Gas Industry Eyes Comeback as New York Weighs Climate Law Delays – City Limits

Fossil fuel interests have enlisted prominent former elected officials to make the case that gas is here to stay.

This story originally appeared in New York Focus, a nonprofit news publication investigating power in New York. Sign up for their newsletter here.

After years of seeing their projects rejected in New York, pipeline and power plant companies are eyeing a comeback as the state weighs a slower transition away from fossil fuels.

They’re not just watching from the sidelines. A national industry group, led by some of the country’s largest pipeline builders and a slew of other gas interests, has recently entered the fray, tapping former state politicians to help advance Gov. Kathy Hochul’s “all of the above” energy strategy. Top of their agenda: pressing pause on the state’s climate targets.

The group, a nonprofit called Natural Allies for a Clean Energy Future, represents some of the companies with the most to gain if Hochul’s proposed rollbacks to the state’s climate law go through. Speaking at a conference in late March, its New York chapter co-chair, former assemblymember and Bronx borough president Ruben Diaz Jr., gave a spirited defense of the governor’s plan, calling it “responsible leadership.”

“Yes, more renewables,” he said, “but yes also to modern efficient natural gas when needed to maintain stability. That is not retreating from climate action. That is governing with common sense.”

Diaz, a self-professed environmental justice champion, was delivering the keynote before the Independent Power Producers of New York, or IPPNY, a trade group representing power plant operators.

It was a new venue for Natural Allies. Formed in 2020, the group has recruited a roster of high-profile former elected officials to persuade Democrats, and especially Black and Latino voters, that gas is here to stay. In the past six months, it has carried that playbook into state-level advocacy, bringing on prominent spokespeople in New York, New Jersey, Pennsylvania, Virginia, and Wisconsin.

The group is entering New York politics at a pivotal moment. Energy demand is growing, but President Donald Trump’s administration is pulling support for renewables and waging war on offshore wind, a central pillar of New York’s green transition. State energy regulators are considering a proposal from business groups to pause efforts to achieve a zero-emissions grid. And the governor is fighting a court order over violations of the state climate law.

The fight has come to a head in state budget talks, which are now in overtime as the governor, Assembly, and Senate wrangle over Hochul’s proposed rollbacks of New York’s emissions mandates and other policy sticking points. Despite support from some upstate Democrats, Hochul has admitted that she’s facing an uphill battle with the legislature.

Natural Allies brings national heft to the state fight, with the help of familiar faces from New York’s political scene. The group announced Diaz and former Lieutenant Gov. Robert Duffy as its state co-chairs last fall, and they quickly began making the rounds in policy circles and among clergy groups. Diaz’s efforts focused on communities of color downstate.

Duffy, who directs the Greater Rochester Chamber of Commerce, leads the group’s upstate outreach. He said the gas group’s priorities mesh with those of many businesses in the region, who he said could be forced out of New York if the state keeps its current climate deadlines.

“It just defies logic that this is even controversial,” he said.

Natural Allies says it doesn’t lobby in New York, but it treads a fine line.

At the March conference, Diaz mentioned meeting beforehand with a state senator and said he was helping to build “a coalition so that we can give the governor the backing that she needs, so that we can convince many of the legislators” to change the climate law. The previous month, according to the group’s social media, he joined the annual conference of the New York State Association of Black, Puerto Rican, Hispanic, and Asian Legislators.

Natural Allies’ website hosts a “Take Action” page directed at state energy regulators. In late March, the group tagged state Senate Majority Leader Andrea Stewart-Cousins in a social media post warning of massive energy cost hikes on families “if [climate law] adjustments aren’t made.”

Michael McKeon, spokesperson for Natural Allies, denied that any of the group’s efforts amounted to lobbying. (McKeon is a partner at the consultancy and lobbying shop Actum, where Diaz is co-chair.)

“We have never had legislative meetings or met with the [governor’s office] to discuss legislation at all,” he wrote in an email. “We can and do try to educate folks about our view on issues.” Asked about the “Take Action” page on the group’s website, with a form letter pushing the Public Service Commission to hold hearings on the state’s clean grid mandate, McKeon said it was active for only 10 days in March and “falls outside of lobbying rules.”

Diaz, who runs his own lobbying firm in addition to working for Actum, said he would “know better” than to lobby without disclosing it.

“It’s a consulting gig,” Diaz said of his work with the group. “I’m just there to help educate the community.”

