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A08597 Summary:

COSPNSRSimon, Burdick, Dinowitz, Septimo, Seawright, Dickens, Gottfried, Epstein, Gallagher, Carroll, Stirpe
Add Art 76 76-0101 - 76-0117, En Con L; rpld 301-e sub (f), 1115 sub (a) 9, Tax L
Enacts the carbon dioxide removal leadership act which directs New York state to procure carbon dioxide removal services in order to achieve statewide net zero greenhouse gas emissions pursuant to legally enforceable limits; defines terms.
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A08597 Memo:

submitted in accordance with Assembly Rule III, Sec 1(f)
  TITLE OF BILL: An act to amend the environmental conservation law, in relation to enacting the carbon dioxide removal leadership act; and to repeal certain provisions of the tax law relating to taxes on carbon dioxide emissions   PURPOSE OR GENERAL IDEA OF BILL: Enacts the carbon dioxide removal leadership act; repealer   SUMMARY OF SPECIFIC PROVISIONS: Section 1. Titles the act the "Carbon Dioxide Removal Leadership Act." Directs New York State to procure carbon dioxide removal services pursu- ant to paragraph b of subdivision four of section 75-0109 of the envi- ronmental conservation law. Section 2. Adds new article 76 to the environmental conservation law. Section 76-0101 sets definitions for this article. Subsection 76-0103 sets the terms for the New York State carbon dioxide removal reverse auction. Subsection 760105 sets terms for measurement, reporting and verification of carbon dioxide removal. Subsection 76-0107 sets terms for bidding preferences. Subsection 76-0109 set on-going bidder respon- sibilities. Subsection 76-0111 authorizes funding for the reverse auction. Subsection 76-0113 creates a carbon dioxide removal and equity survey. Subsection 76-0117 enacts a severability clause. Section 3. Repeals Subdivision (f) of section 301-e of the tax law. Section 4. Repeals paragraph 9 of subdivision (a) of section 1115 of the tax law. Section 5. Sets the effective date.   JUSTIFICATION: The inundation of the Earth's atmosphere with an excess of greenhouse gasses has set the planet on course to supersede a 3 Celsius by the end of the 21St century. The level of saturation today is likely to push the increase in global temperature beyond 1.5 Celsius threshold, a tipping point at which many climate scientists predict our options to solve the climate crisis will become extremely constrained. In addition to the parallel imperative of eliminating future emissions from fossil fuels, these facts make it clear that there is no solution to the climate crisis without removing billions of tons of already-emit- ted CO2 from the atmosphere each year. The Carbon Dioxide Removal Leadership act sets a framework for New York to directly procure carbon removal; foster technological advances in this critical new sector; meet the carbon removal coals of the Climate Leadership and Community Protection act of 2019, and to prime New York state to be a leading hub in the emerging carbon removal industry. The legislation creates a reverse auction for carbon removal funded by the state. The initial funding for the reverse auction is secured by eliminating certain tax exemptions on fossil fuels and reallocating those funds to carbon direct removal. Bidders would be able to submit project proposals for carbon removal through terrestrial mineralization, rock weathering, the creation of construction materials and other products from removed carbon, as well as other removal methods. By directly procuring durable carbon removal, New York will accrue several important benefits. Firstly, the reserve auction process creates an incentive for companies interested in carbon direct removal to deploy and research this technology. This creates a market for direct carbon removal where none currently exists. While carbon removal will be a necessary component of any net-zero emissions plan, carbon removal tech- nology is currently prohibitively expensive to scale in an effective manner. Creating an incentive for the development of this technology will better position New York to deploy carbon direct removal in the future. Additionally, establishing New York as a "hub" for carbon direct removal will create additional economic opportunities for New Yorkers. Finally, the CLCPA calls for 15% of New York's net-zero emissions plan to be accomplished either by carbon offsets or by carbon direct removal. Currently, without the further development of carbon removal technology, New York may have to depend on carbon offsets to meet this part of its climate goals. A reliance on carbon offsets may serve to further depend- ence on fossil fuels in hard-to-decarbonize sectors and does not address the issue of legacy carbon already in the atmosphere. This legislation creates a path for New York to more effectively achieve this component of the CLCPA goals while positioning itself as the hub of a nascent carbon removal industry.   PRIOR LEGISLATIVE HISTORY: New Bill   FISCAL IMPLICATION: To be determined.   EFFECTIVE DATE: This act shall take effect immediately.
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A08597 Text:

