RGGI Riding Clean Energy to a Low Carbon Future
The Regional Greenhouse Gas Initiative (RGGI) has now produced enough data to make certain trends abundantly clear: the electric sector is becoming cleaner while the regional economy grows. The nine participating RGGI states, which held their first allowance auction nearly eight years ago, have delivered on their promise of cutting carbon emissions from the region’s power plants. As Acadia Center’s most recent report details, these emissions reductions have been driven, in part, by the steady growth of renewable energy generation and energy efficiency programs. Not only has this transition to a clean energy system helped to curb harmful pollution, it has produced substantial benefits for the regional economy.
Emissions in 2015 continued the downward trend of recent years. Carbon emissions from the power plants covered by RGGI totaled 83.2 million tons in 2015, which was 6.3% below the 2015 emissions cap of 88.7 tons and 37% below emissions levels in 2008, the year before RGGI started. RGGI’s experience continues to show that power sector emissions can be reduced much more quickly and cost effectively than expected.
Fostering a clean energy transition
Energy efficiency programs are reducing demand for electricity across the region, while electricity is increasingly being supplied by renewable energy sources. Both of these trends help to displace electricity generation from aging, inefficient, carbon-intensive sources like coal and oil, while deferring the need to invest in costly natural gas infrastructure. All together, these factors are helping to make electricity in the region cleaner and more affordable.
Increasing Role of Energy Efficiency and Renewable Generation
Both energy efficiency and non-emitting generation are projected to continue increasing in the years ahead. In the nine RGGI states, budgets for electric efficiency programs grew from $575 million in 2008 to $1.9 billion in 2015, an increase of 230%. These efficiency programs are the primary beneficiaries of RGGI revenue, and investments in energy efficiency yield economic benefits on the order of 3 to 4 times the up-front cost. Renewable generation will continue increasing, as all nine RGGI states have Renewable Portfolio Standards that require electric utilities to procure increasing quantities of renewable electricity.
Going forward, many of the RGGI states are increasing commitments to clean energy. Connecticut, Rhode Island, and Massachusetts are procuring significant quantities of hydroelectricity and renewable energy through a joint procurement, and soon-to-be-enacted legislation in Massachusetts will require additional procurements of hydroelectricity, offshore wind, and other renewables equivalent to approximately 30%–40% of the Commonwealth’s electric consumption. New York has committed to a 50% renewable energy supply by 2030, and Rhode Island recently adopted a 40% renewable energy requirement by 2035.
As the RGGI states continue to achieve these increasingly ambitious targets for clean energy growth, the economic and environmental well-being of the region will continue to benefit. New, high-quality jobs will be created in the booming clean energy sector. The region will pay less for the imported fossil fuels needed to power traditional generation. Cleaner air will result in healthier citizens who spend more time at school and work, rather than making costly hospital visits. And last but not least, achieving these goals will enable the RGGI states to meet their own economy-wide GHG targets for 2030 and 2050, doing their share to help avoid the worst impacts of a warming planet.
Stay tuned for Part II of our RGGI report, with the latest on the 2016 program review and the CPP.
New Data Shows Regional Greenhouse Gas Initiative Working for Bay State
BOSTON – A new report finds the Regional Greenhouse Gas Initiative is producing major drops in climate pollution in states such as Massachusetts, and despite dire predictions, the economies of RGGI states are leading the nation.
Peter Shattuck, is director of the Clean Energy Initiative at the nonprofit Acadia Center, which produced the new report. Shattuck said CO2 emissions dropped by just over 6 percent below the initiative’s cap in 2015; and there have been greater reductions over the long term.
“Massachusetts and other states participating in RGGI have been able to curb carbon pollution by 37 percent since the program started, even as electricity prices remain below where they were when RGGI started,” he said.
Shattuck said despite opponents’ claims that these environmental efforts would be a drain on the economy, the new research found the economies of Massachusetts and the other states participating in RGGI are outpacing the rest of the nation.
Shattuck said Massachusetts and other states in the initiative are conducting a review of the program and will soon determine what kind of emission-level reductions states in the initiative should aim for by 2030. Meantime, he said, state lawmakers have a measure pending to expand clean energy in the Bay State.