Natural Allies declined to say how much it was paying its state chairs. The group’s latest published tax filings, and prior reporting by the online outlet Heated, show that it paid LLCs linked to some of its national co-chairs, including several former congressmembers, more than $200,000 a year in 2024. The group reported more than $8 million in revenue that year and $10 million in the bank. 

Then, Trump took office. Since then, the five publicly traded gas and energy infrastructure companies that top Natural Allies’ membership list have seen their stocks soar above the S&P 500. With surging energy demand all over headlines and renewables on the defensive, the gas industry is having a moment.

New York may serve as a test of how far the fossil fuel resurgence will go. Just a few years ago, the state had all but ruled out new fossil fuel infrastructure. Between 2020 and 2022, state environmental regulators rejected every major gas project that came before them, citing, among others, the climate law.

Last year, things began to shift. The clearest sign was Hochul’s green light, in November, for a major gas pipeline into the New York City area, which the state had rejected three times before. Soon after, Hochul’s administration finalized a new energy plan that envisions “repowering”—or rebuilding—some New York City fossil fuel plants as late as the mid-2030s in order to plug a hole in the state’s energy mix that was supposed to be filled by offshore wind.

Hochul spokesperson Ken Lovett said the pivot was a necessary response to Trump’s attacks on renewables, and that while the governor is “laser focused” on building clean energy, she won’t rule out any option to “help keep the lights and heat on and costs down.”

“Gov. Hochul has been clear: we are not going to risk the reliability of the grid,” he said.

For some in the industry, the governor’s “all of the above” energy strategy doesn’t go far enough. “It’s a nice talking point,” said Gavin Donohue, president of the IPPNY trade group. “But we need to back it up with policy changes.”

Power plant operators are less focused on the climate law’s topline emissions targets, which Hochul is seeking to change through the budget, than a separate provision requiring a zero-emissions grid by 2040.

“Under the current law, my company and [others like it] are expected to essentially go away by 2040,” said Matthew Schwall, senior director of regulatory affairs at Alpha Generation, at IPPNY’s conference in late March.

Schwall’s company owns some of the aging, embattled “peaker” plants that get fired up when demand on the grid spikes. The company recently proposed new units at two of its Brooklyn plants, but Schwall said they faced tough odds getting built unless the state reconsiders its clean grid mandate.

The cost to build a new gas plant has doubled or tripled since 2020, depending on where in the country it’s built, an executive from the turbine manufacturer GE Vernova said at the conference. And given backlogs in supply chains and construction timelines, it would likely take until at least the early 2030s for any new gas plants to get up and running.

“I don’t know how to attract financing for a project when the law says your project cannot run by 2040,” Schwall said.

Hochul’s administration doesn’t need to change the climate law to put that mandate on hold. Regulators are already allowed to do so if they find that meeting the target will compromise grid reliability—and the business group petition pending before the state Public Service Commission asks them to do just that.

Though distinct, the fight at the commission and the one in the legislature are hard to fully separate, with many of the same groups on the front lines of both.

Yvonne Hennessey, who leads the environmental practice at the law firm Barclay Damon and has represented oil and gas clients in major permitting fights, said she has seen renewed industry interest over the last six months in building new gas plants. She said Hochul’s recent moves have been encouraging, but that investors are still waiting for a clearer signal that they’re welcome in New York. Major changes to the state’s climate targets would provide it.

Climate advocates say there couldn’t be a worse time to turn back toward fossil fuels. Raya Salter, founder of the Energy Justice Law and Policy Center and a member of the state’s Climate Action Council, called the industry’s recent advocacy a “cynical ploy.”

“The entire world is aflame because we won’t quit fossil fuels,” she said, pointing to Trump’s war in the Middle East and the fallout on energy prices. “The fact that we are doubling down on fossil fuel infrastructure because of the fossil fuel lobby, instead of doubling down on renewables, is actually insane.”

While experts expect the energy shock to accelerate the transition to renewables in many fossil fuel-importing economies, Hennessey sees it as an opportunity for New York to reconsider fracking, which it banned in 2014.

“We could very well have our own source of fossil fuel in the state of New York,” she said. (Hochul has so far rejected the idea of new gas drilling within state lines.)

Downstate, Diaz is pitching new gas plants as an environmental justice measure, which will allow the dirtiest old facilities to be retired.

He acknowledged that he himself long doubted those kinds of promises. In the late 1990s, he recalled, the state promised that a fleet of new downstate gas plants would be cleaner than the old. The problem, Diaz said, was that the old ones stayed on too—and many are still there, almost 30 years later.

What makes him think this time will be different?

“That we have Kathy Hochul,” he said.