New York has the opportunity to capture billions in new federal incentives, grow the state’s clean economy, and save and create high-quality jobs by investing in industrial decarbonization. As an industrial state with strong climate goals, New York is primed to become a nation-leading production hub for the next-generation, ultralow-carbon materials we need for the clean energy transition. To make this happen, the state cannot afford to only invest in off-the-shelf solutions to industrial pollution; it must also support novel technologies that can dramatically reduce emissions from heavy industry.
State policymakers have already proposed a plan that would get the state partway to realizing this vision. The recently approved Scoping Plan—the state’s wide-ranging agenda for implementing the Climate Leadership and Community Protection Act (CLCPA) of 2019—suggests a suite of industrial emissions reduction policies that will be important to achieve decarbonization. The plan is organized around the premise that near-term emission cuts in industry are likely to come primarily from energy efficiencies and some limited electrification for lower-temperature processes. These projects will be critical for industrial decarbonization and the state should act quickly to implement the recommendations in the plan.
However, these investments on their own are insufficient to drive deep decarbonization of the sector. While the Scoping Plan proposes useful tools, the governor, state agencies, and legislative leaders should go further to support the full suite of industrial emissions reduction strategies, from energy efficiency to R&D to full-scale deployment of novel technologies. Deeply decarbonizing sectors like steel, aluminum, and cement will mean deploying emerging technologies that can dramatically slash or eliminate greenhouse gas emissions. This will require measures to demonstrate their commercial viability and support their early commercial-scale deployment.
The Scoping Plan mentions that greater emissions reductions in the industrial sector (via the use of carbon capture, alternative fuels, or other measures) will likely occur in the longer term as innovation takes place and technologies scale, mature, and become more viable, but the plan falls short of recommending ways that New York State can actively speed deployment. Instead of waiting for the market to act on these technologies, policymakers now have an opportunity to take advantage of a level of federal support for ambitions industrial projects that they likely couldn’t have predicted in 2019 (when the CLCPA was passed).
Two major opportunities that New York State officials should be looking at are primary steel production using green hydrogen and the use of inert anodes in aluminum smelting. These technologies are being demonstrated elsewhere and New York should learn from those examples. In Canada, a joint venture of Rio Tinto and Alcoa is piloting the use of inert anodes for smelting aluminum. In Sweden, the HYBRIT facility is producing fossil-free steel.
New federal funding is on the table to facilitate exactly these kinds of high ambition industrial investments. This includes roughly $6 billion under the Department of Energy’s (DOE) Industrial Demonstrations Program, which is aimed at commercial-scale deployments of first-of-a-kind emerging technologies, and the $8 billion Hydrogen Hubs program, alongside other lucrative tax incentives.
This federal action represents an enormous economic development opportunity; the industrial initiatives in the Inflation Reduction Act alone have the potential to create nearly 180,000 new jobs nationwide. New federal investments in infrastructure, electric vehicle manufacturing, and clean energy—coupled with robust domestic content incentives—will also create significant additional demand for clean American-made materials.
New York’s chance to lead in this space is contingent on action. The applicant for the Northeast Hydrogen Hub, led by New York State, was encouraged to proceed in the competitive grant process being administered by DOE, and initial concept papers are due to DOE next month for major industrial decarbonization projects funded by the Inflation Reduction Act.
To help attract federal funding under these programs, the state should gear relevant policy tools recommended by the Scoping Plan toward supporting ambitious industrial decarbonization projects. For example, the plan emphasizes the need to provide financial and technical assistance to help the private sector reduce emissions; incentivize procurement of low-carbon products; support workforce development; facilitate research, development, and demonstration; and provide economic incentives for clean technology manufacturing. Policymakers should ensure that all of these tools are being deployed in service of making New York State a hub of clean industrial manufacturing. The Scoping Plan also proposes an economy-wide cap-and-invest program and suggests that New York invest proceeds from pollution allowance auctions into projects consistent with the CLCPA, which should include support for industrial decarbonization.
Importantly, the Scoping Plan also recommends that the cap-and-invest program include mechanisms to prevent in-state climate action from driving energy-intensive and trade-exposed industries, such as aluminum production, out of the state. This would cost New York jobs and possibly increase pollution if production moves to dirtier jurisdictions. The framework for this cap-and-invest program was announced as part of Governor Kathy Hochul’s budget. While there is no specific callout for major industrial decarbonization projects (the governor’s budget did call for setting aside revenue from the cap-and-invest program to help small industrial businesses improve efficiency), such investments would be consistent with realizing the aims of the CLCPA.
The time is ripe for New York to take the lead on ultralow-carbon industrial manufacturing. As the legislature and state agencies move to implement the Scoping Plan, more ambitious action to reduce or eliminate industrial greenhouse gas emissions while strengthening New York’s manufacturing base should be a priority.