Carbon Markets

Acadia Center works with partners across the region to establish and strengthen programs that reduce pollution and invest in a clean energy future. Acadia Center’s Carbon Markets Program focuses on policies that hold polluters financially accountable for carbon dioxide (CO₂) emissions and generate funding for programs and projects that reduce harmful pollution, create jobs, and deliver a better quality of life in every community. Our advocacy on carbon programs is focused on three opportunities:

• Strengthening the Regional Greenhouse Gas Initiative (RGGI) to reduce pollution from power plants and make investments in clean energy and energy efficiency.
• Launching an ambitious, equitable program through the Transportation and Climate Initiative (TCI) to reduce pollution from vehicles and fund transportation investments that will give more people access to clean, affordable mobility options.
• Passing legislation to establish an economy-wide price on carbon, accelerating our transition to a clean energy future.

Why Carbon Programs?

Currently, the price of fossil fuels is not grounded in the reality of their health impacts: the price neither reflects the current impacts of local air pollution, nor the devastating effects of current and future climate change. To transition our economy as quickly as possible away from fossil fuels and to level the playing field for clean alternatives, we need to begin by making the price reflect the “true cost” of fossil fuel use.  Charging for CO₂ and other greenhouse gas emissions helps hold polluters accountable and ensures that the price of fossil-fuel fired power reflects some of the costs imposed on society (sometimes referred to as the “social cost of carbon”). With a more accurate price on greenhouse gas-spewing activities, the markets we already rely on will deliver better, cleaner options. Putting a price on carbon allows individual firms to find their own creative solutions to reducing emissions and could achieve emissions cuts more quickly, cheaply, and efficiently than with regulation alone.

These carbon pricing policies take the form of either cap-and-invest programs or flat fees (often referred to as “carbon taxes”) applied to greenhouse gas emissions. Acadia Center’s work has been instrumental in establishing and strengthening the Regional Greenhouse Gas Initiative (RGGI), the first regional cap-and-invest program in the nation, and Acadia Center is currently working to ensure that the region improves on that model in the transportation sector through the Transportation and Climate Initiative (TCI). Cap-and-invest programs set a declining limit (“cap”) on emissions, hold auctions through which polluters can buy emissions allowances, and use the proceeds from those auctions to invest in projects that achieve strategic decarbonization goals. Both the price of allowances and the investment of allowance proceeds help to reduce pollution.

Guiding Considerations for Acadia Center’s Carbon Markets Program

Acadia Center’s work to put a price on greenhouse gas emissions focuses on two key considerations:

• Cap-and-invest programs alone are insufficient; additional, complementary policies are necessary at the federal, state, and local level to deliver CO₂ reductions with the urgency required to address the climate crisis. For example, robust energy efficiency programs are critical for cutting pollution in the electric sector while helping consumers save on their energy bills. In the transportation sector, sufficiently funded public transit (made affordable for all riders) is a critical complementary measure to TCI. Both examples above are necessary under any circumstances, but cap-and-invest programs can provide an important source of funding to help make them possible.
• Market-based solutions have the potential to exacerbate environmental and social injustices if they are not designed with equity as a top priority and meaningful input from frontline communities. While economists favor carbon pricing for its ability to deliver CO₂ reductions at the lowest possible cost, relying on price signals alone does not ensure that emission reductions will occur in the communities most in need of cleaner air. People living in low-income communities and communities of color which bear the brunt of environmental injustices are rightfully concerned that a continued reliance on market forces will maintain the inequitable factors that have left them breathing dirtier air. Acadia Center is committed in its advocacy on market-based policies to ensuring that these concerns are heard and addressed with solutions that deliver cleaner air in communities overburdened by pollution and greater investment in underserved communities.

The Regional Greenhouse Gas Initiative: Reducing Power Plant Pollution and Investing in the Clean Energy Future

The Regional Greenhouse Gas Initiative (RGGI, pronounced “Reggie”) is a cap-and-invest program that was launched as a first-in-the-nation program designed to reduce CO₂ emissions from power plants. Since RGGI’s launch the participating states have experienced substantial benefits and demonstrated that climate action can be a boon for the economy. The states and stakeholders have also learned valuable lessons through the RGGI experience, both in terms of what has worked and what must be improved on to deliver a truly ambitious and equitable program.

As detailed in Acadia Center’s RGGI: 10 Years in Review Report, since 2008, the RGGI program has helped participating states outperform the rest of the country:

• CO₂ emissions from RGGI power plants have fallen by 47%, outpacing the rest of the country by 90%;
• Electricity prices in RGGI states have fallen by 5.7%, while prices have increased in the rest of the country by 8.6%;
• GDP of the RGGI states has grown by 47%, outpacing growth in rest of the country by 31%;
• RGGI states have generated $3.2 billion in allowance auction proceeds, the majority of which have been invested in energy efficiency and renewable energy programs; and
• RGGI-driven reductions in co-pollutant emissions have resulted in over $5.7 billion in health and productivity benefits.

While RGGI has been a proven success at the regional level, Acadia Center is working hard to make it stronger and to ensure that the program delivers benefits in overburdened and underserved communities. Through the 2021 RGGI Program Review, Acadia Center and our allies will be advocating for key improvements—including a more ambitious emissions cap—to help participating states cut power plant pollution faster. Acadia Center will also be working at the state and regional level to include protections for communities suffering from disproportionate pollution, to guarantee a larger share of RGGI proceeds reach underserved communities, and to ensure that RGGI-funded programs are designed to meet the needs of all residents. For example, Acadia Center uses its seat on state energy efficiency councils to deliver next-generation energy efficiency programs that will give low-income consumers and renters greater access to RGGI-supported energy savings.

The Transportation and Climate Initiative: Reducing Vehicle Pollution and Investing in Clean, Modern, Equitable Transportation Options

The Transportation and Climate Initiative (TCI) has the potential to deliver substantial pollution reductions while generating funds for clean transportation investments. Through this initiative, twelve Northeast and Mid-Atlantic states and Washington, D.C. have been working together to develop a regional program that will place a declining limit on carbon emissions from transportation while delivering a new funding source to help advance a more modern, equitable, low-carbon transportation future. Acadia Center is leading efforts at the local and regional level to ensure that TCI lives up to its potential by crafting a program that is both ambitious on climate and designed to prioritize benefits in communities that lack access to transportation options and suffer from transportation pollution.

Acadia Center takes a collaborative approach to TCI advocacy, working closely with partners to lead state-focused TCI forums and at the regional level through Our Transportation Future. Acadia Center’s TCI analysis helps to inform stakeholders and policymakers on the opportunities presented through TCI, namely improving air quality, addressing climate change, and supporting a range of clean transportation investments to help every community thrive.

Carbon Pricing Legislation

Working through coalitions in states across the region, Acadia Center has been working to pass first-in-the-nation carbon pricing legislation. Acadia Center supports bills like An Act to Promote Green Infrastructure and Reduce Carbon Emissions in Massachusetts, which would establish a price on carbon across the economy, invest in clean energy through a Green Infrastructure Fund that Acadia Center helped design, and provide income-based rebates to ensure progressive impacts.