Refining RGGI: States are helping improve an already impressive system that cuts pollution, creates jobs, spurs energy innovation, and reduces energy costs

Who doesn’t want more good things?

And by good things, here’s some of what I mean:

• pollution cuts that help protect the health of our children and of our increasingly fragile atmosphere. (Just how bad are things getting, climate-wise? To find out, check out NRDC’s new extreme weather mapping tool, which shows the increasingly severe impacts global-warming pollution is having on our nation.)   
• good-paying jobs that can’t be shipped overseas—jobs not just for out-of-work construction workers and newly graduated engineers, but for data-entry clerks and front-office workers, too
• energy innovation, like the kind New York’s Energy Research and Development Authority is funding at six clean-energy-technology incubators across the state
• and, lower energy costs for consumers and businesses. 

All of these have been brought into being by the Regional Greenhouse Gas Initiative, a program a bipartisan group of governors from 10 Northeastern and Mid-Atlantic states created three and a half years ago, in a different political climate, to do all this and more.

Contrary to claims by New Jersey’s Governor Chris Christie and by Americans for Prosperity, an oil-industry front group funded by the Koch Brothers, study after study has shown RGGI does just what it was designed to do. Air pollution in the region is down by at least 6 percent as a result of RGGI alone; the program has generated at least 16,000 job-years of work. (A job year is just what it sounds like—one year’s worth of employment.) From the northern tip of Maine to the southern border of Maryland, RGGI has created $1.6 billion in increased economic activity. And over the next 10 years, ratepayers—tenants, homeowners and businesses alike—will save $1.3 billion on energy costs. 

Now, as reported in today’s New York Times, seven states are refining the program further, a move we at NRDC applaud. In fact, we believe these changes and this year’s review of the program design offer great opportunities to make the system even more effective. (By the way, contrary to the New York Times’ report, New Jersey is still, by law, a RGGI state. Governor Christie may have indicated his desire to not collaborate regionally, but the RGGI statute and the RGGI regulations are both very much still the law in New Jersey.) 

RGGI works by requiring power plants to purchase pollution permits at quarterly auctions. The revenues are then channeled into energy efficiency and renewable energy efforts like the NYSERDA program I mentioned earlier. The energy-efficiency efforts in particular have resulted in huge money and pollution savings, returning at least $4 for every dollar invested. But because there’s been a surplus of pollution permits, sometimes called allowances, states are not reducing pollution as quickly as they originally planned. Happily, Connecticut, Delaware, Maryland, Massachusetts, New York, Rhode Island and Vermont, which hold many of these surplus allowances, will retire much of their holdings—about 15 percent of the total number of allowances created during RGGI’s first three years. It’s likely this reduction in supply will, as the economy improves, help accurately price pollution, thereby setting in motion more of that list of benefits I mentioned at the beginning of this post.

The upcoming review of the program design offers us even more opportunities to perfect RGGI. Here’s a list of policy changes we can all benefit from:

• Lower pollution limits, so these limits reflect the actual amount of global-warming pollution emitted in the region in 2009, the year on which the pollution standard is based
• Linking RGGI to California’s (and any other mandatory) emissions reduction market, because a larger market means that power plants will have greater opportunities to identify the lowest cost options for reducing pollution
• A greater number of emission sources, including smaller power plants, refineries and cement kilns.

These improvements will help the states stay on track to reduce emissions at these facilities by at least 80 percent by 2050.

RGGI is a great example of how political leaders of all stripes can work together to create solutions that benefit everyone. Despite our highly fractious political climate, these are the kind of solutions we’re still capable of as a nation. As the RGGI review process progresses this year, I look forward to our states crafting more of them, so we can put people back to work, reduce our energy costs, spur transformative energy innovations, and cut pollution even further.