A Program That Works
The Northeast faces two fundamental and intertwined challenges: fossil fuel dependence and pollution from fossil fuels. Our dependence on coal, oil, and gas imposes economic costs, pollutes our air and water, and harms public health. It also contributes to global warming, which threatens the future of our coastal cities with sea-level rise, the future of our beloved ecosystems with the loss of habitats and species, and the well-being of our people with extreme weather events and new threats to public health.
In 2005, leaders in 10 northeastern states took a decisive step against global warming and fossil fuel dependence by agreeing to create a system to limit emissions of carbon dioxide from power plants. Known as the Regional Greenhouse Gas Initiative (RGGI), the system took full effect in 2009, becoming the first mandatory cap on global warming pollution implemented anywhere in the United States.
Two and a half years later, RGGI has largely been a success. It has achieved its goals of sparking investment in clean energy solutions in the region and demonstrating the workability of a program that caps emissions and requires polluters to pay for the right to emit carbon dioxide. The program’s pollution cap, however, will need to be lowered for it to reduce emissions as intended.
Fossil fuel consumption at power plants hurts the environment and is a drag on the Northeast’s economy.
• Unchecked global warming could bring floods as severe as today’s 100-year floods to Boston and Atlantic City every one or two years by the end of this century.
• Winter recreation—a $7.6 billion industry in the Northeast—could suffer as global warming cuts ski and snowboard seasons dramatically, potentially ending ski season outside of western Maine by late this century.
• All of the states in RGGI are net importers of fossil fuels. In total, the region imports 98.6 percent of its fossil fuels.
RGGI is succeeding at promoting clean energy and demonstrating that a cap on global warming pollution can be implemented smoothly. However, the program needs to be improved in order for its emissions cap to be an effective pollution-fighting tool.
RGGI is helping northeastern states address important energy challenges by providing needed investments in energy efficiency and renewable energy—cutting pollution, curbing dependence on fossil fuels, and creating pioneering clean energy approaches that can be adopted by other states and nationally.
• Connecticut, which has the highest electricity costs in the continental United States, is developing on-site distributed generation as an alternative to expensive fossil fuels, installing solar panels on schools, town halls, and other buildings across the state.
• Delaware is using RGGI funds to support its pioneering business model of a “sustainable energy utility.” Delaware’s Sustainable Energy Utility finances clean energy projects by claiming a share of the benefits over time to recoup its investment.
• Maine is using RGGI funds to fund large-scale efficiency projects at businesses, colleges, and factories.RGGI has allowed the state to fund projects that cut electricity usage by the equivalent of hundreds of average homes’ needs with single large projects—like motor replacements at a paper mill, or large-scale retrofits at a chemical plant.
• Maryland’s aging stock of apartment buildings has historically been difficult to reach with standard energy efficiency programs. RGGI has enabled the state to create a new Strategic Energy Investment Fund, which has taken on projects such as renovating 1,600 apartment units for increased efficiency in 2009, measures that will produce $68.5 million in lifetime energy savings.
• Massachusetts is helping cities and towns make long-term investments in clean energy programs. Through the RGGI-funded Green Communities program, Massachusetts provides clean energy grants to local governments such as Boston, which has used the funds to install energyefficient LED streetlights that will save the city money for years to come while curbing pollution.
• New Hampshire has issued grants to a number of small programs, including a highly successful revolving loan fund that offers an example of a selfsustaining model for financing clean energy.
• New Jersey has long been dependent on power imported from other states. The state has used RGGI funds to build on its leadership in developing a home-grown source of renewable power: solar energy. RGGI-supported loans, for example, have helped pay for the largest solar energy system at a university anywhere in the country.
• New York has used its RGGI funds to pursue a mix of efficiency measures and workforce development—saving energy while creating local jobs, instead of importing fossil fuels.
• Rhode Island has used its RGGI funds to run a variety of pilot programs, testing promising new approaches to improve energy efficiency. One pilot program, for instance, combines multiple residential retrofit measures into wholesale renovations for homes and small apartments.
• Vermont has used its RGGI funds to expand the program offerings of its energy efficiency utility, Efficiency Vermont, into heating fuels. Efficiency measures undertaken as part of that program will save $10 million over their lifetime.
RGGI has demonstrated that a program that caps emissions and auctions pollution allowances can operate smoothly.
• As the first program in the United States to limit global warming emissions and auction pollution allowances, RGGI plays an important role in demonstrating that other states, other regions, and the nation as a whole could use a similar model to reduce emissions.
• After 11 auctions, RGGI’s market monitor has seen no evidence of allowance-hoarding, speculation, market manipulation, or other flaws in the auction program. The program has raised $872 million over this period.
RGGI’s pollution cap needs to be lowered to be effective.
• In 2005, RGGI’s initial cap on carbon dioxide emissions was set based on projected power plant emissions in 2009. Between 2005 and 2009, however, a number of unexpected factors, including milder weather and relatively cheap natural gas, caused emissions to decline 34 percent below the cap.
• Emissions from power plants in the RGGI states are now not expected to surpass the cap before 2030.
The RGGI states should build on the program’s success by tightening the cap and expanding their commitments to clean energy.
• All RGGI funds should be spent on clean energy. To date, 32 percent of RGGI funds have been spent on purposes like deficit reduction and utility bill relief.
Though these are worthwhile expenditures, they do not deliver the long-term environmental and economic benefits that clean energy investments offer.
• RGGI’s cap should be lowered, setting actual 2009 emissions as its starting point and aiming to cut 20 percent below that level by 2020, and 40 percent below by 2030.