Saturday, June 4, 2011

Citizens Budget Commission (CBC) of New York Report on New York City's Green Policies - How Competitive Are They Really?
On April 4, 2011 The Citizens Budget Commission (CBC) released a report that examines New York City’s “green” policies from the perspective of urban competitiveness, not exclusively in terms of promoting environmental sustainability. The report – “New York’s Green Policies: Too Much or Too Little – A Competitive Perspective” – builds upon the City’s PlaNYC, a comprehensive plan for the next quarter century of New York City that was unveiled on Earth Day 2007. The CBC report assesses how New York compares to other cities in pursuing green objectives and suggests how New York’s leaders can set priorities for taking additional steps to promote environmental goals in ways that align with goals of economic growth and urban competitiveness.

The report’s findings and recommendations include the following:
* Air – With respect to greenhouse gas emissions, New York ranks 13th among 21 international cities and 2nd among 16 large U.S. cities. On measures of air pollution, New York ranks 12th of 21 internationally cities and 22nd of 34 large U.S. cities.
* Water – International comparative data are not available, but among large U.S. cities, New York ranks 13th of 27 in terms of water quality and 11th of 23 in terms of conservation.
* Solid Waste – New York lags internationally and domestically, generating nearly as much waste as London and diverting less of it to recycling programs and waste-to-energy plants than most European nations.
Four recommended guidelines to help clarify municipal decision-making are:
* Limit municipal government activities to those appropriate to the local level of government;
* Give preference to practices that support and encourage consumer choice and responsible consumer behavior;
* Elevate the use of cost-effectiveness as the basis for decision-making, and rethink existing subsidies and regulations (both mandates and prohibitions) with an aim of revising or eliminating those financial incentives which are too generous and changing those regulations which are too burdensome;
* Assess innovative ideas before citywide adoption through evaluation of efforts in other localities and/or pilot programs within New York City.

Consistent with these guidelines, the report identifies specific measures that could enhance New York’s competitiveness in terms of getting greener. The proposed agenda items include the following:
* Three current initiatives that should be dropped because they appear to fall short in terms of cost-effectiveness: the local tax credits for solar energy and for green roofs, and the requirement for recycling of certain types of plastic;
* Three initiatives currently underway that are candidates for acceleration to gain greater benefits: enhanced metering of electricity use and of water consumption, and facilitating deployment of Combined Heat and Power (CHP) facilities;
* Four new initiatives, which appear to be desirable in order to enhance New York’s competitive position:
o Vigorous implementation of the newly enacted Greater, Greener Buildings Plan (GGBP) which seeks to promote greater energy efficiency in existing commercial buildings in ways consistent with the CBC guidelines;
o A renewed effort to adopt congestion pricing to stimulate mass transit use and raise funds for its improvement;
o Reduction of solid waste generation and promotion of recycling by pilot testing a “pay to throw” program in selected neighborhoods;
o Planning new “waste to energy” facilities in New York City to gain the combined benefits of cleaner electricity sources and reduced reliance on landfills for waste disposal.

“PlaNYC was an historic step forward in terms of long-range planning for New York City,” said CBC President Carol Kellermann. “This report augments it by raising crucial policy issues that New York must consider if it is to be both economically competitive and environmentally sustainable.” “This report suggests ‘green’ priorities for the City and specific actions that align with those priorities,” said CBC Executive Vice President and Research Director Charles Brecher. “In tough economic times, it’s especially important that environmental sustainability and economic competitiveness be pursued jointly, with great attention to ensuring the most cost-effective use of resources.”
Given that the federal government has established significant subsidies, and states have supplemented these policies with regulations in the form of renewable energy portfolios and additional tax subsidies, existing municipal subsidies may be wasteful.

Consider the case of New York City’s property tax abatement for solar panels, implemented as a three year pilot program. A commercial firm investing in a panel to generate five kilowatts and costing $38,000 would be eligible for a federal tax credit of $8,633. In addition, New York State provides an income tax credit of $5,000 and a rebate from NYSERDA of $9,056. New York City has established a property tax abatement for the panel that is 5 percent of the cost in each of four years, for a total of 20 percent or $7,600. The additional local tax subsidy is likely to fail a cost‐effectiveness test in two ways.

First, the additional municipal subsidy may be more than is necessary, on top of the more substantial state and federal incentives, to induce the private investment; that is, the $7,000 may bring the combined public subsidy to more than the difference between the cost of solar production and the cost of electric energy supplied by plants relying on other fuels. Second, a local tax subsidy seems inappropriate, since the external benefits are not primarily local, but the cost to taxpayers is borne locally. This municipal program was initiated as a pilot‐effort (expiring after three years); assuming the post-pilot evaluation confirms the outcomes anticipated here, this subsidy is a prime candidate for expiration.

The full report is available at

The Citizens Budget Commission (CBC) of New York, NY
2 Penn Plaza * 5th Floor * New York, NY 10121; 212-279-2605, ext. 322 212-279-2605, ext. 315
April 4, 2011

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