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Governor Kathy Hochul’s proposal to weaken the state’s emissions targets reflects a fundamental tension in the process of decarbonization.

New York Governor Kathy Hochul has been signaling her intent to rewrite the state’s climate law for months, arguing that achieving the existing emissions targets it lays out would impose “enormous” costs on New Yorkers. She finally revealed her proposal to do so on Friday, requesting new targets and more time to meet them. If she gets her way, New York would be the first state to renege on its climate goals.
More specifically, Hochul pitched moving the law’s deadline for enacting climate regulations from 2024 to 2030. She wants to establish a new emissions target for 2040 to replace one for 2030 that will now be all but impossible to meet, and to revise the existing 2050 target. She also wants to change the official accounting method the state uses to calculate emissions from shorter-lived greenhouse gases like methane — an idea she first floated during a budget fight in 2023. That would ease pressure to cut natural gas use and make the state look further along on its climate goals than it currently does. It would also align New York’s approach with the way the rest of the U.S. accounts for methane.
The governor can’t do any of this without the legislature, though. She’s pushing for the changes as part of closed-door budget negotiations with a March 31 deadline. Discussions did not get off on a promising foot: More than half the state Senate has rebuked her plan, with 29 Democrats penning a letter to say they “categorically oppose any effort to roll back New York’s nation-leading climate law.” It is the “fossil fuel status quo that has created the affordability crisis,” the senators wrote.
Environmental groups also reject the governor’s version of events, arguing that her proposal would threaten affordability rather than address it, and accusing her of giving in to fossil fuel interests.
Neither side is presenting a complete picture of the trade-offs, however. To back up Hochul’s assertion that the law as written would impose prohibitive costs on New Yorkers, her administration has relied on overly aggressive analyses that misleadingly frame climate action as a pure expense. At the same time, it's true that the regulations Hochul wants to delay would raise costs for many New Yorkers in the near term, with savings materializing later.
The dispute is emblematic of the way the cost of living crisis is deepening a tension at the heart of climate politics: Decarbonization often imposes real costs now in exchange for diffuse benefits later, which is a tough sell to voters who are finding it increasingly difficult simply to keep themselves afloat.
Hochul arguably got herself into this mess. The clash in New York dates back to 2024, when her administration missed the deadline to issue regulations that would ensure the state achieved its emissions targets.
At first it seemed like the regulations would simply come late. The state was developing a Cap and Invest program — essentially a carbon price that charges polluters for every ton they emit and delivers the proceeds back to consumers as rebates, incentives, and public benefit programs. State officials released a pre-proposal for the program in January 2024 that included a price ceiling to minimize cost impacts. It was expected to generate $3 billion to $5 billion in its first year.
At the time, Hochul’s administration painted a rosy picture of the program, arguing that it would accelerate emission reductions, especially as the state reinvested revenue into incentives for New Yorkers to switch to heat pumps and electric vehicles. While the cost for consumers of driving gas-powered cars and using oil and gas-burning heating systems would go up, “millions of households would break even,” officials said, after proceeds from the program were returned via direct payments and incentives. By 2030, they said, many would come out ahead.
Cap and Invest was never envisioned as New York’s only tool to ratchet down emissions. The state’s own modeling indicated that the proposal — even when implemented alongside other policies — would fall short of the state’s target of cutting emissions to 40% below 1990 levels by 2030 by at least 15%.
Then, after holding a series of public workshops on the pre-proposal, the administration went silent. In early 2025, Hochul shocked the climate community when she decided to delay the program indefinitely, citing affordability concerns. Environmental groups accused her of breaking the law, sued the state, and won. Last October, the New York State Supreme Court ordered Hochul to “promulgate rules and regulations to ensure compliance with the statewide emissions reductions limits.”
Hochul had two options. She could impose a tax on carbon in an election year when affordability had become the defining issue. Or she could ask the legislature to change the law’s deadlines.