                STATE OF NEW YORK
                   IN ASSEMBLY
                                    January 10, 2022
        Introduced  by  M. of A. FAHY -- read once and referred to the Committee
          on Environmental Conservation
        AN ACT to amend the  environmental  conservation  law,  in  relation  to
          enacting  the  carbon  dioxide  removal  leadership act; and to repeal
          certain provisions of the tax law relating to taxes on carbon  dioxide

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
     1    Section 1. This act shall be known and may be  cited  as  the  "Carbon
     2  Dioxide  Removal  Leadership  Act".  This  act directs New York state to
     3  procure carbon dioxide removal services in order  to  achieve  statewide
     4  net zero greenhouse gas emissions pursuant to legally enforceable limits
     5  set  forth  in paragraph b of subdivision four of section 75-0109 of the
     6  environmental conservation law. The use  of  such  mechanism  creates  a
     7  target  for  carbon dioxide removal by the year two thousand fifty equal
     8  to fifteen percent of statewide greenhouse gas emissions estimated as  a
     9  percentage  of  emissions in the year nineteen hundred ninety, and shall
    10  be implemented in lieu of  any  alternative  compliance  mechanism  that
    11  would  permit  greenhouse gas emissions offset projects. The procurement
    12  of carbon dioxide removal services shall  not  result  in  disadvantaged
    13  communities  having  to  bear a disproportionate burden of environmental
    14  impacts, and shall incorporate preferential consideration  for  projects
    15  that result in quantifiable economic and social benefits for such commu-
    16  nities.
    17    §  2.  The  environmental  conservation law is amended by adding a new
    18  article 76 to read as follows:
    19                                 ARTICLE 76
    20                           CARBON DIOXIDE REMOVAL
    21  Section 76-0101. Definitions.
    22          76-0103. New York state carbon dioxide removal reverse auction.
    23          76-0105. Carbon  dioxide  removal  measurement,  reporting   and
    24                     verification.

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.

