The posting of a clearing price of $7.50 per ton at the latest auction of carbon pollution allowances under the nine-state Regional Greenhouse Gas Initiative (RGGI) last Friday might not seem like a big deal. But that price, 44 percent higher than what allowances sold for last year at this time, means great things for residents of the Northeastern and Mid-Atlantic RGGI region and the residents of New York, the largest of the RGGI states.
Together, the RGGI states--Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont--reap significant benefits from the market-based program that substantially cuts dangerous carbon and air pollution from the region's power plants while it creates jobs and saves consumers serious money on energy.
When last week's auction brought in more than $115 million dollars (bringing the grand total since the program's inception to $2.3 billion, as highlighted by our friends at the Acadia Center), it meant the nine participating states will have substantially more money to use for energy efficiency, renewable energy and other carbon- and cost-cutting projects that bring health and economic benefits to everyone. New York, alone, will receive $44 million of that.
In January 2014, the RGGI states strengthened the program by cutting the amount of carbon pollution power plants were allowed to dump into our atmosphere. And they recently launched another program review to decide whether to further limit the region's power plant pollution -- the first stakeholder meeting to kick off that "RGGI 3.0" process was held on November 17th in New York City. (NRDC helped craft initial coalition program review comments spearheaded by Acadia Center. They're available here).
RGGI is a market-based program to cut climate-warming emissions from the power sector. Power plants must buy or trade allowances for every short ton of carbon dioxide pollution they release and the total emissions allowed for a state declines each year. The states can then direct auction profits toward other uses, such as programs to support energy efficiency, renewable energy, direct bill assistance, and greenhouse gas abatement.
The latest auction results show that continuing to strengthen the RGGI program, so that it cuts more carbon and helps states reach their ambitious short- and longer-term greenhouse gas reduction targets, ramps up the carbon-cutting work we can do on the ground and the many co-benefits that come along with it.
New York offers just one example of how impressive this program can be, especially if it's made even stronger. In the Empire State, RGGI has spurred carbon pollution reductions of 30 percent since the program first took effect in 2009, and created more than 9,000 new job-years. (A job-year is just what it sounds like: one year's worth of full-time work.) Evaluators have estimated RGGI's net value to the state's economy at more than $600 million so far. RGGI is expected to save New Yorkers more than $50 million on their energy bills this year alone, and, over the lifetime of these measures, is expected to save nearly $2 billion for homeowners and tenants, businesses, factories, and farms in New York.
The health savings are pretty spectacular, too. That's because cutting carbon pollution also reduces other dangerous pollutants that pour out of power plant smokestacks. Smog and soot, after all, are associated with serious health problems, including asthma, heart attacks, and serious developmental delays. Based on an Acadia Center analysis of Environmental Protection Agency data, the pollution reductions RGGI's brought about over the last six years have resulted in public health savings to the state and its residents worth more than $1.1 billion.
And if all that sounds too macro to wrap your head around, check out just some of the ways that proceeds from RGGI auctions have been distributed on the ground in New York:
â¢ In low-income Big Apple neighborhoods, RGGI proceeds have helped non-profits, houses of worship, small businesses, and apartment buildings undertake the kind of energy efficiency upgrades that can save them as much as 70 percent on their utility bills, and 70 percent of their carbon emissions, too. Those savings have helped businesses and community institutions keep their doors open and their service programs running; they've lowered energy costs for cash-strapped tenants, all while helping to stabilize our climate.
â¢ In the Hudson River Valley, RGGI profits have helped homeowners, businesses, and farmers save money on pollution-free solar energy while creating good-paying local jobs for installers and designers, office workers, marketers, truck drivers and accountants.
â¢ In the Adirondack's Keene Valley, RGGI is enabling farmer Rob Hastings to install a new, emissions-free solar thermal heating system in four of his greenhouses. They, in turn, will help him extend his growing season and hire more workers from the local community.
â¢ In Buffalo, RGGI funds have helped bring energy efficiency retrofits to at least 500 low-income homeowners--with an average energy savings of $700 a year, the state estimates--while creating new jobs for residents whose previous low levels of education kept them underemployed or out of the workplace entirely.
A strengthened RGGI, one that continues to significantly cut carbon pollution by lowering the allowable amounts of pollution, can help New York and the RGGI region overall continue as national climate leaders.
In New York, especially, that climate leadership is already particularly strong: Last week, Governor Andrew Cuomo directed the state's Public Service Commission, which regulates New York's utilities, to develop programs that guarantee New York gets 50 percent of its electricity from renewable sources, including on- and offshore wind power, and solar power, too, by 2030, thereby significantly cutting our power-sector carbon pollution. Last month, Governor Cuomo signed the Under 2 MOU, joining 65 other countries, states, provinces, and cities around the globe in committing to cut greenhouse gases by 80 percent by 2050. (That's the level scientists say we must reach if we're to avoid climate change's worst effects.) New York has also pledged to cut building energy use by 23 percent by that same year. To actually meet these ambitious and super-important targets, New York needs a stronger RGGI.
In 2013, Governor Cuomo told New Yorkers, "Through its participation in RGGI, New York has demonstrated that environmental progress can also bring economic prosperity." Last week's auction proves we can continue to create more of both, by further slashing pollution under this pioneering program.
Now that RGGI's cap is declining year over year to better reflect actual emissions and the real impacts of carbon pollution, the fundamentals of supply and demand result in an escalating allowance price over time. And due to the RGGI states' wise use of auction revenues, a higher allowance price allows us to invest more in additional carbon-cutting measures. It's as simple as that. And it's a great big win for everyone.
As New York and the other RGGI states continue their program review, and develop plans to further cut carbon under the EPA's Clean Power Plan, they should submit plans to the EPA in September 2016 that go further, faster than the EPA requires. That will help them meet their climate goals, bring economic and health benefits to their residents, and lead the nation once again.