A Robust Cap-and-Invest Program Can Help New Yorkers Save Money on Utility Bills, Raise Billions to Invest in Local Communities

An ambitious Cap-and-Invest program can help 46% of New York households upgrade to a highly efficient heat pump by 2035, delivering $1,022 in annual energy savings to the median household. This is just one way a strong Cap-and-Invest program can deliver cost-savings to New Yorkers, according to a new report by Switchbox and commissioned by Earthjustice, WE ACT for Environmental Justice, and Environmental Defense Fund.

The report, New York’s Affordable Energy Future: How Cap-and-Invest can provide billions to reinvest in local communities, lower energy bills for households, details how the program’s revenue can make a measurable dent in the cost of energy for New York households at the same time the program cuts pollution. The report models the impact of two potential pricing scenarios, a lower scenario starting at $14 per ton of emissions and a higher ambition scenario at $26 per ton. In both scenarios, Cap-and-Invest can drive decarbonization, support community economic development, and save households money on energy bills — and critically, a stronger program with a higher price on emissions significantly enhances these benefits while ensuring economically vulnerable New Yorkers are better off or equally well off in terms of energy costs.

“The data is clear: New York’s Cap-and-Invest program could be transformative for the state, catalyzing an economy-wide shift towards clean energy, while raising billions of dollars a year to invest in communities,” said Juan-Pablo Velez, report co-author and Switchbox Executive Director. “Nearly half of all homes could be electrified and weatherized over the next decade, improving comfort and cutting energy bills. The state could do this while insulating low and moderate income households from higher energy costs, and without significantly burdening higher income households.”

In order to realize the full economic and public health benefits of an economy-wide shift away from fossil fuels, report authors illustrate the potential impact of directing 40% of the program’s revenue toward direct energy rebates, 23% of revenue for generous subsidies for heat pumps and weatherization and 2% of revenue toward a place-based investment program. The investments modeled assess just a few of the pathways by which the New York Cap-and-Invest (NYCI) program can deliver benefits and cost-savings to New Yorkers. In the rebate program modeled, 83% of New York households would receive direct rebates, which would fully insulate 46% of households from any increased energy costs under NYCI. Increased adoption of clean energy technologies over time paired with rebates would mean even more households see energy savings.

“Governor Hochul has a historic opportunity to drive bold, transformative change for New York’s energy future. By adopting a robust Cap-and-Invest program, she can ensure the state maximizes its environmental and economic benefits, accelerating the transition to cleaner energy while delivering real savings to households,” said Kate Courtin, Senior Manager for State Climate Policy at Environmental Defense Fund. “The findings of this report make clear that Cap-and-Invest is not just about cutting climate and air pollution. Clean energy upgrades and direct investments in communities and households enabled by the program are an energy affordability solution. What’s more, the stronger the program, the more New Yorkers these cost-saving benefits can reach.”

A robust NYCI program can put money back in New Yorkers’ pockets while delivering transformative benefits for New York communities. By utilizing Cap-and-Invest revenue to help households adopt heat pumps and energy efficiency upgrades, low-income households would save a median of $54 to $69 per month, while the median household would save between $67 and $85 in energy costs per month, with higher savings achieved under a higher ambition program. In total under an ambitious program, the average low-income household could save an estimated $9,156 over the first 10 years of the program if it upgrades in year one. Rebates would also help protect New Yorkers from increased costs. A well-funded NYCI program can likewise generate approximately $3 billion to disadvantaged communities across the state to invest in community-directed projects, such as green affordable housing, rooftop solar, electric buses, and bike lanes.

“The kind of climate and economic justice policy New Yorkers need right now is one that holds corporate polluters accountable, prioritizes environmental justice, public health, and directs funds into neighborhoods to support community-led clean energy transitions,” said Eric Walker, Senior Policy Manager for Energy Justice at WE ACT for Environmental Justice. “A robust Cap-and-Invest program that meaningfully accounts for the high price our local communities pay for pollution can unlock billions for investments that drive economic development, cleaner air, and affordability in local communities.”

As the ambition of the Cap-and-Invest program grows, so too would New Yorkers reap increased benefits and opportunities to invest in community-led priorities while insulating most low and moderate income households from increased costs. Not only would a higher price scenario allow New York to double the number of communities reached by place-based investments, this higher revenue stream would help twice as many households adopt highly efficient electric appliances such as heat pumps. At the same time, such a program would continue to fully insulate effectively the same number of households from any energy cost increases as a lower price scenario. And a majority of low- and moderate-income households would be equally well off, if not better off — consistent with the findings under the lower price scenario. Put another way, with smart reinvestment, New York regulators can be confident that a strong NYCI program will also be an affordable one.

“With federal climate action unlikely over the next four years, Governor Kathy Hochul must double down on New York’s role as a nationwide climate leader and maximize Cap-and-Invest to lower energy costs for everyday New Yorkers,” said Rachel Spector, Senior Attorney at Earthjustice. “From Hurricane Sandy to summers blanketed in wildfire smoke to people struggling with asthma and cancer, New Yorkers are all too familiar with the high costs of climate pollution. As buildings represent the largest source of emissions in New York state, a robust, well-funded Cap-and-Invest program that supports building electrification is not only critical for reducing health-harming air pollution but also for securing a clean energy future for all New Yorkers.”