Cap-and-trade generates $3.3 million for energy efficiency this year

South Burlington's new twenty-five acre solar farm promises to generate a reported 2.2 megawatts of electricity for the state, enough to power roughly 450 homes. VTD/Eric Blokland

A solar installation in South Burlington. Eric Blokland/for VTDigger

Vermont’s efficiency utility received $3.3 million this year through the Northeast carbon cap-and-trade initiative. The money will be used to fund the state’s thermal efficiency program.

Vermont participates in the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade “market” among nine Northeastern states designed to cap regional greenhouse gas emissions and encourage states to invest in renewable energy and efficiency projects.

During quarterly auctions, participating states sell and purchase carbon allowances, which function as the market’s currency, at a price that varies based on the regional cap of 91 million tons of carbon for 2014. Vermont received its carbon allowance in 2009, when it first joined the program.

The state has since raked in about $12 million for thermal efficiency programs by selling its allowances to other states. In the most recent auction in December, Vermont sold nearly all its 288,224 carbon allowances at about $3 each, adding up to $864,672 in proceeds. Buyers in the compact must purchase one allowance for each ton of carbon emissions they produce.

These proceeds go to Efficiency Vermont for thermal efficiency programs designed to reduce the cost of heating residents’ homes.

“This has been extraordinarily successful,” said Gov. Peter Shumlin during a news conference Wednesday outlining several regional climate change goals.

Shumlin, who is a member of the White House Task Force on Climate Preparedness and Resiliency, said the state cannot solve climate change issues alone and must take advantage of these sorts of programs.

“Whenever a single state, that’s as narrow and long as Vermont is, thinks that it can raise huge amounts of revenue to solve climate change all by themselves … we have challenges,” he said. “So we need to talk about regional, or better yet, national approaches to the biggest challenge that we face.”

The RGGI, one example of Vermont’s partnership with other states, has provided the state millions of dollars for thermal efficiency projects. This is largely because Vermont has a large amount of allowances, said Justin Johnson, deputy secretary of Agency of Natural Resources.

Before Vermont signed onto the initiative in 2009, the state anticipated the closing of Entergy’s Vermont Yankee nuclear plant and replacing it with another electricity generating facility, which would guarantee higher carbon emissions than a nuclear plant. Vermont Yankee will now operate until the end of 2014 while Vermont continues to enjoy the allowances.

“We got an excess of allowances essentially to cover the possibility that our [electric] generation [emissions] would go up,” Johnson said.

Vermont hardly buys any of these allowances when it goes to auction, he said. There are two facilities in Vermont that meet the 25-megawatt threshold requiring the purchase of carbon emission allowances. These include the McNeil Generating Station in Burlington and a gas-powered plant in Berlin, operated by Green Mountain Power during peak demand.

All states have different rules for what they do with auction proceeds, Johnson said. After the auction, a check goes to the Vermont Public Service Board and they allocate 98 percent of the money to the Vermont Energy Investment Corp., which operates Efficiency Vermont, to provide funding for thermal efficiency projects.

Efficiency Vermont gets the rest of its thermal efficiency financing through ISO New England’s Forward Capacity Market, which pays the state to reduce its load on the grid during peak demands, said Jim Merriam, director Efficiency Vermont.

Merriam said thermal efficiency programs in the state have essentially taken 50,000 cars off the road over the course of the initiative.

While this will not reduce the regions net carbon output, the initiative’s cap on emissions will reduce by 2.5 percent after 2015 until 2020, which will shrink the regions supply of carbon and increase its demand.

Some states do not use the proceeds to invest in renewables or efficiency. For example, New Hampshire uses its money to balance their budget. Similarly, New Jersey pulled out of the program after raiding the funds in 2011.

Johnson said what other states do with the money will not affect Vermont’s allocation of allowances. Participating states include Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont.

Shumlin said he was disappointed when New Jersey Gov. Chris Christie, who recently came to Vermont for a GOP fundraiser event, pulled out of the program.

“RGGI is something to be proud of and to embrace, not something to raid for short-term budget gains – as has occurred in some states recently – or to reject for political gain,” said Shumlin in a 2011 statement.

Recently, eight Northeast governors, including Shumlin, called on Southern states to reduce their emissions and align with the standards set in the East. Christie is not part of this consortium.