That brings us to February, when a conveniently-timed memo leaked from the state energy office with the subject, “Likely Costs of CLCPA Compliance.” (CLCPA stands for Climate Leadership and Community Protection Act — the name of New York’s climate law.)
In order to “fully comply” with the law’s emissions limits, the memo says, the Cap and Invest program cannot have a price ceiling. The energy office estimated the carbon price would start at $120 per metric ton, although the memo says this is likely an underestimate because it was calculated before Trump revoked clean energy tax credits, rolled back vehicle emissions rules, and imposed costly tariffs that also raise the cost of clean energy projects. By comparison, the 2024 pre-proposal would have capped the carbon price at between $14 and $23 in the first year.
“Absent changes” to the climate law, the memo goes on to say, New Yorkers would be paying more than $2 more at the pump and an extra $17 per month on their heating bills by 2031 under Cap and Invest.
The environmental community was flabbergasted. The memo “represents modeling of a program that has not been on the table,” Kate Courtin, a senior manager on the state climate policy team at the Environmental Defense Fund, told me. The numbers “do not reflect any of the scenarios the state was looking at.”
The document appears to reflect a Cap and Invest program that would singlehandedly achieve the statutory targets, which other climate advocates I talked to framed as an absurdly literal reading of the court’s order.
“It feels very disingenuous, because no one is asking for that,” Liz Moran, a New York policy advocate at Earthjustice, told me. Earthjustice represented the environmental groups who sued the administration to compel Hochul to release a climate plan. “Our litigation is not about what is in the regulations,” she said. “It is about the fact that she did not issue regulations. No one was anticipating one set of regulations alone to achieve the targets.”
Vanessa Fajans-Turner, the executive director for Environmental Advocates NY, issued a statement calling the memo “a political tactic meant to scare legislators into giving her a way out of obeying the law.”
That may be so, but the memo also raises uncomfortable questions about New York’s climate strategy in a political environment dominated by affordability concerns.
Environmental Advocates NY argues that extending the law’s deadlines would “increase costs for households and the state,” citing the hazards of a warming world. The state’s earlier analysis also found that the financial benefits to New Yorkers would outweigh the costs. But in both examples, there is a lag between when the costs and benefits hit.
New Yorkers will experience Cap and Invest as a cost first. While the costs may not be as high as the memo envisions, it still literally puts a price on carbon. The pre-proposal also estimated that fuel costs would increase by as much as $9 to $15 per month in the first year for some families. Enacting a carbon tax just as energy prices are going up due to rising demand, the costs of caring for our increasingly fragile grid, and war with Iran could come off as tone deaf at best, political suicide at worst.
“It’s impossible to have a coherent debate about this if we’re not all first on the same page that a carbon price is designed to add costs to carbon-intensive energy uses, and that will add costs to consumers,” Noah Kaufman, a senior research scholar at Columbia University’s Center on Global Energy Policy, told me.
While Moran emphasized that the Cap and Invest program did not have to be the only tool the state uses to reach its emissions targets, the memo underscores how much the state’s toolbox has changed since the targets were enacted. Trump’s slashing clean energy tax cuts and enacting tariffs have increased the cost of clean energy. New York’s strategy also relied on clean car rules that would require all vehicle sales to be zero-emissions by 2035 — but Trump has stripped the state’s ability to enact such a policy. He also, of course, put an effective ban on new offshore wind development. New York was planning to have at least 9 gigawatts of offshore wind by 2035, but it got just 1.8 gigawatts into the pipeline before the moratorium came down.
The most recent data shows that as of 2023, New York had cut emissions by only about 14% relative to 1990 levels. “You look at where New York is on emissions or renewables or electric vehicle penetration, and it doesn’t look plausible at all,” Kaufman said. “It’s analogous to the 1.5-degree [Celsius temperature rise] target. People have a hard time letting go of it, even though when you map out the pathway that it would take to get from here to there, it looks entirely implausible.”
