A study from an economic, financial, and strategy consulting group says the Regional Greenhouse Gas Initiative (RGGI), a multi-state program designed to cap emissions from power plants in the northeastern U.S., has generated $4 billion in net economic activity even as it has increased electricity prices in the region.
The report from the Analysis Group, released April 17 at the 2018 Current Issues conference in Santa Fe, New Mexico, found that the program continues to help lower emissions of carbon dioxide (CO2), and it has benefited local economies and also created jobs across its nine-state region, which includes Maryland, New York, Delaware, Connecticut, Maine, Massachusetts, New Hampshire, Rhode Island and Vermont. The RGGI was launched in 2009.
The Analysis Group report was vetted by an advisory committee including representatives from Exelon, ConEdison, and Calpine. It was financed by groups mostly focused on renewable energy, climate, and the environment.
“During this period, the emissions cap for power plants in the region was lowered, and the prices power generators had to pay for emissions rose,” report co-author Paul Hibbard, a principal with Analysis Group, said in a press release. “Some observers had wondered whether tightening emissions targets would choke off the modest but consistent stream of economic benefits the region has seen since RGGI went into effect in 2009. But that didn’t happen: economic benefits and job creation continued, at magnitudes similar to what we’ve seen in previous study periods.”
The most recent report—The Economic Impacts of the Regional Greenhouse Gas Initiative on Nine Northeast and Mid-Atlantic States: Review of RGGI’s Third Three-Year Compliance Period (2015-2017)—came from an Analysis Group team including Hibbard; Susan Tierney, senior advisor; Pavel Darling, vice president; and Sarah Cullinan, associate. The group estimated the nine states realized $1.4 billion in net economic value from RGGI’s implementation during the 2015-2017 period.
New Jersey was a member of the original program, but then-Gov. Chris Christie (R) pulled the state out in 2012. Current Gov. Phil Murphy (D), in one of his first actions after taking office in January, signed an executive order to rejoin the program. Pennsylvania Gov. Tom Wolf (D) also reportedly would like his state to become a member; Virginia also has considered joining.
Previous reports from Analysis Group also found positive financial impacts from the RGGI program. The group’s 2015 report found $1.3 billion in net economic benefits to RGGI states from the program in the 2012-2014 period. The 2012 report found $1.6 billion in net economic benefits from program implementation across 2009-2011.
The RGGI is the first U.S. multi-state cap-and-trade program aimed at controlling CO2 emissions from power plants. As part of the program, generators must bid and pay to be allowed to exceed caps on emissions of greenhouse gases power California also has a cap-and-trade program, covering power plants, industrial facilities, and fuel distributors, which was launched in 2013.
The Analysis Group study found proceeds from the RGGI’s auctions of emissions “credits” have totaled $2.8 billion since the program’s inception. Participating states have used the money to fund “energy-efficiency measures and programs; renewable energy projects; GHG-emission reduction measures; direct electricity consumer bill assistance, including for low-income households; and education and job training programs,” the report said, adding that more than 40,000 new jobs have been created in the region as a result of the program.
“These local investments keep more of the RGGI states’ energy dollars in their region and reduce the amount of dollars that leave the region to pay for fossil fuel resources produced outside the RGGI states,” the report said.
The report said CO2 emissions from power plants in the nine-state region have dropped by more than 50% over the past nine years since the program was launched. It also said that over the past three years, the program “has helped to lower the total amount of dollars member states send outside their region in the form of payments for fossil fuels by over $1 billion. RGGI has lowered states’ total fossil-fired power production and their consumers’ use of natural gas and oil for heating.”
“RGGI was not designed to be an economic development program. It was designed to cut greenhouse gas emissions, which it is doing successfully,” said Tierney in the release. “But the point of our work is to chart any economic side effects. The data continue to show that cutting carbon emissions can be a net positive for the economy.”
—Darrell Proctoris a POWER associate editor (@DarrellProctor1, @POWERmagazine)