Concentration of CO2 in the Atmosphere

New Regional Greenhouse Gas Initiative Plan

States in the RGGI

States in the RGGI

By George Harvey

The Regional Green Gas Initiative (RGGI) is a market-based program to reduce greenhouse gases in nine states in the Northeast. The states involved are all those in New England, plus New York, Delaware, and Maryland.

The way the RGGI has functioned is to issue a quantity of allowances to emit greenhouse gases each quarter. The allowances are sold at auction four times each year, and they can be traded. Each allowance represents one ton of carbon dioxide, and every power plant in the area has to stick to the number of tons it receives.

Progress can be made on reducing greenhouse gases from the area’s power sector by regularly reducing the number of allowances sold at auction. Currently, the amount is reduced 2.5% each year. As it has done so, the allowances have been sold for prices ranging from $1.86 to $7.50 each.

The money goes to the states, and each state uses its at its own discretion. In one state, it might be used to reduce the cost of electricity, while in another it could be used to pay for efficiency measures.

The RGGI is not permanent. It has been renewed regularly at three year intervals since it began. The third of these covered the years 2015, 2016, and 2017. It also depends on overall goals that are reviewed at regular intervals. The current goals extend to 2020.

In August of this year, representatives of the RGGI states met to determine on a course of action for the future. They decided on a slightly more ambitious plan than what they had been following in the past, with an overall reduction of 30% in the years from 2020 to 2030.

There is a perception among some people that the RGGI allowances are in fact a sort of tax, and that they therefore inhibit economic growth or place a burden on the people of the RGGI states. In fact, the RGGI has lost one state, New Jersey, over such concerns.

There has been a series of economic studies indicating that there is no economic burden resulting from the initiative. Over the first ten years of the initiative, emissions from power generation in the RGGI states dropped by 40%. Meanwhile, the gross domestic products of the states in the RGGI grew apace and thousands of jobs were created in conjunction with it. An analysis of the first three-year period of operation showed net benefits in the area relating to the initiative coming to $1.6 billion, and for the second three-year period, the benefits came to $1.3 billion.

The economic benefits described in the analysis do not include health benefits. The American Lung Association has determined that burning a gallon of gasoline does $1.30 in damages relating to health costs, and getting energy from coal costs even more. We cannot trace the use of a specific gallon of gas or a lump of coal to a specific instance of lung cancer, emphysema, or asthma, but that $1.30 is paid, whether we like it or not, someplace in the market. For people who have pulmonary disease or heart conditions, each $1.30 is just another economic injury added to their suffering. But it adds to the health costs of all, to our insurance bills, and to our taxes.

When we reduce the amount of fossil fuels used, life does not just become cleaner. It is healthier, less expensive, and possibly more enjoyable.

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