[G]ov. Phil Scott agreed this week to a carbon-pollution-pricing scheme that will impose dramatic cuts to the amount of carbon dioxide Northeast states produce through electricity generation.
The agreement commits to a 30 percent reduction in carbon dioxide emissions from electricity power plants between 2021 and 2030.
The move accelerates restrictions on pollution set by the country’s first market-based carbon pricing program, called the Regional Greenhouse Gas Initiative, or RGGI.
David Farnsworth, a former Public Service Board staff attorney who represented Vermont during the earliest stages of RGGI’s formation in 2003 and 2004, said the program is modest but important — in part because it shows that carbon pricing is viable.
“This has always been a really modest program, but it’s demonstrating a concept,” Farnsworth said. “The RGGI states have been really intelligent about this.
“Often, at the beginning of environmental programs, you hear Chicken Little, ‘The sky is falling,’ kind of critiques,” he continued. “The critiques were that it was going to destroy the economy in the Northeast. It hasn’t. Actually, it’s been really beneficial.”
The program began with five Republican governors and five Democratic governors, Farnsworth said. Recent events at the national level haven’t eroded that political comity, he said.
“Now, the political climate in the U.S. has been very negative about carbon management — there’s no Clean Power Plan, we walked away from the Paris Accords,” Farnsworth said. “You wonder if that decision-making is going to filter down to the RGGI states.”
This most recent agreement — which extends the terms of RGGI another 10 years while constricting still further the Northeast’s carbon-dioxide pollution — shows that the program has staying power, he said.
The tightened RGGI carbon-emission limits are expected to reduce pollution in the Northeast, and bring more money to state coffers. Vermont has received almost $20.5 million from the program since its inception in 2009. How much it will bring in next year or in subsequent years will depend on how the market responds.
“It’s a little bit early to say exactly how it will look, because RGGI is a market, and the amount [Vermont receives] is always determined by how the market behaves,” said Mary Sprayregen, the director of strategy, policy and public affairs at Vermont Energy Investment Corp. Sprayregen said Vermont could see revenue from the program increase as emissions trades become more rare.
Most of the $20.5 million Vermont has received from RGGI has gone to a state program called Efficiency Vermont, which is overseen by the Public Utilities Commission and administered by VEIC.
Efficiency Vermont has invested the proceeds into efficiency measures that aren’t offered through other programs, Sprayregen said. For instance, weatherization assistance is available through other programs for low-income individuals, but not for multi-family housing such as apartment buildings. Efficiency Vermont invests in initiatives like weatherization for multi-family housing, she said.
Investments in energy efficiency save about double the cost of the investment, according to a 2016 report.
Scott is one of nine governors to agree to the new pollution limits established through RGGI, which is a compact between Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island and Vermont.
Participation in RGGI is voluntary, and governors may choose to withdraw from the agreement. New Jersey was one of the original members of RGGI, and the state actually withdrew shortly after it was put in place in 2009. New Jersey lawmakers are seeking to rejoin RGGI next year.
Vermont’s participation in RGGI is fairly lucrative for the state.
The state brought in a total of $20.5 million as of June, according to the latest auction numbers, having paid almost nothing into the program.
That’s because RGGI prices only carbon pollution emitted by electricity power plants. Vermont has two fossil-fuel-fired electric plants, one owned by Green Mountain Power and another by Burlington Electric Department. These plants, known as “peakers,” rarely run. They’re in place to supply short-term electricity when regional electric prices spike due to acute and extremely high demand. These events are not common.
Since Vermont almost never produces electricity from fossil fuels, Vermont utilities pay very little into the program. For example, GMP bought no apportionments whatsoever in 2016, company spokeswoman Kristin Carlson said.
Vermont invests its proceeds from RGGI in energy efficiency programs that are reviewed and approved by the Public Utilities Commission (known until June as the Public Service Board).
RGGI is scheduled to ratchet down emissions caps imposed on all nine states’ electric generators by 2.5 percent each year until 2020; the agreement Scott made this week commits the states to what is effectively more than a 3 percent annual decrease for the next 10 years after that.
The cap in 2015 was 91 million tons.
Electric utilities in the nine participating states may emit no more than that amount of carbon dioxide over the course of the year.
Utilities, investors and others must purchase rights to emit certain portions of that total, called apportionments. Utilities must own apportionments for every ton of carbon-dioxide emissions they produce, and they purchase apportionments quarterly through a RGGI auction.
The next RGGI apportionment auction takes place Sept. 6.
Through 2014, RGGI is estimated to have saved 76 MMBtu of fossil-fuel energy, and 21 million MWh of electricity. The initiative’s organizers claim that savings has averted about 15.4 million tons of carbon pollution.
Since 2005 states enrolled in RGGI have reduced the carbon-dioxide emissions of their electricity generation by more than 45 percent, while the region’s gross domestic product in the same period grew by 8 percent, RGGI administrators said in a report published last year.
The same effort saved 4.6 million households and 21,400 businesses around $4.7 billion in “lifetime energy bill savings,” the September, 2016 RGGI report, titled “The Investment of RGGI Proceeds through 2014,” states.
Since the program’s inception in 2009, states have received about $2 billion in RGGI proceeds. The money has been disbursed primarily through state energy efficiency and renewable energy efforts.
Update, Aug. 25, 2017, 12:13 p.m.: The number for the total amount the state has received from the RGGI program is $20.5 million, as of June 2017. The amount previously mentioned, $14.5, was from 2014.
