New York’s Climate Leadership and Community Protection Act

Clean energy goals and the Scoping Plan

The 2019 Climate Leadership and Community Protection Act (the “Climate Act”), which addresses climate change and aims to achieve net-zero emissions in New York State (the “State”), was amended in May 2026 with the approval of the State budget to enact practical changes prioritising affordability while continuing the State’s commitment to clean energy and climate goals. The changes included modifying a 2030 mandate to reduce State-wide greenhouse gas (GHG) emissions by 40% to a 60% reduction by 2040, both compared to 1990 levels, only to the maximum extent feasible and cost-effective. The measure also de-emphasised the State’s calculation of methane’s global warming impact, aligning with most other states, and ceased accounting for emissions from importing fossil fuels into the State, drawing criticism from climate scientists. However, the goals to achieve a zero-emission electricity system by 2040, to reduce State-wide GHG emissions by 85% compared to 1990 levels by 2050, and for 70% of State-wide electricity to come from renewable energy sources remain unchanged, although the latter will likely be delayed.

As of May 2025, among the State’s existing sources of electricity generation, renewable resources accounted for approximately 35.9% of the State’s electricity generation, nuclear resources for approximately 24.8%, and power plants that use fossil fuels for 39.3%. The Climate Act created the Climate Action Council (CAC), which developed a scoping plan (the “Scoping Plan”) to establish a framework for meeting the Climate Act’s targets and GHG emission reductions. The State Comptroller’s 2024 audit found the State is not on track to meet the 2030 targets for reasons including transmission constraints, project cancellations, and expiring contracts and renewable energy certificate (REC) price agreements, and recommended that the Public Service Commission (the PSC) regularly review the Climate Act. The PSC’s most recent biennial review in May 2025 found a 42,145 GWh renewable energy deficit under base case load and recommended adding three additional New York State Energy Research & Development Authority (NYSERDA) Tier 1 solicitations procuring about 5,600 GWh per solicitation in 2027, 2028 and 2029.

Solar, wind, hydroelectric and other renewable energy will power New York

According to the Scoping Plan, New York must deploy clean energy resources, such as land-based wind and solar, offshore wind, hydropower, fuel cells that use renewable fuels, and energy storage, to achieve the Climate Act’s requirements and goals. The Climate Act requires the State to install 10 gigawatts (GW) of distributed solar by 2030 (6 GW had been installed by 2024) and 9 GW of offshore wind by 2035. It is expected that, by 2050, the State will install over 60 GW of utility-scale and distributed solar capacity.

With respect to transport fuel, the new budget recommends that the State replace existing vehicles that run on gasoline or diesel with battery-electric, hydrogen fuel-cell, or other future zero-emission propulsion technologies. The State should also emphasise fuel cells using biogas in waste transportation, electric co-location, and cogeneration opportunities for energy- and heat-intensive industries and other hard-to-electrify users. It also requires new off-road vehicles and equipment sold in New York to be zero-emission by 2035 and new medium-duty and heavy-duty vehicles to be zero-emission by 2045.

Energy storage and green hydrogen will ensure grid reliability

The State’s 6 GW Energy Storage Roadmap (the “Roadmap”) provides recommendations to achieve 6 GW of energy storage by 2030, including a new Bulk Energy Storage programme utilising an Index Storage Credit (ISC) mechanism, and directs NYSERDA to conduct at least three bulk energy storage procurements. In March 2025, the PSC adopted the Bulk Energy Storage Program Implementation Plan, which describes the ISC mechanism as market-based and modelled on the RECs and offshore wind renewable energy certificates (ORECs) utilised in NYSERDA’s large-scale renewables procurements.

The ISC provides project developers with a hedge, thereby improving revenue certainty and the project’s financeability. Under a competitive solicitation in which developers bid a strike price intended to approximate the revenue threshold for project viability, NYSERDA will pay the developer if the strike price is above the reference price derived from market price indices, whereas the developer will pay NYSERDA if the strike price is below it. In July 2025, NYSERDA issued the first of three ISC solicitations (ISCRFP25-1) to procure 3 GW of total bulk energy storage capacity by 2030, which garnered interest from 46 proposals comprising approximately 6 GW of power capacity and 30 GWh of energy storage capacity. NYSERDA will disclose the results in Q3 2026.

