Leading on Climate in the Northeast

On August 23, nine Northeast and Mid-Atlantic states unveiled their plan to drive deeper reductions in climate pollution from the electric sector. The plan would extend the popular and successful Regional Greenhouse Gas Initiative (RGGI) to 2030 and make important modifications to strengthen the program. The announcement was the culmination of nearly two years of dialog between the states and stakeholders including the Sierra Club and represents a big win for public health, the environment, and the climate. 

RGGI is the nation’s first regional initiative to reduce climate pollution from the power sector.  It was established a decade ago by a bipartisan group of governors from Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont. (Although New Jersey subsequently withdrew, RGGI-watchers eagerly anticipate its return to the program in the near future.) RGGI works by placing a declining cap on greenhouse gas emissions from the electric sector.  Fossil fuel-fired power plants in the region must acquire allowances for their climate pollution. These allowances are made available through quarterly auctions.  Auction proceeds are returned to states, which invest most of the revenue in clean energy and energy efficiency.

RGGI has been wildly popular, and with good reason.  Recent polling across the RGGI states found 77 percent support for participation in the program.  Small surprise, because RGGI has had enormous benefits for the region.  From its inception through 2015, power plant greenhouse gas emissions in the nine RGGI states dropped by 37 percent.  During that time, electricity prices declined. Meanwhile, through the quarterly auctions, the RGGI states have raised over $2 billion, which has primarily been directed to advancing energy efficiency, renewable energy and greenhouse gas abatement, and providing direct bill assistance, benefiting tens of thousands of businesses and millions of households.

The proposal released by RGGI states on August 23rd would continue RGGI’s history of success.  It would decrease the emission cap by another 30 percent between 2020 and 2030.  In addition, it would strengthen a number of important elements of the program. For example, there is presently a large existing bank of unused allowances because actual emissions have been below the emissions cap.  The states’ proposal would eliminate that bank, ensuring that the newly proposed cap is effective in driving pollution reductions.  In addition, the states have innovated a new mechanism that could make the future cap even tighter if allowance prices are sufficiently low.  Through the new Emissions Containment Reserve, ten percent of the allowances would only be released if auction prices surpassed a certain threshold, allowing for greater climate progress.

The Sierra Club and its allies have pushed hard to see the RGGI states continue their climate leadership.  The Sierra Club commissioned a study from Synapse Energy Economics to determine what a least-cost build-out to the RGGI states’ mid-term climate goals would entail for the electric sector.  This report served as the analytical basis for the Sierra Club and other groups’ recommendations to the states on strengthening the program.  The Club actively participating in more than a dozen regional and state stakeholder meetings and webinars over the past 21 months. 

Now that the states have unveiled their proposal, they will accept public input and then finalize a model rule for states to adopt. The Sierra Club looks forward to continuing to productively engage with states to ensure a successful conclusion to the current program review.  Once that is finalized, we look forward to working to ensure that RGGI revenues benefit the communities most deeply affected by power plant pollution.  

 


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