Tuesday, February 12, 2013

RGGI Proposes 45% Cut In GHG Emissions Cap

Feb 7: After a comprehensive two-year program review, the nine Northeastern and Mid-Atlantic states participating in the Regional Greenhouse Gas Initiative (RGGI), the nation's first market-based regulatory program to reduce greenhouse gas (GHG) emissions, released an updated RGGI Model Rule and Program Review Recommendations Summary. The Updated Model Rule will guide the RGGI states as they follow state-specific statutory and regulatory processes to propose updates to their CO2 Budget Trading Programs.

    Five years ago the RGGI states -- Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, and Vermont -- demonstrated leadership in addressing CO2 pollution and accelerating the region's transition to a clean energy economy by conducting the first ever regional auction for CO2 allowances in the nation. The changes outlined in the Updated Model Rule and Program Review Recommendations Summary build upon RGGI's success and strengthen the program moving forward. The improvements include:

  • A reduction of the 2014 regional CO2 budget, "RGGI cap", from 165 million to 91 million tons -- a reduction of 45 percent. The cap would decline 2.5 percent each year from 2015 to 2020.
  • Additional adjustments to the RGGI cap from 2014-2020. This will account for the private bank of allowances held by market participants before the new cap is implemented in 2014. From 2014-2020 compliance with the applicable cap will be achieved by use of "new" auctioned allowances and "old" allowances from the private bank.
  • Cost containment reserve (CCR) of allowances that creates a fixed additional supply of allowances that are only available for sale if CO2 allowance prices exceed certain price levels ($4 in 2014, $6 in 2015, $8 in 2016, and $10 in 2017, rising by 2.5 percent, to account for inflation, each year thereafter.)
  • Updates to the RGGI offsets program, including a new forestry protocol.
  • Not reoffering unsold 2012 and 2013 CO2 allowances.
  • Requiring regulated entities to acquire and hold allowances equal to at least 50 percent of their emissions in each of the first 2 years of the 3 year compliance period, in addition to demonstrating full compliance at the end of each 3 year compliance period.
  • Commitment to identifying and evaluating potential tracking tools for emissions associated with electricity imported into the RGGI region, leading to a workable, practicable, and legal mechanism to address such emissions.
    With the release of the Updated Model Rule, the RGGI states now plan to revise their CO2 Budget Trading Programs through their individual state-specific statutory and regulatory processes. Each RGGI state seeks to complete their state specific processes such that the proposed changes to the program would take effect on January 1, 2014.
    An independent report by the Analysis Group found that the investment of RGGI proceeds from the first three years: Generates $1.6 billion in net economic benefit region-wide through the end of the decade; Puts $1.1 billion in electricity bill savings back into the pockets of consumers in the region over the next decade; Creates 16,000 job-years in the region; and Keeps $765 million in the local economy due to reduced fossil fuel demand.
    Collin O'Mara, Secretary of the Delaware Department of Natural Resources and Environmental Control and Chair of the RGGI, Inc. Board of Directors said, "Over the past five years, the RGGI states have demonstrated that a market-based program that spurs investments in energy efficiency and low-emission electric generation can simultaneously achieve the goals of cleaner, cheaper, and more reliable energy. Today, we are taking another significant step forward in realizing our common goal of reducing carbon emissions, driving energy efficiency investments, accelerating clean energy deployment, and providing economic benefits to the region's businesses and families."
    Dale Bryk, Director of the Energy and Transportation Program at the Natural Resources Defense Council issued a statement saying, "This program has shown the nation unequivocally that environmental and economic progress can indeed go hand in hand.

    "In the wake of Superstorm Sandy, RGGI is combating extreme weather at its source: climate change. At the same time, it has proved to be an economic engine for participating states: creating thousands of local jobs, generating millions for clean energy development, and lowering energy bills. Now that it will be nearly twice as strong, just imagine what it can do. As the EPA prepares to issue carbon pollution standards for existing power plants nationwide, other states would be wise to look to RGGI as a model. By following this lead, they too can reap similar economic benefits while helping to reduce the turbocharged weather that has been sweeping across the entire country."

    Judi Greenwald, Vice President, Technology and Innovation at the Center for Climate and Energy Solutions (C2ES) said, "We applaud today's plan by the nine states in the northeast Regional Greenhouse Gas Initiative to adjust their cap-and-trade program by tightening the cap and increasing compliance flexibility for businesses. Combined, the adjustments would significantly reduce greenhouse gas emissions and increase available funding for clean energy without unduly burdening businesses or consumers. C2ES believes that market-based policies are the most effective and efficient means of reducing greenhouse gas emissions, and we appreciate the continued leadership of the RGGI states."

    A long list of green energy companies in the Northeast have enthusiastically supported the RGGI and said it is a boost to the economy while "improving energy security." In letters to their respective state Governors they have said, ". . we encourage you to support and strengthen RGGI going forward."

    Access a lengthy release with more details and additional quotes from participating states (click here). Access the RGII website for more information (click here). Access a release from NRDC (click here). Access the C2ES release with links to more information (click here). Access support letter from green energy companies (click here). [#Climate]
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