Given the scale of the proposed renewable energy buildout, the Scoping Plan recognises the need to incorporate load flexibility for a manageable system, which will necessitate investment in zero-emission resources such as green hydrogen and energy storage. In 2025, the State made USD3.7 million available to support clean hydrogen-based fuel cell resources and awarded over USD11 million to clean hydrogen research and development projects.

The State can potentially boost its grid’s flexibility through electric vehicle (EV) charging, which a January 2025 Brattle report commissioned by the New York Department of Public Service (NYDPS) identified as the primary opportunity to build load flexibility. The report identified certain programmes that stabilise the State’s grid, including behind-the-meter storage programmes, EV-managed charging programmes, and a pilot for NYC’s first vehicle-to-grid programme in Brooklyn, New York. In May 2025, State agencies formed a working group to accelerate clean vehicle adoption and charging infrastructure deployment, and, in July 2025, the State awarded USD3 million to projects integrating EVs into the grid.

Geothermal and nuclear energy as emerging resources

The Scoping Plan recognises the potential of developing utility thermal energy networks across the State’s utility service territories and enhanced geothermal systems (EGS), noting benefits from national progress, including through the U.S. Department of Energy’s (DOE) Enhanced Geothermal Shot, an initiative to reduce EGS costs by 90% to USD45 per megawatt-hour (MWh) by 2035. As emerging commercial geothermal installations and thermal energy storage systems benefit from federal tax credits, they could potentially establish a gas utility transition strategy.

With respect to nuclear energy, the Scoping Plan finds that, while waste management and storage issues need to be resolved before scalable adoption, nuclear generation provides significant baseload capacity and is zero-emission, with advanced small modular reactors emerging as another resource that could contribute to 100% zero-emission electricity by 2040. Therefore, analysis should be conducted before 2030 to determine whether subsidising the State’s remaining nuclear reactors will be necessary to achieve the State’s zero-emission electricity goal.

Federal tax credit incentives and other federal funding have increased advanced nuclear energy prospects. The New York Power Authority (NYPA) and the NYDPS plan to develop at least one new nuclear energy facility with a combined minimum capacity of 1 GW. In 2025, NYPA issued two Requests for Information (RFIs): one for upstate communities interested in hosting a nuclear project and another for private developers with experience in nuclear project development. In 2025, NYPA and Ontario Power Generation announced an agreement to collaborate in developing advanced nuclear energy technologies, and, in 2026, Governor Hochul announced the “Nuclear Reliability Backbone” initiative to establish 8.4 GW of nuclear generation, comprising 3.4 GW of existing nuclear capacity, 1 GW of advanced nuclear development underway by NYPA, and an incremental 4 GW of new nuclear capacity. NYSERDA and NYDPS are also developing a Master Plan for Responsible Advanced Nuclear Development in New York before 2027.

Transmission infrastructure investments

New York has taken significant steps towards the transmission system investments necessary to deliver energy to load-demand locations and facilitate the Climate Act’s goals. The PSC launched the Coordinated Grid Planning Process (CGPP) in 2023, involving a three-year planning framework to identify distribution, local transmission, and bulk system upgrades needed to meet the Climate Act’s goals. In May 2026, the State’s investor-owned utilities filed the resultant “Cycle 1 Report”, identifying a local transmission project portfolio and requesting approval for seven projects to address transmission issues. The next CGPP cycle is expected to begin in late 2026, after PSC action on the Cycle 1 Report.

Additionally, the PSC established a new tier of RECs to increase the role of renewable resources and decrease reliance on fossil-fuelled generation within NYC. Following a solicitation, NYSERDA selected two proposals in 2021. One of them, Champlain Hudson Power Express, includes a 1,250-megawatt (“MW”) transmission line from a withdrawal point in Quebec, Canada, to an injection point in Queens, New York, and began operations in May 2026. The other project, Clean Path New York, terminated its contract with NYSERDA in 2024 and is not moving forward.

