RGGI modeling should be more expansive – environmental groups and power companies agree

Later this year, Northeast and Mid-Atlantic states will determine the future of the successful, first-in-the-nation climate program for the power sector, the Regional Greenhouse Gas Initiative (RGGI). The most important decision centers on the cap level, the primary indicator of the program’s environmental ambition. Before the RGGI states ultimately decide on a post-2020 cap level, however, they will model the impacts of a range of possible cap scenarios. It is with that range in mind that the Collaborative for RGGI Progress (“the Collaborative”) urged the RGGI states to broaden their proposed scope of modeling when they submitted comments last week.

The Collaborative is a unique coalition that includes two of the region’s largest power generators (Calpine and Exelon), one of the largest utilities (National Grid), and environmental organizations (Acadia Center and Natural Resources Defense Council). By finding common ground among diverse interests, the Collaborative seeks to propel balanced policy that advances RGGI states’ climate leadership.

At a February meeting in Delaware, the RGGI states proposed to model just two scenarios: one that reflects doing the bare minimum to comply with the requirements of the Clean Power Plan (see “Model Run #1” in the figure below), and a second that essentially continues the current RGGI cap trajectory of 2.5% per year through 2030 (see “Model Run #2” in the figure)¹. The Collaborative commends the RGGI states for modeling these two scenarios, but also requests the modeling of two more ambitious scenarios:

• A 5% annual reduction per year from the 2020 cap level from the electric sector from 2021 to 2030 (the green line in the figure); and
• A scenario that aligns electric industry emissions reductions with RGGI states’ shared commitment to 80% economy-wide GHG reduction targets by 2050.

The 5% annual reduction scenario would provide the states with more information on options for achieving deep, economy-wide emissions reduction commitments, and there is ample quantitative justification to model this specific scenario. As discussed in more detail in more detailed comments to RGGI, Inc. by NRDC, an annual 5% reduction from 2020-2030 would be on par with the actual emissions reductions that have occurred since RGGI began in 2009. RGGI has also generated billions of dollars in economic benefits since 2009, and modeling of a similar emissions reduction trajectory going forward will enable states to assess the impacts of continuing along a comparable glide path. RGGI modeling should also be used to evaluate the contribution that the program can make to achieve the RGGI states’ ambitious, long-term, economy-wide GHG reduction targets. A recent analysis from Synapse Energy Economics indicates that the most cost-effective pathway to achieving those targets translates to annual RGGI cap reductions of approximately 5% from 2020-2030. While the RGGI modeling will not encompass the building and transportation sectors – as Synapse’s analysis did – it affords an opportunity to evaluate how far the electric sector can go toward achieving multi-sector requirements.

This is not the first time that stakeholders have asked the RGGI states to model this 5% cap scenario; in previously submitted comments, environmental advocates, public health groups, clean energy companies and a representative of Fortune 500 businesses have all made compelling cases for the inclusion of this modeling run. However, these comments from the Collaborative represent the first time that RGGI compliance entities and electric utilities have weighed in to support this modeling.

The request is simple, the justification is clear, and the support is abundant. If the RGGI states intend to achieve their long term goals, they need to begin considering the pathways that will actually get them there. Modeling the impacts of a cap that declines by 5% of the 2020 level each year through 2030 is a key step in that process.

¹ From 2014 -2020, the cap declines annually by 2.5% of the preceding year’s cap level, while the proposed trajectory from 2020-2030 would be an annual decline of 2.5% from the 2020 level. The proposed 2.5% cap through 2030 would also eliminate the cost containment reserve and prohibit the use of offsets.

Jordan Stutt is a Policy Analyst in Acadia Center’s Boston office. He works on energy, transportation and climate change issues, with an emphasis on research and policy analysis for energy systems and carbon markets. He was an Energy Policy Analyst at Pace Energy and Climate Center, Pace University Law School in White Plains, NY, where he focused on energy efficiency and RGGI.

Peter Shattuck is Director of Acadia Center’s Massachusetts office and Clean Energy Initiative. Peter’s work at Acadia Center focuses on cleaning up the energy supply across all sectors of the economy. Driving market-based emissions reductions is at the core of this work, using cap and trade policies such as the Regional Greenhouse Gas Initiative, which Acadia Center has tracked since the program’s early development in the 2000s.