“The Legislature right now is considering a bill that would launch the nation’s first offshore wind industry, and would support other forms of clean energy,” he added.
The measure, S. 2400, is expected to come up for a vote during the final days of the state legislative session over the weekend.
Mike Clifford, Public News Service – MA
Report: RGGI resulting in emissions reductions, lower electricity costs
BOSTON – A new report examining the effects of the Regional Greenhouse Gas Initiative, a coalition of Northeastern and Mid-Atlantic states, including Rhode Island, shows participating states are outpacing other parts of the country for both emissions reduction and declining electricity prices.
Acadia Center, a nonprofit advocate of low-carbon energy, released the report, showing the region has realized a reduction in carbon emissions in each of the last five years, and is down 37 percent since the program launched in 2009. The coalition, known better as RGGI, is a mandatory cap-and-trade market comprising nine states, including all of the New England states, Delaware, Maryland and New York.
Read the full article at Providence Business News.
RGGI’s Success Continues: Region Outpacing the Rest of the Country on Emissions and Economics
BOSTON — A new report from Acadia Center shows that the Northeast and Mid-Atlantic States’ Regional Greenhouse Gas Initiative (RGGI) continues to succeed in driving down emissions, which have declined in each of the last 5 years and are down 37% since the program launched. Over the same time period electricity prices have declined across the region, even as prices in other states have increased, and RGGI states have outpaced other states on both emissions reductions and economic growth. The analysis, Regional Greenhouse Gas Initiative Status Report, Part I: Measuring Success describes key trends and drivers, including that:
- Emissions of CO2 fell 6.3% below the RGGI cap in 2015.
- Electricity prices across the region have decreased by 3.4% on average since RGGI took effect, while electricity prices in other states have increased by 7.2%.
- RGGI states have reduced emissions by 16% more than other states and seen 3.6% more economic growth since RGGI launched.
- Electric sector trends responsible for low emissions — including increasing generation from renewables and natural gas and growing investments in energy efficiency — show no signs of reversing.
- Reforms decided during the 2016 Program Review will determine whether RGGI continues to succeed.
“The experience of the RGGI states shows that we can reduce emissions while benefitting consumers and boosting economic growth,” said Daniel L. Sosland, Acadia Center President.
“States within RGGI have done better since the program’s launch than states that have yet to act,” said Peter Shattuck, Director of Acadia Center’s Clean Energy Initiative. “As more states consider how to reduce climate pollution, RGGI’s precedent is an important example of how market-based programs deliver real benefits.”
Against this backdrop of success to-date, RGGI’s member states are currently working to determine the program’s future course through the 2016 Program Review. The reforms being considered will determine the extent to which states can use the RGGI model to continue to reduce emissions to meet state and federal requirements and address the threat of climate change. “These states have the opportunity to continue their role as national leaders on climate,” said Jordan Stutt, Policy Analyst at Acadia Center. “RGGI is an effective and proven tool to address the increasingly apparent threats of climate change, and experience to date shows that more progress is achievable.”
Part II of RGGI Status Report will focus on key decisions states face in the 2016 Program Review, including RGGI’s level of ambition through 2030 and other changes needed to achieve state-level climate commitments and the requirements of the Environmental Protection Agency’s Clean Power Plan.
For more information, see: acadiacenter.staging.wpengine.com/document/measuring-rggi-success
Krysia Wazny, Communications Associate
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Peter Shattuck, Director, Clean Energy Initiative
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Acadia Center is a non-profit, research, and advocacy organization committed to advancing the clean energy future. Acadia Center is at the forefront of efforts to build clean, low-carbon, and consumer-friendly economies. Acadia Center provides accurate and reliable information and offers a comprehensive, real-world approach to problem solving through innovation and collaboration.
Report: Cap-and-trade system cuts carbon use, boosts growth
Albany — The nation’s first state-level emissions cap-and-trade program has vastly reduced carbon dioxide emissions in a nine-state region including New York since 2009, according to a report to be released Thursday.
