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Top 10 Benefits of New York ISO's Carbon Pricing Plan

May 12, 2020

The Analysis Group’s assessment of our Carbon Pricing Proposal, and accompanying Summary for Policymakers, identified key value propositions of adding a carbon pricing mechanism in wholesale electricity markets. Those benefits are summarized below.

1. Accelerated entry of renewables projects

A price on carbon emissions will increase the opportunity for financing of clean energy resources to enter the market through improved revenue certainty.


2. Revenue streams and economic benefits

Carbon pricing can reduce state-funded clean energy costs while providing clear signals that reward investment in clean energy and investment flexibility to redirect COVID-constrained budgets.


3. Public health impacts and Environmental Justice

Given the location of fossil generation in downstate New York, a carbon price will reduce emissions and local air pollution in these communities.


4. Acceleration of fossil retirements and reduced use of natural gas

A carbon price will encourage owners of inefficient fossil fuel units to deactivate or improve efficiency, especially downstate.


5. Incentives for efficient transmission investments

A location-based carbon price will create strong incentives for cost-effective investment in increased transfer capability between upstate and downstate.


6. Incentives for innovation

A carbon price in the NYISO energy market will increase incentives for entrepreneurs and others to develop new supply-side and demand-side technologies, products, and services.


7. Compatibility with other policy instruments

A carbon price complements other state clean energy policies by valuing low-carbon investment and operations in the electric system and aligns market-based incentives with public policy goals.


8. Consumer cost impacts

Competitive markets have a 20-year record of promoting system efficiency to deliver the least-cost supply mix to consumers and produce long-term savings. Carbon pricing leverages markets to more efficiently deliver carbon reduction goals.


9. Incentives for energy efficiency and other customer-based actions

A carbon price improves price signals to encourage consumers to more effectively manage their energy use with clean energy solutions.


10. State policy leadership   

A carbon price can be quickly implemented and exported to other states and regions, demonstrating New York’s leadership through a market-based approach.

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We are an independent, not-for-profit corporation responsible for operating the state’s bulk electricity grid, administering New York’s competitive wholesale electricity markets, conducting comprehensive long-term planning for the state’s electric power system, and advancing the technological infrastructure of the electric system serving the Empire State.