When I asked climate advocates about the emission targets, they didn’t deny that the numbers were unrealistic, but they also saw no need to update them. “There’s an understanding that the targets will be hard to meet,” Moran said. “But why change them if we haven’t even started to try?”
“I think any conversation about the targets and the law should focus on what the state can be doing right now and in the immediate future to implement the law and accelerate clean energy progress,” Courtin said.
At the same time, environmental groups are right that reliance on fossil fuels is a big part of why energy costs are increasing for New Yorkers. The state’s grid operator published a report in January that highlighted how the rising cost of natural gas was a leading factor driving up electricity bills. Some of Hochul’s recent decisions, including walking back a ban on gas hookups in new buildings and approving a new natural gas pipeline, will further entrench New York’s reliance on the fuel.
Advocates told me they were most angry that the Hochul administration was portraying climate action and clean energy as an impediment rather than a solution to the affordability crisis, which could do long-term damage to the case for decarbonization. Already, the New York Post editorial board has claimed victory, writing that Hochul is “finally admitting that the ‘climate’ law she’s long supported is toxic to New York’s economy and to ’affordability.’”
“The troubling thing is that they’re presenting this false narrative that these two things are at odds with each other,” Justin Balik, the state program director for the nonprofit Evergreen Action, told me. He pointed out that other governors — Mikie Sherrill in New Jersey, Abigail Spanberger in Virginia — have found winning political messages that champion both affordability and climate action.
“Let’s have a conversation about New York doing every single thing that is within the state’s control to both cut people’s costs and cut pollution at the same time,” Balik said. Evergreen recently commissioned a report outlining a range of clean energy-friendly strategies that could help New York reduce energy costs, like requiring data centers to build new clean power plants and lowering utilities’ rate of return. Those strategies would not get Hochul out of the deadline to impose a carbon tax, however.
There will never be a good time to price carbon; it could feel as politically painful, or more so, in 2030 as it did in 2024, 2025, and 2026. It will be up to the legislature to decide whether New York will take the leap now and recommit to the ambition it had during an earlier, more auspicious moment for decarbonization, or to wait. If there’s a third option, it hasn’t been articulated yet.
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BAAJA would likely help speed up the U.S. transmission buildout, but there’s a chance we’re undercounting the benefits.
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As you may have seen, my colleague Emily Pontecorvo and I got the first look at the Rhodium Group’s analysis of what the bipartisan permitting bill will do to emissions.
You can read our story at Heatmap. The upshot is that the bill’s most significant provisions are likely neutral for climate change in a worst-case scenario — and could, in more optimistic scenarios, help reduce emissions. (Those scenarios aren’t about how the bill will be interpreted, to be clear, but about what might happen in the broader energy economy — with economic growth, for instance, or oil prices — that will feed back into the emissions math.)
I won’t give away much more about our story, but there is one irony I want to note about the Rhodium study and the broader morass of American electricity policy. One of the Rhodium study’s big findings is that BAAJA will help expand the transmission system. Power lines are essential for decarbonization because they move electricity from the country’s sunniest and windiest places to its cities, towns, and suburbs.
BAAJA will help transmission both because the law affirmatively expands the power grid and because the bill’s changes to environmental review law could help power lines. Today, for instance, it takes twice as long on average to conduct a federal environmental impact study for transmission lines as it does for pipelines, according to Rhodium data. All in all, the Rhodium analysis estimates BAAJA could increase the amount of new transmission capacity added per year by 167% to 262% nationwide, compared to the average rate over the past decade.
Which is very interesting. But it’s worth noting that the Rhodium analysis may — emphasis on may — undercount the bill’s transmission benefits. This is because the Rhodium authors did not have time to conduct a full network study of the U.S. transmission system, which would take into effect the grid’s physical footprint, power flows, and existing bottlenecks. Instead, they looked at power supply and demand within the context of the broader U.S. energy system.
