“REGGI” ... the new kid on the block: Under the Regional Greenhouse Gas Initiative, ten Northeastern U.S. states agreed to slash carbon dioxide emissions from power plants by 10 percent from averaged 2002-04 levels by 2018.
“It’s modest,” said REGGI Corp. executive director Jonathan Schrag. The UN’s best estimates are that greenhouse gases need to be reduced by 80 percent by 2050 to stem climate change.
To meet the cap, all large power plants in the 10 states are assigned a credit for each ton of CO2 they are allowed to emit under the cap. The main difference between REGGI and other trading programs is that it relies on auctions of the type that President Obama originally wanted at the national level, requiring polluters to buy credits, with proceeds returned to public coffers.
“The auction component is a major innovation,” said Scrag. “I think it’s a significant advantage if you are able to return to the public the benefits, the value of capturing the price of CO2 emissions.”
Indeed, REGGI’s emission reductions may be modest, but the economic benefits have proved sizeable, with more than $260 million generated by June 1. Despite hard times, the states are sticking to their commitment so far to use auction proceeds for environmental programs.
But are greenhouse gas emissions being reduced to the set levels? In fact, the target is so modest that emissions were already below the cap in 2008, and are again so far in 2009, years ahead of schedule. As in Europe, that may be due to increased energy efficiency and warmer winter weather rather than carbon trading.
With fresh reports on the more rapid pace of melting glaciers and other ecological calamities, and the low price of carbon on the REGGI market, critics argue the cap should be tightened. But Schrag said while that was a valuable lesson learned for future stages, the 10 states had agreed up front not to change the rules mid-course, and they’re sticking to that.
“They have committed to review the program at the end of 2011,” said Schrag.
Environmental justice advocates have the same concerns in the Northeast as in the Southwest and Europe, noting the power plants are still sited in poor neighborhoods that can least afford the public health impacts.
Schrag said member states are taking steps to ensure such concerns are addressed, although not the way activists might advocate. Maryland is subsidizing electric bills for low income ratepayers, Massachusetts is creating so-called “green” jobs in poor neighborhoods, and nearly all the states are setting up energy efficiency and weatherization programs to help reduce costly heating bills and use of polluting fuels.
The REGGI member states have made it clear they want to be folded into a the national cap-and-trade program proposed by Waxman and Markey. In the meantime, Schrag said, it’s an important pilot program that builds on the shoulders of the acid rain and EU programs, and which can guide the federal government and western states such as California as they put programs in place.
“We are pioneering. We are the first mandatory, fully operating carbon trading system in the country,” he said. “But I think it’s important to appreciate the innovations that have gone forward from the very early cap-and-trade programs, building upon the experience in Europe and with acid rain, and to adapt those programs to the new challenges of greenhouse gas regulation.”
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