New York public policy transmission planning process

The New York Independent System Operator (NYISO) administers transmission system planning, which includes a biennial Public Policy Transmission Planning Process to identify and meet transmission needs driven by public policy to ensure that the high-voltage transmission grid can support the State’s climate policies.

Interconnection and transmission planning reforms

In response to generator interconnection reforms under the Federal Energy Regulatory Commission’s (FERC) Order No 2023, NYISO restructured its process for evaluating interconnection requests into a two-phase “cluster” approach for improved procedural efficiency. NYISO’s study of the Transitional Cluster is expected to conclude in summer 2026, which is also when the request window to enter the next cycle should open. NYISO is evaluating whether improvements to its process for connecting certain larger load facilities, such as data centres, to the transmission system are appropriate and is targeting filing any changes with FERC before 2027.

In Order No 1920, FERC directed significant transmission planning reforms, and system operators such as NYISO are required to make filings with FERC to implement these long-term reforms by conducting regional transmission planning to identify needs and evaluating and selecting solutions for those needs. NYISO is developing its implementation filings, which may result in considerable procedural changes, with certain provisions addressing interregional coordination due in June 2027. Additional information regarding coordination between the CGPP and the NYISO planning process will be addressed in the future, including through NYISO’s June 2026 FERC filing.

Offshore wind

Offshore wind is planned to be one of the State’s main sources of electricity to facilitate a 60% reduction in GHG emissions by 2040. The State has one operating offshore wind farm (the South Fork Wind Farm) and two projects under construction (Empire Wind 1 and Sunrise Wind). Six offshore wind projects are in planning and development stages in the New York Bight area; however, project timelines were impacted by the Trump administration (“Administration”) withdrawing all areas of the US Outer Continental Shelf (OCS) from offshore wind leasing, prohibiting the Bureau of Ocean Energy Management (BOEM) from issuing new or renewed approvals, rights of way, permits, leases, or loans for offshore wind projects (“Wind Memorandum”).

The US Department of the Interior (DOI) also issued a stop-work order for Empire Wind 1 over federal approval concerns, which was subsequently lifted. The DOI then issued a stop-work order for the nearly completed Revolution Wind project off the Rhode Island and Connecticut coasts, which Ørsted, Connecticut and Rhode Island challenged, and the court granted a preliminary injunction allowing construction to resume. The Administration separately annulled BOEM’s construction and operation approvals for offshore wind projects off the Maryland and Massachusetts coasts. The US District Court for the District of Massachusetts then vacated President Trump’s Wind Memorandum. However, BOEM issued lease-pause orders for all five large-scale offshore wind projects under construction – Empire Wind 1, Revolution Wind, Vineyard Wind 1, Sunrise Wind, and Coastal Virginia Offshore Wind – citing national security concerns. All project sponsors filed suit, and federal courts granted preliminary injunctions for each project.

The Administration has since pivoted to negotiating settlements with offshore wind developers to relinquish their leases in exchange for lease fee reimbursements, contingent on reinvestment in domestic fossil fuel projects. In March 2026, DOI’s settlement with TotalEnergies reimbursed approximately USD1 billion in lease fees in exchange for TotalEnergies relinquishing two offshore wind leases off the North Carolina and New York coasts and committing investments in US LNG production and Gulf of Mexico oil and gas development. The Administration announced similar contingency agreements with offshore wind developers with leases off the coasts of New Jersey, New York, and California.

NYSERDA manages the delivery and procurement of offshore wind energy to the State, and selected projects enter into contracts to sell ORECs to NYSERDA on behalf of the State’s electricity ratepayers. Due to federal actions and challenging market conditions, NYSERDA’s OREC solicitations have had mixed results, and NYSERDA did not offer a solicitation award in 2026 because of the uncertainty. In February 2026, NYSERDA issued an RFI seeking industry input on pre-development support, such as State funding, to build a “steady and sustainable pipeline” and to explore whether new or modified approaches to offshore wind procurement could support new projects capable of advancing future offtake and construction.

