Bring on the Fire Trucks: RGGI States Tighten Cap, Up Their Climate Game

February 8, 2013 | 11:27 am
John Rogers
Energy Campaign Analytic Lead

The nine states involved in the Regional Greenhouse Gas Initiative (RGGI) announced plans yesterday to get stricter about power plant carbon emissions, with a tighter cap on those emissions and other updates that build on the program’s successes. That’s good news indeed, for the region and the country.

One friend used this analogy: If climate change is like the house being on fire, adapting to climate impacts is like grabbing the kids and the cat and getting out; tackling the causes of climate change is like calling the fire department to actually do something about the fire. Consider yesterday’s move our regional 9-1-1 call. The fire trucks are rolling.

smokestacks belching

RGGI’s working

RGGI is the pioneering agreement to reduce global warming pollution from power plants launched several years ago by Northeast and Mid-Atlantic states. It uses a market-based approach, a “cap and trade” system that caps the overall amount of CO2 that power plants can emit, and requires each power plant to buy a permit (“allowance”) for each ton CO2 it emitted. The states sell the allowances, and the market figures out who wants and needs them.

The program’s launch came with the first auction of allowances in 2008 and the start of the cap in January 2009, two really important steps for starting to address our carbon problem. In the words of yesterday’s RGGI announcement:

Five years ago the RGGI states demonstrated leadership in addressing CO2 pollution and accelerating the region’s transition to a clean energy economy by conducting the first ever regional auction for CO2 allowances in the nation.

And it has worked: smooth, successful auctions, with no funny business (no market manipulation, for example); strong use of allowance auction revenues by the states for energy efficiency, renewable energy, and more; and reductions in emissions. Studies have shown the strong net benefits from the initiative, including “$1.6 billion in net economic benefit region-wide through the end of the decade.”

RGGI’s getting better

Now the states have moved to address the fact that the cap as originally set has actually been too high — far above what power plants have been emitting:

After a comprehensive two-year program review, the nine Northeastern and Mid-Atlantic states participating in the Regional Greenhouse Gas Initiative (RGGI), the nation’s first market-based regulatory program to reduce greenhouse gas emissions, today released an updated RGGI Model Rule and Program Review Recommendations Summary.

The new agreement includes a tighter cap, one that would drop it 45 percent, from 165 million tons to 91 million, for 2014, and then drop it 2.5 percent more for each of the following years (2015-2020). A tighter cap was a primary piece of what hundreds of business, organizations, and consumer advocates, including UCS, called for in a joint letter late last year.

The agreement also includes “cost containment reserves,” a fixed extra set of allowances that would become available if allowance prices go above certain levels, and other improvements that build on the experiences of the first few years.

RGGI’s just the beginning

Next steps are for each of the states to update their regulations or get the legislative authority to implement this agreement.

And for others to follow the lead of the Northeast and California, and get serious about tackling power plant carbon emissions. And for everybody — including the RGGI states — to ramp it up across the economy.

It’s a good time for leaders, and fire trucks. Bring ’em on.