That’s a reasonable decision; indeed, it was probably the only decision they could make. Because of how energy system models work, a more fulsome analysis might have taken weeks to complete, not to mention a very large amount of money and computational power. When the National Renewable Energy Lab studied how quickly Los Angeles could switch to 100% renewable energy earlier this decade, for instance, it ran such a study, modeling every transmission line and substation in LA. Its supercomputer wound up churning through more than 100 million simulations; the research effort took three years. If the Rhodium analysts had done even a fraction as much work to examine what BAAJA would mean for the country’s power grid, then they would have of course finished their analysis well after the window to vote on BAAJA would have closed.
One of the ironies here is that while the LA 100 study was particularly exhaustive, we actually require clean energy projects to conduct similar studies all the time. Right now, one of the primary reasons it takes so long to hook up a new power plant to the grid is that it has to undergo an interconnection study in many parts of the country. In those regions, a new solar farm or battery project can’t connect to the grid until operators study its effect on grid congestion everywhere else.
As it happens, BAAJA aims to fix this process, allowing power plants to join the grid in batches.
I want to note the irony that a process we mandate for the power sector is actually too slow to deliver speedy policy analysis to legislators. If Rhodium had tried to study BAAJA the way we make power plants study the grid, then it never would have delivered its verdict in time. If you think Congress is slow, in other words, you should meet the electricity sector.
Current conditions: The Pineapple Express, an atmospheric river originating in the Pacific near Hawaii, is arriving in the Southwest laden with heavy rain that’s set to flood the region • Indonesia has the worst air quality in the world as forest fires rage along Sumatra’s southern coast • A cross-country storm will soak much of the United States on Tuesday’s Election Day.
The Senate’s grand compromise to simplify federal permitting on energy projects would likely drop emissions slightly as the benefits to accelerating deployments of clean energy infrastructure outweigh the boost the legislation could give to fossil fuels. Even under the worst-case scenario, emissions remain on the same trajectory as today. That’s according to a hotly anticipated new analysis by the Rhodium Group, the consultancy whose U.S. emissions estimates are among the most widely cited in American politics. The report, shared first with my colleague Emily Pontecorvo, found that provisions in the Bipartisan American Affordability and Jobs Act largely counteract each other on climate. The bill makes building transmission lines much easier, a key step to patching more renewables onto the grid. But it also makes new gas pipelines simpler to permit, clearing the way for a buildout of the infrastructure for the fossil fuel already dominating U.S. electricity and heating systems. Still, under the best-case scenario, the legislation could cut U.S. economy-wide emissions by 5% below where they would otherwise go in 2040. The bill could also slash energy bills by $78 per year and support construction of more than 200 gigawatts of clean energy capacity, as compared to a world where it didn’t pass. The Rhodium report is at least the second analysis yet to find that the bill could modestly lower emissions. The first, as I reported last week, came from the think tank Resources for the Future, which saw a slight drop in power-sector emissions relative to a world without BAAJA.
If overhauling national permitting rules to make building green energy infrastructure easier doesn’t work to lower emissions, traditional negotiations in favor of regulations that can deliver cuts looks no more promising. Two weeks of United Nations-led talks in Armenia ended Saturday without a settled approach to meeting 2030 deadlines for preserving more nature. “We don’t need to spend more to close the biodiversity funding gap, we need to spend better,” Marina Von Weissenberg, a Finnish senior ministerial advisor, said in a statement. “Governments have a real opportunity here to reshape public spending with future generations in mind, but they can’t do it alone. International coordination is key to giving governments the confidence to lead change.”
Last week, my colleague Katie Brigham published a detailed feature highlighting China’s tightening grip over the global supply chain for electrolyzers, the technology that zaps water with electricity to separate the molecule’s hydrogen from its oxygen and harvest the former as fuel. Keen readers of this newsletter recognize the story. Even before the Iran War, China had beefed up its public support for green hydrogen and related technologies. After the conflict constricted the flow of oil through the Strait of Hormuz, the People’s Republic redoubled its efforts. Quite literally. New data from the National Energy Administration shows that investments into the hydrogen industry doubled in the first nine months of this year, according to Hydrogen Insight.
