Gov. Hochul has not yet signed the Climate Change Superfund bill — likely due to concerns that this bill will increase New Yorkers’ energy costs. However, concerns about the costs of the bill — which would fund the state’s climate transition by imposing fees on the biggest polluters, are unwarranted. Instead, vetoing this bill would come at a high cost to all New Yorkers — for generations to come. New York desperately needs to invest more deeply in climate adaptation, and this requires significant funding. New York will face more than $500 billion in adaptation costs to ensure that we have access to clean water, and that our roads, sewers, and homes do not collapse in future storms and floods. For example, it will cost $100 billion to upgrade New York City’s sewers to withstand flooding, another $100 billion to upgrade roads and other infrastructure for resiliency against storms and rising sea levels, and more than $50 billion for a sea barrier for New York City. And these are just a some of the known costs New York will face over the next few years to adapt to rising global temperatures. The Superfund Act, which was passed by the state Senate and Assembly this year, would impose a fee on fossil fuel companies that emitted more than 1 billion metric tons of carbon dioxide between 2000 and 2018. Restricting the assessed fee to very large emitters limits the Act’s scope to between 30 and 40 firms, including U.S. companies ExxonMobil and Chevron and foreign companies Saudi Aramco, Shell, and BP. In total, the bill requires these large fossil fuel companies to collectively pay $75 billion to New York State over the course of 25 years — or $3 billion in annual total fees — with each company’s obligation proportional to the scale of its past polluting activities. The largest eight of these fossil fuel companies collectively earned $389 billion in profits in 2022 alone. Thus, the annual total fee of $3 billion amounts to less than 1% of these companies’ profits in some years. Protesters shout slogans as they cross the Brooklyn Bridge during a Youth Climate Strike march to demand an end to the era of fossil fuels, Friday, Sept. 20, 2024, in New York. (AP Photo/Andres Kudacki) The governor’s presumed concern that these fees may be passed on to energy consumers are unwarranted. The fee is designed to be backward-looking; that is, the assessed amount that each company will pay to the state is based on their previous behavior, rather than their ongoing behavior. By making the fee “fixed” and backward-looking on emitters, the Superfund Act ensures that emitters will not benefit by raising prices or lowering quantities on consumers. On the contrary, if a company were to raise prices in response to the Superfund Act, they would actually lose more in revenue than if they were to keep prices the same. Passing on a price increase to energy consumers would hurt business, making it very unlikely.  Further, the fixed fees are different for each company — if one company were to raise prices to recover its Superfund fees, a competitor could simply steal their business by holding its prices steady. If instead the Superfund were to impose the same fee on each company, there would be a greater risk that companies could all simultaneously act to pass the fee forward to consumers. However, even this is unlikely since the fixed and backward-looking nature of the Superfund fees make it difficult for companies to adjust their prices without seeing losses. Finally, by limiting the number of firms impacted by the assessment, the Superfund Act further lessens the risk that there will be any pass through to consumers. While the Superfund is designed not to alter the behavior of emitters, this will not always be the optimal policy tool in climate policy. Economists and policymakers agree that we need tools to curb emissions systematically and dramatically. In New York, policymakers are working on establishing rules and implementation of a cap-and-trade system that would — if implemented correctly — increase the cost of emitting greenhouse gases for large firms, thereby lowering emissions. We need policies that will change behavior and incentivize electrification and reduced greenhouse gas emissions. However, we also need revenue, now, to fund the climate transition. In the case of the Climate Superfund, the goal is to raise funds for the state without impacting the behavior or market structure of fossil fuel companies. After passage in both houses of the New York State Legislature, the governor must sign this legislation and collect these much-needed funds. Failure to do so puts New Yorkers at risk — both physically and fiscally. Eisner is an economist at the Fiscal Policy Institute.