After meeting with the President last week to discuss the prospects for comprehensive climate and energy legislation, Senator Olympia Snowe (R-Me) said she is willing to work on capping and reducing the pollution that drives global warming by starting with the power sector. This welcome move should be a natural fit for all Senators of both parties from the Northeast, because those states already have established a power sector carbon pollution cap – the Regional Greenhouse Gas Initiative, affectionately known as RGGI (pronounced “Reggie”).
The Northeast states figured out long ago that the biggest job killing energy taxes are $5 gasoline prices and $200 heating bills which result from failed energy policies or no policies at all. And they are not alone: twenty five states have committed to adopt mandatory, comprehensive policies designed to shift their economies away from reliance on dirty old fuels, volatile energy prices and the antiquated power plants that our grandparents built and move towards clean technologies and innovation that bring jobs, lower energy bills, and can help make US businesses more competitive in today’s global markets. These state efforts have been truly bipartisan, including Republican governors from New York, Connecticut, Rhode Island, Vermont, Massachusetts, Minnesota, California and Utah.
The Northeastern states have made some of the greatest advances figuring out how to make this transition in a smart way. In January, 2009 they launched RGGI, a “cap-and-invest” program whereby the states auction a limited number of global warming pollution permits quarterly and use the proceeds to promote energy efficiency. The states’ analysis shows that this innovative pairing of a pollution cap and stepped up efficiency will actually reduce energy bills for the average household by over $100 per year. Homes and businesses that upgrade their heating and air conditioning systems or improve building insulation and lighting can reduce their energy bills by over 30%. Even consumers who don’t participate in efficiency programs benefit because those who do reduce demand reduce the market price of electricity for everyone, as well as underlying fuel prices and the cost of pollution permits. It’s the simple law of supply and demand.
At present RGGI covers only power plants, but the states have always envisioned broadening coverage over time to encompass all the important sources of carbon emissions. If Congress does not enact a climate and clean energy bill, the Northeast states will certainly retain RGGI and very likely adopt new policies to cover the industrial and transportation sectors. That means that all of Senator Snowe’s constituents, and all of Senators Collins, Brown and Gregg’s constituents, are already operating under a program that caps and cuts power plant carbon pollution and funds energy efficiency. It’s in their constituents’ interests to secure comparable policies at the federal level covering the rest of the nation, including these key provisions:
Mandatory pollution cap. A mandatory pollution cap on all major sources of carbon will send the clear, long-term signal to the marketplace that is needed to drive investment in clean energy technologies. A mandatory cap on power plants is essential to create a level playing field for northeast firms, and the same is very likely to be true for industrial facilities and transportation fuel providers.
Investment in energy efficiency. There is no question that energy efficiency is the cheapest, cleanest and fastest way to meet our energy needs and reduce the environmental and public health impacts of our energy systems. It’s also a huge job-creater. As discussed in my previous post, a McKinsey & Co study determined that investing in all cost-effective energy efficiency would create almost one million jobs while reducing our national energy bill $1.2 trillion by 2020. The study also acknowledged that a variety of regulatory and market barriers prevent the private sector from making these investments without policy changes. About half the states are doing something to encourage efficiency, but half are doing nothing and almost none are capturing anywhere near all cost-effective efficiency. Without a requirement that all utilities invest in cost-effective energy efficiency, Americans will continue to pay too much for the privilege of wasting their energy and the profligate states will continue to free ride on the investments that the Northeast and other leading states are making to lower overall energy costs for everyone.
Clean Air Act authority. The Northeast states have also been among the most stalwart protectors of the Clean Air Act. For decades, the states have suffered as winds brought them soot, smog and mercury from the oldest and dirtiest coal-fired plants in Midwestern states. State environment officials have already criticized efforts by the owners of those plants to weaken Clean Air Act protections and called on Senate leadership to guarantee that the Act’s well-established tools remain available to assist in achieving the nation’s environmental goals. They also strongly support protecting EPA’s authority to regulate global warming pollution, asking Senate leadership to ensure that “all of the tools to address the tremendous challenge of climate change remain available to our nation.” All Northeast Senators should work to ensure that EPA retains its critical authorities in order to protect the health of their own citizens and help ensure that upwind neighbors do their part to reduce pollution that afflicts their region.