Data centre moratorium

In July 2026, Governor Hochul established the first statewide moratorium on new hyperscale data centres and current incomplete permit applications for one year while creating a development regulatory framework. This comprises 50+-megawatt centres which must also have Uninterruptible Power Supply (UPS), specialised cooling, and cybersecurity systems and provide data storage, cloud computing, or content delivery.

The Executive Order (EO) directs NYDPS to create a Generic Environmental Impact Statement (GEIS) assessing potential environmental impacts and consider creating a Grid Acceleration Fund requiring data centers to front capital contributions to finance grid improvements and fund dedicated new clean energy supply. Additionally, DEC is directed to assess water withdrawal regulations.

Meeting the Climate Act’s clean energy goals in a post-“One Big Beautiful Bill Act” world

In 2025, the “One Big Beautiful Bill Act” (the “OBBBA”) imposed significant changes to clean energy tax credits, sunsetting them earlier than previously scheduled under the 2022 Inflation Reduction Act (IRA). Investment tax credits (ITCs) for certain technologies, such as standalone battery energy storage systems, were however generally preserved, while the advanced manufacturing credit was terminated for wind energy components. In addition, the Department of the Treasury guidance eliminated the “Five Percent Safe Harbor”, which would have allowed solar or wind projects to rely on spending 5% of the project’s total CapEx by a certain date to establish when construction of the project began for purposes of claiming the ITC or production tax credit (PTC). If the aforementioned Treasury guidance survives recent successful challenges in federal court, such projects will instead need to satisfy the more subjective “Physical Work Test” to establish the date construction begins.

Under the IRA as modified by the new OBBBA, PTCs and ITCs for wind and solar projects can be claimed for projects beginning construction after 4 July 2026 that are placed in service on or prior to 31 December 2027. The ITC is based on 30% of the basis of the energy property, and the PTC is generally equal to 1.5 cents (adjusted on a yearly basis for inflation) per kilowatt-hour of electricity produced by the taxpayer and sold to an unrelated party, both dependent on prevailing wage and qualified apprentice rules.

The rate of the ITC/PTC can increase up to 10% (for PTCs) or ten percentage points (for ITCs) for projects that are located in “energy communities” (ie, specified areas associated with the fossil fuel industry or brownfield sites), meet certain US-manufactured content thresholds, and/or are located in specified low-income communities. Projects beginning construction or placed in service after 2026 will also have to contend with “foreign entity of concern” (FEOC) rules designed to prevent components and investors of eligible projects from being sourced from China, Russia, Iran, and North Korea.

The IRA also instituted a new ITC/PTC for hydrogen production, a new PTC for zero-emission nuclear power production from certain existing nuclear facilities, and a significant rate increase for the existing carbon capture credit. While the new OBBBA exempted the ITC/PTC for hydrogen production from FEOC requirements, it also eliminated the ITC/PTC for hydrogen production for facilities beginning construction in 2028 or thereafter.

The Climate Act’s implementation

The Action Plan

The State’s 2023 cornerstone commitment toward achieving the Climate Act’s goals, the 10-Point Action Plan (the “Action Plan”), outlines comprehensive actions to expand the State’s renewable energy sector and foundational initiatives for combatting macroeconomic and inflationary pressures affecting the renewable energy industry. Components of the Action Plan include NYSERDA awards for offshore and onshore renewable energy projects along with supply chain ecosystem investments; launching an accelerated renewable energy procurement process for both offshore wind and onshore renewables; and engaging in a historic development of transmission infrastructure across the State. After the State’s May 2026 budget signing, the deadline for the CAC to update the Action Plan has been extended to 2028.

New York Department of Environmental Conservation Regulations

In 2025, a coalition of environmental advocacy groups sued the Department of Environmental Conservation (DEC) for missing its 2024 deadline to draft and promulgate enforceable regulations to ensure the State meets the Climate Act Scoping Plan’s State-wide GHG emission limits. In October 2025, the Albany County Supreme Court ordered the Hochul administration to release the rules by 6 February 2026, which the Hochul administration appealed.

