The program has missed opportunities to do more for the environment, energy efficiency and the economy.
by Tom Tietenberg of Waterville is the Mitchell Family Professor of Economics Emeritus at Colby College
Portland Press Herald op-ed
WATERVILLE — One of the unsung heroes in Maine’s drive to prepare our homes and businesses for a secure energy future is the Regional Greenhouse Gas Initiative. It set the nation’s first multistate mandatory limit on carbon dioxide emissions and was founded with strong bipartisan support. Interestingly, contrary to stereotypes, the initiative was started by a Republican governor, George Pataki of New York, and today a majority of the nine RGGI states are Republican-led, including Maine.
In part, this bipartisan support results from the fact that RGGI and other carbon-pricing programs are market-based and are known to be the most cost-effective means of achieving reductions in CO2 emissions. Support also flows, however, from the economic boost that the states have experienced since RGGI was implemented.
Independent analysis has shown that on net, since RGGI began, the size of our economy has increased while energy costs and pollution have been reduced, with large health benefits. Compared with non-RGGI states, the region has reduced emissions faster, increased the total economy more and seen electricity prices decline, while others have seen increases.
At a time when many in Washington, D.C., are withdrawing from action on climate change, cities, states and regions are stepping up. We are leading, and we are also directly benefiting.
As RGGI undergoes one of its periodic reviews, it is important to understand what is at stake. In examining the history of RGGI, it is clear that businesses and homeowners have done their part, but the governing board of RGGI has not. In particular, it has been too timid.
Although the program had set emissions caps that declined over time, the chosen decline trajectories fell well short of what the market was capable of achieving and was ready to undertake. The directors, who are none other than the administrations of the nine states from Maine to Maryland, have an opportunity to correct that failure for the future by choosing a more aggressive and advantageous decline of the caps.
Why should it matter? It matters environmentally because emissions reductions benefit our climate, but it also matters because increasing the stringency of the cap increases the amount of revenue raised by RGGI, and that revenue is used to fund energy-efficiency improvements here in Maine. RGGI funds are a major source of revenue for Efficiency Maine, and are combined with other funds to help businesses and homeowners use energy more efficiently and cut their energy bills.
Consider just two examples of how energy-efficiency investments made possible by RGGI funding have worked in practice to strengthen some of our major employers. They illustrate the important role that efficiency plays in positioning Maine for a secure energy future.
The Jackson Laboratory, Hancock County’s largest employer, is a world-class biomedical research facility dedicated to finding cures for cancer and other risks to human health. It also supplies mice to research facilities around the world.
Raising mice requires a precise temperature- and humidity-controlled environment, and providing that environment was proving to be quite expensive. With assistance from Efficiency Maine, The Jackson Laboratory built a combined heat and power plant that was fueled by wood pellets. In that plant, steam generated by the wood-pellet boiler not only supplies various heating needs, but also drives a turbine that generates electricity on site. By generating some of its own power in a sustainable, cost-effective fashion, the lab also helps insulate itself against some of the price volatility in electricity markets. Its complementary investments in energy-efficient lighting and other improvements have further cut overall power needs, and hence, costs.
Another example is Hannaford Supermarkets, Maine’s largest employer. It used two RGGI-funded grants to install more efficient lighting throughout refrigerated areas in its distribution center and in display cases. Using ultra-efficient LED lights, these investments have saved about $200,000 in energy costs every year.
Recipients of other RGGI-funded grants include Huhtamaki, the Lewiston-Auburn Water Pollution Control Authority, Mt. Abram Ski Area, Sappi Paper, Sugarloaf, Twin Rivers Paper and the University of Maine, as well as other important employers.
With results like these, it is no surprise that a recent poll of Mainers found that 77 percent would favor strengthening RGGI by more rapid reductions in the cap. This would mean more revenue, more funding for Efficiency Maine, more energy-efficient investments, less wasted energy and fewer emissions. We hope the RGGI directors, including officials here in Maine, can shed their timidity and make the right choice.