        A. 8597                             2
     1          76-0107. Bid preferences.
     2          76-0109. On-going bidder responsibilities.
     3          76-0111. Reverse auction funding.
     4          76-0113. Carbon dioxide removal and equity survey.
     5          76-0115. Authority and compliance.
     6          76-0117. Severability.
     7  § 76-0101. Definitions.
     8    For  the  purposes of this article, the following terms shall have the
     9  following meanings:
    10    1. "Annual price per ton" means the maximum price per  metric  ton  of
    11  CDR which the state will pay per bid in a given year.
    12    2.  "Annual  removal  target" means the minimum total volume of carbon
    13  dioxide removal, expressed in metric tons of carbon dioxide  equivalent,
    14  for  which the department will solicit bids in a given year, such amount
    15  to be increased by the portion of the annual removal target not  met  in
    16  the prior year.
    17    3. "Bid" means a bid fulfilling the requirements of section 76-0105 of
    18  this article.
    19    4.  "Bid price" means the total price the bidder is willing to be paid
    20  in a given bid for providing carbon dioxide removal.
    21    5. "Bidder" means a person or  entities  qualified  to  submit  a  bid
    22  pursuant  to the requirements set forth in section 76-0109 of this arti-
    23  cle.
    24    6. "Carbon dioxide equivalent" or "CO2e" means the  amount  of  carbon
    25  dioxide  by  mass that would produce the same global warming impact as a
    26  given mass of another greenhouse gas over an integrated twenty-five-year
    27  time frame after emission.
    28    7. "Carbon dioxide removal" or "CDR"  means  removing  carbon  dioxide
    29  from  the  atmosphere,  on  a  net  basis  to CDR process emissions, and
    30  durably storing it in geological, terrestrial, or ocean  reservoirs,  or
    31  in long-lived products.
    32    8. "CDR process" means the physical process by which carbon dioxide is
    33  removed from the atmosphere and durably sequestered or stored.
    34    9.  "CDR  project" means the specific project which will be delivering
    35  the CDR outlined in a given bid.
    36    10. "Carbon removal fee" means a fee levied by  the  state  against  a
    37  hard-to-abate emissions source for the purpose of funding this act.
    38    11. "Department" means the department of environmental conservation.
    39    12. "Disadvantaged communities" means communities that bear burdens of
    40  negative  public  health  effects,  environmental  pollution, impacts of
    41  climate change, and possess certain socioeconomic criteria, or  comprise
    42  high concentrations of low- and moderate-income households.
    43    13.  "Durability"  or "durable" means the secure sequestration of CO2e
    44  in the geosphere, in the ocean, in long-lived  products,  or  otherwise,
    45  measured as a unit of time.
    46    14.  "Greenhouse  gas"  means  carbon dioxide, methane, nitrous oxide,
    47  hydrofluorocarbons, perfluorocarbons, sulfur hexafluoride, and any other
    48  substance emitted into the air that may  be  reasonably  anticipated  to
    49  cause or contribute to anthropogenic climate change.
    50    15. "Life-cycle analysis" or "LCA" means a complete, end-to-end analy-
    51  sis  of  the  greenhouse  gas  emissions  resulting  from a CDR process,
    52  including, but not limited to, manufacturing,  transportation,  utiliza-
    53  tion,  sequestration  and other processes occurring prior to, during, or
    54  after, the CDR process which are required to achieve CDR.
    55    16. "Measurement, reporting and verification" or "MRV" means the veri-
    56  fied measurement and reporting of CDR using an objective,  peer-reviewed

        A. 8597                             3
     1  and  scientifically  supported  accounting  methodology  and taking into
     2  account regionally appropriate sampling and data collection  methods  to
     3  quantify  emissions  and  removals  associated  with the CDR process and
     4  durability of removal instead of solely model-based or statistical meth-
     5  ods.
     6    17. "Megaton" or "Mt" means one million metric tons.
     7    18.  "Minimum  bid" means the minimum volume of CDR for which a bidder
     8  may submit a bid.
     9    19. "Reverse auction" means  a  bidding  process  in  which  qualified
    10  bidders  submit  bids  for  CDR  to remove and durably store a specified
    11  quantity of CO2e in exchange for payment by the state.
    12    20. "Social cost" means a measure, in dollars, of the long-term damage
    13  done by a ton of CO2e emissions in a given year.
    14    21. "Ton" means metric ton, or tonne (one thousand kilograms).
    15    22. "Total annual bid" means the total volume of CDR  for  which  bids
    16  were submitted in a given year.
    17  § 76-0103. New York state carbon dioxide removal reverse auction.
    18    1.  Pursuant  to paragraph a of subdivision four of section 75-0109 of
    19  this chapter, beginning  in  the  year  two  thousand  twenty-five,  the
    20  department  shall annually conduct a reverse auction for the purchase of
    21  CDR. The department shall initiate the reverse auction  on  April  first
    22  and close the reverse auction on June thirtieth of each year the reverse
    23  auction is held.
    24    2.  All  verified  CDR purchased by the department through the reverse
    25  auction shall be considered a greenhouse gas emission offset as  defined
    26  in article seventy-five of this chapter.
    27    3.  The  department  shall  conduct the reverse auction subject to the
    28  following requirements:
    29    a. The department shall accept qualifying bids up to the maximum aver-
    30  age price per ton of CDR to meet the annual removal target;
    31    b. The minimum bid for eighty percent of  the  annual  removal  target
    32  shall be no less than 0.01Mt, or ten thousand tons of CDR;
    33    c.  The  minimum  bid  for twenty percent of the annual removal target
    34  shall be no less than 0.001Mt, or one thousand tons of CDR;
    35    d. Bids shall include a term for delivery  that  may  not  exceed  ten
    36  years; and
    37    e.  The  department shall not accept bids causing the total annual bid
    38  to exceed the maximum average price  per  ton  pursuant  to  subdivision
    39  three of this section.
    40    4.  The  maximum  average  price per ton of CDR shall be three hundred
    41  fifty dollars in the year two thousand twenty-five, and  shall  decrease
    42  by five percent each year subsequently as adjusted for inflation.
    43    5.  At  least  sixty  days  prior to opening each reverse auction, the
    44  department shall  establish  the  annual  removal  target.  Such  annual
    45  removal  target  shall  be  set  to  achieve the greenhouse gas emission
    46  offset objectives pursuant to paragraph b of subdivision four of section
    47  75-0109 of this chapter and shall be no less than 0.1Mt in two  thousand
    48  twenty-five.  The department shall increase the annual removal target by
    49  at least the following amounts annually:
    50    a.  One hundred percent per year from the year two thousand twenty-six
    51  through two thousand twenty-nine;
    52    b. Twenty-five percent per year from  the  year  two  thousand  thirty
    53  through two thousand thirty-nine;
    54    c.  Twenty  percent  per year from the year two thousand forty through
    55  two thousand forty-four;