Fermi America went public in a gangbusters initial public offering last year as the company, with a board of directors including former Texas governor and U.S. Secretary of Energy Rick Perry, pledged to build the world’s largest data center and power the facility with gas and four large-scale Westinghouse AP1000 nuclear reactors. In April, the chief executive and chief financial officer quit. The board room drama continued into the next month. The company’s stock recovered somewhat over the summer as investors bet on a turnaround pegged to a series of deals with companies looking to lease space on its future servers. But fresh chaos enveloped the startup Friday when The Texas Tribune reported that Perry had failed to earn enough support from the board of directors to win reelection to his seat.
In a statement posted to X on Friday evening, Fermi said that neither Perry nor investor Jeffrey Stein had been removed from the company’s board. “In fact, both Governor Perry and Jeffrey Stein received a majority of the votes cast by shareholders,” the statement read. “Let’s be clear: Governor Perry and Mr. Stein remain members of Fermi’s Board of Directors and will continue serving until their successors are duly elected. Both remain eligible for reelection.”
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If you thought the fine particulate matter from last year’s catastrophic Los Angeles firestorm was bad, you weren’t thinking imaginatively enough about just how dangerous all that airborne material could be. A new study published in the journal Science Advances suggests that upward of 7 million people were exposed to high levels of airborne lead and other toxic metals released when homes and vehicles caught flame. The January 2025 Eaton inferno that destroyed more than 9,400 buildings and killed 19 people spewed 80 times the normal concentration of lead found in the atmosphere through a plume that settled over 70% of the Los Angeles metropolitan area. “I can envision that in the future we have these evacuation zones for smoke exposure as well,” Haroula Baliaka, the study’s lead author, who was a PhD candidate at Caltech last year, told Bloomberg. “Unfortunately, this is not a one-time event. It’s a new reality and we need to adapt to it and we need to do it sooner rather than later.”
The findings come a week after a study published in JAMA Pediatrics showed a link between wildfire smoke exposure during pregnancy and autism diagnoses in children. The research from Rutgers University examined 893,212 mother-child pairs enrolled in Medicaid, with children born between 2007 and 2014. Each increase of 0.75 micrograms per cubic meter in average concentrations of wildfire-related air pollution during pregnancy was associated with a 30% higher risk of a subsequent autism diagnosis. Exposure in the second and third trimesters had the highest risk. “Wildfire smoke can travel far beyond the communities where fires are burning, and exposure may occur even when smoke is not visible,” Stefania Papatheodorou, an epidemiologist at the Rutgers School of Public Health and lead author of the study, said in a press release. “Our findings highlight the importance of awareness of wildfire events and their potential effects on air quality during pregnancy.”
The United Kingdom is building out more than 10 gigawatts of offshore wind as London looks to shore up its electricity supplies amid the global energy shock. But Chancellor of the Exchequer John Healey said he would veto any offshore wind projects that don’t lower bills. While clean power is “how we break the grip of international gas prices on our bills,” he said the infrastructure “has to come at the right pace, in the right places, with the grid to carry it.” The statement fueled what The Guardian called “concerns that the government is moving away from the pro-renewables agenda.”
Meanwhile, the U.S. midterms aren’t the only election this week. In Sunday’s runoff election, Bulgaria’s pro-Russian acting President Iliana Iotova appeared to eke out a victory over the former prime minister Andrei Gyurov, a pro-Western banker. Her win unites the government with her close ally, Prime Minister Rumen Radev, ensuring stronger support for the leader’s two signature energy policies. One, a plan to build a pair of Westinghouse AP1000s at the Kozloduy nuclear plant, is scheduled to advance to the next planning stage next year. The other, the easing of sanctions on Russian uranium to ensure a supply of fuel for the plant’s existing reactors, looks likely to continue under Iotova’s friendly diplomacy with the Kremlin.