The Acadia Center, a non-profit research organization that advocates for clean energy and economic growth, found that the Northeastern and Mid-Atlantic states involved in the cap-and-trade program have also reported more economic growth than states without a similar initiative….
Thursday’s report notes RGGI states’ economies grew 24.9 percent, opposed to 21.3 percent in non-RGGI states, again excluding California.
Almost 60 percent of revenue generated by carbon dioxide allowances was reinvested in energy efficiency programs between 2012 and 2014, the report says, and Jordan Stutt, policy analyst for the Acadia Center, said other states may begin noticing the economic growth in RGGI states.
“The rest of the country is really primed to experience similar results by implementing well-designed carbon reduction program(s),” Stutt said.
See full article from the Albany Times Union.
Acadia Center’s Community Energy Forums continue with event in the SouthCoast
Last month, Acadia Center co-hosted the first event in the South Coast Community Energy Series with Leadership SouthCoast, the Marion Institute, South Coast Media Group, and Toxics Action Center. The New Bedford forum, “Building the SouthCoast’s Clean Energy Future,” explored the current energy landscape, energy challenges affecting the SouthCoast, and local clean energy alternatives for the region.
Because of new developments in the way energy is generated, delivered, and used, communities and neighborhoods have exciting opportunities to benefit from clean, efficient, and affordable energy at the local level and move away from increasing their overreliance on fossil fuels. However, reforming our existing and outdated utility model is necessary to enable these transformative community energy projects to flourish. Through forums like this one, residents can learn more about their current energy system, the reforms that are possible, and the ways they can have an influence.
Speakers at the event included: Claire Miller, Lead Community Organizer, Toxics Action Center; Roger Cabral, Organizer with South Coast Neighbors United; Peter Shattuck, Director of the Clean Energy Initiative and Massachusetts Office, Acadia Center; and Janet Milkman, Executive Director, Marion Institute.
The diverse panel examined how energy decisions affect a person’s wallet, health, and community. The speakers presented an overview of the current energy system and how it works; highlights of local efforts to combat proposed pipeline expansions; an explanation of the Attorney General’s Natural Gas Report and of Acadia Center’s EnergyVision — outlining a pathway for creating safer, cleaner, and more affordable energy systems; tips for deciphering a utility bill; and local opportunities, like the SouthCoast Energy Challenge, for reducing energy usage through energy efficiency.
SouthCoast Today, a local media outlet, covered the event with a piece here: Panel Explores SouthCoast Region’s Clean Energy Future.
The New Bedford forum was the first event in the SouthCoast Community Energy Series, which seeks to explore energy issues affecting the SouthCoast and how local residents and communities can maximize the economic, environmental, and public health benefits of clean energy. Two more events are planned for the coming months.
Tyler Soleau is Acadia Center’s Energy and Climate Outreach Director working from the Boston office. He focuses on raising awareness, network building and advancing Acadia Center’s clean energy program goals in Massachusetts and the Northeast. Tyler came to Acadia Center from the Massachusetts House of Representatives where he served most immediately as Staff Director and Counsel for the House Committee on Climate Change.
New Legislation Advances Rhode Island’s Commitment to Renewable Energy
On July 7, 2016, Rhode Island Governor Gina Raimondo signed into law several bills that will help advance the deployment of renewable energy resources. These bills are welcome developments that signal the state’s commitment to the growth of renewable energy and a clean energy economy, and lay the groundwork for expanding community energy projects and advancing solar and other distributed energy resources through incentive programs and good rate design. Key provisions in each of the bills are summarized in this post.
- H-7413A/S-2185A — This bill extends the Renewable Energy Standard (RES) from 2019 to 2035 and ramps up National Grid’s renewable energy obligation from 14.5% to 38.5% over that period. Significantly, by extending the RES, Rhode Island policymakers place the state in a leadership position and reaffirm its long-term commitment to advancing the deployment of renewable resources. The new law also requires the Public Utilities Commission (PUC) to review the adequacy of renewable resources every 5 years beginning in 2019 and allows the PUC to delay all or part of the implementation requirement until it determines that resources are available to meet the legislative requirement.