        A. 8597                             4

     1    d. Ten percent per year from the year two thousand forty-five  through
     2  two thousand forty-nine; and
     3    e. Three percent in the year two thousand fifty.
     4    6.  The department shall accept qualifying bids sufficient to meet the
     5  annual removal target, based on the criteria outlined in section 76-0107
     6  of this article. If the total annual bid is less than the annual removal
     7  target, the department shall increase the annual removal target  in  the
     8  subsequent  year by the difference between the annual removal target and
     9  the total annual bid.
    10    7. The department shall publicly announce the winning  bids;  publicly
    11  release  the winning bidders' proposals and scorecards and contract with
    12  the winning bidders no later than September thirtieth of each year.
    13    8. The department shall recommend any necessary revision  to  subdivi-
    14  sions  three  and  four of this section based on current and anticipated
    15  CDR market conditions in advance of each funding reauthorization  stipu-
    16  lated by section 76-0111 of this article.
    17  § 76-0105. Carbon  dioxide  removal measurement, reporting and verifica-
    18               tion.
    19    1. Each bid submitted to the department  must  contain  the  following
    20  information:
    21    a.  Legal  name,  address,  contact  information  and history of prior
    22  participation in the CDR reverse auction, or other  public  or  private-
    23  market procurement programs, for each entity or person submitting a bid;
    24    b. The total volume of CDR to be achieved pursuant to the bid;
    25    c.  The length of time the bidder will require to deliver the proposed
    26  CDR project;
    27    d. A description of the CDR process and the CDR project;
    28    e. LCA of each CDR  process  required  to  achieve  the  proposed  CDR
    29  project;
    30    f. Land area and water volume employed for CDR project;
    31    g. Description, quantified where possible, of the following externali-
    32  ties and/or co-benefits resulting from the CDR project:
    33    (i)  ecosystem and ecological harms and co-benefits, including impacts
    34  on the surrounding soil health, biodiversity, and water and air quality;
    35    (ii) job creation and industrial development benefits, particularly in
    36  disadvantaged communities; and
    37    (iii) equity and environmental justice impacts;
    38    h. Description of the MRV the bidder will employ for the CDR  project,
    39  from an independent third-party deemed acceptable by the department that
    40  verifies all requirements of this section;
    41    i.  Legally  binding  attestation  by each bidder that the information
    42  provided is accurate and that all requirements of this section are  met;
    43  and
    44    j.  Any  additional  information the department reasonably requests to
    45  assess the bid.
    46    2. The LCA must demonstrate, and the MRV must verify, that the  carbon
    47  dioxide  will  be  removed  from the atmosphere and securely and durably
    48  stored for at least one hundred years from the  date  of  CDR.  However,
    49  such CDR may not be used in the extraction or recovery of oil or gas.
    50    3.  The  CDR  for  which  the  bid  is  submitted must commence and be
    51  completed as soon as reasonably commercially possible, but completed  no
    52  later than ten years from the effective date of the contract between the
    53  department  and  bidder. The department may use its discretion to deter-
    54  mine payment schedule for the CDR, and how much, if any, payment  is  to
    55  be remitted in advance, and how much on delivery.