William Nordhaus, the pioneering Yale University economist who won the Nobel Prize in 2018 for integrating climate change into macroeconomic analysis, has died at 85 following a battle with an aggressive form of brain cancer. His nephew, Ted Nordhaus of the Breakthrough Institute, referred to his father, Robert Nordhaus, as “the original environmental lawyer and Bill as the original environmental economist,” he wrote in a blog post after his uncle’s passing. “It is safe to say that the Nordhaus brothers were doing environmental law and economics, respectively, long before either label existed. Not bad for two kids who grew up in the intellectual hotbed of Albuquerque, New Mexico, population 40,000, during and after the second world war.” Their legacies are something of the Nordhaus family brand: Pragmatism. May his memory be a blessing.
Even in the worst-case scenario, BAAJA wouldn’t increase emissions, an analysis by the Rhodium Group concludes.
The bipartisan permitting reform bill is likely to slightly cut greenhouse gas emissions and lower electricity bills by 2040 — or at worst leave emissions on the same trajectory that they are on today — as compared to the status quo, according to a new analysis of many of its provisions by the Rhodium Group, an independent research firm.
The analysis examines the policies in the Bipartisan American Affordability and Jobs Act, or BAAJA, that would have the most-clear cut effects on climate pollution and the energy system. It is the most comprehensive account of the bill’s effects on emissions so far, although it does not examine all of its provisions.
The bill is hard to analyze because — unlike recent partisan energy bills, such as the Inflation Reduction Act or President Trump’s tax and spending bill — its effects on the climate are more ambiguous and often seem to counteract each other. BAAJA will make it easier to build not only long-distance transmission lines, which are essential for clean energy, but also natural gas pipelines, which can expand fossil fuel production.
Yet the climate benefits likely outweigh or balance out the harms, at least among the studied policies, the report finds. In the best case scenario, the bill could cut U.S. economy-wide emissions by 4%, reduce energy bills by $78 per year, and drive more than 200 gigawatts of new clean energy capacity by 2040, compared to status quo policy. In a worst case scenario, greenhouse gas emissions would remain unchanged on their current trajectory.
The results should be viewed as more directionally instructive than a precise accounting of the legislation, Ben King, an energy and climate director at Rhodium, told me.
“We don’t see emissions increasing because of the bill,” King said. “This bill should drive some emission reductions, it should drive some more clean energy on the grid, and it should drive electricity bills down. And given the complexity of the bill, that’s what we can say at this point.”
The analysis does not look at the bill’s permitting certainty provisions, which Democrats initially sought to stop President Trump’s war on wind but have become one of its thorniest sections. Rhodium’s modeling is also a crude tool for assessing transmission policy, since the model can look only at economic inputs such as supply and demand, and not the physical reality of the U.S. grid, such as where transmission lines run or where the bottlenecks are.
It is the second analysis to find that the bill could modestly lower carbon pollution. A more limited report focusing only on the power grid, published last week by the think tank Resources for the Future, found the legislation could cut electricity emissions by 6% while reducing electricity system costs by $350 billion through 2050.
The effects of the bill may sound small, but BAAJA is not a climate bill. It’s not engineered to reduce reliance on fossil fuels or boost clean energy technologies. Its overarching purpose is to address various federal bottlenecks that bog down America’s ability to build stuff, whether that’s a pipeline or a highway or a power line or a solar farm. So it’s not entirely surprising that it’s not expected to have a dramatic effect on emissions.
The reason it’s a priority for Senate climate champions is that many of its provisions are important precursors to decarbonizing the U.S. economy more quickly. By enabling faster expansion of the power grid, the bill would put the country in a much better position to transition to clean energy. After Joe Biden’s big climate bill, the Inflation Reduction Act, passed in 2022, Princeton University researchers found that the country’s slow buildout of transmission lines would be a major obstacle to gleaning the law’s benefits. Unless the country more than doubled the rate of transmission expansion, they wrote, more than 80% of the IRA’s emission reduction potential by 2030 would be lost.
