Report: RGGI worth $1.6B for 10 states

In the three years since the Regional Greenhouse Gas Initiative has been in place, an independent economic-consulting firm claims it has been worth more than $1.6 billion, or nearly $33 per person, to the 10 participating states, including Rhode Island.
“It’s the first market-based program to reduce carbon dioxide from power plants in the U.S. that we think is important because even though it’s 10 states, those … states represent one-sixth of the U.S. GDP and one-sixth of the U.S. population,” said Paul Hibbard, vice president of Boston-based Analysis Group, an economics and strategies consulting firm.
The 10 states participating are: Maryland, Delaware, Connecticut, Massachusetts, Maine, New Hampshire, New Jersey, New York, Rhode Island and Vermont. (New Jersey plans to pull out of the program at the end of the year.)
Rhode Island has received $14.3 million; about $744,000 of that was spent on program administration and about $300,000 was spent on education outreach and job training.
“One of the ways they are using the money is the R.I. Office of Energy Resources is funding a program that provides energy education to low-income ratepayers in the state and it’s to help figure out how to save money on their energy bills,” Hibbard said.
But the vast majority, $13.2 million, was spent on energy-efficiency programs for property owners, he said.
The state-by-state breakdown was released Nov. 14. by the National Association of Regulatory Utility Commissioners in a report titled: “The Economic Impacts of the Regional Greenhouse Gas Initiative on Ten Northeast and Mid-Atlantic States.” The report claimed investments to date from the 10 states will create the following: The regional economy of the combined states gains more than $1.6 billion in economic value and an estimated 16,000 jobs. Three years ago, the 10 states submitted sealed bids to buy allowances to emit greenhouse gases, in the nation‘s first carbon cap-and-trade program.
A cap-and-trade program is designed to reduce emissions of a pollutant by placing a limit on the total amount of emissions that can be released by participating states during a fixed time period. The cap is implemented through allowances. Each allowance permits the right to emit a specific amount of emissions. The allowances are auctioned off by the agency implementing the program.
It requires a 10 percent reduction in emissions by 2019, but only in emissions generated by power plants. Some critics have said the program’s carbon caps don’t reflect the fact that milder summers resulted in lower-than-expected energy use in the Northeast, meaning that the states could grow their emissions and still not break the caps. Power companies in the participating states submitted sealed bids for the first auction. In that auction, the greenhouse gas initiative offered allowances for only 12.6 million of 2009’s 188 million tons allowed by each state based on their regulations. Carbon allowances purchased from one state can be transferred by a purchaser to cover emissions generated in another participating state.
After the states stabilize power-sector carbon emissions at their capped level by 2014, the cap will be reduced each year from 2015 through 2018.
Under the program, 223 power plants in the Northeast since 2009 have had to buy allowances for their C02 emissions. Power plants were given six years to stabilize emissions, after which they will be required to reduce emissions by 2.5 percent per year for the next four years.
The report says that spending on energy-efficiency programs was the most popular way states spent the Regional Greenhouse Gas Initiative funds, and the most economically advantageous. Funds were also invested in other ways, all with positive economic outcomes, including worker training, community-based renewable energy projects, bill-payment assistance to low-income and other energy customers, land protection and contributions to a state’s general fund to help close budget gaps. “As the first U.S. experiment with a carbon price in electricity markets, RGGI now has produced actual historical data that reveal the concrete economic impacts at the state and regional level,” said Susan Tierney, one of the lead authors of the report and a managing principal of Analysis Group. “We tracked the dollars spent, and RGGI generates greater economic growth in every one of the 10 states that participate in RGGI than would occur without a carbon price. The states’ auction of the CO2 allowances was important for generating those public benefits.”
Larry Ragonese, press director for the New Jersey Department of Environmental Protection, said New Jersey plans to participate in this month’s auction and then will follow through with its plans to pull out at the end of the year.
As far as the Analysis Group report, those projections will not change as that report was based on investments that have already been made, according to David Littell, a commissioner of the Maine Public Utilities Commission and chairman of the RGGI.
In 2011, the 10-state cap was 188 million short tons of CO2. In 2012, the cap will be 165 million short tons – equal to the total number of CO2 allowances issued from the nine remaining states.
“New Jersey’s withdrawal from RGGI will have no other impacts on program operations,” Littell said. “RGGI has strong support and will continue regardless of the actions of any one state.” &#8226

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