This post was co-authored with my colleague Bruce Ho.
While the Supreme Court has temporarily delayed implementation of the federal Clean Power Plan, the Regional Greenhouse Gas Initiative (RGGI), the nation's first cap-and-trade program designed to cut carbon pollution from the power sector, continues to move forward. RGGI is a pioneering collaboration among nine Northeastern and Mid-Atlantic states - Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont - that has demonstrated to the nation that we can cut dangerous carbon pollution while lowering utility bills, strengthening the grid, and improving our economy. In the seven years that RGGI has been in place, it has helped the participating states cut power-plant carbon pollution by more than 35 percent, while adding public health savings estimated at more than $10 billion, 30,000 job-years of work (a job-year is one year of full-time employment), almost $400 million in energy-bill savings, and $2.9 billion to the regional economy.
As the governors of several RGGI states have made clear since the Supreme Court's Clean Power Plan stay, the RGGI program and the states' leadership on climate change will continue. (Here's just one example, from Delaware Governor Jack Markell: "We remain determined to move forward in responding to the issue of climate change. As a RGGI state, Delaware has led the country in working to curtail greenhouse gas emissions from the power sector, and we will continue to do so regardless of the decision to stay the Clean Power Plan rule.")
Currently, the RGGI states are undertaking a review of the RGGI program to determine the level of carbon pollution reductions that the states will achieve beyond their current commitments, which extend through 2020. While this review was scheduled before the Clean Power Plan existed, the states are also using the review as an opportunity to design a compliance plan for the Clean Power Plan, which includes emissions targets out to 2030.
As articulated by the states, the first steps in their review of the RGGI program are to take stock of where the states' carbon emissions are headed under the current RGGI program and other state and federal clean energy policies - collectively referred to as the states' "reference case" - and then evaluate a range of potential policy scenarios, including future power-sector carbon pollution caps, that would cut emissions further. As NRDC and our environmental and public health allies told the RGGI states in comments filed last Friday, the states have an important opportunity in this review to make good on their commitments to make continued progress in reducing carbon pollution and to cement their leadership on climate change - but only if they get the reference case and policy scenarios right.
To achieve the RGGI states' existing goals to cut economy-wide greenhouse gas pollution in the range of 35-45 percent by 2030 and 80 percent by 2050 - the minimum level scientists say we need to avoid climate change's worst effects - the RGGI states will need to continue to cut power sector carbon pollution, both further and faster than the Clean Power Plan requires. Toward this end, we've recommended that the states include in the policy scenario analysis a power sector carbon cap that decreases by 5 percent below 2020 levels per year after 2020, in addition to the states' existing proposal to evaluate a cap that decreases by 2.5 percent per year.
The policy scenarios that the states analyze now will help determine the emissions cap they adopt later in the review. So it's important that the states include in their range of scenarios ambitious carbon pollution reductions that will get the states where they want to go on climate. We're pleased that the RGGI states intend to look at a scenario that posits annual emissions reductions of 2.5 percent between 2020 and 2030. But to achieve the economy-wide reductions that many states have mandated, and the safe future our kids need, it's likely that we'll need more ambitious carbon pollution cuts from power generators. A 5 percent annual cap reduction would work out to about 3.9 million fewer tons of carbon pollution annually. Since 2009, emissions from power plants in RGGI have fallen on average by 3.8 million tons of carbon pollution per year. So our recommendation is right in line with the level of annual emissions reductions that the states have been able to achieve thus far.
It's also critical that the states include assumptions in their reference case that accurately reflect where the region is headed under existing state and federal policies. The reference case is used to help understand the level of effort needed to achieve future RGGI carbon caps, and there's good reason to believe that a variety of existing policies will contribute to lower emissions, making it even easier to meet a more ambitious RGGI cap for the power sector. Currently, the states' reference case has some components that need to be corrected:
• The states should account for newly-extended federal renewable energy tax credits, which will drive significant growth in wind and solar energy. Right now, the reference case doesn't include the significant impacts of December's extension of the federal Production Tax Credit for wind power and federal Solar Investment Tax Credit. Over the next five years, these tax incentives will be incredibly important drivers of clean energy deployment, and, all on their own, are projected to bring online as many as 53 gigawatts of renewable energy nationally, according to a new study released this week by the National Renewable Energy Laboratory (NREL). That additional clean-energy deployment will lower emissions from the power sector and decrease electric prices, making RGGI compliance less expensive.
• The states should use more realistic assumptions about renewable energy costs. The current reference case also significantly overestimates the fast-dropping costs of wind and solar power by using out-of-date costs tallied by the U.S. Energy Information Administration (EIA). As NRDC analysis has shown, EIA's forecasts consistently overestimate renewable energy costs and underestimate deployment of new wind and solar. The Environmental Protection Agency used more accurate (and lower) prices published by NREL in the EPA's federal Clean Power Plan analysis, and the RGGI states should use NREL's figures as well.
• The states should ensure that their reference case fully accounts for other state clean energy policies that will make it even easier to meet a more ambitious RGGI cap. The current reference case also doesn't fully account for other independent drivers of power-sector carbon reductions in the region, such as state renewable energy and energy efficiency policies. Every RGGI state has a renewable energy standard--New York, for example, recently initiated a utility commission proceeding to get 50 percent of its electricity from clean sources by 2030--and every RGGI state but one has an energy efficiency standard or goal. (Massachusetts leads the region and the nation by now requiring annual electric savings of 2.93 percent.) These standards will reduce carbon pollution independent of RGGI - thus making it easier to meet a future RGGI cap - and should also be incorporated into the reference case.
Getting these assumptions right and including a more ambitious power sector carbon pollution reduction scenario in the RGGI states' analysis are the first steps in ensuring that the RGGI states will have the information they need to commit to further, meaningful cuts in power-plant carbon pollution later on.
RGGI has shown how smart, forward-thinking policies to protect our environment can improve our economy, create thousands of new jobs and enhance our health. In fact, the program is a clear example of the benefits we can expect to see nationally if the Clean Power Plan is upheld, as we expect it will be. By conducting a thorough program review and committing to further power-sector carbon pollution cuts to achieve the states' existing economy-wide 2030 and 2050 climate targets, the RGGI states can cement the climate leadership they've exhibited so far, and once again help lead our nation forward into the clean energy economy.