Also in February 2026, NYSERDA released a memo projecting significant consumer energy cost increases if the State implemented a cap-and-invest programme to meet the 2030 emissions goals. Environmental groups disputed the memo’s cost projections with analyses suggesting that a well-designed programme would deliver net savings for the majority of households.

Cap-and-Invest Program and Mandatory GHG Reporting Programs

In May 2026, Hochul passed a new State budget amending the Climate Act by pushing the deadline for issuing mandatory emissions regulations to 2030 and changing the GHG accounting methodology from a 20-year to a 100-year global warming potential period. The budget also moved the DEC and NYSERDA’s Cap-and-Invest Program (NYCI) deadline to 2028 and established a target to reduce emissions by 60% by 2040, while maintaining the existing 2050 target. Under the NYCI, the State will set a cap on the total, annually declining amount of GHG emissions allowed across the economy, and businesses will be required to purchase allowances at auction based on their GHG emissions. The regulations implementing the NYCI are currently being shaped by ongoing public feedback.

In addition, the DEC and NYSERDA contemplate a forthcoming Auction Rule, which would describe the operation of the allowance auctions and mechanisms to protect the overall integrity of the allowance market, prevent market manipulation, and provide cost containment and programme stability. The DEC issued final Mandatory GHG Reporting Program regulations under 6 NYCRR Part 253 (“Part 253”), establishing a mandatory GHG emissions reporting programme that requires emitters of GHGs – including facilities, fuel suppliers, waste haulers, electric power entities, and others – to report annual emissions to the DEC starting in 2026, with the first annual emissions report due on 1 June 2027. Notably, Part 253 applies not only to facilities located in the State but also to upstream electricity and fuel suppliers that provide electricity or fuel into the State. Reporting is required from facilities emitting 10,000 metric tonnes or more of CO2 equivalents per year, as well as fuel suppliers, waste haulers and transporters, electric power entities, agricultural suppliers, and anaerobic digestion and liquid storage waste facilities exceeding specified thresholds.

Furthermore, the State legislature is considering corporate-level climate disclosure legislation. The proposed Climate Corporate Data Accountability Act (introduced on 28 January 2026) (CCDAA) would mandate climate disclosures from large companies doing business in New York. The proposed CCDAA would require companies doing business in New York with total revenues exceeding USD1 billion in the preceding fiscal year to disclose annually Scope 1, Scope 2, and Scope 3 GHG emissions to an emissions reporting organisation. If enacted, the DEC would be required to adopt implementing regulations on or before 31 December 2027, with Scope 1 and Scope 2 disclosures starting in 2028 and Scope 3 disclosures starting in 2029. Separately, SB S3697-A would require covered entities with total annual revenues in excess of USD500 million that do business in New York to prepare biennial climate-related financial risk reports. Both bills are currently pending before State Senate committees.

Recent investment opportunities

In 2025, NYSERDA announced contracts for 26 land-based renewable energy projects with over 2.5 GW capacity planned to be operational by 2029 and spurring over USD6 billion in direct investment and over 1,900 jobs. NYSERDA further announced that USD15 million was available to support clean, resilient economic development projects under the State’s Regional Economic Development Council initiative. Also, as mentioned, the PSC adopted the Clean Energy Standard Biennial Review, which increased the annual procurement target for NYSERDA’s land-based renewable energy programme (Tier 1) to 5,600 GWh.

In addition, Hochul announced a solicitation to accelerate renewable energy project development, and a plan for the USD1 billion Sustainable Future Program supporting climate action and jobs. Additionally, NYSERDA issued its 2025 annual Renewable Energy Standard (RES) solicitation for Tier 1 RECs. NYSERDA subsequently issued its 2026 RES solicitation (RESRFP26-1) in April 2026, seeking to procure additional Tier 1-eligible RECs from facilities with a viable path to entering commercial operation in the near future. The State also implemented a five-year, USD3.75 billion funding commitment to clean water infrastructure.