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.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A8597
SPONSOR: Fahy 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.
STATE OF NEW YORK
________________________________________________________________________
8597
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
emissions
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.
LBD14092-01-1
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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
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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;
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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.
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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
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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.
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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.
