Good climate change policies cut the emissions of heat-trapping gases, but the best ones do so at low cost while achieving other benefits at the same time. A new study confirms that the Regional Greenhouse Gas Initiative (RGGI) falls into the “best” category.
As many readers know, RGGI limits carbon pollution from the power plants in nine New England and mid-Atlantic states. It is a “cap and trade” program that establishes an aggregate pool of “allowances” that give power plant owners the right to emit specific amounts of carbon based on the number of allowances they own. It is also an “auction and invest” program, in which the nine state governments auction off the allowances to the highest bidders, and then invest the proceeds to support measures to further reduce carbon emissions, such as through energy efficiency and renewable energy.
A respected consulting firm, The Analysis Group, just completed its second analysis of the RGGI program. This analysis tallied the costs and the benefits of the program for the years 2012-2014. Here are the main conclusions:
- Carbon emissions from the nine states’ power plants are on track for a 50 percent reduction by 2020 compared to 2005 levels;
- The reinvestment of auction proceeds to boost efficiency and renewables will save consumers approximately $460 million dollars from now until 2025, largely because energy efficiency investments reduce overall energy use and lower energy bills;
- Because this region is an energy importer, placing a price on carbon and reinvesting the proceeds in efficiency and renewables allows these states to retain “energy dollars” that would otherwise be exported out of the region. The Analysis Group estimates that about $1.3 billion will be kept locally rather than exported thanks to the last three years of investments in efficiency and renewables from the program’s proceeds.
- Keeping the energy dollars local also adds about 14,000 job years (the equivalent of 14,000 people having a job for a year), because the proceeds are being used for jobs that cannot be outsourced, such as putting solar panels on schools or retrofitting old leaky buildings.
These findings are consistent with the first Analysis Group study which examined RGGI during 2009-2011. Taken together, the Analysis Group finds that RGGI will add about 2.9 billion dollars to the nine states’ economies, while helping to cutting carbon pollution from power plants in half.
As the former chair of RGGI, I have long touted its potential benefits. So now I’m both happy and proud to note that six years of a well-documented track record is enough to confirm this fundamental fact: RGGI works.
So what is next for this program? In the short run, I expect other states will consider joining RGGI, or establishing similar regional programs of their own, as a cost-effective way to lower their carbon emissions and comply with the new EPA Clean Power Plan, slated to be finalized in the next few weeks.
But beyond that, the documented six-year success of RGGI should jumpstart a conversation about expanding RGGI to cover other high-emitting sectors of the economy, such as transportation. We know the program works and benefits the regional economy; it is time to build upon that success and expand the program to other economic sectors, as California and Quebec have already done, and as Ontario plans to do. And by making the program cover emissions throughout the economy (and not just from power plants), the region would also position itself for added benefits by linking with California, Quebec, and Ontario. As RGGI proves, there is strength in numbers.