Nine northeastern and mid-Atlantic states announced last Thursday that they will cut the cap on carbon emissions from power plants by nearly half. The new cap of 91 million tons of carbon per year is part of a market-based cap-and-trade program called the Regional Greenhouse Gas Initiative (RGGI). It is the only program in the country that sets a mandatory price for carbon.
Gov. Peter Shumlin, Sen. Patrick Leahy, and a number of business and environmental groups applauded the new cap. Shumlin said, “Climate change is the single greatest challenge to our future and to the Vermont way of life. I am proud that Vermont is again taking the lead to improve a program that is just one of the many climate success stories that we are going to need.”
The nine states that participate in the Regional Greenhouse Gas Initiative agreed that starting in 2014 power plant emissions will be capped at 91 million tons of carbon per year, which is what emissions were in 2012. The new agreement will also reduce the cap by 2.5 percent each year through 2020. The previous cap, set in 2009, was 165 million tons. The drop in carbon emissions since the last cap was set is attributed to milder weather, increased use of natural gas, and improved energy efficiency.
Deb Markowitz, secretary of the Vermont Agency of Natural Resources, attributed the improved energy efficiency to the initiative. “The program is a success, adding billions in economic value to the region and saving more than $700 million by not buying fossil fuel from outside the region,” she said.
The program, which was launched in 2009, works by requiring power plants to buy permits for each ton of carbon they produce. The state then invests the revenue in energy efficiency and renewable energy, which creates jobs and increases economic activity. Participating states are Vermont, New Hampshire, New York, Maine, Massachusetts, Connecticut, Delaware, Rhode Island and Maryland.
According to a study conducted by Analysis Group, an economic consulting firm, the program generated $7 million for energy efficiency projects in Vermont and produced 195 new jobs in its first three years. The initiative reduced power plant revenue, but also lowered heating bills and funded clean energy projects, which resulted in a net economic gain of $1.6 billion in the nine-state region. Vermont received a net economic benefit of $22 million dollars.
Scott Johnstone, executive director of the Vermont Energy Investment Corporation, said that RGGI has already helped weatherize homes, install biomass heating systems, and rebuild after Tropical Storm Irene.
One Vermont energy efficiency project that received RGGI funding is the Property Assessed Clean Energy program, which helps homeowners invest in energy efficiency and renewable energy.
RGGI states also agreed to adjust the cap to account for unsold allowances, establish a cost containment system, and allow power plants to invest in forestry to meet their emissions cap. The cost containment system is designed to moderate swings in the price of carbon permits.
Vermont businesses that support the new cap include Ben & Jerry’s and Seventh Generation.
The Conservation Law Foundation, a New England-based nonprofit that supports environmentally sustainable legislation, said the reduction is an important step, but much more will be needed to reach the 80 percent reduction in emissions by 2050 that climate scientists say is necessary to avoid a climate catastrophe.
Senator Patrick Leahy commented, “Vermont has shown great initiative by engaging in RGGI even though our state is not a major generator of greenhouse gases through electrical power generation. And I applaud Vermont’s creativity in applying these funds to reduce fossil fuel consumption, where the most work needs to be done to mitigate greenhouse gas emissions.”
Meanwhile, the EPA is preparing to issue national carbon pollution standards for new power plants. There are currently no uniform national limits on carbon emissions.
Climate activist and Vermont resident Bill McKibben recently told the Vermont House of Representatives that improving energy efficiency should be the state’s highest priority in slowing climate change.
