A report lauds the success of the Northeast’s greenhouse gas cap-and-trade program, which has been operating three years – the only regional program operating in the US (California’s starts next year).
The states participating in the program are: Connecticut, Delaware, Massachusetts, Maryland, Maine, New Hampshire, New Jersey, New York, Rhode Island, and Vermont.
In three years, the Regional Greenhouse Gas Initiative (RGGI) added economic value worth more than $1.6 billion (or nearly $33 per person) to the 10 member states, says a report by the independent economic consulting firm Analysis Group.
In addition, customers are saving money on utility bills – $1.3 billion over the next decade based on energy efficiency upgrades to date. The reduced demand for fossil fuels is also keeping over $765 million in the local economy.
It’s also creating green jobs – 16,000 to date.
New Jersey Governor Chris Christie is pulling the state out of the RGGI at the end of the year, and it has been under assault by fossil fuel interests since the midterm elections, but Delaware, Maine and New Hampshire voted to reject efforts to pull the states out.
Efforts to roll back RGGI is being fueled by Americans for Prosperity, a corporate front group bankrolled by some of the nation’s leading polluters, including Koch Industries. They provide legislative templates, so state lawmakers don’t have to create their own bills – they’ve produced 800-1,000 pieces of "model legislation," and one of them is: "State Withdrawal from Regional Climate Initiatives.
According to the report, "The Economic Impacts of the Regional Greenhouse Gas Initiative on Ten Northeast and Mid-Atlantic States," RGGI investments to date will end up delivering the following results:
- The regional economy gains more than $1.6 billion in economic value added (reflecting the difference between total revenues in the overall economy, less the cost to produce goods and services)
- Customers save nearly $1.1 billion on electricity bills, and an additional $174 million on natural gas and heating oil bills, for a total of $1.3 billion in savings over the next decade through installation of energy efficiency measures using funding from RGGI auction proceeds to date
- Power plant owners experience $1.6 billion in lower revenue over time, although overall had higher revenues than costs as a result of RGGI during the 2009-2011 period
RGGI requires major power producers to buy allowances at auction for each ton of carbon dioxide (CO2) they emit. Power plant owners have spent roughly $912 million from mid-2008 through September 2011 to buy allowances from states.
"As the first U.S. experiment with a carbon price in electricity markets, RGGI has produced actual historical data that reveal concrete economic impacts at the state and regional level," says Dr. Susan Tierney, one of the lead authors of the report and a managing principal of Analysis Group. "We tracked the dollars spent, and RGGI generates greater economic growth in every one of the 10 states that participate in RGGI than would occur without a carbon price. The states’ auction of the CO2 allowances was important for generating those public benefits."
The report identifies that spending on energy efficiency programs was the most popular way states spent RGGI funds, and the most economically advantageous. Funds were also invested in other ways, all with positive economic outcomes, including worker training, community-based renewable energy projects, bill-payment assistance to low-income and other energy customers, land protection, and contributions to a state’s general fund to help close budget gaps.
"Although RGGI represents a well-functioning multi-state agreement, RGGI is fundamentally rooted in states’ rights. Each state spent the money raised through the regional carbon market according to its own individual priorities," comments co-author Paul Hibbard , vice president with Analysis Group. "Regardless of what they invested in, each state benefitted from capturing the value of the RGGI allowances for public benefit, re-investing the auction proceeds back into the local economy, and reducing fossil fuel demand. By and large, these dollars remained inside their local economies. And, those states that made energy efficiency a priority reaped even greater economic benefits."
The performance of this regional market is important given the RGGI states’ large population (1/6 of the U.S.) and economic clout (1/5 of U.S. GDP), according to the report.
As a result of the relative efficiency and low emissions of the region’s electricity mix, the 10 states in RGGI use only 11% of the country’s power generation and produce 6% of all U.S. carbon emissions.
Here’s the report:
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