On Wednesday, the administration announced upcoming grants for municipal investment in electric car charging stations across seven states. The grants will be announced soon after the New Year, a news release stated.

John Herrick

Comments

  1. Linus Leavens :

    (make that “carbon disclosure project” instead of “carbon capture project” ) By declaring a value on something that has no value, climateer profiteers have prepositioned themselves to profit from trading carbon. They are the wealthy elite who push top- down policy on the rest of us. Just who in Vermont has driven this policy? The Vermont Democrat Party, funded by some “very important donors”. Google “carbon capture project”, “carbon sequestration”, “Chicago Climate Exchange”, “Dr Richard Sandor”, & take a peek behind the curtain. You will find some Vermonters at the core of the Agenda.

    • Townsend Peters :

      “The Vermont Democrat Party” apparently includes former Gov. Douglas – you know, that Republican who supported and signed the legislation.

      Well, I suppose the Republicans are elitist too. I’ve always thought so. But somehow, Leavens, I doubt your comment is nonpartisan.

  2. Jim Barrett :

    Sounds like abby ripoff by government to take and take more money out of th pockets of those working to support their families. These payments are made by companies and companies get revenue from the American people. When additional costs are added to a companies operating budget, the money has to come from somewhere…it is not free. Shumlin touts this income as great while he just GAVE away millions for the climate change farce…..sounds like he should stick to buying land from challenged people!

  3. Sally Shaw :

    I am uneasy with these cap and trade schemes. While I’m happy VT is applying the money to efficiency programs to further reduce its carbon footprint, selling “carbon credits” to other states or companies to allow them to pollute more doesn’t seem like a net gain. What is their incentive to clean up their act, if it’s cheaper to buy VT’s clean air credits?

    • Townsend Peters :

      How high or low the cap is. If it’s set right, the effect will be to lower carbon emission regionally.

      The jury is still out on whether it’s set right at this point. The participating agreed last year to lower the cap on an annual basis starting in 2015. It seems clear that it was not set low enough to start with, since credits were actually being left on the table and not purchased.

      At this point, it is making a difference in Vermont’s carbon footprint because we are investing it in reducing fossil fuel use for heat, and we don’t have much in the way of other revenue sources for that activity.

  4. Lee Stirling :

    I would certainly prefer Efficiency Vermont get a portion of it’s funding through trading these carbon credits than by further increasing the “energy efficiency” charges or the “Low income heating assistance” fees that our utility bills have relatively begun to reflect.

  5. Wow. VT has raked $12 million by selling CO2 allowances to other states. Revenue without taxes, and the proceeds are invested to reduce Vermonters’ energy bills for generations to come. What’s not to like!

    • Linus Leavens :

      If you are the power generating company who is forced to buy carbon credits, you might think you are being heavily & unjustly taxed. Just because the 5th generation of the Rockefeller family has declared a war on coal (there’s a lot of coal, & they own a lot of oil) and devised a scheme to obtain wealth from We the People by selling them something that doesn’t exist (carbon “offsets”- reminds me of a solar “orchard”), you might begin to feel like a Medieval sinner forced to buy indulgences & Papal dispensation. History tends to repeat itself.

  6. Linus Leavens :

    Cap & Trade “generates” nothing. It robs Peter to pay Paul. It forces power producers to purchace Carbon Credits as if they have a real value, when in fact they are created out of thin air. Wealth redistribution is the goal. into their pockets. Prepositioned investments in Carbon are what is at stake, & the elites driving the top downpolicy are all in. They can’t back out now. They are too invested in this. This is their weakest point.

  7. To comply with Cap & Trade and reduce greenhouse gas emissions means that companies have to increase their energy efficiency. For instance:
    Increased energy efficiency = Reduced utility bills = Profit
    Increased natural gas energy efficiency = Reduced global warming
    Increased natural gas energy efficiency = Reduced CO2 emissions
    Increased natural gas energy efficiency = Water conservation

    If it can be goof for their pocket book, and also good for the environment is that bad?
    Installing this Energy Saving equipment will mean that local contractors will be hired to perform this work. Is this not good for the local economy?

    What natural gas is not wasted today, will be there to be used another day.
    If it benefits Vermont because they have taken the initiative to do something to increase their states income, is this not good?

    • Paul Lorenzini :

      I cannot wait to sell my house and get out of this state.

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