But Jordan Stutt, carbon programs director at Acadia Center, a clean-energy research and advocacy organization with offices throughout the northeastern United States, said those fears are unfounded.
“The doomsday concerns about electricity prices and competitiveness in the region have not come true,” he said.
Emissions from power plants have dropped 51 percent from 2008, a year before the program started, to 2017, he said. Electricity prices in the region have fallen nearly 6 percent, while they have increased by nearly 9 percent in the rest of the country.
“All the evidence points to the fact that RGGI’s working well, it’s been a great success since its inception,” says Peter Shattuck, director of the Clean Energy Initiative at the Acadia Center, an an environmental policy group with offices in Maine and around the northeast.
“[Since RGGI’s 2009 startup] carbon pollution is down 40 percent, electricity prices are down 3 percent, and at the same time [the participating] states’ economies have grown by 25 percent,” he says.
“This is an opportunity and a necessity to fill that void. And this is not uncharted territory for RGGI itself,” Shattuck says. “It was conceived during the 2000’s when the Bush administration was not acting on climate and a bipartisan group of governors came together and formed the program.”
Listen to the whole interview from Maine Things Considered on Maine Public Radio here.
“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.
Member states of the Regional Greenhouse Gas Initiative (RGGI) today announced the results of the 29th quarterly auction of carbon dioxide (CO2) allowances. 25,374,294 CO2 allowances were sold at a clearing price of $6.02, which includes all 10,000,000 available allowances from the Cost Containment Reserve. This clearing price is 9% higher than the previous auction, and 23% higher than the clearing price from one year ago. The RGGI states have now raised $2.26 billion for reinvestment, the majority of which is used to fund energy efficiency and other consumer benefit programs. RGGI has been a successful model for reducing power sector emissions, and with reforms to ensure future environmental performance, it will be an effective means of complying with EPA’s Clean Power Plan.
The results of this latest auction show that the RGGI market continues to thrive, with clearing prices increasing in seven of the last eight quarterly auctions. These rising prices are indicative of confidence in the program’s future. RGGI’s first-in-nation model for reducing CO2 from the power sector has outperformed expectations, both in terms of environmental and economic results. As states explore their options for compliance with EPA’s Clean Power Plan, RGGI’s flexible, market-based approach to regulating power plants has gained increasing attention.
“The RGGI states’ success in reducing climate pollution from the power sector has paved the way for other states to adopt effective market-based climate programs,” said Acadia Center President, Daniel Sosland. “RGGI states have created the blueprint for an effective and economically beneficial pathway to a clean energy future.”
In crafting the final version of the Clean Power Plan, EPA took measures to support the use of programs like RGGI. EPA provided final targets in mass-based terms, facilitated the use of multi-state trading programs, and allowed states to treat emissions from new and existing units equally. In sum, these steps from EPA will let the RGGI states comply by using their existing model, with a few minor changes.
One of these changes will be a revision to the Cost Containment Reserve.
“The purchase of ten million Cost Containment Reserve allowances in Auction 29 demonstrates the need for reform of this price control mechanism” said Jordan Stutt, Policy Analyst with Acadia Center. As currently structured, additional allowances from the Cost Containment Reserve become available for purchase when price thresholds are met. “These additional allowances have now been made available in both years of the Cost Containment Reserve’s existence. Allowances purchased from the Cost Containment Reserve inflate the RGGI cap, undermining the program’s environmental performance and complicating the process of demonstrating compliance with the Clean Power Plan and state GHG reduction requirements.”
Since RGGI’s launch, emissions have declined significantly as electric generation from natural gas and renewables has displaced carbon-intensive generation from coal and oil, and as investments in energy efficiency have reduced demand for power. Declining emissions have been accompanied by a drop in electricity prices, which are down 2% on average across the region since RGGI took effect in 2009.
“RGGI has demonstrated that smart policy can drive emissions reductions in the power sector while generating consumer benefits,” said Peter Shattuck, Director of Acadia Center’s Clean Energy Initiative. “The continued increase in RGGI allowance prices will help to accelerate the transition to a cleaner power sector.”
The Regional Greenhouse Gas Initiative (RGGI) is the first mandatory, market-based effort in the United States to reduce greenhouse gas emissions. Nine Northeastern and Mid-Atlantic states reduce CO2 emissions by setting an overall limit on emissions “allowances” which permit power plants to dispose of CO2 in the atmosphere. States sell allowances through auctions and invest proceeds in consumer benefit programs: energy efficiency, renewable energy, and other programs.
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 real-world and comprehensive approach to problem solving through innovation and collaboration.
NEW JERSEY is missing out by sitting on the sidelines of the Regional Greenhouse Gas Initiative. The state should be a player, not a spectator, in this game that brings so many benefits to the nine states that are already part of the team. A new analysis by our organization (“New Jersey and RGGI: Potential Benefits of Renewed Participation”) shows that by refusing to participate in RGGI, New Jersey is missing out on substantial environmental and economic benefits.