (HFCs) and sulfur hexafluoride (SF₆) — both potent GHGs — alongside the ongoing implementation of the state’s comprehensive “Cap-and-Invest” program.

Update on New York’s “Cap-and-Invest” Program known as NYCI

In late December 2023, the NYSDEC and NYSERDA unveiled a “Pre-Proposal Outline” of New York’s eagerly anticipated “Cap-and-Invest” program known as NYIC. While not yet formal draft regulations, the outline offers a comprehensive overview of the program’s anticipated workings upon its enactment in 2024. Key provisions of the proposal largely align with the initial framework released in June 2023. The salient points include:

• Establishment of a mandatory GHG reporting program under a new 6 NYCRR Part 253, expanding reporting obligations to encompass various industries.
• Implementation of an annual emissions cap across the economy, gradually reducing over time to meet CLCPA-mandated reductions.
• Obligation for the largest GHG emitters (termed “Obligated Entities”) to purchase emissions allowances auctioned by NYSERDA.
• Allocation of no-cost allowances to Emissions-Intense and Trade-Exposed Industries (EITEs) to mitigate GHG “leakage.”
• Anticipated revenue generation of $6 to $12 billion from auctions, earmarked for further GHG reduction technologies.

The “Pre-Proposal Outline” seeks input from stakeholders, with NYSDEC and NYSERDA planning to introduce formal draft regulations in 2024, followed by a comment period and public hearings. The regulations are expected to take effect by the end of 2024, with compliance obligations commencing in 2025.

Update on 6 NYCRR Part 494, Hydrofluorocarbon Standards and Reporting and Monitoring

NYSDEC is proposing amendments to 6 NYCRR Part 494 to address Hydrofluorocarbons (HFCs). HFCs are highly potent GHGs, boasting hundreds to thousands of times greater global warming potential (GWP) compared to natural refrigerants. Their widespread use in refrigeration, heating, ventilation, and air conditioning (HVAC) systems, and insulation foams for energy-efficient buildings made the buildings sector the largest emitter of HFCs in New York in 2019, accounting for 32% of statewide emissions. This rule aims to cap the GWP of new air conditioning and refrigeration systems at 10 CO₂e by 2034, aligning with the Kigali Amendment to the Montreal Protocol and the federal American Innovation and Manufacturing Act of 2021. These measures target an 85% reduction in HFC production and trade in the U.S. by 2036, bringing New York’s regulations in line with those of other U.S. Climate Alliance states like California, Colorado, Connecticut, and New Jersey.

The proposed amendments include various prohibitions, reporting requirements, and repair standards, alongside restrictions on HFC sale, use, and supply, and regulations for new products and systems containing HFCs. They establish a timeline for reducing HFC emissions to meet the 10 GWP limit, impose controls on emissions from existing equipment, and facilitate a transition away from HFCs in major applications, such as food chain refrigeration systems.

Starting January 1, 2025, the regulations will ban regulated HFCs with a 20-year GWP exceeding 10 in new refrigeration equipment containing over 50 lbs. of refrigerant. This affects a diverse range of end-users, from supermarkets and ice rinks to industrial chillers and residential air-conditioning units, subjecting all new installations to strict restrictions that phase down to the 10 GWP limit by 2034.

Update on the Proposed 6 NYCRR Part 495, ‘Sulfur Hexafluoride Standards and Reporting’

NYSDEC is implementing another measure to comply with the requirements of the CLCPA by introducing a new draft regulation, 6 NYCRR Part 495, titled “Sulfur Hexafluoride Standards and Reporting.” This regulation aims to significantly reduce the use of SF₆, a gas with a GWP 17,500 times that of CO₂ and a persistent presence in our atmosphere for millennia. SF₆ is predominantly used as an insulator in electricity transmission and distribution equipment within the electricity sector, making it subject to intense scrutiny as the most potent GHG listed in the CLCPA.

The proposed regulation outlines a phased reduction of SF₆ in gas insulated equipment (GIE) through the implementation of emissions limits, utilization restrictions, and reporting requirements for specified SF₆ users and suppliers. NYSDEC’s proposal closely aligns with the California Air Resources Board’s (CARB) Regulation for Reducing Sulfur Hexafluoride Emissions and complies with California and federal reporting standards. The regulatory timeline proposes a planned obsolescence for SF₆, with a ban on acquisition after designated phase-out dates unless specific conditions are met.

These phase-out dates are customized based on the equipment’s configuration, voltage capacity, and short-circuit current ratings. Companies that use SF₆ GIE will be required to maintain an annual inventory of equipment and insulating gas from 2025 onwards, with owners reporting on this inventory if their annual GHG emissions exceed 7,500 MTCO₂e starting in 2026. The reduction in the availability of SF₆ GIE will commence in 2026 and extend until 2033. From 2028 onwards, GIE owners must ensure that total GIE emissions remain below an emissions limit determined by their baseline capacity. Furthermore, under Subpart 495-2, New York will limit the use of SF₆ to essential purposes and impose a registration requirement on suppliers (including manufacturers, producers, and distributors) of fluorinated GHGs starting in 2025. These suppliers will begin reporting annually on total volumes supplied to the state from 2026 onwards.

