We support the recent action by the board of directors of the Regional Greenhouse Gas Initiative to lower the cap on carbon emissions in the nine-state area.
Last week, the board voted to set a cap of 91 million tons emitted in 2014, with a reduction of 2.5 percent each year thereafter until 2020. RGGI is a so-called “cap and trade” system â a cap is set on emissions and then allowances â similar to shares of stock â are traded through auctions. Currently, 92 million tons of carbon are being emitted regionwide, although the cap had been set at 165 million tons.
The reasons for these lower emissions are several â and most have little to do with coal- or oil-emitting power plants. Cheap natural gas has flooded the region, a trend that is not expected to abate. Although natural gas does emit carbon dioxide, it is at a rate 50 percent less than more carbon-intense fuels like coal. ISO New England, the region’s bulk power provider, turns to natural gas power plants to provide the least expensive power to homes and businesses, reducing the overall need for other, dirtier sources of power. Moreover, the downturn in the economy has caused thrifty New Englanders to find ways to reduce energy consumption overall.
But it’s impossible to ignore energy efficiency as part of the answer â and here RGGI has played a significant part. The money raised from allowances has been used for a variety of programs that have subsidized a variety of energy efficiency measures in homes, businesses, municipalities and industries. It’s paved the way for job training, energy audits, residential weatherization programs, renewable energy grants and revolving loans. A report issued in November 2012 estimates that RGGI investments will offset the need for more than 27 million megawatt hours of electricity generation and 26.7 million British Thermal Units (BTUs) of energy generation. This fact is not to be underestimated or ignored.
“The good news is that we are substantially lower than we thought we would be for all these reasons,” said N.H. Commissioner of Environmental Services Thomas Burack. “That’s something to celebrate. We have a very good platform to build from here.”
As the economy improves and natural gas prices rise modestly, as most forecasters predict, the importance of RGGI increases as well. There will be a price to pay if coal- and oil-fired or even inefficient natural gas-fired plants begin to rev up to meet demand. In fact, economic consultants Analysis Group predicts that $2.2 billion will be raised from 2014-2020.
The success of RGGI does come at a modest price to electricity ratepayers, who pay for the administration of the program through a fee on their monthly bill. In fact, some members of our editorial board believe RGGI should be abolished entirely for this very reason. They argue that any cost to ratepayers is unwarranted, as they have no choice as to whether or not they wish to participate. Certainly, that was on the minds of the N.H. Legislature last year when it voted to return a portion of RGGI proceeds to customers. Maine Gov. Paul LePage wants to institute a similar measure.
Both New Hampshire and Maine now must submit legislation consistent with the RGGI board’s actions. Whether the proceeds go back to ratepayers or remain in energy efficiency projects, what’s important is that the legislatures act to endorse this measure.