Nine Northeast States Agree To RGGI Adjustments

Aug 24, 2017

The nine Mid-Atlantic and New England states that participate in the Regional Greenhouse Gas Initiative have agreed to a draft proposal that will further reduce power plant carbon emissions under the regional environmental pact.

The Regional Greenhouse Gas Initiative, known as RGGI, caps power plant carbon dioxide emissions.  Regulated power plants must have allowances for each ton of emissions, which are traded in quarterly auctions.  Environmental Advocates of New York spokesman Travis Proulx says RGGI has shown since 2009 that a cap and trade system works.  “The way RGGI works is it sets a cap on allowable pollution. Polluters then essentially have to pay for the right to meet that cap.  That money is then intentionally reinvested back into the development of cleaner energy technology as well as energy efficiency projects across the state.  Since 2009 hundreds of millions of dollars otherwise wouldn’t have been available have gone into virtually every single community in the state.”

The nine participating states have agreed to reduce the cap on emissions by an additional 30 percent below 2020 levels by 2030.   The Adirondack Council participates in the RGGI auctions, buying the allowances to permanently retire them.   Council spokesman John Sheehan says the proposed changes will mean the cost of allowances will rise a little bit.  “It’ll cause the power industry to work a little harder to reduce its emissions so it can avoid paying for allowances by reducing the number that they need. As you know every time they put a ton of carbon out their smokestack they’ve got to buy one of these to account for that and there is a finite number. So once they’re gone they’re gone and they can’t put more carbon out. So they have to find ways to economize in what’s coming out of the smokestack.”

The program changes include the addition of an Emissions Containment Reserve, which allows  states to withhold allowances from auction if emission reduction costs are lower than projections.  RGGI indicates the move is a way to adapt to supply and demand.  Proulx calls the proposal a good move.  “The way the program was working is there was this additional number of pollution credits that were available.  And what happened is oftentimes, unintentionally by the people who actually created the program, polluters were stockpiling these credits and so they were essentially creating their own little loophole around actually reducing the emissions cap. And what this is going to do is right size the program, put everything back on track and make sure that we are having an annual and pure ratchet down of the amount of carbon pollution being spewed into the air we breathe.”

There are also modifications to the trigger price for allowances. Proux says that move is needed because the pricing has been volatile in recent years.  “The whole goal of RGGI is to make the industry more efficient. But then what happens is the industry gets efficient so therefore there are more credits that are needed. So again this right sizes the number of credits that are available and there’s a much more standard pricing program.  So states have a more reliable idea of what is going to actually be raised and what they’re going to have to be able to invest back into clean energy and energy efficiency.”

The states participating in RGGI are New York, Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, Rhode Island and Vermont.  Republican New Jersey Governor Chris Christie pulled his state out of the pact in 2011, although it is expected to rejoin after the 2018 gubernatorial elections.  Virginia is also considering joining the initiative.

A stakeholders meeting to review the proposed changes will be held September 25th in Maryland.