        A. 8597                             5
     1    4.  The  CDR  project for which the bid is submitted must be unique to
     2  this transaction and additional to any prior or  otherwise  existing  or
     3  planned  CDR, and may not be used as part of any other private or public
     4  transaction for carbon removal.
     5    5. Methods of CDR may include, but are not limited to:
     6    a. Terrestrial mineralization or enhanced rock weathering;
     7    b.  Terrestrial  biomass  carbon  removal and storage such as biochar,
     8  bio-oil or bio-energy with carbon capture and sequestration;
     9    c. Hydrological or marine-based CDR including electro-chemical  carbon
    10  capture, alkalinity enhancement, marine permaculture, deep-ocean seques-
    11  tration of biomass, and coastal enhanced weathering;
    12    d.  Construction  materials  and  products,  the  production  of which
    13  directly contribute to the sequestration  of  carbon  dioxide  or  other
    14  greenhouse gases, including mass timber; or
    15    e.  Direct  air carbon capture with durable geologic sequestration, or
    16  utilization in the  built  environment  including  concrete,  long-lived
    17  plastics, carbon fiber, or other durable goods.
    18  § 76-0107. Bid preferences.
    19    The  department shall create a scorecard to evaluate the bids received
    20  based on the following factors:
    21    1. Price per ton;
    22    2. CDR project occurs within state or  waters  within  fifty  nautical
    23  miles of the state;
    24    3. Scale potential of the CDR process in the state, and generally;
    25    4. Delivery term for the proposed CDR project;
    26    5.  CDR  project  is performed by a bidder that is incorporated, based
    27  in, and has state tax liability in the state;
    28    6. Durability of CDR in excess of one hundred years;
    29    7.  Conservation  efficiency  in  use  of  water,  land,  and   energy
    30  resources;
    31    8.  CDR  project  offers significant ecological or ecosystem benefits,
    32  and does not create significant harms;
    33    9. CDR project benefits  one  or  more  disadvantaged  communities  as
    34  defined in section 75-0101 of this chapter;
    35    10. CDR project generates employment within the state; and
    36    11.  CDR  project  is otherwise assessed to promote equity or environ-
    37  mental justice within the state.
    38  § 76-0109. On-going bidder responsibilities.
    39    1. The department shall require each bidder provide periodic verifica-
    40  tion from an independent third party deemed satisfactory by the  depart-
    41  ment that:
    42    a.  The  volume of CDR removed from the atmosphere and stored meets or
    43  exceeds the amount provided in the bid; and
    44    b. There has been no leakage of CO2e  or  material  reduction  in  the
    45  number of years of CDR durability.
    46    2.  Upon  a failure by the bidder to provide the verification required
    47  by the department, the  department  may  take  action  to  penalize  the
    48  bidder, including, but not limited to:
    49    a.  Levying fines or penalties against the bidder to recoup funds paid
    50  pursuant to the bid; or
    51    b. Rejection of future bids by the bidder.
    52    3. Subject only to the defenses set forth in subdivision four of  this
    53  section, the bidder, its successors, assigns, and transferees of respon-
    54  sibilities,  liabilities,  rights or economic benefits of the CDR, shall
    55  be liable for the social cost, as determined by the department  pursuant