BAAJA could nearly triple the build rate of high-voltage transmission, the Rhodium Group found, from an average of about 0.7 terawatt-miles added per year over the past decade to an average annual pace of 1.9 to 2.6 terawatt-miles through 2040. Because Republicans and President Trump have repealed so many of the IRA’s provisions, this won’t drive as much clean energy as the Princeton researchers expected, but Rhodium estimates that by 2040, BAAJA would help between 17 and 249 gigawatts of clean resources get built compared to a world without it.
The growing grid is the main reason why the bill cuts energy costs, because it enables more lower-cost resources to connect to the grid. The bill’s requirement that data centers pay the full cost of connecting to the grid also puts downward pressure on electricity rates.
“If your goal is to do climate policy in the future, this is an important down payment to making progress there,” King said.
The authors studied the bill’s provisions under a range of economic assumptions, including a “best case” scenario in which clean energy gets cheaper and easily outcompetes natural gas, and a “worst case” scenario where natural gas prices collapse and the inexpensive fuel keeps dominating the U.S. energy system.

The authors limited their analysis to the bill’s provisions that speed up transmission line and natural gas pipeline permitting. They assumed that when you make it easier to approve transmission lines, the lines get cheaper to build and get built more quickly. The same goes for gas pipelines. Then they looked at how the energy system would respond. Would we build more power plants? Would there be more natural gas production? Where will that gas go?
The caveats, aside from omitting the bill’s “project certainty” provisions, are that they did not account for policies that support geothermal energy, virtual power plants, advanced transmission technologies, or the ways in which the bill would reduce congestion on the grid — all of which could result in fewer emissions. At the same time, the modeling assumes that all of the data centers that get built between now and 2040 connect to the grid, even though today, many data centers are planning to run on inefficient off-grid natural gas plants. That means this modeling likely underestimates emissions from data centers. (Although the authors did a separate exercise that went deeper into data centers, which I’ll explain shortly.)
The report also limited its analysis to the United States. While the modeling found that liquified natural gas exports would increase by 8% to 15% under BAAJA, the authors did not account for how those exports could affect the energy mix or emissions in the rest of the world.
They found that the bill’s changes to the Clean Water Act and the National Environmental Policy Act would enable more gas pipeline development, which, in isolation, would increase emissions relative to a world without BAAJA. More pipelines means more production of oil and natural gas, which means higher methane and CO2 emissions throughout the fossil supply chain. Under a worst case scenario, they estimate a 4% increase in the amount of new gas capacity, although gas-fired generation as a whole increases by less than 1% in 2040. Even then, emissions would simply be flat compared to current expectations.
“On net, the emissions increases that we see there are outweighed by the emissions benefits that come from the transmission provisions of the bill,” King said.
The report also studied how BAAJA might affect data center emissions. Its “base case” scenario — which includes all the analysis I’ve shared with you so far — assumes data centers will make up about 17% of electricity demand by 2040. That figure already supposes huge growth in data center energy consumption, because data centers only use about 5% of U.S. electricity today.
But what if data center demand grows even faster than that? The authors modeled two additional scenarios to see what would happen if data center electricity demand instead accounted for more than a quarter of U.S. electricity demand in 2040.
While BAAJA would make it easier for data centers to connect to the grid, it also includes ratepayer protection provisions that would make it more expensive to do so — roughly 10% more for a 1 gigawatt data center, Rhodium estimates. Determining whether that will drive developers on-grid or off-grid was beyond the scope of the analysis, so the modelers looked at the two extremes — a world where all additional data center demand hooks up to the grid and one where none of it does.
For the on-grid scenario, whether or not that additional demand is met with mostly gas plants or cleaner sources largely depends on the price of fossil versus clean generation. But even if most of the demand was met by natural gas plants on the grid, emissions would still be 30% lower than if it was met by natural gas plants off the grid, Rhodium found.
Editor’s note: This article originally misstated the scope and timing of electricity systems savings in the Resources for the Future study. It has been corrected in this version.