State Current: New York Green Jobs Program Invests RGGI Proceeds into Efficiency

In September, the New York State Senate passed landmark legislation creating the “Green Jobs/Green New York” program, which aims to make 1,000,000 homes, businesses, and not-for-profits in New York more energy efficient. Workforce development and job training constitutes the second pillar of the program, which aims to create 14,000 jobs.

The program will be administered by the New York State Energy Research and Development Authority (NYSERDA), which will establish a revolving loan program to provide the upfront cost of up to $13,000 per residential customer to retrofit a home, and up to $26,000 to retrofit each qualifying business. NYSERDA will also conduct energy audits, administer the program, and provide a credit enhancement for critical private sector capital investments. The program is estimated to reduce energy usage of its participants by 30–40%. Property owners will repay the full cost of the investment over time with portions of their energy savings, yielding net savings for the program participants. The new law requires NYSERDA to establish innovative financing mechanisms such as on-bill financing, which allows utility customers to pay a monthly average bill and pay down the loan with any money paid in excess of actual costs.

NYSERDA will target small geographic areas for the initial retrofits through a competitive process that requires applicants to include local community groups and collaborate with contractors, local utilities, labor, and training organizations.  NYSERDA must give preference to areas with high energy costs and coalitions that include women- and minority-based businesses, and groups based in economically distressed communities.

The program will also receive $2–4 million of Regional Greenhouse Gas Initiative (RGGI) funds, which the state gathers through the sale of carbon allowances to major emitters in RGGI-participating states, to establish green job training throughout the state. In partnership with the Department of Labor, NYSERDA will create workforce training programs throughout the state to ensure that the state’s workforce is highly trained and in place to handle mass-scale retrofitting. NYSERDA will also partner with providers of workforce training such as community colleges, community-based organizations, trade associations, and labor unions to create successful and sustainable strategies. Key challenges to address will include building sufficient capacity, such as hiring enough qualified trainers or securing proper facilities for hands-on work for training programs. The program will also attempt to overcome inconsistencies in curricula and market acceptance of certifications throughout the state.

The program will be funded with revenue raised by the auction of carbon emission credits through the RGGI. The bill allocates $112 million from the auction proceeds to NYSERDA and this funding will be used to leverage private and federal investments. Auctions of carbon emission credits over the last two years have raised almost $150 million for the state, which expects to take in an additional $70 million through 2010. On October 15th, Governor David Patterson proposed a plan to take $90 million in RGGI proceeds to close New York’s budget deficit only days after signing the bill, which will be considered by the State Legislature currently in recess. The announcement was roundly criticized by environmental groups, which fear the move sets a precedent for using the money as a reserve for other programs in New York and other participating states. The Governor’s office maintains that the $112 million for NYSERDA would be preserved.

The criticism is rooted partly in the fact that under the memorandum of understanding signed by the 10 RGGI states, the states agreed to use proceeds from RGGI auctions for energy conservation and clean energy programs. Most states have delivered on this commitment. In Maine, all proceeds are used for electric and fuel efficiency. New Hampshire dedicates 90% of its proceeds to energy efficiency and at least 10 percent to low-income energy assistance. The state established the Greenhouse Gas Emissions Reduction Fund (GHGERF) with RGGI proceeds, which will support energy efficiency and renewable energy projects and initiatives in New Hampshire. The fund has already implemented a new revolving loan fund offered to businesses and administered by the NH Business Finance Authority.