Implementation and Monitoring

Initial efforts under the CLCPA have primarily focused on decarbonizing the energy and transportation sectors. Achieving the mandated reductions necessitates a swift transition to renewable energy sources and the electrification of transportation. This entails incentivizing renewable energy infrastructure development, expanding the market for carbon offset credits, and promoting the adoption of zero-emission vehicles. Facilities, particularly those in or near EJ communities, face significant pressure to transition away from fossil fuels and align with the CLCPA’s objectives.

Moreover, with the approval of the Securities and Exchange Commission’s (SEC) Enhancement and Standardization of Climate-Related Disclosures final rule, organizations operating in New York will soon be required by the United States (US) government to report their Scope 1 and Scope 2 GHG emissions. This reflects the increasing importance of why companies in New York should start complying with the CLCPA at a high level. By doing so, New York state companies will not only meet the government-mandated requirements of New York but also those of the federal government, leading to avoided penalties and compliance hardships down the road.

To achieve the CLCPA’s goals, the New York State Climate Action Council (CAC) meticulously developed a comprehensive roadmap known as the Scoping Plan. Unveiled after three years of extensive collaboration and public input, the plan outlines 129 legislative and regulatory recommendations, along with numerous programmatic actions. Endorsed by the CAC in December 2022, the plan serves as a blueprint for achieving the state’s ambitious climate targets while fostering economic growth and equity.

To monitor the implementation progress of the Scoping Plan’s recommendations, the Sabin Center for Climate Change Law introduced the CLCPA Scoping Plan Tracker. This tool catalogues the 129 recommendations and tracks New York’s progress in their implementation. By simplifying the monitoring process and providing key insights into areas needing improvement, the tracker facilitates effective oversight of the state’s climate action efforts.

Environmental Justice

Central to the CLCPA’s implementation is ensuring a just transition to a clean energy economy. The plan prioritizes climate justice, aiming to address environmental and energy burdens disproportionately affecting DAC. Through targeted investments and policies, the state endeavors to create equitable opportunities for all while mitigating the impacts of climate change.

Since the enactment of the CLCPA, ALL4 has been actively supporting our clients in New York, particularly those within DAC, in devising and executing effective compliance strategies to address both GHG emissions and the co-pollutant emissions of hazardous air pollutants (HAP). Our efforts have been primarily driven by our expertise in Environmental, Social, and Governance (ESG) practices and air quality permitting, which we have utilized in building strong relationships with regulators at NYSDEC. Specifically, ALL4 has been instrumental in aiding several New York-based clients in meeting the rigorous ambient air quality standards outlined in New York’s Part 212 air toxics rule, while also ensuring compliance with the environmental justice requirements mandated by the CLCPA for their Title V operating permit renewal. ALL4 has played a central role in devising emission control strategies that strike a balance between our clients’ interests and the well-being of the surrounding community. Furthermore, ALL4 has provided ongoing support to these clients post-submittal, which has included developing a comprehensive Public Participation Plan (PPP) and offering expert testimony during public hearings to engage with local community members and address any concerns regarding the pending permits.

Conclusion

The CLCPA of New York state represents a landmark effort to combat climate change and promote environmental justice. The proposed regulations outlined in this blog aim to significantly reduce GHG emissions across various sectors while ensuring equitable distribution of benefits. Through initiatives such as the “Cap-and-Invest” program (NYCI) and regulations targeting HFCs and SF₆, New York is taking decisive steps towards achieving its climate goals. Implementation and monitoring mechanisms, including the Scoping Plan and the CLCPA Scoping Plan Tracker, underscore the state’s commitment to transparency and accountability. Central to the CLCPA’s success is its focus on environmental justice, aiming to address disparities in climate impacts and promote resilience among disadvantaged communities. By prioritizing equity in climate policies and investments, New York sets an example for other jurisdictions striving for sustainable and inclusive futures.

What You Can Do

Now that NYSDEC has been granted enforcement authority to require GHG accounting as part of air permitting, it is imperative that companies in New York begin to actively pursue GHG and co-pollutant mitigation strategies that conform to the goals of the CLCPA. ALL4 can provide support for these compliance demonstrations and related requests. Additionally, ALL4 offers sustainability-related services, including conducting materiality assessments, implementing GHG accounting procedures, devising ESG reporting strategies, providing assurance services, establishing carbon reduction targets, pursuing net-zero goals, and implementing climate initiatives. For inquiries about ALL4’s services or questions regarding how the CLCPA might affect your facility in the state of New York, please contact ALL4’s ESG and Sustainability Managing Consultant, James Giannantonio, at the email address jgiannantonio@all4inc.com.