NEW YORK, New York, August 26, 2017 (ENS) – Nine Northeastern and Mid-Atlantic states that have the first U.S. market-based compact to cut greenhouse gas emissions from power plants, have decided to reduce the limit on emissions by 30 percent between 2020 and 2030.
The nine states – Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont – participate in a CO2 cap and trade market which began in 2009, known as the Regional Greenhouse Gas Initiative, RGGI, (say Reggie).
RGGI establishes a regional cap on the amount of CO2 pollution that fossil-fueled power plants 25MW and larger can emit by issuing a limited number of tradable CO2 allowances.
Each allowance represents an authorization for a regulated power plant to emit one short ton of CO2.
Individual CO2 budget trading programs in each of the nine RGGI states together create a regional market for CO2 allowances.
If approved by stakeholders, the new limit, proposed on August 23, means that a regional cap of 75,147,784 tons of CO2 in 2021, will decline by 2.275 million tons of CO2 every year thereafter, resulting in a total 30 percent reduction in the regional cap from 2020 to 2030.
That is a little higher than the current agreement to cut emissions by 2.5 percent annually.
The RGGI states will seek stakeholder comments on the draft program elements in a public meeting to be held on September 25 in Baltimore.
After reviewing stakeholder comments, conducting additional economic analysis, and releasing updated materials including a revised Model Rule, states will follow state-specific statutory and regulatory processes to propose updates to their CO2 Budget Trading Programs.
“The RGGI states are demonstrating our commitment to a strengthened RGGI program that will utilize innovative new mechanisms to secure significant carbon reductions at a reasonable price on into the next decade, working in concert with our competitive energy markets and reliability goals,” said Katie Dykes, who chairs the Connecticut Public Utilities Regulatory Authority and the RGGI, Inc. Board of Directors.
Through RGGI’s implementation and through complementary state policies, the RGGI states have shown that economic benefits, consumer savings, public health improvements, and greenhouse gas emissions reductions can go hand-in-hand.
The RGGI states have already slashed power sector carbon emissions, cutting them almost in half since 2009, “…far ahead of goals set in the Clean Power Plan or the Paris Climate Accord,” said New York State Department of Environmental Conservation Commissioner Basil Seggos.
“As the federal government has abdicated its authority, Governor [Andrew} Cuomo and the governors of the other RGGI states are setting the standard for leadership on climate,” Seggos said.
The 2030 cap will be more than 65 percent lower than RGGI’s 2009 starting cap, continuing the participating states’ progress in reducing emissions.
Studies, such as a recent independent report by Abt Associates, have found that RGGI has generated public health benefits which have saved hundreds of lives, prevented thousands of asthma attacks, and saved $5.7 billion in health-related
RGGI’s auctioning of allowances has especially been praised as an innovative program design element. These quarterly regional auctions have generated more than $2.7 billion in proceeds for reinvestment in strategic programs to benefit consumers and build a stronger and cleaner energy system in the RGGI states.
Independent reports by the Analysis Group have found that RGGI is generating billions of dollars in net economic benefit and tens of thousands of job years.
Investments funded through RGGI proceeds improve the cost-effectiveness and reliability of the grid by reducing peak demand, which in turn lowers wholesale power prices and helps avoid the need for costly infrastructure investments, RGGI states.
“Maryland is proud of the teamwork among states to achieve consensus for a stronger and broader, balanced and sustainable RGGI,” said Maryland Environment Secretary Ben Grumbles, who also served as Secretary and was recently elected to serve as Treasurer of the RGGI, Inc. Board of Directors.
“This consensus agreement is a win for both our environment and our economy,” said Grumbles. “We are particularly enthusiastic about the climate progress we will make through the 30 percent reduction in the emissions cap and the innovative new Emissions Containment Reserve.”
The new proposal calls for implementation of an Emissions Containment Reserve, ECR, in 2021, wherein states will withhold allowances from circulation to secure additional emission reductions if prices fall below established trigger prices.
The states implementing the ECR will withhold up to 10 percent of the allowances in their base budgets per year.
At this time, Maine and New Hampshire do not intend to implement an ECR. Allowances withheld in this way will not be reoffered for sale. The ECR trigger price will be $6.00 in 2021, and rise at seven percent per year, so that the ECR will only trigger if emission reduction costs are lower than projected.
“These proposed changes will substantially strengthen the RGGI program and mark an important milestone in our work to act on climate change,” said Janet Coit, director of the Rhode Island Department of Environmental Management. “Reducing the emissions cap by 30 percent from 2020 to 2030, in particular, will ensure this successful program continues to drive down harmful emissions and to promote a cleaner energy system well into the future.”