- H-8354A/S-2450B — This bill makes a number of changes that affect distributed energy resource development in Rhode Island. Distributed energy resources, like rooftop solar photovoltaics, are a new and growing part of our energy system. These local, clean energy resources will help diversify the energy portfolio, create in-state economic opportunities, and reduce pollution and associated health risks.
- The bill extends the Renewable Energy Fund from 2017 to 2022, providing grants to reduce the up-front cost of renewable energy projects for residents and businesses in Rhode Island.
- It also expands virtual net metering, which allows multiple customers to share power from a single renewable energy system that is not physically connected to their meter(s). Previously, only public, multi-municipal, and farm projects were allowed to virtual net meter. Under the new law, residential customers and qualified low and moderate income housing developments are eligible for “Community Remote Net Metering.” Output from these community projects are credited at the full retail rate (net of the RES charge) up to the sum of average usage, and excess credits are valued at the standard offer service charge. The Community Remote Net Metering program is currently capped at 30 MW as of December 31, 2018, but the PUC has the authority to extend the program.
- The bill creates an opportunity to promote small- and medium-scale shared solar facilities and larger (>250 kW) community remote distributed generation systems through the Renewable Energy Growth (REG) program — a performance-based incentive program. The bill allows the Distributed Generation Board to propose to the PUC to allocate annual MW goals under the REG program to community remote distributed generation systems. These projects may also receive a higher incentive rate of up to 15% more than the ceiling price for a comparable non-community project. The bill also allows the utility to propose rules and tariffs for shared solar facilities.
- It clarifies that third party ownership and third party financing arrangements for eligible net metering systems and community remote net metering projects as well as projects enrolled in the REG program are allowed. This is significant because it allows companies that lease solar systems to operate in the state. In response to the passage of the law, SolarCity said that it anticipated expanding from 20 employees in Rhode Island to somewhere between 75 and 200.
- Furthermore, renewable energy resources used in residential systems or employed by a manufacturer are exempt from property tax. This means that, for example, a homeowner would not be penalized for installing a solar PV array through higher property taxes resulting from their property’s increased value.
- H-8180/S-2174 — This bill amends the “Rhode Island Regulatory Reform Act” to establish a state-wide solar permitting process. A consistent and streamlined permitting process can help improve the cost effectiveness and timeliness of the interconnection process for renewable resources. In this case, the Office of Regulatory Reform will be advised by a task force comprised of the Commissioner of the Office of Energy Resources, at least five municipal representatives, and a representative from a clean energy regional business association. No later than December 31, 2016, the Office of Regulatory Reform will submit a report with recommendations for a permitting process for small residential and small commercial roof-top solar projects. The Office of Energy Resources is then required to propose legislation to establish the state-wide solar permitting process no later than January 31, 2017.
- H-7890/S-2328 — This bill expands the role of the Governor’s workforce board to include in the state career pathways system, a workforce training program(s) that would fill skill gaps and create employment opportunities in the clean energy sector.
Carbon prices are way down, thanks to the Supreme Court’s hold on Clean Power Plan
“Low RGGI prices hamper the region’s ability to pursue additional carbon cuts,” and make clean energy investment less profitable, said Jordan Stutt, a clean energy analyst for the Acadia Center, a New England climate policy think tank.
He said lower prices mean states earn less money from trading carbon, reducing the amount of auction money they will get that can be reinvested in state-run clean energy and energy efficiency programs.
Report critical of ‘hidden costs’ in transmission projects
A new report released this week by a Boston-based environmental group is critical of what the group calls “hidden costs” in regional electric transmission line projects.
The Acadia Center report calls on regional grid operator ISO-New England and the six states it serves to adopt four recommendations in terms of determining whether new transmission lines are needed. The recommendations are:
• Give equal consideration to local energy solutions when planning for grid reliability, and allow them to be eligible for cost recovery.
• States should adopt regulatory and market reforms to provide opportunities and financial incentives for local energy resources.
• ISO-NE should require that transmission bids be in guaranteed costs to improve the accuracy of transmission cost estimates.
• The regional grid operator should improve its energy forecasts so consumers do not pay for projects that are not needed.
