If cap-and-trade is truly dead, the Regional Greenhouse Gas Initiative (RGGI) is desperately fighting to resuscitate it.
RGGI was formed by ten states in the Northeast and Mid-Atlantic, focused on reducing CO2 emissions through cap-and-trade programs. RGGI reported this week that state programs have already seen many economic and environmental benefits.
States are expected to sell emission allowances through auctions, and invest their proceeds in consumer benefits. Participating states are reportedly investing, on average, 80 percent of their CO2 allowance proceeds to consumer benefit and energy programs. The report's findings are based on a two-year analysis of program investments, specifically focused on energy efficiency, renewable energy, bill payment assistance, and additional programs.
Overall the report finds that state investments have created jobs, reduced energy costs, and generated high economic returns.
The states have taken different approaches to achieve their communal goal of reducing CO2 emissions from the power sector 10 percent, by 2018. For example, in Connecticut, while most proceeds from CO2 allowances are going towards expanding programs focused on efficient and renewable energy, a small portion of their proceeds are aimed at additional climate programs. Nearly 70 percent of their investments are focused on energy efficiency, with 23 percent for renewable energy, and seven percent for other programs and administration.
The Energy Conservation Management Board (ECMB) runs energy efficiency programs in Connecticut. The ECMB consists of 14 members who advise the state's three electric distribution companies on programs that are both cost-effective and energy efficient. Programs are focused on public outreach, process improvement, and workforce development.
Reports show that between 2008 and 2009, these CT programs produced $3 to $4 for every $1 invested. Nearly 2,700 jobs are directly attributed to energy efficiency, with an average employment income of $50,000 per year. ECMB's energy efficient programs also reportedly benefit low-income consumers -- through auditing, weatherization, and retrofitting programs, consumers saw an estimated $6 million dollars in annual energy savings.
Regarding renewable energy programs in CT, the Connecticut Clean Energy Fund (CCEF) is focused on promoting clean energy sources. Last year, 14 schools and seven town buildings approved projects to install solar PV systems with CO2 allowance proceeds. RGGI estimates that these systems will produce nearly 1,500 megawatt-hours of electricity annually.
Connecticut also has a Small Business Energy Advantage Program (SBEA) focused on enabling small business owners to reduce their energy budgets. 1,900 businesses received assessments and upgrades in 2010, which saved participants over $5.8 million annually. According to RGGI, the upgrades also prevented nearly 18,000 tons of CO2 emissions per year.
The report offers the following story:
Chick's Drive-In, a landmark restaurant in West Haven, Connecticut, was just one of nearly 1,900 small businesses to benefit from SBEA in 2010. Through SBEA, the restaurant received financial incentives for the purchase and installation of more efficient lighting and refrigeration equipment. As a result, the owner Joseph "Chick" Celentano is now saving hundreds of dollars on his electricity bill each month. The eatery will save 468,000 kilowatt-hours of electricity--the equivalent of planting 56 acres of trees or saving more than 17,000 gallons of gas--over the lifetime of the new equipment.
But not everyone paints as rosy a picture as RGGI. Reports found that states such as New York and New Jersey aimed to divert green energy funds toward saving their budgets. The Sierra Club's Jeff Tittel remarks on the raid, "Unfortunately, once government discovers a new source of money, it's like a potato chip: They keep going back for more."
Just yesterday, a Fox News headline gleefully gloated, "One Giant Leap Forward - New Hampshire Smacks Down Cap-And-Trade." The op-ed highlighted New Hampshire's House of Representatives newly passed vote to repeal RGGI, with House Speaker William O'Brian claiming, "The Regional Greenhouse Gas Initiative has always been a backdoor tax increase on the citizens of New Hampshire. RGGI is a perfect example of the cost of regulation to the public. Rarely has a program been as transparent in its attempts at income redistribution."
It seems that New Hampshire's House of Representatives may reflect U.S. Republican House sentiments overall. While 10 states may be participating in cap-and-trade initiatives, recent election results make it highly unlikely that a federal cap-and-trade program will be implemented in the near future.
Overall, while many consider the recent RGGI report a success story, skeptics remain dubious. Only time will tell if the programs can sustain themselves and inspire other states to follow suit.