        A. 8597                             6
     1  to  section 75-0113 of this chapter, of any CO2e leakage or reduction in
     2  CDR durability.
     3    4.  There  shall  be  no liability under this subdivision for a person
     4  otherwise liable who can establish by a preponderance  of  the  evidence
     5  that  the CO2e leakage or reduction in CDR durability were caused solely
     6  by:
     7    a. an act of God;
     8    b. an act of war; or
     9    c. an act or omission of a third party other than an employee or agent
    10  of the bidder.
    11  § 76-0111. Reverse auction funding.
    12    Funding for the authorized five year reverse auction period, beginning
    13  in the year two thousand twenty-five and ending in two thousand  twenty-
    14  nine,  shall  be  derived  entirely  from  state revenues that have been
    15  accrued in preceding tax years from certain reinstated tax  revenues  on
    16  aviation  gasoline  which is imported or caused to be imported into this
    17  state by a petroleum business which is registered under article twelve-A
    18  of the tax law as a distributor of  motor  fuel  or  produced,  refined,
    19  manufactured or compounded in this state by such a petroleum business.
    20  § 76-0113. Carbon dioxide removal and equity survey.
    21    1.  Prior  to  the  initiation  of the reverse auction, the department
    22  shall publish a survey of  CDR  opportunities  within  the  state.  Such
    23  survey must include, but may not be limited to:
    24    a.  Data  gathered  by  the department pursuant to CDR verification as
    25  required by section 76-0109 of this article;
    26    b. Review of CDR processes in New York state  with  0.1Mt  or  greater
    27  current scale potential and one-hundred-year or greater durability, with
    28  a discussion for each of water and land-use requirements, LCA, potential
    29  harms,  and  potential  co-benefits, including jobs, industrial develop-
    30  ment, ecosystem, and environmental equity and social justice; and
    31    c.  Reference  to  all  prior  reverse  auction  awards  and  projects
    32  completed  in  previous  years,  including  all data related to each CDR
    33  process employed in each bid.
    34    2. The  completion  of  the  survey  shall  incorporate  participatory
    35  research  and  design  methodologies  and  activities that afford direct
    36  engagement between the department and members of disadvantaged and envi-
    37  ronmental justice communities  throughout  the  state.  Such  activities
    38  shall  be  carried  out  on  a  regional basis and will enable community
    39  members to solicit information from the department concerning the objec-
    40  tives, and intended benefits and outcomes of  the  procurement  program;
    41  and  to  offer  direct  comment and suggestions related to the program's
    42  design, implementation and shared community benefits.
    43    3. Provided the state has reauthorized funding of the reverse  auction
    44  pursuant to section 76-0111 of this article, the department shall update
    45  the survey no less than every five years.
    46  § 76-0115. Authority and compliance.
    47    1.  Nothing  in  this  article shall limit the existing authority of a
    48  state entity to adopt and implement greenhouse gas  emissions  reduction
    49  measures, including carbon dioxide removal.
    50    2. Nothing in this article shall relieve any person, entity, or public
    51  agency of compliance with other applicable federal, state, or local laws
    52  or  regulations, including state air and water quality requirements, and
    53  other requirements for protecting public health or the environment.
    54    3. Review under this act may be conducted in a proceeding under  arti-
    55  cle seventy-eight of the civil practice law and rules at the instance of
    56  any person aggrieved.

        A. 8597                             7
     1  § 76-0117. Severability.
     2    If  any word, phrase, clause, sentence, paragraph, section, or part of
     3  this article shall be adjudged by any court of competent jurisdiction to
     4  be invalid, such judgment shall not affect, impair,  or  invalidate  the
     5  remainder  thereof,  but shall be confined in its operation to the word,
     6  phrase, clause, sentence, paragraph, section, or part  thereof  directly
     7  involved  in  the  controversy  in  which  such judgment shall have been
     8  rendered.
     9    § 3. Subdivision (f) of section 301-e of the tax law is REPEALED.
    10    § 4. Paragraph 9 of subdivision (a) of section 1115 of the tax law  is
    11  REPEALED.
    12    § 5. This act shall take effect immediately.
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