Cap-and-Invest (New York state)

Cap-and-Invest (New York state) is a proposed market-based approach to reducing greenhouse gas emissions in New York State. It functions as a cap-and-trade system, but with a specific emphasis on reinvesting revenue generated from the sale of emission allowances into climate mitigation, adaptation, and clean energy programs.

The core mechanism involves setting a statewide limit, or "cap," on the total amount of greenhouse gases that major sources within the state can emit. This cap declines over time, creating an incentive for emitters to reduce their emissions.

Entities covered by the cap receive or purchase allowances, each representing the right to emit one ton of carbon dioxide equivalent. Those entities that can reduce their emissions more easily and cheaply can sell excess allowances to those for whom reductions are more costly. This trading creates a market for emissions, allowing for the most cost-effective reductions.

A key feature of Cap-and-Invest is the "invest" component. Revenue generated from the auctioning of emission allowances is earmarked for strategic reinvestment. These investments typically target areas such as:

• Clean Energy Development: Funding renewable energy projects, energy efficiency programs, and the development of innovative clean technologies.
• Climate Adaptation: Supporting infrastructure projects and community programs designed to enhance resilience to the impacts of climate change, such as sea-level rise, extreme weather events, and heat waves.
• Environmental Justice: Prioritizing investments in disadvantaged communities disproportionately affected by pollution and climate change.
• Workforce Development: Training programs to prepare workers for jobs in the clean energy sector.

The rationale behind Cap-and-Invest is to not only reduce emissions but also to stimulate economic growth, create jobs, and improve public health, particularly in historically underserved communities. While the specific details of a Cap-and-Invest program in New York may vary depending on legislative action and regulatory implementation, the underlying principles of setting a declining cap, trading allowances, and reinvesting revenue remain central.