William Dornbos, Acadia Center’s Connecticut director and a senior attorney with the organization, said “transmission planning and financing processes have not sufficiently evolved to enable the region to choose outcomes with the greatest consumer and environmental benefits.”
“Acadia Center is not asking to trade reliability for savings — the region is missing opportunities to ensure the lights stay on with innovative and potentially more affordable solutions,” Dornbos said.
RGGI Experience Suggests CPP Concerns Are Overblown
The EPA’s Clean Power Plan (CPP)¹ is a groundbreaking regulation to combat climate change. Despite popular support for the rule, this first federal action to reduce carbon emissions from existing power plants has been met with considerable pushback in some quarters. The rule’s opponents most frequently cite three talking points, saying the CPP could 1) cause electricity prices to rise, 2) be a job killer, and 3) lead to economic stagnation.
These concerns will sound quite familiar to the states participating in the Regional Greenhouse Gas Initiative (RGGI), which launched in 2009. As the nation’s first market-based program to reduce carbon emissions, RGGI had plenty of detractors who used the same arguments as those currently being directed at the CPP. Now, with seven and a half years of RGGI experience to analyze, we can assess how the program has actually performed. As discussed in more detail in Acadia Center’s upcoming RGGI report, the early fears about RGGI’s impacts on electricity prices, jobs, and the economy should be put to rest. The figures below illustrate some of the key findings from RGGI’s operation to-date.
By choosing to hold power plant owners responsible for the carbon they emit (rather than allowing them to pollute for free), the RGGI states accepted that it would become more expensive for fossil-fueled power plants to generate electricity. That, in turn, could result in higher electricity prices. But as shown in the table below, average retail electricity prices in the RGGI states actually declined by 3.4% from 2008 (the year before RGGI began) to 2015.2 The emergence of low-cost natural gas undoubtedly played a role in this trend, but so too have RGGI-funded investments in energy efficiency and renewable energy, both of which reduce demand for carbon-intensive electricity generation and reduce prices.
Despite claims that RGGI would cost the region jobs by driving businesses away, the program has actually made a significant contribution to employment in the RGGI states. Independent analysis determined that RGGI was responsible for creating 28,500 job-years through 2014. Some of these jobs are the direct result of clean energy projects funded with RGGI auction revenue, and investments in energy efficiency and renewable energy have enabled clean companies to scale up their operations, creating new, high quality jobs for the local workforce. Additional jobs are created as consumers spend energy bill savings in local economies.
Far from stagnating in comparison to the rest of the country, the economies of the RGGI states have outpaced growth in other states’ economies since the program launched in 2008. Over the same time period, RGGI emissions declined by 37%. The combination of economic growth with declining emissions witnessed in the RGGI states is both groundbreaking and a trend that is likely to spread as additional states adopt market-based climate programs like RGGI. Historically, electricity demand has been linked to economic growth, and electric sector emissions have increased during periods of economic expansion. However, this correlation has been broken in the RGGI region. As shown in the table below, economic growth in the RGGI states has exceeded growth in the rest of the country even as the RGGI states have surpassed their ambitious climate goals. Additionally, macroeconomic analysis of RGGI’s impact through 2014 shows that the program added nearly three billion dollars in net economic benefits for the region.
RGGI’s experience has demonstrated that a well-designed, market-based program can achieve environmental goals and drive economic growth. Emissions reductions under RGGI have come at far lower than expected costs, and the clean energy sector and economy as a whole have been boosted by the reinvestment of allowance revenue into energy efficiency and renewable energy programs. RGGI’s experience shows the actual impact of smart climate policy in practice. Before heeding dire predictions of potential impacts of the CPP, it is worth keeping this real-world experience in mind.
Stay tuned for our upcoming RGGI report with the latest on market trends, the RGGI program review, and the CPP.
1 The Supreme Court issued a stay on the Clean Power Plan in February, 2016, but as discussed in an earlier blog post, we expect the stay to be lifted and the Clean Power Plan to be enforced.
2 Energy Information Administration (EIA) 826 Dataset, http://www.eia.gov/electricity/data/eia826/